FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ .
STRATFORD ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-26112 41-1759882
(State of Jurisdiction) (Commission (IRS Employer
File Number) Identification No.)
67 Wall Street, Suite 2411, c/o Daniel W. Dowe, Esq.
New York, New York 10005
(Address of Principal Executive offices) (Zip Code)
Registrant's telephone number, including area code 212-825-9292
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 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 filing requirements for the
past 90 days. Yes _X_ No ___.
The Company had 11,939,396 shares of its $.001 par value common stock issued and
outstanding on February 28, 1998. On a fully diluted basis, assuming all
outstanding stock options and warrants to purchase common are exercised, the
Company would have 15,611,672 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-Q Incorporated Document
- --------------------- ---------------------
Part II
Item 6 - Exhibits and Reports Form 8-K filed on
on Form 8-K November 24, 1997
<PAGE>
STRATFORD ACQUISITION CORPORATION
Index
Page No.
--------
Part I Financial Information
Item 1. Financial Statements (Unaudited)
Balance Sheet - dated
February 28, 1998 and May 31, 1997............................... F-1
Statement of Operations - for the three months ended February
28, 1998 and February 28, 1997 and for the nine months ended
February 28, 1998 and February 28, 1997.......................... F-2
Statement of Cash Flows - for the nine
months ended February 28, 1998 and
February 28, 1997................................................ F-3
Notes to Financial Statements.................................... F-4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 1
Part II Other Information
Item 1. Legal Proceedings................................................ 4
Item 2. Changes in Securities............................................ 5
Item 3. Defaults Upon Senior Securities.................................. 6
Item 4. Submission of Matters to a Vote of Security Holders.............. 6
Item 5. Other Information................................................ 6
Item 6. Exhibits and Reports on Form 8-K................................. 7
ii
<PAGE>
PART I
Page
----
Item 1. Financial Statements
Balance Sheet - dated
February 28, 1998 and May 31, 1997............................... F-1
Statement of Operations - for the three months ended February
28, 1998 and February 28, 1997 and for the nine months ended
February 28, 1998 and February 28, 1997.......................... F-2
Statement of Cash Flows - for the nine
months ended February 28, 1998 and
February 28, 1997................................................ F-3
Notes to Financial Statements.................................... F-4
<PAGE>
STRATFORD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
February 28, May 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 209,369 $ 10,098
Other receivables 12,264 40,579
Inventory 124,027 143,313
Marketable securities -- 13,250
----------- -----------
Total Current Assets 345,660 207,240
PROPERTY, PLANT, AND EQUIPMENT, net of
accumulated depreciation and amortization 112,407 2,158
OTHER ASSETS:
Organization costs, net of accumulated amortization 767 741
Security deposits 9,861 9,394
----------- -----------
10,628 10,135
----------- -----------
$ 468,695 $ 219,533
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 71,962 $ 110,385
Payroll taxes payable 933 2,833
Short-term debenture 550,000 --
----------- -----------
Total Current Liabilities 622,895 113,218
DUE TO SHAREHOLDERS -- 315,000
SHAREHOLDERS' EQUITY:
Common stock - $0.001 par value
50,000,000 shares authorized.
11,939,396 and 10,113,381 shares
issued and outstanding, respectively 11,939 10,113
Additional paid-in capital 1,985,883 1,325,024
Deficit accumulated during the
development stage (2,152,022) (1,543,822)
----------- -----------
Shareholders' Equity (Deficit) (154,200) (208,685)
----------- -----------
$ 468,695 $ 219,533
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-1
<PAGE>
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Compensation and related costs
legal, accounting, consulting fees and other general
and administrative costs 225,809 209,531 594,643 545,685
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 225,809 209,531 594,643 545,685
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (225,809) (209,531) (594,643) (545,685)
------------ ------------ ------------ ------------
OTHER INCOME:
Interest income -- -- 39 49
Foreign exchange gain (loss) (22,281) 2,644 (13,595) 1,522
------------ ------------ ------------ ------------
(22,281) 2,644 (13,557) 1,571
NET LOSS $ (248,090) $ (206,887) $ (608,200) $ (544,114)
============ ============ ============ ============
Basic loss per weighted-average share of
common stock outstanding $ (0.02) $ (0.02) $ (0.05) $ (0.06)
============ ============ ============ ============
Weighted-average share of common stock outstanding 11,741,396 10,655,092 11,400,884 9,941,981
============ ============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-2
<PAGE>
STRATFORD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
February 28,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(608,200) $(544,114)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,319 --
Common stock issued as payment for services 61,350 559
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) decrease in other receivables 28,315 (31,752)
(Increase) decrease in inventory 19,286 --
(Increase) decrease in organization costs (26) --
(Increase) decrease in security deposits (467) 44,118
Increase (decrease) in accounts payable and accrued expenses (38,423) (100,000)
Increase (decrease) in accounts payroll taxes payable (1,900) --
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (537,747) (631,189)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (112,568) --
Proceeds from sale of marketable securities 13,250 --
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES (99,318) --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debentures 550,000 --
Increase (decrease) in loan to shareholder (315,000) 413,700
Proceeds from sale of common stock 601,335 75,029
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 836,335 488,729
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 199,271 (142,460)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,098 155,194
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 209,369 $ 12,734
========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE>
STRATFORD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1998
(Unaudited)
Reference is made to the financial statements included in the Company's Annual
Report (Form 10-K) filed with the Securities and Exchange Commission for the
year ended May 31, 1996.
