ULTRONICS CORP
10-K, 1999-04-09
BLANK CHECKS
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[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.

                                       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 Number: 33-55254-38

                              Ultronics Corporation
             (Exact name of registrant as specified in its charter)

         Nevada                                 87-0485313
(State or other jurisdiction of        (IRS Employer Identification
incorporated or organization)            Number)

         4348 Butternut Road
         Salt Lake City, Utah                        84124
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code: (801) 272-2432
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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K 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]

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  months and (2) has been subject to such filing  requirements  for
the past 90 days. Yes [X] No [ ]

State the  aggregate  market  value of the voting  stock  held by  nonaffiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days: The Company does not have an active  trading market and it is,  therefore,
difficult, if not impossible,  to determine the market value of the stock. Based
on the bid price for the  Company's  Common Stock at April 13, 1998,  of $0.0125
per share, the market value of shares held by nonaffiliates would be $43,750.

As of April 13, 1998, the Registrant had 6,000,000 shares of common stock issued
and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the part
of the form  10-KSB  (e.g.,  part I, part II,  etc.) into which the  document is
incorporated:  (1) Any annual report to security holders; (2) Any proxy or other
information  statement;  and (3) Any prospectus filed pursuant to rule 424(b) or
(c) under the Securities Act of 1933: NONE


                                        1

<PAGE>



                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

HISTORY AND ORGANIZATION

         Ultronics  Corporation (the "Company") was incorporated  under the laws
of Nevada on March 14, 1990. The Company's  only prior  activity  related to the
sale of  shares of its  common  stock to  Capital  General  Corporation  and the
gifting of shares to certain  individuals.  The Company's  prior  management who
were  associated  with  Capital  General  Corporation  resigned  in 1997 and the
Company's new management took control of the Company.  The Company has never had
operations  and since it was formed its primary  mission has been to investigate
potential companies that would be interested in merging with it.

         In 1997, the Company sold  5,000,000  shares of its common stock for an
aggregate purchase price of $25,000. The majority of the shares were sold to the
Company's current president and director, W. Reed Jensen and his adult children.

         The Company is currently  seeking  potential  business  acquisition  or
opportunities to enter in an effort to commence business operations. The Company
does not  propose to  restrict  its search  for a  business  opportunity  to any
particular  industry  or  geographical  area  and  may,  therefore,   engage  in
essentially  any  business  in  any  industry.   The  Company  has  unrestricted
discretion in seeking and  participating in a business  opportunity,  subject to
the availability of such opportunities, economic conditions, and other factors.

         The  selection of a business  opportunity  in which to  participate  is
complex and risky.  Additionally,  as the Company has only limited resources, it
may be difficult to find good opportunities.  There can be no assurance that the
Company will be able to identify and acquire any business opportunity which will
ultimately  prove to be  beneficial  to the  Company and its  shareholders.  The
Company will select any potential  business  opportunity  based on  management's
business judgment.

         The activities of the Company are subject to several  significant risks
which arise  primarily  as a result of the fact that the Company has no specific
business and may acquire or participate in a business  opportunity  based on the
decision of management which potentially could act without the consent, vote, or
approval  of the  Company's  shareholders.  The risks  faced by the  Company are
further  increased  as a result of its lack of  resources  and its  inability to
provide a prospective business opportunity with significant capital.

ITEM 2.           DESCRIPTION OF PROPERTIES

     The Company's  administrative  offices are located at 4348 Butternut  Road,
Salt Lake  City,  Utah  84124,  which are the  office  of W.  Reed  Jensen,  the
president of the Company.  Mr. Jensen has allowed the Company to use this office
without charge.

ITEM 3.           LEGAL PROCEEDINGS

         Neither the Company nor its current president and director are involved
in any legal proceedings.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         No matters  were  submitted  to a vote of  shareholders  of the Company
during the fourth quarter of the fiscal year ended December 31, 1997.


                                        2

<PAGE>



                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS

         The  Company's  Common Stock is quoted on the National  Association  of
Securities Dealers Electronic  Bulletin Board under the symbol "UTRO." Set forth
below are the high and low bid prices for the  Company's  Common Stock since the
fourth  quarter  of 1997  when the  Company's  Common  Stock  was  listed on the
Electronic Bulletin Board.  Although the Company's Common Stock is quoted on the
Electronic  Bulletin  Board  it has  traded  sporadically  with no real  volume.
Consequently,  the  information  provided  below  may not be  indicative  of the
Company's Common Stock price under different conditions.

