SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] 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. 33-55254-33
CLAIRE TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0467224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7373 NORTH SCOTTSDALE ROAD, SUITE B169
SCOTTSDALE, ARIZONA 85253
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 483-8700
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 (l) 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 (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]
Revenues for 1997 were $3,762,988.
As of April 23, 1998, the estimated market value of the voting stock held by
non-affiliates of the registrant, based upon an estimate of the market price at
$0.10, was $312,000.
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 December 31,1997
$.001 PAR VALUE CLASS A COMMON STOCK 15,819,173
<PAGE>
PART I
ITEM 1. Business.
Claire Technologies, Inc., a Nevada corporation (the "Company"
"Claire") was incorporated in 1988 for the purpose of developing venture
businesses. Claire was formed by Capital General Corporation (CGC) and has
acquired new management to acquire corporations and develop certain businesses.
The Company acquired approximately 70.5% of the outstanding common
stock of Hyperflow Technologies, Inc. ("Hyperflow") in 1995. Hyperflow was
incorporated in Nevada in May of 1995 and is a development stage company engaged
in the design, engineering, manufacturing, and sales of etching, stripping,
aqueous, and semi-aqueous precision cleaning systems for computer, electronic,
and semi-conductor industries. On November 6, 1996, the Company entered into a
Promissory Note with Hyperflow for the amount of $65,000. On December 27, 1996,
the Company entered into a second Promissory Note with Hyperflow for the amount
of $240,500. Hyperflow is the debtor in both of these notes, which have been
renegotiated. Hyperflow was sold to the principals of Hyperflow to provide for
the divesting of all interest in Hyperflow by Claire. Claire is the holder of a
promissory note from Hyperflow providing for the payment of $305,500 by January
15, 1997.
On March 11, 1996 the Company issued a private placement memorandum
under Regulation S for the amount of $1,000,000 consisting of 2,000,000 shares
at $0.50 per share. This offering was completed on May 20, 1996 and all shares
were sold. Proceeds from this offering were used in the acquisition of Hyperflow
and for working capital.
On November 21, 1997, Claire Technologies, Inc. ("Claire") entered into
two separate merger agreements whereby Orion Preventive Medicine, Inc. ("Orion")
and Allied Health Partners, Inc. ("Allied") were merged into Olympic
Rehabilitation Services, Inc. ("Olympic"). Olympic, a wholly owned subsidiary of
Claire, was the surviving corporation. The sole consideration for the subject
mergers was the issuance of a total of 12,500,000 shares of common stock of
Claire for the surrender of all of the issued and outstanding stock of those
corporations. The statutory merger agreements were structured so as to qualify
as a tax free reorganization under the Internal Revenue Code for the
shareholders of Orion and Allied.
Prior to the mergers, both Orion and Allied were engaged in the
provision of contract physical, occupational and activity therapy services to
various hospitals and other medical providers and, in addition, Allied provided
management services to several free standing rehabilitation facilities. All of
those therapy and management services will continue to be offered by Olympic, as
the surviving corporation, and Olympic intends to actively pursue additional
rehabilitation service contracts in the states of Mississippi, Arkansas,
Louisiana and Tennessee. Richard Kellar, the former president of Allied, will
serve as the President and Chief Operating Officer of Olympic. He will be
assisted by Linda Holliman, also formerly associated with Allied, who will serve
as an operations and marketing consultant.
The Company's executive offices are presently located at 7373 North
Scottsdale Road, Suite B169, Scottsdale, Arizona 85253, its telephone number at
this location is (602) 483-8700 and telefax number is (602) 443-1235.
ITEM 2. Properties
Claire is headquartered in leased office premises at 7373 North
Scottsdale Road, Suite B169, Scottsdale, Arizona 85253. The lease arrangement is
for three years beginning March 15, 1996. Current payments are $1,200 per month.
Olympic leases office space at 62100 Pooles Bluff Road, Bogalusa, LA 70427. The
current lease term ends on December 31, 1999. The monthly payments are $700 per
month. In addition, Olympic also leases space for its three other clinics. The
2
<PAGE>
clinic situated in Cleveland, MS, has a one year lease ending October 31, 1998
with monthly payments of $1,800; in New Iberia, LA the lease is for four years
ending December 31, 2001 with monthly payments of $5,023.28 and finally in
Grenada, MS, the lease ends December 31, 1999 with monthly payments of $800. The
Company owns no other property.
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 CGC, Yeaman and 74 other named defendants,
Nevada and Utah corporations, including the Company. The issues raised in the
complaint were settled by agreement between the said Bureau of Securities and
Yeaman and CGC 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 the 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 as not to apply to 27 of the
respondent companies, not including the Company.
Other than this matter, the Company and any of its subsidiaries and any
of their property, are not involved in any material pending legal proceeding. At
this time, the Company does not have any material bankruptcy, receivership, or
similar proceeding pending.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Shareholders Meeting, held June 30, 1997, the following
items were voted and approved: (1)the Directors are to serve for a one year
period, (2) the appointment of Smith & Company as the independent auditor of the
Company, (3) payment of debt by issuing stock, and (4) effecting a four-to-one
reverse split of the Company's common stock.
No other matter was submitted to the Company's security holders for a
vote during the fiscal year ending December 31, 1997.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
The Company trades on the NASDAQ-OTC system, (trading symbol CLEA).
The following table lists the high and low sales prices for the common
stock of the company during the two most recent fiscal years:
NASDAQ-OTC
High Sales Price Low Sales Price
1997 First Quarter .50 .3125
Second Quarter .50 .20
Third Quarter .22 .07
Fourth Quarter .375 .1875
1996 First Quarter 1.75 1.687
Second Quarter 1.25 1.156
Third Quarter 1.00 0.968
Fourth Quarter 0.75 0.625
As of December 31, 1997 there were 400 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.