The financial statements for the periods ended February 28, 1998 are unaudited
and include all adjustments which, in the opinion of management, are necessary
to present a fair statement of the results of operations for the periods then
ended. All such adjustments are of a normal recurring nature. The results of the
Company's operations for any interim period are not necessarily indicative of
the results of the Company's operations for a full fiscal year.
1. In February 1997, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards No. 128, "Earnings Per Share" (FAS No.
128) which became effective for both interim and annual financial
statements for periods ending after December 15, 1997. The Company has
adopted FAS No. 128 for its period ending February 28, 1998.
2. During February 1998, the Company issued 10% Convertible Debenture for
$550,000 and a warrant to purchase 1,100,000 shares of Common Stock. The
Debenture has a maturity date of October 31, 1998 and shall be convertible
into Common Stock at a rate of 60% of the exercise price of the Warrant,
only if the Company defaults on repayment of the outstanding principal and
interest due at maturity of the Debenture. The Warrant will be issued as
further consideration for the purchase of the Debenture and shall have an
exercise price of $.30 per share and shall expire on February 1, 2001.
3. In June, 1997, the Company commenced an action against Mr. Jan Sulkiewicz
and certain persons and entities that he controls for breach of contract
and to secure certain equipment and intellectual property that is owned by
the Company. Since the filing of the lawsuit, Mr. Sulkiewicz has returned
some equipment, however the remaining issues are still being litigated. The
Company believes that this lawsuit will be adjudicated in its favor. In
addition, Mr. Sulkiewicz and companies that he controls are named
defendants in the third lawsuit listed in this footnote. Stratford
Acquisition Corporation v. Jan Sulkiewicz, et. Al., Ontario Court (General
Division), Index No. 97-CV-126925.
F-4
<PAGE>
On August 12, 1997, a shareholder, Mel Greenspoon, commenced an action
against the Company and its former President, Mr. A. Roy MacMillan, to
enjoin the Company and Mr. MacMillan from taking any action that would
restrict the sale of common stock that he allegedly owns. Mr. Greenspoon is
one of the shareholders that are subject to the following lawsuit. The
Company has raised several defenses to this action and believes the lawsuit
is without merit. Mel Greenspoon vs. Stratford Acquisition Corporation, et.
Al., Ontario Court (General Division), Index No. 97-CV-126814.
On August 27, 1997, the Company commenced an action against several of its
shareholders seeking, principally, to cancel approximately 1,800,000 shares
of common stock and certain stock options which it believes were unlawfully
issued. In addition, the Company has asserted additional claims in this
litigation against certain defendants, who were former directors and
officers of the Company, for breach of their fiduciary duties of care and
loyalty to the Company. The Company believes that this lawsuit will be
adjudicated in its favor. Stratford Acquisition Corporation v. 10222
Investments, et. Al., United States District Court, District of Minnesota,
Index No. 97-1954. The Company has since canceled approximately 190,000
shares of common stock through settlement agreements with eight defendants.
A former director and officer of the Company, Barbara Robinson, who is also
a defendant in the lawsuit Stratford Acquisition Corporation v. 10222
Investments, et. al., filed a lawsuit Barbara Robinson v. The Canadian Bar
Insurance, et.al. v. Stratford Acquisition Corporation and Arthur Smith,
Ontario Court (General Division), Index No. 97-CV-129642A to seek payment
for employment disability insurance that she alleges was due to her under
two disability insurance policies. The defendant insurance companies have
denied any wrongdoing and, in fact, have filed a third-party complaint
against the Company and its former director and President, Arthur Smith,
alleging that Ms. Robinson and her former employer at the time, Mr. Arthur
Smith's law office, and Mr. Arthur Smith, as a director and officer of the
Company, made misrepresentations with respect to Ms. Robinson's employment
status and her alleged disabilities at the time she was employed by
Stratford. Ms. Robinson had received payments under disability policies
prior to joining the Company for physical ailments that pre-existed her
employment at the Company. The Company believes it has no obligations to
Ms. Robinson or the insurance companies.