              Quarter Ended             High Bid           Low Bid   
       --------------------------       -----------    --------------
       Fourth Quarter 1997            $       0.125    $        0.125
       First Quarter 1998             $       0.125    $        0.125

         At April 7,  1998,  the bid price for the  Company's  Common  Stock was
$0.125 and there was no ask price. All prices listed herein reflect inter-dealer
prices,  without retail mark-up,  mark-down or commissions and may not represent
actual transactions. Since its inception, the Company has not paid any dividends
on its  Common  Stock,  and the  Company  does not  anticipate  that it will pay
dividends  in the  foreseeable  future.  At  April  7,  1998,  the  Company  had
approximately 378 shareholders.

ITEM 6.           SELECTED FINANCIAL DATA

                              ULTRONICS CORPORATION
                              SUMMARY OF OPERATIONS
                                 DECEMBER, 1997

<TABLE>
<CAPTION>
                                        1997            1996           1995           1994            1993    
                                    -------------  -------------  --------------  -------------  -------------
<S>                                        <C>                 <C>             <C>            <C>            <C>
Total Assets........................       25,000              0               0              0              0
Revenues............................            0              0               0              0              0
Operating Expenses..................        2,623              0               0              0              0
Net Earnings (Loss).................       (2,623)             0               0              0              0
Per Share Data Earnings (Loss)                  0              0               0              0              0

Average Common Shares
     Outstanding....................    1,260,274      1,000,000       1,000,000      1,000,000      1,000,000
</TABLE>


ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                  OVERVIEW

         Since its organization,  the Company has had no operations. The Company
was organized to engage in the  acquisition of assets,  properties or a business
without regard to any specific industry or type of business. The Company intends
to take advantage of any reasonable business proposal presented which management
believes will provide the Company and its  stockholders  with a viable  business
opportunity.  The board of directors will make the final approval in determining
whether to complete any acquisition,  and unless required by applicable law, the
articles of incorporation or bylaws or by contract,  stockholders' approval will
not be sought.

         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  will  require  the  Company  to  incur  costs  for  payment  of
accountants,  attorneys, and others. If a decision is made not to participate in
or  complete  the  acquisition  of a specific  business  opportunity,  the costs
incurred in a related

                                        3

<PAGE>



investigation  will not be recoverable.  Further,  even if an agreement is reach
for the participation in a specific business opportunity by way of investment or
otherwise,  the failure to consummate the particular  transaction  may result in
the loss to the Company of all related costs incurred.

         Currently,  management  is not able to determine  the time or resources
that will be necessary to locate and acquire or merge with a business  prospect.
There is no  assurance  that the Company  will be able to acquire an interest in
any  such  prospects,  products  or  opportunities  that  may  exist or that any
activity of the Company,  regardless of the completion of any transaction,  will
be profitable.

         If and when the Company locates a business  opportunity,  management of
the  Company  will give  consideration  to the  dollar  amount of that  entity's
profitable operations and the adequacy of its working capital in determining the
terms  and  conditions   under  which  the  Company  would  consummate  such  an
acquisition.  Potential  business  opportunities,  no matter which form they may
take,  will  most  likely  result  in  substantial  dilution  for the  Company's
shareholders due to the issuance of stock to acquire such an opportunity.

LIQUIDITY AND CAPITAL RESOURCES

         As of  December  31,  1997,  the  Company  had  $25,000  in assets  and
liabilities  of  $2,623.  The  Company  has  only  incidental  ongoing  expenses
primarily  associated with  maintaining its corporate status and maintaining the
Company's reporting  obligations to the Securities and Exchange Commission.  For
the twelve months ended December 31, 1997, the Company's principal expenses were
professional  fees of  $2,623.  Prior to control of the  Company  changing,  the
obligations  and  expenses  of the  Company  were paid by prior  management  and
Capital General Corporation.

         Since  inception  the  Company  has  not  generated  revenue  and it is
unlikely that any revenue will be generated until the Company locates a business
opportunity  with which to acquire or merge.  Management  of the Company will be
investigating various business opportunities. These efforts may cost the Company
not only out of pocket expenses for its management but also expenses  associated
with legal and accounting  cost. There can be no guarantee that the Company will
receive  any  benefits  from  the  efforts  of  management  to  locate  business
opportunities.