3
<PAGE>
ITEM 6. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The Company has not had operations that have generated income since its
inception until it acquired Olympic. Its only receipts have been from the sale
of its common stock, which have been used to pay expenses and acquire a 70.5%
interest in Hyperflow. Further, there has been a limited trading market for the
Company's common stock since its inception to the date of this report.
During the year ended December 31, 1997, management fees in the amount
of $110,000 were paid or accrued. The Company's President received $40,000. The
Company's Secretary received $10,000, all of which is accrued. Of the total of
$110,000, $90,000 was paid by stock and $20,000 was accrued. For the President,
$30,000 was paid by stock and $10,000 was accrued.
The following discussion includes the operations of Olympic and its
predecessors for all of 1997 and 1996.
Net income for the year ended December 31, 1997 was $743,052, compared
with a net loss of $1,623,066 for the year ending December 31, 1996. The main
reason for this increase is due to the acquisition of Olympic and its
operations. In 1997, Claire had a net loss of $249,574 and Olympic had net
income of $992,626, for consolidated net income of $743,052. For 1996, Claire
had a net loss of $1,973,145 and Olympic had net income of $350,079, for a
consolidated net loss of $1,623,066. All revenues for 1997 and 1996 relate to
Olympic.
General and administrative expenses for the year ended December 31, 1997
were $2,495,244, compared with $1,393,598 for the same period in 1996.
Depreciation and amortization expense for the year ended December 31, 1997
was $92,265, compared with $80,796 for the same period in 1996.
Interest expense for the year ended December 31, 1997 was $54,447,
compared with $114,026 for the same period in 1996. The decrease relates to
paying debt by issuing common stock.
Bad debts were $377,980 for the year ended December 31, 1997, compared
with $516,600 for the same period in 1996.
Loss from investment, which represents the Hyperflow items, was
$982,967 for the year ended December 31, 1996.
The Company plans for 1998 are to try to expand the operations of
Olympic.
The Company foreclosed on the loans made to Hyperflow in the first
quarter of 1997, and sold the assets to Hyperflo, Inc. (an Arizona Company,
unrelated to both Claire and Hyperflow), which had some common management with
Hyperflow.
The assets were sold to Hyperflo, Inc. for a $305,500 Promissory Note.
The Note bears interest at 7.87% per annum and the accrued interest and
principle are due September 6, 2003. The Company will also receive a royalty of
2.5% of the gross revenue received from sales of products developed with
Hyperflow technology. The first $1,500,000 of gross revenue is not subject to
the royalty. The Promissory Note must also be paid in full if Hyperflo, Inc.
sells the technology.
During the year, the Company sold 125,000 shares of its restricted
common stock at $.80 per share and received $100,000 and issued 25,000 shares of
4
<PAGE>
its restricted common stock at $.80 per share to pay $20,000 of interest
expense. It also issued 1,034,298 shares of S-8 stock at $.78 per share to
cancel debt of $807,439.
ITEM 7. Financial Statements and Supplementary Data.
Complete audited Consolidated Balance Sheets, Consolidated Statements
of Operations and Consolidated Statements of Cash Flows are attached as exhibits
to this document and are filed herewith. See Item 13.
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
No independent accountant previously engaged as the principal
accountant to audit the Company's financial statements, nor an independent
accountant who was previously engaged to audit a significant subsidiary and on
whom the principal accountant expressed reliance in its report, has resigned or
was dismissed. The Company has not changed accountants nor has it had any
disagreements with any accountants.
PART III
ITEM 9. 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 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
Jan Wallace 42 President, Director
Grace Sim 37 Secretary-Treasurer
Jan Wallace (age 42) is a Director, President and Chief Operating Officer of the
Company. Ms. Wallace has been employed by the Company since April 1995, when she
was elected to the Board of Directors. Ms. Wallace was previously Vice President
of Active Systems, Inc. a Canadian Company specializing in SGML Software an ISO
standard in Ottawa, Ontario. Prior to that she was President and Owner of
Mailhouse Plus, Ltd., an office equipment distribution company which was sold to
Ascom Corporation. She has also been in management with Pitney Bowes-Canada and
Bell Canada where she received its highest award in Sales and Marketing. Ms.
Wallace was educated at Queens University in Kingston, Ontario and Carleton
University, Ottawa, Ontario in Political Science with a minor in Economics. Ms.
Wallace is also an officer and director of Dynamic Associates, Inc.
Grace Sim (age 37) has been Secretary-Treasurer and Director of the Company
since March 7, 1997. Prior to joining Claire Technologies, Inc., Ms. Sim owned
an accounting consulting company in Ottawa, Ontario, Canada. Ms. Sim received
her Bachelor of Mathematics with honors from the University of Waterloo in
Waterloo, Ontario. She is also an officer in Dynamic Associates, Inc., a company
which files annual reports pursuant to the Securities Exchange Act of 1934.
5
<PAGE>
ITEM 10. Executive Compensation.
Annual Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Other Restricted
Annual Stock Options/* LTIP All other
Name Title Year Salary Bonus Compensation Awarded SARs (#) payouts ($) Compensation
- ---- ----- ---- --------- ----- ------------ ------- -------- ----------- ------------
<S> <C> <C> <C>
Jan Wallace President, 1997 $ 40,000
CEO,
Director
Grace
Sim Secretary/ 1997 10,000
Treasurer
</TABLE>
There can be no assurance that the amounts of compensation actually paid
for 1998, or the persons to whom it is paid, will not differ materially from the
above amounts paid for 1997.
