U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-89326
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HLS (USA), INC.
(formerly HARVEST E-XPRESS)
---------------------------
(Name of Small Business Issuer as specified in its charter)
Nevada 87-0530644
------------------------------ -------------------
State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
145 West 44th Street, 6th Floor, New York, NY 10036
---------------------------------------------------
(Address of principal executive offices)
Registrant's telephone no., including area code: (212) 289-7772
---------------------------------------------------------------
Harvest E-xpress
29 East 100 North, Malad, ID 83252
-----------------------------------
Former name, former address, and former fiscal year, if changed
since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 [ ]
Common Stock outstanding at May 1, 1997 - 990,000 shares of $.001 par
value Class A Common Stock and 29,010,000 shares of $.001 par value
Class B Common Stock.
<PAGE>
HLS (USA), INC.
CONTENTS
PAGE
----
PART 1 ITEM 1 FINANCIAL INFORMATION
-- Condensed Balance Sheets- 1
March 31, 1997 and December 31, 1996
-- Condensed Statements of Operations- 2
For three months ended March 31, 1997,
three months ended March 31, 1996 and
from inception on June 23, 1994 through
March 31, 1997
-- Condensed Statements of Cash Flows- 3
Three months ended March 31, 1997, three
months ended March 31, 1996 and from
inception on June 23, 1994 through
March 31, 1997
-- Notes to Condensed Financial Statements 5
-- ITEM 2 MANAGEMENT'S PLAN OF OPERATIONS 8
PART 2 OTHER INFORMATION
-- Item 1 Legal Proceedings 9
-- Item 2 Changes in Securities 9
-- Item 3 Defaults upon Senior Securities 9
-- Item 4 Submission of Matters to a vote of 9
Security Holders
-- Item 5 Other Information 9
-- Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 11
<PAGE>
PART I FINANCIAL INFORMATION
HLS (USA), INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
----------- --------------
CURRENT ASSETS:
Cash in bank $ 5,099 $ 259
Note Receivable - related party 1,375 $ 1,344
----------- --------
Total Current Assets $ 6,474 $ 1,603
----------- --------
PROPERTY AND EQUIPMENT, net $ 36,901 38,690
----------- --------
OTHER ASSETS:
Organization costs, net 142 157
----------- --------
Total Other Assets $ 142 157
----------- --------
$ 43,517 $ 40,450
----------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts from shareholder $ 315 $ 315
Accounts payable 3,521 592
Notes payable 5,013 -
---------- --------
Total Current Liabilities 8,849 907
---------- --------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock ($.001 par value,
50,000,000 shares authorized,
200,000 shares issued and
outstanding) 200 200
Capital in excess of par value 97,796 97,796
Deficit accumulated during the
developmental stage $ (63,328) (58,453)
----------
Total Stockholders' Equity
(Deficit) 34,668 39,543
---------- ----------
$ 43,517 $ 40,450
---------- ----------
NOTE: The balance sheet at December 31, 1996 was taken from
the audited financial statements at that date and
condensed.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HLS (USA), INC.
(A Development Stage Company)
(Unaudited)
CONDENSED STATEMENTS OF OPERATIONS
Cumulative from
For the Three For the Three June 23, 1994
Months Ended Months Ended through
March 31, 1997 March 31, 1996 March 31, 1997
-------------- -------------- ---------------
REVENUE:
Sales $ $ 1,920 $ 18,035
------ -------- ---------
EXPENSES:
General and administrative 3,013 2,158 29,692
Payroll and related expenses - 8,891 28,115
Depreciation & amortization 1,764 2,434 11,255
Operating expense 115 1,195 12,872
------ -------- ---------
Total Expenses 4,892 14,768 81,934
------ -------- ---------
OPERATING INCOME (LOSS) (4,892) (12,848) (63,899)
OTHER INCOME (LOSS):
Interest income 31 574 1,409
Interest expense (14) (158) (838)
------ -------- -------
Total Other Income (Expense) 17 416 571
------ -------- -------
GAIN (LOSS) BEFORE INCOME TAXES (4,875) (12,432) (63,328)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
------ ------- -------
NET INCOME (LOSS) $ (4,875) $ (12,432) $ (63,328)
========== =========== ===========
INCOME (LOSS) PER COMMON SHARE $(.00) $(.06) $(.41)
========== =========== ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
HLS (USA), INC.
