U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: January 31, 1997
Commission File Number: 0-24590
SUARRO COMMUNICATIONS, INC.
(f/k/a SOLUTIONS, INCORPORATED)
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
84-1273503
(IRS Employer Identification No.)
1635 N.E. Loop 410, Suite 900
San Antonio, Texas
(Address of principal executive offices)
78209
(Zip Code)
(210) 805-0599
(Issuer's Telephone Number)
SOLUTIONS, INCORPORATED
6 Venture, Suite 207
Irvine, California 92718
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes __X__ No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of January 31, 1997 was 6,200,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the nine month period ended January
31, 1997, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATIONS
PLAN OF OPERATIONS
The Company's principal business plan provides for the Company to deliver
cost effective nationwide on-line business products and services, via the
Internet, the world's largest electronic network. The Company anticipates
deriving its revenue from two segments of the industry including (i) sales of
its proprietary On-line products, and (ii) sales of Internet access services.
Its initial proprietary on-line business services is known as Annual Reports On-
line (ARO). In addition to ARO, the Company intends to offer a wide range of
services to the Internet community including but not limited to Internet Access
Services, Internet Consulting Services, Services Network Design, Installation
and Support Services, Internet Advertising and Marketing Support including
Creative Services and Concept Development, Web Page Design and Editing, Graphic
Design and Image Manipulation, and Audio Clips. Management believes that the
Company's flexible World Wide Web advertising and marketing strategy will allow
its clients to gain immediate exposure to any web browser, free of charge.
In addition to on-line revenue, the Company plans to consolidate and
acquire several strategically located telecommunication customer bases under the
Suarro banner. These consolidation targets have been identified, and are well
positioned, with loyal customer bases. Management has commenced discussions
with these consolidation targets. However, as of the date of this report, no
definitive agreements have been reached. Of those targeted companies chosen for
its consolidation program, each has complimentary operations servicing a
specific segment of the telecommunications market. The Company's plan calls for
combining customer bases and infrastructure, thereby reducing the overhead by
economies of scale and increasing profitability. With this consolidation
strategy, additional proven products and services should be obtained, which
should add to the attractiveness of the Company to its customer base.
As of the date of this report, the Company's objective is to propel the
Company into a prominent position in the Internet and telecommunications
services market. It is the Company's overall goal to continue to offer viable
solutions to real world problems using the Internet as the distribution channel
as well as provide businesses with a full suite of Internet services ranging
from consulting to Internet business development activities.
To accomplish this goal the Company has developed a plan to accelerate its
marketing and sales activities, product development, and customer service. This
should be accomplished with the consolidation of the strategically located
telecommunication customer bases combined with a full scale cross marketing
program between the customer bases.
2
<PAGE>
As of the date of this report, the Company's securities are not liquid.
There is no market for the Company's securities. Relevant thereto, the Company
has submitted an application to the NASD for trading its common stock on the OTC
Bulletin Board. The Company is currently awaiting response from the NASD and
anticipates the stock being cleared for trading within the next fiscal quarter.
However, there are no assurances that this will occur.
The Company generated no revenues during the nine month period ended
January 31, 1997. Management of the Company anticipates that the Company will
not generate any significant revenues until the Company accomplishes its
business objectives stated above. The Company anticipates accomplishing its
business objective within a twelve month period, once the Company's stock has
been cleared for trading by the NASD. Once this occurs, the Company can begin
its plan of consolidation and acquisition creating a unified profitable customer
base, thereby reducing overhead through economies of scale. It is the Company's
intention to consummate its consolidation and acquisition strategy with issuance
of its common stock. While these are the Company's proposed operations, there
are no assurances that the Company will be successful.
The Company is currently seeking a cash infusion of $500,000 in the form
of debt or equity via private or potentially public means. The Company has not
reached an agreement with any underwriters at this time and because the Company
is not required to pay rent or salaries to any of its officers or directors,
management believes that the Company has sufficient funds to continue operations
through the foreseeable future. The cash infusion will be utilized for
facilities expansion, equipment, supplies and a reserve account for operations.