*Options - No Options are outstanding at December 31, 1997.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1997,
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 by each director and officer as a group,
consisting of:
<TABLE>
<CAPTION>
Name and address Amount of Percent
Title of class of owner ownership of class
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Harry Moll 1,819,046(1) 11.50%
Box 836
Georgetown, Grand Cayman,
BWI
Class A Common William A. Lucky 5,500,000 34.77%
1613 Jimmie Davis Highway
Bossier City, LA 71112
Class A Common Jan Wallace 251,250 1.59%
6929 East Cheney
Paradise Valley, AZ 85253
Class A Common Richard Kellar 3,000,000 18.96%
PO Box 945
Bogalusa, LA 70419-0945
Class A Common William H. Means 1,000,000 6.32%
1613 Jimmie Davis Highway
Bossier City, LA 71112
Class A Common Alexander L. Blondeau 1,000,000 6.32%
1613 Jimmie Davis Highway
Bossier City, LA 71112
Class A Common Grace Sim 0 0.00%
c/o Claire Technologies, Inc.
Suite B169
7373 North Scottsdale Road
Scottsdale, Arizona 85253
Class A Common All Officers and Directors 251,250 1.59%
as a Group (2 persons)
</TABLE>
(1) Includes 39,921 shares owned by SSM Ltd., which is controlled by Mr. Moll.
6
<PAGE>
ITEM 12. Certain Relationships and Related Transactions.
The Company is provided with office space and other management services
on a month-to-month basis by Amteck Management, Inc., an entity controlled by
the Company's former Secretary. $12,000 was paid or accrued to Amteck as rent in
1997. Other fees to Amteck will be based on services received. Officers
currently are receiving no salary but are being paid management fees when
services are provided. $20,000 was accrued as management fees in 1997. Various
other individuals are paid as services are performed.
For 1998, it is projected that the Company's President will receive
$5,000 monthly and the Secretary will receive $5,000 monthly.
PART IV
ITEM 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following financial statements, financial statement schedules and
supplementary date are included:
F-1 Independent Auditor's Report
Financial Statements:
F-2 Consolidated Balance Sheets - December 31, 1997 and 1996
F-3 Consolidated Statements of Operations - Years Ended
December 31, 1997, 1996, and 1995.
F-4 Consolidated Statements of Changes in Stockholders' Equity
- Years Ended December 31, 1997, 1996, and 1995.
F-6 Consolidated Statements of Cash Flows - Years Ended
December 31, 1997, 1996, and 1995.
F-7 Notes to Financial Statements
(b) Reports on Form 8-K.
A Report on Form 8-K was filed to report the merger of Orion
Preventive Medicine, Inc. and Allied Health Partners, Inc. into Olympic
Rehabilitation Services, Inc. on November 21, 1997. The date of the 8-K was
December 5, 1997. No other Form 8-K was filed during fiscal 1997.
7
<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.
CLAIRE TECHNOLOGIES, INC.
Date: _4/28/98____ By: __/s/ Jan Wallace___________________
Jan Wallace, 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: __4/28/98___ By: ___/s/ Jan Wallace__________________________
Jan Wallace, President and Director
Date: __4/28/98___ By: ___/s/ Grace Sim___________________________
Grace Sim, Director
8
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Claire Technologies, Inc. (A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Claire
Technologies, Inc. (a development stage company) and subsidiary as of December
31, 1997 and 1996, and the related consolidated statements of operations,
changes in stockholders' equity (deficit), and cash flows for the years ended
December 31, 1997, 1996, and 1995, and for the period of May 3, 1988 (date of
inception) to December 31, 1997. 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. The financial
statements for December 31, 1996 and 1995 have been restated to reflect the
acquisition of a subsidiary in 1997. The statements for 1996 and 1995 reflect
the acquisition under the pooling-of-interests method of accounting as if it had
occurred in 1995.
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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Claire Technologies,
Inc. (a development stage company) and subsidiary as of December 31, 1997 and
1996, and the results of their operations, changes in stockholders' equity
(deficit) and their cash flows for the years ended December 31, 1997, 1996, and
1995, and for the period of May 3, 1988 (date of inception) to December 31, 1997
in conformity with generally accepted accounting principles.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
April 21, 1998
F-1
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1997 1996
----------------- ------------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 31,405 $ 16,063
Prepaid expenses 15,730 9,292
Accounts receivable (Net of allowance for doubtful
accounts of $479,000, $211,000 in 1996) 1,117,239 498,578
Option (Note 5) 0 0
----------------- ------------------
TOTAL CURRENT ASSETS 1,164,374 523,933
PROPERTY, PLANT, AND EQUIPMENT
(Note 6 and Schedules V and VI) 501,223 478,885
OTHER ASSETS
Investment (Note 7) 0 0
Loan receivable (Note 7) 0 0
Goodwill (Note 1) 0 0
Organization costs 217 247
Deposits 3,460 3,470
----------------- ------------------
3,677 3,717
----------------- ------------------
$ 1,669,274 $ 1,006,535
================= ==================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 56,284 $ 139,312
Accrued expenses - related parties (Note 10) 78,179 283,800
Accrued expenses 6,127 8,767
Current portion of notes payable (Note 14) 33,693 326,757
Bridge loan (Note 8) 0 14,999
Loans payable - related parties (Note 9) 187,190 624,747
Accrued interest payable - related parties 0 23,004
----------------- ------------------
TOTAL CURRENT LIABILITIES 361,473 1,421,386
LONG-TERM DEBT (Note 14) 84,105 31,944
----------------- ------------------
TOTAL LIABILITIES 445,578 1,453,330
Commitments and contingencies (Note 16) 0 0
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 15,819,173 shares
(14,634,875 in 1996) 15,819 14,635
Additional paid-in capital 3,180,870 2,254,615
Deficit accumulated during the development stage (1,972,993) (2,716,045)
Stock subscription receivable (Note 3) 0 0
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 1,223,696 (446,795)
----------------- ------------------