         The  Company  has had no  employees  since its  inception  and does not
intend to employ anyone in the future,  unless its present  business  operations
were to change.  The  president of the Company is  providing  the Company with a
location  for its  offices on a "rent  free  basis."  The  Company is not paying
salaries or other form of compensation to the officer or director of the Company
for his time and effort.  The Company does intend to  reimburse  its officer and
director for out of pocket cost.

RESULTS OF OPERATIONS

         The  Company  has not had any  operations  during the fiscal year ended
December 31, 1997, and has not had any operations since its  incorporation.  The
Company's only operations to date have involved the preliminary investigation of
one or more  potential  business  opportunities,  none  of  which  have  come to
fruition.

ITEM 8.           FINANCIAL STATEMENTS

         The  financial  statements  of the  Company  are set forth  immediately
following the signature page to this form 10-KSB.



                                        4

<PAGE>



ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

         The  Company  has  had  no  disagreements  with  its  certified  public
accountants  with respect to  accounting  practices or  procedures  or financial
disclosure.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The following table sets forth as of March 24, 1997, the name, age, and
position of the Company's sole officer and director.

         Name              Age      Position          Director or Officer Since
W. Reed Jensen             56       President and             1997
                                    Director

         Set forth  below is  certain  biographical  information  regarding  the
Company's executive officer and director.

     Mr. Jensen has been an accountant for the past thirty years.  Mr. Jensen is
currently  controller of the Metropolitan  Water District of Salt Lake City. Mr.
Jensen received his bachelor degree in accounting from the University of Utah in
1967.

         To the knowledge of management,  during the past five years, no present
director, or executive officer of the Company:

                  (1)filed a petition under the federal  bankruptcy  laws or any
         state  insolvency  law,  nor had a  receiver,  fiscal  agent or similar
         officer  appointed  by a court for the  business  or  property  of such
         person,  or any  partnership  in which he was a general  partner  at or
         within two years before the time of such filing,  or any corporation or
         business  association of which he was an executive officer at or within
         two years before the time of such filing;

                  (2)was convicted in a criminal  proceeding or named subject of
         a pending criminal  proceeding  (excluding traffic violations and other
         minor offenses);

                  (3)was  the  subject  of any order,  judgment  or decree,  not
         subsequently reversed,  suspended or vacated, of any court of competent
         jurisdiction,   permanently  or  temporarily   enjoining  him  from  or
         otherwise limiting, the following activities:

                           (i)   acting  as  a  futures   commission   merchant,
                  introducing broker, commodity trading advisor,  commodity pool
                  operator,   floor  broker,   leverage  transaction   merchant,
                  associated person of any of the foregoing, or as an investment
                  advisor, underwriter, broker or dealer in securities, or as an
                  affiliate  person,  director  or  employee  of any  investment
                  company,  or engaging in or continuing any conduct or practice
                  in connection with such activity;

                           (ii) engaging in any type of business practice; or

                           (iii)engaging  in any activity in connection with the
                  purchase or sale of any security or commodity or in connection
                  with any  violation  of  federal or state  securities  laws or
                  federal commodities laws;

                  (4) was the  subject of any order,  judgment,  or decree,  not
         subsequently reversed,  suspended,  or vacated, of any federal or state
         authority barring, suspending, or otherwise

                                        5

<PAGE>



         limiting  for more than 60 days the  right of such  person to engage in
         any activity  described above under this Item, or to be associated with
         persons engaged in any such activity;

                  (5) was found by a court of competent  jurisdiction in a civil
         action or by the  Securities  and Exchange  Commission to have violated
         any federal or state  securities  law,  and the  judgment in such civil
         action or finding by the  Securities  and Exchange  Commission  has not
         been subsequently reversed, suspended, or vacated.

                  (6) was found by a court of competent  jurisdiction in a civil
         action or by the Commodity Futures Trading  Commission to have violated
         any federal  commodities  law, and the judgment in such civil action or
         finding  by the  Commodity  Futures  Trading  Commission  has not  been
         subsequently reversed, suspended or vacated.

         The  individuals  and companies who controlled the Company prior to its
new management  have had legal  problems in the past.  (Please see the Company's
1996 Form 10-K).