(A Development Stage Company)
(Unaudited)
CONDENSED STATEMENTS OF CASH FLOWS
Cumulative
from June 23,
For the Three For the Three 1994 through
Months Ended Months Ended March 31,
March 31, 1997 March 31, 1996 1997
-------------- -------------- -------------
Cash Flows from Operating
Activities:
Net income (loss) $ (4,875) $ (12,432) $ (63,328)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation & amortization
expense 1,804 2,403 11,455
Changes in assets and
liabilities:
Decrease in accounts
receivable - 3,120 -
Accounts payable 2,929 (197) 3,521
Accrued expenses - 342 -
------- --------- ----------
Net cash (used) by operating
activities (142) (6,764) (48,352)
------- --------- ----------
Cash Flows from Investing Activities:
Purchase of certificates of deposit - (573) -
Purchase of property and equipment - (5,900) (48,183)
Decrease (increase) in notes
receivable (31) (1,250) (1,375)
------ --------- ----------
Net cash (used) by investing
activities (31) (7,723) (49,558)
------ --------- ----------
Cash Flows from Financing Activities:
Proceeds from common stock
issuance - - 110,000
Stock offering costs - - (12,004)
Increase (decrease) in note payable 5,013 - 5,013
Increase (decrease) in long-term debt - - -
----- ---- ----
Net cash provided by
financing activities 5,013 - 103,009
------ ---- ----------
Net Increase (Decrease) in Cash 4,840 (14,487) 5,099
Cash at Beginning of Period 259 27,307 -
------ --------- ----
Cash at End of Period $ 5,099 $ 12,820 $ 5,099
-------- --------- --------
(continued)
<PAGE>
HLS (USA), Inc.
(A Development Stage Company)
Cumulative
from June 23,
For the Three For the Three 1994 through
March 31, 1997 March 31, 1996 1997
-------------- -------------- -------------
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period
for:
Interest $ - $ - $ 823
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the three months ended March 31, 1997 (Unaudited):
None
For the three months ended March 31, 1996:
None
The accompanying notes are an integral part of these financial statements.
<PAGE>
HLS (USA), Inc.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of
the State of Nevada on June 23, 1994. As of March 31, 1997,
the Company had not commenced planned principal operations.
The Company is considered a development stage company as
defined in SFAS No. 7. See Note 6. The Company has, at the
present time, not paid any dividends and any dividends that
may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit.
In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and
cash flows at March 31, 1997 and for all the periods
presented have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial
statements and notes thereto included in the Company's
December 31, 1996 audited financial statements. The results
of operations for the period ended March 31, 1997 are not
necessarily indicative of results for the full year.
Accounting 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, the disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reported
period. Actual results could differ from those estimated.
NOTE 2 - NOTE RECEIVABLE--RELATED PARTY
During the year ended December 31, 1996, the Company made a
loan to an officer of the Company in the amount of $1,250.
The note receivable earns interest at 10% and is due on
demand. Interest of $125 and $94 has been accrued at March
31, 1997 and December 31, 1996, respectively.
<PAGE>
HLS (USA), Inc.
(A Development Stage Company)
NOTE 3 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at
cost, less accumulated depreciation:
March 31,
1997 December 31,
(Unaudited) 1996
----------- ------------
Office equipment $ 4,883 $ 4,883
Trucks and trailers 42,500 42,500
Tools 801 801
---------- ------
48,184 48,184
Less accumulated
depreciation (11,283) (9,494)
---------- ------
$ 36,901 $ 38,690
Depreciation expense for the periods ended March 31, 1997
and December 31, 1996 was $1,789 and $6,695, respectively.