$ 1,669,274 $ 1,006,535
================= ==================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
5/3/88
(Date of
Year ended December 31, inception) to
1997 1996 1995 12/31/97
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Service revenue $ 3,359,358 $ 1,224,545 $ 0 $ 4,583,903
Rental revenue 401,722 198,926 0 600,648
Net equipment sales 1,908 41,450 0 43,358
--------------- --------------- --------------- ---------------
GROSS PROFIT 3,762,988 1,464,921 0 5,227,909
General & administrative expenses:
Administrative 0 39,000 80,000 119,000
Contract services/outside services 447,718 238,730 85,880 772,328
Insurance 55,735 6,893 0 62,628
Legal and accounting 53,530 28,768 53,990 136,288
Payroll taxes and benefits 208,209 85,280 0 293,489
Rent 126,281 36,257 13,917 176,455
Salaries/Management fees 1,426,831 769,817 302,725 2,499,373
Supplies 48,367 44,640 9,327 102,334
Travel & entertainment 74,535 73,598 82,799 230,932
Utilities 38,898 21,956 13,856 74,710
Other 15,140 48,659 63,614 129,413
Depreciation & amortization 92,265 80,796 12,848 185,909
Interest expense 54,447 114,026 5,692 174,165
Bad debts 377,980 516,600 2,300 896,880
--------------- --------------- --------------- ---------------
3,019,936 2,105,020 726,948 5,853,904
--------------- --------------- --------------- ---------------
NET INCOME (LOSS)
BEFORE OTHER 743,052 (640,099) (726,948) (625,995)
OTHER EXPENSE
Loss on investment (Note 7) 0 (982,967) (265,000) (1,247,967)
--------------- --------------- --------------- ---------------
NET INCOME (LOSS)
BEFORE INCOME TAXES 743,052 (1,623,066) (991,948) (1,873,962)
INCOME TAXES 0 0 0 0
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 743,052 $ (1,623,066) $ (991,948) $ (1,873,962)
=============== =============== =============== ===============
Net income (loss) per weighted
average share - operations $ .05 $ (.04) $ (.54)
Net income (loss) per weighted
average share - other expense .00 (.07) (.20)
--------------- --------------- ---------------
Net income (loss) per weighted
average share $ .05 $ (.11) $ (.74)
=============== =============== ===============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 15,162,188 14,403,044 1,348,333
=============== =============== ===============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Stock During
Par Value $.001 Paid-in Subscription Development
Shares Amount Capital Receivable Stage
------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balances at 5/3/88 (Date of inception) 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock (restricted) at
$.008 per share at 5/5/88 250,000 250 1,750
Net loss for period (1,950)
Balances at 12/31/88 250,000 250 1,750 0 (1,950)
Net loss for year (10)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/89 250,000 250 1,750 0 (1,960)
Net loss for year (10)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/90 250,000 250 1,750 0 (1,970)
Net loss for year (10)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/91 250,000 250 1,750 0 (1,980)
Net loss for year (20)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/92 250,000 250 1,750 0 (2,000)
Net income for year 0
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/93 250,000 250 1,750 0 (2,000)
Net income for year 0
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/94 250,000 250 1,750 0 (2,000)
Issuance of common stock (restricted) at
4/3/95 for subsidiary 2,625,000 2,625 1,875
Cancellation of stock at 5/31/95 (2,600,000) (2,600) (1,800)
Sale of common stock (Regulation "S") at
$.20 per share at 5/16/95 500,000 500 99,500
Issuance of common stock (restricted) at
$.004 per share for services at 6/30/95 475,000 475 1,425
Sale of common stock (restricted) at $4.00
per share at 6/30/95 130,000 130 519,870
Sale of common stock (restricted) at $4.00
per share at 7/24/95 113,750 114 454,886
Costs associated with stock sales (100,000)
Issuance of common stock (restricted) at
$.001 per share for services at 11/30/95 6,250 6 (6)
Options exercised 39,000 39 155,961 (81,000)
Issuance of common stock at $.001 for
Subsidiary* 12,500,000 12,500 (12,500)
Net loss for year (991,948)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/95 14,039,000 14,039 1,120,961 (81,000) (993,948)
* Transaction occurred in November, 1997 but is reflected earlier under
pooling-of-interests method of accounting.
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Stock During
Par Value $.001 Paid-in Subscription Development
Shares Amount Capital Receivable Stage
------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balances at 12/31/95 14,039,000 $ 14,039 $ 1,120,961 $ (81,000) $ (993,948)
Collection of stock subscription 81,000
Issuance of common stock (restricted) at
$2.00 per share for interest expense
at 5/14/96 32,500 33 64,967
Issuance of common stock (Regulation S)
to pay interest expense and reduce debt
at $2.00 per share at 5/14/96 327,125 327 653,923
Sale of common stock (S-8) at $4.00 per
share at 5/20/96 6,250 6 24,994
Sale of common stock (Regulation S) at $2.00
per share at 5/31/96 200,000 200 399,800
Sale of common stock (S-8) at $3.00 per share
at 6/24/96 6,250 6 18,744
Sale of common stock (S-8) at $3.00 per share
at 6/25/96 11,250 11 33,739
Sale of common stock (S-8) at $3.00 per share
at 6/27/96 7,500 8 22,492
Deferred offering costs (100,000)
Sale of common stock (S-8) at $3.00 per share
at 7/8/96 5,000 5 14,995
Dividends paid by subsidiary (1) (99,031)
Net loss for year (1,623,066)
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/96 14,634,875 14,635 2,254,615 0 (2,716,045)
Issuance of common stock (restricted) at
$.80 per share for interest expense at
2/28/97 25,000 25 19,975
Sale of common stock (restricted) at $.80
per share at 6/25/97 93,750 94 74,906
Sale of common stock (restricted) at $.80
per share at 6/30/97 31,250 31 24,969
Issuance of common stock (S-8) at
$.78 per share to cancel liabilities at
7/28/97 1,034,298 1,034 806,405
Net income for year 743,052
------------- ------------- --------------- --------------- ---------------
Balances at 12/31/97 15,819,173 $ 15,819 $ 3,180,870 $ 0 $ (1,972,993)
============= ============= =============== =============== ===============
</TABLE>
** Common stock shares, amounts and per share figures reflect a 4-for-1
reverse split of the Company's stock which was approved June 30, 1997.