KEY CONSULTANT

     The Company and Mr.  Jensen have relied,  and will continue to rely, on the
advice and  consultation  of Mark  Peterson  as to the future  direction  of the
Company.  Investors in the Company should consider Mr. Peterson as an individual
who will  exercise  significant  influence on any potential  business  merger or
acquisition.  Although  Mr.  Peterson  does  not  currently  own  shares  of the
Company's  Common  Stock,  he has  indicated  a desire to acquire  shares in the
future. Mr. Peterson is an owner and president of Alpine Securities  Corporation
located in Salt Lake City, Utah.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The  Company is not  subject to the  requirements  of Section  16(a) of the
Exchange Act.

ITEM 11.          EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following tables set forth certain summary  information  concerning
the compensation  paid or accrued for each of the Company's last three completed
fiscal years to the  Company's or its  principal  subsidiaries  chief  executive
officer and each of its other executive  officers that received  compensation in
excess of $100,000  during such period (as  determined at December 31, 1997, the
end of the Company's last completed fiscal year):

<TABLE>
<CAPTION>
                                    Annual Compensation      Long Term Compensaton Awards 
                                                    Other       Restricted
Name and                                            Annual        Stock      Options      LTIP         All other
Principal Position     Year   Salary    Bonus($)  Compensation    Awards      /SARs       Payout      Compensation
- ------------------    ------  -------   --------  ------------    -------   -----------   ------      ------------
<S>                    <C>    <C>  <C>        <C>           <C>        <C>           <C>         <C>            <C>
W. Reed Jensen         1997   $   -0-        -0-           -0-        -0-           -0-         -0-            -0-
President and CEO
Krista Nielson former
President              1997   $   -0-        -0-           -0-        -0-           -0-         -0-            -0-

Cash Compensation
</TABLE>

         There  was no cash  compensation  paid  to any  director  or  executive
officer of the Company during the fiscal years ended October 31, 1996, 1995, and
1994.



                                        6

<PAGE>



         Bonuses and Deferred Compensation:  None.

         Compensation Pursuant to Plans:   None.

         Pension Table:  None.

         Other Compensation:  None.

         Compensation of Directors:  None.

         Termination of Employment and Change of Control Arrangement:

         There are no compensatory plans or arrangements,  including payments to
be  received  from  the  Company,  with  respect  to any  person  named  in Cash
Compensation set out above which would in any way result in payments to any such
person  because of his  resignation,  retirement,  or other  termination of such
person's  employment  with the  Company  or its  subsidiaries,  or any change in
control of the Company, or a change in the person's responsibilities following a
changing in control of the Company.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The  following  table sets forth as of April 8, 1998,  the name and the
number of shares of the Company's Common Stock, par value $0.001 per share, held
of record or beneficially by each person who held of record, or was known by the
Company  to  own  beneficially,  more  than  5%  of  the  6,000,000  issued  and
outstanding shares of the Company's Common Stock, and the name and shareholdings
of each director and of all officers and directors as a group.

     Title                                       Amount and
      of          Name of                         Nature of           Percentage
     Class   Beneficial Owner               Beneficial Ownership(1)    of Class
   Common    Stacey J. Hansen(2)
             2625 Solar Circle #30
             Salt Lake City, Utah 84124             1,000,000(D)          16.67%
   Common    Kellee J. Chase(2)
             6730 Morro Street
             Salt Lake City, Utah 84121               500,000(D)           8.33%
   Common    Scott R. Jensen(2)
             1094 Sirmingo Way
             Riverton, Utah 84065                     500,000(D)           8.33%
   Common    Brent T. Jensen(2)
             1528 W. Page
             Gilbert, Arizona 85233                   500,000(D)           8.33%
   Common    W. Reed Jensen(2)
             4348 Butternut Road
             Salt Lake City, Utah 84124             2,500,000(D)          41.67%
   Common    Capital General Corporation
             3098 South Highland Dr., #460
             Salt Lake City, Utah 84106               920,400(D)          15.34%

OFFICERS, DIRECTORS AND NOMINEES:

   Common    W. Reed Jensen                 ----------See Above----------

             All Officers
             and Directors
             as a Group (1 person)                  2,500,000             41.67%

(1) Indirect and Direct ownership are referenced by an "I" or "D", respectively.
All  shares  owned  directly  are  owned  beneficially  and of  record  and such
shareholder has sole voting, investment, and dispositive power, unless otherwise
noted.