Relationships with outside services have already been established for
accounting, legal, database marketing, front end development and program
services. It is management's belief that out-source services should be used
whenever viable.
The Company anticipates the need for product research and development for
the term of the outlined plan. Research and development is an ongoing process
in the communications industry and is necessary to stay competitive in the
industry. It is management's belief that most of the ongoing research and
development will be conducted in-house within the companies that are targeted
for consolidation or merger. While these are the Company's anticipations, there
are no assurance that this will occur.
The Company does not anticipate the purchase of a plant and/or significant
equipment unless such assets are acquired through the consummation of a
consolidation or merger.
The Company does not anticipate any significant changes in the number of
employees; however, in the event an acquisition or merger is consummated, this
may change.
3
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
The Registrant filed a Form 8-K on August 28, 1996 reporting a change
in control of Registrant wherein the Company underwent a name change from
Solutions, Inc. to Suarro Communications, Inc. Additionally, there was a change
in the Registrant's Certifying Accountant and the resignation of the
Registrant's directors.
The Registrant filed amendments to this Form 8-K on September 6, 1996 (A-1)
which provided for the change in accountants, October 28, 1996 (A-2) which
provided for the financial statement of the business acquired, and November 1,
1996 (A-3) which provided the pro forma combined balance sheet and statements
of operation, and January 15, 1997 (A-4) which provided the restated pro forma
combined balance sheet and restated pro forma combined statements of operations.
4
<PAGE>
<TABLE>
SUARRO COMMUNICATIONS, INC.
(A Development Stage Company)
Unaudited
Balance Sheet
January 31, 1997 and April 30, 1996
(Unaudited)
<CAPTION>
(Unaudited) (Audited)
January 31, April 30,
1997 1996
_________ ___________
<S> <C> <C>
ASSETS
Cash $ 623 $ 1,870
Proprietary telecommunication and
Internet costs 0 0
_________ ___________
TOTAL ASSETS $ 623 $ 1,870
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 4,210 $ 0
--------- -----------
Total Liabilities $ 4,210 $ 0
--------- -----------
SHAREHOLDERS' EQUITY
Preferred stock, no par value,
Authorized 1,000,000 shares; issued
and outstanding, 0 shares 0 0
Common Stock, $.001 par value
Authorized 20,000,000 shares; issued
and outstanding, 6,200,000 shares 6,200 6,200
Additional paid in capital (discount) (2,048) (2,048)
Deficit accumulated during development (7,739) (2,282)
---------- ------------
Total Stockholders' Equity $ (3,587) $ 1,870
_________ ___________
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 623 $ 1,870
========= ===========
</TABLE>
5
<PAGE>
<TABLE>
SUARRO COMMUNICATIONS, INC.
(A Development Stage Company)
Unaudited
Statement of Operations
<CAPTION>
Three Months Nine Months Nine Months
Ended Ended Ended
January 31, January 31 January 31
1997 1997 1996
____________ ____________ _____________
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
Expenses 2,959 5,457 0
------------ ------------ -------------
Net Income (loss) $ (2,959) (5,457) $ 0
============= ============= ==============
Net Loss per share $ ($0.0005) ($0.0009) 0
============ =============== ===============
Common Shares Outstanding 6,200,000 6,200,000 6,200,000
</TABLE>
6
<PAGE>
<TABLE>
SUARRO COMMUNICATIONS, INC.