(1) Paid prior to becoming a subsidiary of the Company.
See Notes to Financial Statements.
F-5
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
5/3/88
(Date of
Year ended December 31, Inception) to
1997 1996 1995 12/31/97
---------------- --------------- --------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ 743,052 $ (1,623,066) $ (991,948) $ (1,873,962)
Adjustments to reconcile net income (loss) to
cash provided (used) by operating activities:
Depreciation and amortization 92,265 80,796 12,848 185,909
Bad debts 261,394 211,000 0 472,394
Stock issued for expenses 20,000 84,044 2,000 106,044
Loss on investment 0 492,967 265,000 757,967
Changes in assets and liabilities:
Prepaid expenses (6,438) 90,708 (100,000)
(15,730)
Accounts receivable (880,055) (709,578) 0 (1,589,633)
Accounts payable (83,028) 107,469 31,843 56,284
Accrued expenses 162,425 190,020 102,547 478,046
Accrued interest payable 0 17,313 5,691 0
---------------- --------------- --------------- ---------------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 309,615 (1,058,327) (672,019) (1,422,681)
INVESTING ACTIVITIES
Purchase of equipment (114,573) (495,829) (20,624) (631,026)
Purchase of investment 0 0 (438,000) (438,000)
Goodwill 0 0 (331,000) (331,000)
Deposits 10 (3,470) 0 (3,460)
Organization costs 0 (210) (80) (340)
---------------- --------------- --------------- ---------------
NET CASH (USED)
BY INVESTING ACTIVITIES (114,563) (499,509) (789,704) (1,403,826)
FINANCING ACTIVITIES
Proceeds from sale of common stock 100,000 496,000 1,050,000 1,648,000
Loans - related parties 0 1,326,329 561,287 1,887,616
Loan repayments - related parties (248,697) (334,456) (68,238) (651,391)
Dividends paid 0 (99,111) 0 (99,111)
Loan proceeds 345,000 174,153 0 519,153
Loan repayments (376,013) (70,342) 0 (446,355)
---------------- --------------- --------------- ---------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (179,710) 1,492,573 1,543,049 2,857,912
---------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 15,342 (65,263) 81,326 31,405
Cash and cash equivalents at beginning of year 16,063 81,326 0 0
---------------- --------------- --------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 31,405 $ 16,063 $ 81,326 $ 31,405
================ =============== =============== ===============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 27,015 $ 12,937 $ 151 $ 40,103
================ =============== =============== ===============
</TABLE>
During 1997, the Company issued 1,034,298 shares of restricted common stock to
pay $807,439 of debt and liabilities.
During 1996, the Company issued 317,603 shares of Regulation S stock to pay
$635,206 of debt. The subsidiary issued a promissory note for $45,000 to
purchase equipment.
See Notes to Financial Statements.
F-6
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Consolidation
The consolidated financial statements for all periods presented
include the accounts of the Company and its wholly-owned
subsidiary, Olympic Rehabilitation Services, Inc., ("Olympic")
which was incorporated in Louisiana on June 25, 1997. On November
20, 1997, Olympic merged with Orion Preventive Medicine, Inc. and
Allied Health Partners, Inc. ("Allied"). Prior to the merger with
Olympic, Allied acquired the following entities which were all
controlled by Olympic's current President: Allied Management Group,
LLC, South Oaks Rehabilitation Clinic, LLC, North Oaks
Rehabilitation Center, LLC, and Healthcare Partners, LLC.
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.
Equipment
Equipment is recorded at cost and is being depreciated over a
useful life of five to thirty-nine years using the straight-line
method.
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.
Organization Costs
Organization costs are being amortized over five years.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Allowance for Uncollectible Accounts
The Company provides an allowance for uncollectible accounts based
upon prior experience and management's assessment of the
collectability of existing specific accounts.
Goodwill
Goodwill was being amortized over fifteen years. Goodwill related
to the investment in Hyperflow (see Note 7).
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.
The Company utilizes the liability method of accounting for income
taxes as set forth in Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS 109). Under the
liability method, deferred taxes are determined based on the
differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse. An allowance against
deferred tax assets is recorded when it is more likely than not
that such tax benefits will not be realized.
Income (Loss) per Share
Income (loss) per common share is computed by dividing net loss by
the weighted average shares outstanding during each period. Shares,
amounts and per share figures reflect a four-for-one reverse split
of the Company's stock which was approved June 30, 1997 and
effective October 1, 1997.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Nevada
on May 3, 1988 as Demure, Inc., and has been in the development
stage since incorporation. On June 7, 1995, the name was changed to
Claire Technologies, Inc. The Company, through Olympic, has entered
into the business of providing contract physical, occupational, and
activity therapy services to various hospitals and other medical
providers. In addition, Olympic provides management services to
several rehabilitation facilities. The Company feels it is leaving
the development stage, effective January 1, 1998, since it now has
viable operations through Olympic.
F-7
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1997 and 1996
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 250,000 shares of
its common stock to Capital General Corporation for $2,000 cash for
an average consideration of $.008 per share. The Company's
authorized stock includes 100,000,000 shares of common stock at
$.001 par value.
During 1995, the Company issued 2,625,000 shares of its restricted
common stock in connection with the acquisition of a subsidiary and
shortly thereafter canceled 2,600,000 shares (see Note 13). The
Company issued 500,000 shares of stock for services at $.004 per
share and 6,250 shares at $.001 per share (see Note 10). The
Company sold 500,000 Regulation "S" shares at $.20 per share and
sold 243,750 restricted shares at $4.00 per share.
During 1995, the Company's President exercised stock options on
10,000 shares at $4.00 per share and a consultant exercised stock
options on 8,750 shares at $4.00 per share. The two individuals
provided services of $75,000 to exercise the options.