                                        7

<PAGE>



(2) Stacey J. Hansen,  Kellee J. Chase,  Scott R. Jensen and Brent T. Jensen are
the adult children of W. Reed Jensen. Mr. Jensen denies any beneficial ownership
in his children's shares.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                  TRANSACTIONS WITH MANAGEMENT AND OTHERS.

         In December 1997, the Company sold 5,000,000 shares of its common stock
to Mr. Jensen, the president of the Company,  and his adult children.  The sales
price was $25,000.

         Except as set forth  above,  during the fiscal year ended  December 31,
1997, there were no material  transactions,  or series of similar  transactions,
since the beginning of the Company's last fiscal year, or any currently proposed
transactions,  or series of similar transactions, to which the Company was or is
to be party,  in which the amount  involved  exceeds  $60,000,  and in which any
director  or  executive  officer,  or any  security  holder  who is known by the
Company  to own of  record  or  beneficially  more  than 5% of any  class of the
Company's  common  stock,  or any member of the  immediate  family of any of the
foregoing persons, has an interest.

CERTAIN BUSINESS RELATIONSHIPS

         During the fiscal year ended December 31, 1997,  there were no material
transactions between the Company and its management or principal shareholders.

INDEBTEDNESS OF MANAGEMENT

         There were no material transactions, or series of similar transactions,
since the beginning of the Company's last fiscal year, or any currently proposed
transactions,  or series of similar transactions, to which the Company was or is
to be a party,  in which the amount  involved  exceeds  $60,000 and in which any
director  or  executive  officer,  or any  security  holder  who is known to the
Company  to own of  record  or  beneficially  more  than 5% of any  class of the
Company's  common  stock,  or any member of the  immediate  family of any of the
foregoing persons, has an interest.

TRANSACTIONS WITH PROMOTERS

         The Company was organized more than five years ago; hence  transactions
between the Company and its promoters or founders are not deemed to be material.


                                        8

<PAGE>



                                     PART IV

ITEM 14.          EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)FINANCIAL  STATEMENTS.  The following financial statements are included in
                              this report:

Title of Document                                                  Page
Report of Smith & Company, Certified Public Accountants             F-1

Balance Sheets as of December 31, 1997 and 1996                     F-2

Statements of Operations for the fiscal years ended December
31, 1997, 1996, and 1995 and from inception                         F-3

Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996, 1995 and  from inception                   F-4

Statements of Cash Flows for the fiscal years ended
December 31, 1997, 1996, and 1995 and from inception                F-5

Notes to Financial Statements                                       F-6

(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement schedules
                                     are included as part of this report: None.

(a)(3)EXHIBITS. The following exhibits are included as part of this report:

                     SEC
      Exhibit     Reference
      Number       Number      Title of Document            Location     

      Item 3  Articles of Incorporation and Bylaws

       3.01           3     Articles of Amendment to
                            the Articles of Incorporated  Incorporation
                                                          by reference*

       3.02           3     Articles of Incorporation    Incorporated
                                                         by reference*

       3.03           3     Bylaws                       Incorporated
                                                         by reference*

      Item 4  Instruments Defining the Rights of Security Holders

       4.01           4     Specimen Stock Certificate   Incorporated
                                                         by reference*

*    Incorporated by reference from the Company's registration statement on form
     S-18 filed with the Commission, SEC file no. 33-55254.

         (b)      Reports of Form 8-K

         On  December 8, 1997,  the Company  filed a report on Form 8-K with the
Securities  and  Exchange  Commission  covering  the  change in  control  of the
Company.  No  financial  statements  were  filed as a result  of the  change  of
control.



                                        9

<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

                                            Ultronics Corporation


Date: April 14, 1998                        By: /S/W. Reed Jensen    
                                               -----------------------------
                                               W. Reed Jensen
                                               President and Director
                                               (Principal Executive Officer)



                                       10

<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
Ultronics Corporation (A Development Stage Company)

We have audited the  accompanying  balance  sheets of Ultronics  Corporation  (a
development  stage  company) as of December  31, 1997 and 1996,  and the related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the years ended December 31, 1997, 1996 and 1995 and for the period of March 14,
1990 (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.

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 Ultronics  Corporation  (a
development  stage  company) as of December 31, 1997 and 1996 and the results of
its  operations,  changes in  stockholders'  equity,  and its cash flows for the
years ended  December 31, 1997,  1996, and 1995, and for the period of March 14,
1990 (date of  inception)  to December  31, 1997 in  conformity  with  generally
accepted accounting principles.