(A Development Stage Company)
Unaudited
Cash Flow Statement
<CAPTION>
Nine Months Nine Months
Ended Ended
January 31, January 31
1997 1996
____________ ____________
<S> <C> <C>
Cash flows from
operating activities:
Deficit accumulated during
the development stage $ (5,457) $ 0
Adjustment to reconcile the
deficit accumulated during the
development stage to net cash
used in operating activities:
Increase in accounts payable 4,210 0
------------ -----------
Net cash used in operating
activities (1,247) 0
------------ -----------
Cash flows from investing
activities 0 0
Cash flows from financing
activities 0 0
------------ -----------
Net decrease in cash (1,247) 0
Cash, beginning of period 1,870 0
----------- -----------
Cash, end of period $ 623 $ 0
=========== ===========
Supplemental disclosures;
Noncash investing and
financing activities $ 0 0
=========== ===========
</TABLE>
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<PAGE>
SUARRO COMMUNICATIONS, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
January 31, 1997
(1) Unaudited Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and applicable SEC
guidelines pertaining to interim financial information. In the opinion of
the company's management, all adjustments, consisting of normal recurring
adjustments necessary for a fair presentation of the financial statements,
have been included therein. These statements should be read in conjunction
with the Financial Statements and Notes thereto included in the company's
audited financial statements for the periods ended August 16, 1996 and
April 30, 1996.
(2) Merger
Effective August 16, 1996, the Company acquired all of the outstanding
common stock of Suarro Communications, Inc. by issuing 5,200,000 shares of
its authorized common stock. As a result of the consummation of this share
exchange, the Company undertook a forward split of its common stock whereby
20 shares of common stock was issued in exchange for 1 share of common
stock, increased its authorized capitalization to 20,000,000 shares of
common stock and authorized 1,000,000 shares of preferred stock, and
changed its name to Suarro Communications, Inc.
The merger was accounted for by the "pooling of interests" method of
accounting.
(3) Proprietary Telecommunication and Internet Costs
The costs of developing the proprietary telecommunication and Internet
products were incurred prior to incorporation of the Company. Material and
contract services totaling $149,982 were paid by two individuals or their
wholly-owned company. In addition, the shareholders valued their personal
time in producing the technology at $328,000. Upon incorporation, the
Company originally recorded as an asset $349,382 of these costs as
proprietary telecommunication and Internet costs. The remaining $128,600
($8,600 in paid expenses and $120,000 of the shareholders' personal time)
of the total cost was not recorded as an asset because this amount was
originally considered to be the only amount incurred as research and
development costs. The $349,382 was originally capitalized because
management concluded that technological feasibility had been established
after incurring the research and development expenses. Management's
subsequent evaluation of the development process changed its original
conclusion as to the date that technological feasibility had been
established; therefore, all costs incurred prior to incorporation
($477,982) were expensed as research and development expenses.
8
<PAGE>
Accordingly, the financial statements were restated to reflect the
following changes:
<TABLE>
<CAPTION>
As previously
reported (Decrease) As restated
_____________ __________ ___________
<S> <C> <C> <C>
October 31, 1996 and April 30, 1996:
Proprietary telecommunication
and Internet costs $ 349,382 (349,382) 0
Additional paid-in capital
(discount) $ 347,334 (349,382) (2,048)
</TABLE>
(4) Development Stage Operations
The Company is currently in the developmental stage and has no significant
operations to date.
(5) Going Concern
The Company is a newly organized development stage corporation that has not
commenced operations as of January 31, 1997. This factor, together with
its limited capital, among others, indicate that the Company may be unable
to continue its operations without successful development and marketing of
the Company's products and the procurement of additional financing.
The accompanying financial statements have been prepared on the assumption
that the Company will continue in business, which contemplates the
realization of assets through continuing operations. No adjustments have
been made to reflect potentially lower realizable value of assets should
the Company be unable to continue its operations, as the outcome of the
above matter is not currently determinable.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SUARRO COMMUNICATIONS, INC.
(Registrant)
Dated: March 14, 1997
By: /s/Michael D. McAuliffe
Michael D. McAuliffe
President
10
<PAGE>
SUARRO COMMUNICATIONS, INC.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended January 31, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . .12
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-QSB FOR THE QUARTER
ENDED JANUARY 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JAN-31-1997
<CASH> 623
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 623
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 623
<CURRENT-LIABILITIES> 4,210
<BONDS> 0
0
0
<COMMON> 6,200
<OTHER-SE> (9,787)
<TOTAL-LIABILITY-AND-EQUITY> 623
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,959
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,959)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