Also during December, 1995, three individuals exercised options for
20,250 shares of stock at $4.00 per share. The $81,000 was received
in January, 1996 and was reflected on the 1995 balance sheet as a
stock subscription receivable.
During 1996, the Company issued 32,500 shares of restricted common
stock at $2.00 per share for interest expense, issued 327,125
shares of Regulation S stock at $2.00 per share for interest
expense and debt repayment, sold 200,000 shares of Regulation S
stock at $2.00 per share for cash, sold 6,250 S-8 shares at $4.00
per share for cash and sold 30,000 S-8 shares at $3.00 per share
for cash.
During 1997, the Company issued 25,000 shares of restricted common
stock at $.80 per share for interest expense, sold 125,000 shares
of restricted common stock at $.80 per share, issued 1,034,298
shares of S-8 common stock at $.78 per share to cancel liabilities
of $807,439, and issued 12,500,000 shares of restricted common
stock at $.001 per share to acquire Olympic.
NOTE 4: ACQUISITION OF SUBSIDIARY
As discussed in Notes 1 and 3, the Company issued 12,500,000 shares
of stock to acquire Olympic in November, 1997. Prior year financial
statements have been restated to reflect the activities of Olympic
and its predecessor entities.
NOTE 5: OPTION
During 1995, the Company bought 500,000 shares of Hyperflow
Technologies, Inc. ("Hyperflow") stock at a price of $1.00 per
share. This represented 54.2% of the total outstanding stock of
Hyperflow.
The Company acquired an option to purchase 250,000 shares of
Hyperflow stock at a price of $2.00 per share and 300,000 shares of
Hyperflow stock at $4.00 per share anytime before July 25, 1998.
Prior to December 31,1995, the Company exercised part of the option
and paid $269,000 to acquire 134,500 shares. If the Company
exercises the whole option, it will own 1,050,000 of the total
outstanding shares of 1,550,000, or 67.7%, and will have paid a
total of $2,200,000 for the shares, $1,700,000 for the 550,000
shares acquired pursuant to the option and $500,000 paid for the
first 500,000 shares. At December 31, 1995, the Company owned
634,500 shares of the total of the 1,113,724 shares outstanding, or
56.97%.
NOTE 6: PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment has a cost of $676,026. The
allowance for depreciation is $174,803 at December 31, 1997.
Depreciation expense for the year ended December 31, 1997 was
$92,235 ($80,758 in 1996 and $1,810 in 1995).
NOTE 7: INVESTMENT
At December 31, 1995, the Company owned 634,500 shares of the
common stock of Hyperflow, a private Nevada corporation. The
investment was recorded under the equity method because the Company
did not control the operations of Hyperflow even though it owned
56.97% of Hyperflow. Original cost was $769,000 with $331,000 being
allocated to Goodwill. The Company's share of Hyperflow's 1995 loss
amounted to $265,000, and reduced the investment to a value of
$173,000. Hyperflow had a separate Board of Directors which was
independent of the Company's Board of Directors.
F-8
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1997 and 1996
NOTE 7: INVESTMENT (continued)
During 1996, the Company invested an additional $490,000 in
Hyperflow for a total of $1,259,000 and owned about 70.5% of
Hyperflow, but still was not controlling the daily operations. Also
during 1996, the Company loaned $305,500 to Hyperflow. By the end
of 1996, it was apparent that Hyperflow was not going to be
profitable as expected. The Company charged its investment to
expense and has fully reserved the receivable of $305,500.
Subsequent to December 31, 1996, the Company took all assets of
Hyperflow pursuant to a security agreement executed in 1996. The
Company then sold all of the Hyperflow assets to another entity
interested in developing the technology. The other entity signed a
promissory note in the amount of $305,500 with an interest rate of
7.87% per annum. The principal and accrued interest in the total
amount of $500,000 are due on September 6, 2003. If the loan is
repaid prior to September 6, 2003, the entire $500,000 is still
due. Also the $500,000 is due if the other entity sells all or any
part of its interest in the Hyperflow products, technology or
patent. The other entity will also pay the Company a royalty of
2.5% of the gross revenue received from sales of products developed
with the Hyperflow technology. The first $1,500,000 of gross
revenue is not subject to the royalty.
NOTE 8: BRIDGE LOAN
At December 31, 1995, the Company owed $280,969 to a British West
Indies entity controlled by a person who owned 23.86% of the
Company's common stock, and has options to purchase 180,000 shares
at a price of $.75 per share. The loan is part of a $400,000
revolving floating loan. The interest rate is 12 1/2% per year. The
loan is due thirty days after demand is made, or October 31, 1996,
whichever is earlier. The Company will also pay bonus interest in
the form of 10,000 shares of its common stock for each $50,000 (or
portion thereof) of the line of credit used up to a maximum of
80,000 shares. During 1996, the loan was repaid except for $14,999.
20,000 shares of restricted common stock and 9,522 shares of
Regulation S stock were also issued as additional interest. During
1997, 19,921 shares of S-8 stock were issued to retire the debt and
$938 of additional interest expense.
NOTE 9: LOANS PAYABLE - RELATED PARTIES
At December 31, 1996, the Company owed $375,000 to Dynamic
Associates, Inc. The Company's President is also Dynamic's
President. The loan bears interest at 10% per annum. The loan is
convertible to the Company's stock at $.80 per share. The Company
will also issue 25,000 shares of its restricted common stock. At
December 31, 1996, the Company also owed $23,750 to one of its
former directors. The loan's interest rate was 12.5% per annum and
was due on demand. During 1997, 31,283 shares of S-8 stock were
issued to retire debt and $1,276 of interest expense. At December
31, 1996, $225,997 was owed to an entity controlled by Olympic's
President. At December 31, 1997, $187,190 is owed to an entity
controlled by Olympic's President. The amount is non-interest
bearing.