NOTE 4 - NOTE PAYABLE
On March 19, 1997, the Company entered into a note payable
in the amount of $5,000. The note matures in ninety days and
bears interest at 10%. The Company has recorded interest in
the amount of $13 for the three months ended March 31, 1997.
The note was subsequently repaid in full on April 21, 1997.
NOTE 5 - COMMON STOCK
During June, 1994, the Company issued 100,000 shares of
common stock to its initial stockholders. The sales price of
$.10 per share was arbitrarily determined by the Company.
Total proceeds of the issuance were $10,000.
During August, 1995, the Company issued 100,000 shares of
common stock in a public offering at $1.00 per share. Total
proceeds of the offering amounted to $100,000. Stock
offering costs of $12,004 were offset against capital in
excess of par value.
Stock Option Plan - In January, 1995, the board of directors
of the Company adopted and the stockholders approved, a
stock option plan. The plan provides for the granting of
awards of up to 750,000 shares of common stock to officers,
directors, consultants and employees. The awards can consist
of stock options, restricted stock awards, deferred stock
awards, stock appreciation rights and other stock-based
awards as described in the plan. Awards under the plan will
be granted as determined by the board of directors. To date,
no awards have been granted under the plan.
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." FASB 109 requires the Company
to provide a net deferred tax asset/liability
<PAGE>
HLS (USA), Inc.
(A Development Stage Company)
equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax and any
available operating loss or tax credit carry forwards. At
March 31, 1997, the Company has available unused operating
loss carryforwards of approximately $63,000, which may be
applied against future taxable income and which will expire
in the years 2009 through 2011. The amount of and ultimate
realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part,
upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which
cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards, the Company has
established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset
has been recognized for the loss carryforwards. The change
in the valuation allowance is equal to the tax effect of the
current period's net loss.
NOTE 7 - RELATED PARTY TRANSACTIONS
Management Compensation - During the quarter ended March 31,
1997, no compensation was paid to any officer or director.
Advance from Shareholder - During September 1994, an
officer/shareholder of the Company advanced $315 to the
Company on a non-interest basis to cover organization
expenses. The amount was still owing to the
officer/stockholder at December 31, 1996, and March 31,
1997.
Office Space - The Company has not had a need for rent
office space. An officer of the Company is allowing the
Company to use his address, as needed, at no expense to the
Company.
Note Receivable - During 1996, the Company made a loan to an
officer of the Company in the amount of $1,250. The loan
bears interest at 10% per annum. See Note 2.
NOTE 8 - Subsequent Events
See Part II, Item 5.
<PAGE>
PART 1 FINANCIAL INFORMATION
ITEM 2 Management's Plan of Operations.
The following discussion and analysis should be read in
conjunction with the Company's financial statements and the
notes associated with them contained elsewhere in this
report.
Results of Operations.
Fiscal Year. During 1996, the Company continued to
engage in limited trucking operations, from which it
generated a loss of $(43,584). Operations were limited
during this period due to the fact that management's intent
to acquire combines to commence full scale grain cutting and
harvesting operations during the 1996 harvest season
suffered a serious setback due to the fact that Cleon
Edwards, the chief operating officer of the Company,
suffered a heart attack requiring hospitalization, and
decided to resign as an officer of the Company. Therefore,
the remaining member of management decided not to attempt to
conduct the grain cutting operations, and acquisition of
combines and other equipment for such operations was again
deferred. In addition management decided to actively seek
and pursue other potential business acquisitions or other
opportunities which the Company might become involved in.
Interim Period. During the three months ended March 31,
1997, the Company conducted very limited operations, from
which it generated no revenues. Expenses totaled $4,892
during the period, resulting in a net loss of $4,892.
Liquidity and Capital Resources.