                                                    /s/ Smith & Company
                                                    CERTIFIED PUBLIC ACCOUNTANTS


Salt Lake City, Utah
March 19, 1998

                                       F-1

<PAGE>



                              ULTRONICS CORPORATION
                          (A Development Stage Company)
                                 BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                                      12/31/97              12/31/96     
                                                                                 -----------------     -----------------
             ASSETS
CURRENT ASSETS
<S>                                                                              <C>                   <C>              
         Cash in bank                                                            $          25,000     $               0
                                                                                 -----------------     -----------------

                            TOTAL CURRENT ASSETS                                            25,000                     0
                                                                                 -----------------     -----------------

                                                                                 $          25,000     $               0
                                                                                 =================     =================

             LIABILITIES & EQUITY
CURRENT LIABILITIES
         Accounts payable                                                        $           2,623     $               0
                                                                                 -----------------     -----------------

                      TOTAL CURRENT LIABILITIES                                              2,623                     0

STOCKHOLDERS' EQUITY 
         Common Stock $.001 par value:
          Authorized - 25,000,000 shares
          Issued and outstanding
          6,000,000 shares (1,000,000 in 1996)                                               6,000                 1,000
         Additional paid-in capital                                                         20,000                     0
         Deficit accumulated during
          the development stage                                                             (3,623)               (1,000)
                                                                                 -----------------     -----------------

                      TOTAL STOCKHOLDERS' EQUITY                                            22,377                     0
                                                                                 -----------------     -----------------

                                                                                 $          25,000     $               0
                                                                                 =================     =================
</TABLE>

See Notes to Financial Statements.


                                       F-2

<PAGE>

                              ULTRONICS CORPORATION
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                                                              3/14/90
                                                         Year               Year              Year            (Date of
                                                        ended              ended             ended         inception) to
                                                      12/31/97           12/31/96          12/31/95          12/31/97   
                                                   --------------     --------------    --------------    --------------
<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                                                   2,623                  0                 0             3,623
                                                   --------------     --------------    --------------    --------------

                         NET LOSS                  $       (2,623)    $            0    $            0    $       (3,623)
                                                   ==============     ==============    ==============    ==============


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                                          1,260,274          1,000,000          1,000,000
                                                   ==============     ==============    ===============
</TABLE>




See Notes to Financial Statements.


                                       F-3

<PAGE>



                              ULTRONICS CORPORATION
                          (A Development Stage Company)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                                                             Deficit
                                                                                                            Accumulated
                                                            Common Stock               Additional             During
                                                          Par Value $0.001              Paid-in             Development
                                                      Shares            Amount           Capital              Stage    
                                                 --------------    --------------    -----------------    ---------------
Balances at 3/14/90
<S>                                              <C>            >  <C>               <C>                                
         (Date of inception)                                  0    $            0    $                    $            0
         Issuance of common
             stock (restricted)
             at $.001 per share
             at 3/14/90                               1,000,000             1,000                                      0
         Net loss for period                                                                                      (1,000)
                                                 --------------    --------------    -----------------    ---------------
Balances at 12/31/90                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/91                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/92                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/93                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/94                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/95                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/96                                  1,000,000             1,000                                 (1,000)
         Net income for year                                                                                           0
                                                 --------------    --------------    -----------------    --------------
Balances at 12/31/96                                  1,000,000             1,000                                 (1,000)
         Issuance of common stock
             at $.005 per share at
             12/12/97                                 5,000,000         5,000             20,000
         Net income for year                                                                                      (2,623)
                                                 --------------    --------------    -----------------    ---------------

Balances at 12/31/97                                  6,000,000    $        6,000    $          20,000    $       (3,623)
                                                 ==============    ==============    =================    ==============
</TABLE>




See Notes to Financial Statements.