NOTE 10: RELATED PARTY TRANSACTIONS
During 1995, 506,250 shares of the Company's restricted common
stock were issued to various entities for assistance provided to
the Company. The shares were valued at a nominal amount because
there was no market for the Company's stock at the time. During
1995 $80,000 was paid to the Company's President, $40,000 in cash
and $40,000 in the form of exercised stock options. $25,000 was
paid to the Company's former President. $62,000 was paid to other
officers and/or directors. During 1996, the President received
compensation of $120,000 including $91,000 which is accrued at
December 31, 1996, $120,000 was paid to an officer/director
including $60,000 which is accrued at December 31, 1996, $32,500
was paid to a consultant/director including $15,500 which is
accrued at December 31, 1996, and $120,000 was paid to a
consultant/major shareholder including $104,300 which is accrued at
December 31, 1996. At December 31, 1996, the Company owed $283,800
to various related parties for management fees and administrative
services. The $283,800 includes the $270,800 detailed above and
also includes $13,000 due to an entity controlled by one of the
directors. During 1997, 337,625 shares of S-8 stock were issued to
satisfy the $283,000. During 1997, the Company's President received
37,500 shares of S-8 stock valued at $30,000 and two other
consultants each received 37,500 shares of S-8 stock valued at
$30,000 for services rendered. At December 31, 1997, $20,000 is
owed to the Company's President, $20,000 is owed to the Company's
Secretary, and $58,179 is owed to related parties for rent. During
1997, about $84,000 was paid or accrued to Olympic's President for
rent.
NOTE 11: INCENTIVE STOCK OPTION PLAN
During 1995, the Company established an incentive stock option plan
for employees and directors of the Company. The maximum number of
shares to be issued under the plan is 3,000,000. The Company also
can grant non-qualified stock options. The aggregate fair market
value (determined at the grant date) of the shares to which options
become exercisable for the first time by an optionee during any
calendar year shall not exceed $100,000 for qualified options and
$1,000,000 for non-qualified options. For 10% shareholders, the
option price shall not be less than 100% of the fair market value
of the shares on the grant date and the exercise period shall not
exceed five years from the grant date. During 1995, options were
granted to nine individuals, four of whom were officers and/or
directors, to purchase a total of 343,750 shares at $4.00 per
share. During January, 1996, 39,000 shares were issued for shares
exercised in 1995 (see Note 3). During 1996, 6,250 non-qualified
options
F-9
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1997 and 1996
NOTE 11: INCENTIVE STOCK OPTION PLAN (continued)
were exercised at a price of $4.00 per share, 30,000 non-qualified
options were exercised at a price of $3.00 per share and 479,500
non-qualified options expired or were canceled. At December 31,
1996, 594,500 non-qualified stock options remain outstanding but
not exercised. During January, 1996, 550,000 options were reserved.
100,000 shares have an option price of $1.00 per share. 250,000
shares have an option price of $1.25 per share. 200,000 shares have
an option price of $1.75 per share. The 550,000 options have
exercise periods of one year. During 1997, all remaining options
were canceled.
NOTE 12: INCOME TAXES
No Federal income taxes were due for the years ended December 31,
1997, 1996, or 1995.
At December 31, 1997, the Company has a Federal net operating loss
carryover of approximately $1,909,800 which expires at follows:
Year ended Amount Expiration Date
December 31, 1995 $ 708,900 December 31, 2010
December 31, 1996 703,100 December 31, 2011
December 31, 1997 497,800 December 31, 2012
------------------
$ 1,909,800
==================
The Company also has a capital loss carryover of $1,259,000 which
expires December 31, 2001.
At December 31, 1997, a deferred tax asset has not been recorded
due to the Company's current lack of operations to provide income
to use the net operating loss carryover. In future years, the
Company will likely file a consolidated tax return with Olympic
which has operations.
NOTE 13: CANCELLATION OF STOCK
Effective April 3, 1995, the Company issued 2,625,000 shares of its
restricted common stock to acquire Nu-Aire Distribution Corporation
("Nu-Aire"). On May 31, 1995, the Company and Nu-Aire mutually
agreed to terminate the agreement and render it null and void.
2,600,000 shares of common stock were canceled. Individuals who
helped with the acquisition were allowed to keep 25,000 shares for
their fee.
NOTE 14: NOTES PAYABLE
Notes payable at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Related Parties 1997 Principal Balances 1996 Principal Balances
To Olympic: Rate (%) Current Long-term Current Long-term
---------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Linda Holliman 0 $ 0 $ 0 $ 27,000 $ 0
Barbara Kellar 0 0 0 110,000 0
Richard Kellar 0 0 0 27,150 0
John Evans 0 0 0 27,000 0
K & K Leasing 0 0 0 18,740 0
--------------- --------------- --------------- ------------
0 0 209,890 0
Other Creditors:
Hibernia National
Bank credit line 8.25 0 0 48,826 0
Hibernia National
Bank (1) 6.10 0 0 60,000 0
Hibernia National
Bank (3) 8.50 8,781 37,123 0 0
Hibernia National
Bank (3) 8.50 16,203 23,748 0 0
Pecot & Associates (2) 8.00 8,709 23,234 8,041 0
--------------- --------------- --------------- ------------
33,693 84,105 116,867 31,944
--------------- --------------- --------------- ------------
$ 33,693 $ 84,105 $ 326,757 $ 31,944
=============== =============== =============== =============
</TABLE>
(1) Personally guaranteed by Olympic's President and secured by his
certificate of deposit.
(2) Secured by equipment.
(3) Secured by accounts receivable, equipment, and personal guarantee
by Olympic's President.
F-10
<PAGE>
NOTE 14: NOTES PAYABLE (continued)
Scheduled principal reductions of notes payable are as follows:
1998 $ 33,693
1999 36,623
2000 26,729
2001 14,911
2002 5,842
--------------
$ 117,798
==============
NOTE 15: GOING CONCERN
The financial statements are presented on the basis that the
Company is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business over a reasonable length of time.