The Company was incorporated on June 23, 1994. Although
the Company was incorporated in 1994, it was inactive from
inception and had no operations until after completion of
its public offering in August of 1995. In connection with
the organization of the Company, in 1994 the officers and
directors of the Company contributed $10,000 cash to
initially capitalize the Company in exchange for 100,000
shares of common stock. The Company then filed a
registration statement with the Securities and Exchange
Commission which was declared effective March 15, 1995.
Commencing on such date, the Company offered and sold
100,000 shares of common stock and raised gross proceeds of
$100,000. Net proceeds after offering costs amounted to
$87,996. These proceeds were used to acquire a
semi-trailer/tractor unit and other assets related to the
Company's business operations. As of December 31, 1996, the
Company had total assets of $40,450 consisting mostly of
property and equipment acquired in connection with its
business operations. The Company has no other assets or
commitments with respect to sources of capital, and is
totally dependent upon these assets to provide funding for
the Company until such time that the Company can generate
sufficient revenues from existing operations.
During the first quarter of 1996, the Company continued
to seek potential business acquisitions or other business
opportunities which do not have significant capital
requirements and could be acquired or entered into through
the issuance of additional securities of the Company or
otherwise without cash capital, to provide additional
capital and revenues to the Company. See Part II, Item 5.
<PAGE>
PART 2 OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities
None
ITEM 3 Defaults on Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Information
On April 22, 1997, the stockholders of the Company
approved certain amendments to the Company's articles of
incorporation, including (i) changing the Company's name to
HLS (USA), Inc. and (ii) changing the authorized capital of
the Company to consist of 60,000,000 shares of common stock,
par value $0.001 per share, consisting of 30,000,000 shares
of Class A Common Stock ("Class A Common Stock") and
30,000,000 shares of Class B Common Stock ("Class B Common
Stock"). The Class A Common Stock is entitled to one vote
per share and the Class B Common Stock is entitled to ten
votes per share. The Class B Common Stock does not vote on
the election of directors.
On May 2, 1997, the Company purchased 100% of the
common shares of HLS Corporation Limited, a corporation
organized under the laws of Bermuda ("HLS"), from Hong Leong
Strategic Holdings Limited, a corporation organized under
the laws of Bermuda ("HLSHL"), pursuant to a Stock Purchase
Agreement dated as of April 30, 1997, among HLSHL, the
Company, McKinley Capital, Inc., Ken Edwards and David N.
Nemelka. HLS is now a wholly owned subsidiary of the
Company. The purchase price was paid through the issuance to
HLSHL of 590,000 shares of Class A Common Stock and
29,010,000 shares of Class B Common Stock. In connection
with the foregoing transaction, Ken Edwards, President and
Secretary and a director of the Company, resigned from his
positions with the Company and Peter C. R. Huang and Kwek
Leng Peck, designees of HLSHL, were appointed directors of
the Company. Messrs. Huang and Kwek constitute the Company's
entire board of directors.
As a result of the foregoing, HLSHL beneficially owns
approximately 59.6% of the issued and outstanding Class A
Common Stock and 100% of the issued and outstanding Class B
Common Stock, which together represent approximately 99.6%
of the voting power of the Company's common stock.
In connection with the above purchase of HLS the former
president of the Company received the net assets from the
grain cutting and hauling business, with a fair market value
of approximately $23,000. The transaction will be accounted
for as a bonus to the former president. The Company will
discontinue its grain cutting activities.
<PAGE>
The foregoing transactions were disclosed in a Current
Report on Form 8-K filed with the Securities and Exchange
Commission on May 5, 1997.
On May 13, 1997, the board of directors of the Company
adopted a resolution proposing the dissolution of the
Company and authorized the Company's officers to seek
stockholder approval of the proposed dissolution. Following
stockholder approval, if granted, the Company expects to
wind up its affairs and distribute its assets to
stockholders in accordance with Nevada law.
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
HLS (USA), Inc.
/s/ Peter C. R. Huang Dated: May 14, 1997
- - -------------------------
Name: Peter C. R. Huang
Title: President
(Principal Executive Officer)