                                       F-4

<PAGE>



                              ULTRONICS CORPORATION
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                                             3/14/90
                                                       Year               Year              Year            (Date of
                                                       ended              ended             ended           Inception) to
                                                      12/31/97           12/31/96          12/31/95          12/31/97   
                                                   --------------     --------------    --------------    --------------
OPERATING ACTIVITIES
<S>                                                <C>                <C>               <C>               <C>            
         Net income (loss)                         $       (2,623)    $            0    $            0    $       (3,623)
         Adjustments to reconcile
          net income (loss) to
          cash used by operating
          activities
             Increase in accounts
                  Payable                                   2,623                  0                 0             2,623
                                                   --------------     --------------    --------------    --------------

                          NET CASH USED BY
                      OPERATING ACTIVITIES                      0                  0                 0            (1,000)

INVESTING ACTIVITIES                                            0                  0                 0                 0
                                                   --------------     --------------    --------------    --------------

                          NET CASH USED BY
                      INVESTING ACTIVITIES                      0                  0                 0                 0

FINANCING ACTIVITIES
         Proceeds from sale of
          common stock                                     25,000                  0                 0            26,000
                                                   --------------     --------------    --------------    --------------

                      NET CASH PROVIDED BY
                      FINANCING ACTIVITIES                 25,000                  0                 0            26,000
                                                   --------------     --------------    --------------    --------------

                          INCREASE IN CASH
                      AND CASH EQUIVALENTS                 25,000                  0                 0            25,000
         Cash and cash equivalents
         at beginning of year                                   0                  0                 0                 0
                                                   --------------     --------------    --------------    --------------

                      CASH & CASH EQUIVALENTS
                      AT END OF YEAR               $       25,000     $            0    $            0    $       25,000
                                                   ==============     ==============    ==============    ==============
</TABLE>




See Notes to Financial Statements.


                                       F-5

<PAGE>



                              ULTRONICS CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


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.

         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, 1997 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 $1,000 which will expire December 31, 2005.

NOTE 2:                DEVELOPMENT STAGE COMPANY
         The Company was  incorporated  under the laws of the State of Nevada on
         March  14,   1990  and  has  been  in  the   development   stage  since
         incorporation.

NOTE 3:                CAPITALIZATION
         On the date of incorporation,  the Company sold 1,000,000 shares of its
         common stock to Capital  General  Corporation  for $1,000 cash,  for an
         average  consideration  of $.001 per share.  On December 12, 1997,  the
         Company sold 5,000,000  shares of its common stock to five  individuals
         for  $25,000,  for  average  consideration  of  $.005  per  share.  The
         Company's  authorized stock includes  25,000,000 shares of common stock
         at $.001 par value.

NOTE 4:                RELATED PARTY TRANSACTIONS
         The Company  neither owns or leases any real property.  Office services
         are  provided,  without  charge,  by Company  officers.  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.


                                       F-6


<TABLE> <S> <C>


<ARTICLE>                          5
<LEGEND>
         This schedule  contains summary  financial  information  extracted from
         Ultronics  Corporation  December 31, 1997  financial  statements and is
         qualified in its entirety by reference to such financial statements.
</LEGEND>

<CIK>                              0000894556
<NAME>                             Ultronics Corporation

       
<S>                                 <C>
<PERIOD-TYPE>                       YEAR
<FISCAL-YEAR-END>                   DEC-31-1997
<PERIOD-END>                        DEC-31-1997

<CASH>                                                            25,000
<SECURITIES>                                                      0
<RECEIVABLES>                                                     0
<ALLOWANCES>                                                      0
<INVENTORY>                                                       0
<CURRENT-ASSETS>                                                  25,000
<PP&E>                                                            0
<DEPRECIATION>                                                    0
<TOTAL-ASSETS>                                                    25,000
<CURRENT-LIABILITIES>                                             2,623
<BONDS>                                                           0
                                             0
                                                       0
<COMMON>                                                          6,000
<OTHER-SE>                                                        16,377
<TOTAL-LIABILITY-AND-EQUITY>                                      25,000
<SALES>                                                           0
<TOTAL-REVENUES>                                                  0
<CGS>                                                             0
<TOTAL-COSTS>                                                     2,623
<OTHER-EXPENSES>                                                  0
<LOSS-PROVISION>                                                  0
<INTEREST-EXPENSE>                                                0
<INCOME-PRETAX>                                                   (2,623)
<INCOME-TAX>                                                      0
<INCOME-CONTINUING>                                               (2,623)
<DISCONTINUED>                                                    0
<EXTRAORDINARY>                                                   0
<CHANGES>                                                         0
<NET-INCOME>                                                      (2,623)
<EPS-PRIMARY>                                                     .00
<EPS-DILUTED>                                                     .00
        


</TABLE>


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