Management feels that operations from Olympic will provide
sufficient working capital to allow the Company to continue as a
going concern.
NOTE 16: COMMITMENTS AND CONTINGENCIES
The Company is provided with office space and other management
services on a month-to-month basis by Amteck Management, Inc., an
entity controlled by a former director of the Company. $12,000 was
paid or accrued to Amteck during 1997 ($39,000 in 1996). $600 per
month was paid to Amteck as rent beginning in March, 1996, and was
increased to $1,200 per month beginning May 1, 1997. Other fees to
Amteck will be based on services received. Officers currently are
receiving no salary but are being paid management fees when
services are provided. Various other individuals are paid as
services are performed. There are no written management contracts
with any of the entities.
It is expected that the Company's President and Secretary will
each receive $60,000 of compensation in 1998.
Olympic's President and Vice President of Operations are to
receive a salary of $200,000 per year through November, 1998.
Olympic expects to pay rent in 1998 of approximately $96,000,
including approximately $78,000 which will be paid to its
President.
Olympic leases office space from its President for $700 per month
under an operating lease which expires December 31, 1999. It also
leases space for a clinic at $1,800 per month through October 31,
1998. Another clinic is leased from its President for $5,023 per
month through December 31, 2001 and another clinic is leased from
its President through December 31, 1999 with monthly payments of
$800.
Future minimum lease payments are as follows:
Year Ending Amount
December 31, 1998 $ 110,679
December 31, 1999 78,279
December 31, 2000 60,279
December 31, 2001 60,279
----------
$ 309,516
==========
F-11
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
Board of Directors and Shareholders
Claire Technologies, Inc.
Scottsdale, Arizona
Our audit of the basic financial statements presented in the preceding section
of this report was made primarily to form an opinion on such financial
statements taken as a whole. The additional information, contained in the
following pages, is not considered essential for the fair presentation of the
financial position of Claire Technologies, Inc. and Subsidiary, the results of
their operations or cash flows in conformity with generally accepted accounting
principles. The following information consisting of Schedule V and Schedule VI
is included to comply with reporting requirements of the Securities and Exchange
Commission. Such data was subjected to the audit procedures applied in the audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
April 21, 1998
F-12
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Balance at Balance
Beginning Additions at End
of Period at Cost Retirement of Period
------------------ ------------------ ----------------- -----------------
Year Ended
December 31, 1995:
<S> <C> <C> <C> <C>
Equipment $ 0 $ 20,624 $ 0 $ 20,624
Furniture 0 0 0 0
Leasehold improvements 0 0 0 0
Vehicle 0 0 0 0
------------------ ------------------ ----------------- -----------------
$ 0 $ 20,624 $ 0 $ 20,624
================== ================== ================= =================
Year Ended
December 31, 1996:
Equipment $ 20,624 $ 459,267 $ 0 $ 479,891
Furniture 0 712 0 712
Leasehold improvements 0 73,350 0 73,350
Vehicle 0 7,500 0 7,500
------------------ ------------------ ----------------- -----------------
$ 20,624 $ 540,829 $ 0 $ 561,453
================== ================== ================= =================
Year Ended
December 31, 1997:
Equipment $ 479,891 $ 114,573 $ 0 $ 594,464
Furniture 712 0 0 712
Leasehold improvements 73,350 0 0 73,350
Vehicle 7,500 0 0 7,500
------------------ ------------------ ----------------- -----------------
$ 561,453 $ 114,573 $ 0 $ 676,026
================== ================== ================= =================
</TABLE>
F-13
<PAGE>
CLAIRE TECHNOLOGIES, INC. AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Period Expenses Retirement of Period
------------------ ------------------ ----------------- -----------------
Year Ended
December 31, 1995:
<S> <C> <C> <C> <C>
Equipment $ 0 $ 1,810 $ 0 $ 1,810
Furniture 0 0 0 0
Leasehold improvements 0 0 0 0
Vehicle 0 0 0 0
------------------ ------------------ ----------------- -----------------
$ 0 $ 1,810 $ 0 $ 1,810
================== ================== ================= =================
Year Ended
December 31, 1996:
Equipment $ 1,810 $ 79,670 $ 0 $ 81,480
Furniture 0 76 0 76
Leasehold improvements 0 1,012 0 1,012
Vehicle 0 0 0 0
------------------ ------------------ ----------------- -----------------
$ 1,810 $ 80,758 $ 0 $ 82,568
================== ================== ================= =================
Year Ended
December 31, 1997:
Equipment $ 81,480 $ 88,754 $ 0 $ 170,234
Furniture 76 102 0 178
Leasehold improvements 1,012 1,879 0 2,891
Vehicle 0 1,500 0 1,500
------------------ ------------------ ----------------- -----------------
$ 82,568 $ 92,235 $ 0 $ 174,803
================== ================== ================= =================
</TABLE>
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Claire Technologies, Inc. December 31, 1997 financial
statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000894546
<NAME> Claire Technologies, Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 31,405
<SECURITIES> 0
<RECEIVABLES> 1,596,239
<ALLOWANCES> (479,000)
<INVENTORY> 0
<CURRENT-ASSETS> 1,164,374
<PP&E> 676,026
<DEPRECIATION> (174,803)
<TOTAL-ASSETS> 1,669,274
<CURRENT-LIABILITIES> 361,473
<BONDS> 0
0
0
<COMMON> 15,819
<OTHER-SE> 1,207,877
<TOTAL-LIABILITY-AND-EQUITY> 1,669,274
<SALES> 3,762,988
<TOTAL-REVENUES> 3,762,988
<CGS> 0
<TOTAL-COSTS> 2,965,489
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,447
<INCOME-PRETAX> 743,052
<INCOME-TAX> 0
<INCOME-CONTINUING> 743,052
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 743,052
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