F-5
<PAGE>
4. Investigation by the United States Securities and Exchange Commission (SEC)
The SEC has made inquiries of the Company relating to certain accounting
and financial reporting issues arising from the Company's quarterly, annual
and periodic reports that were filed in 1996 and 1995. The SEC's
investigation is believed to be directed at the actions and omissions of
several former directors, officers, employees and advisors of the Company
that were employed by, or associated with, the Company prior to November
29, 1996. The Company is prepared to respond to any and all inquiries from
the SEC's Department of Enforcement and is agreeable to assisting the SEC
in its investigation. None of the Company's current directors and officers
were employed by the Company prior to November 29, 1996.
F-6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following financial information should be read in conjunction with the
Company's financial statements and footnotes, which are annexed hereto. Forward
looking statements made in this section are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
The Financial Statements for the period ended February 28, 1998 included in this
Form 10-Q are unaudited; however, such information reflects all adjustments
(consists solely of normal recurring adjustments), which are, in the opinion of
management, necessary to present a fair statement of the results for the interim
period.
Results of Operations
Three months ending February 28, 1998 vs. February 28, 1997.
The Company experienced material changes in its operations for the three month
period ending February 28, 1998. As part of its 60-Day Plan to emerge from the
development stage to the operating stage the Company has achieved the following
objectives.
* Completed the sale of $550,000 (USD) of a debenture and warrant and has
used a portion of the proceeds from this financing to purchase new industrial
equipment, remodel its offices and hire sales personnel.
* Purchased and installed a new 75 cubic foot ribbon blending machine and
compressed air bagging machine to enable the company to produce its products on
a commercial scale and at substantially lower costs.
* Finalized an agreement with the first distributor of construction
products that will sell the NovaCrete line of products and has begun discussions
with other large distributors in the United States.
* Hired a sales manager with 25 years of experience to head the company's
sales and marketing operation and hired a second sales person with a cement
technology background who will also oversee the company's quality control
programs. The company also hired a regional sales manager who will be based in
New Jersey and will develop sales of NovaCrete products on the East Coast of the
United States.
* Completed the additional testing of the company's mortar products for
salt resistance and setting times and has
<PAGE>
arranged to have all mortar products tested in accordance with the specification
requirements of the New York State Department of Transportation.
* Opened an office in New York City to serve as the Company's Corporate
Headquarters and has expanded its board of directors to include Edward J.
Malloy, President of the Greater New York Construction Trade Council, which
oversees over 200,000 laborers in the construction industry.
* Completed settlement agreements with eight shareholders that have agreed
to forfeit 190,000 shares of common stock to settle all claims that were
asserted against them in the stock cancellation lawsuit that was filed by the
company last fall.
The primary initiatives that the Company seeks to accomplish by December
31, 1998, are to establish a distribution system for the company's products
throughout Canada and on the East Coast of the United States and to increase its
menu of finished mortar products to seven products by year end.
In addition, as of March 1, 1998, the Company's current Acting President,
Daniel W. Dowe, has agreed to become its President and Chief Executive Officer
for a three year term with an option to serve an additional three years.
Nine months ending February 28, 1998 vs. February 28, 1997.
Although the Company has made material strides toward evolving from the
development stage, sales for the nine month period ending February 28, 1998,
were $0. In the same period in 1997, sales were also $0. The Company's inability
to generate sales in this period is attributable to the complete management and
operational turnaround that the Company undertook in November, 1996 and
expedited toward completion starting on November 17, 1997.
Operating expenses for the nine month period ending on February 28, 1998,
increased approximately 9% to $594,643 when compared to the same period in 1997.
The increase was attributable to the legal, auditing and administrative expenses
incurred by the Company to complete the turnaround of its operations. The
Company also recorded other losses of $13,557, which consisted primarily of
financial losses of $13,595 from currency fluctuations. The net result of the
Company's operations for the nine month period was a loss of $608,200. Thus,
other than for the material operational changes that took place during the
period from November 17, 1997 to February 28, 1998, the Company's business
operations in the nine month period ending on February 28, 1997 were nominal.
On February 28, 1998, the Company had $468,695 in assets, of which $345,660 were
current assets consisting of: $209,369 in cash and cash equivalents, $124,027 of
inventory and $12,264 in other
2
<PAGE>
receivables, which represents a tax refund due from Canada for sales tax paid on
the new industrial equipment that was purchased in February, 1998. In addition,
the Company had $112,407 of equipment (net of depreciation), organizational cost
of $767 and security deposits of $9,861. Based on the Company's average monthly
operating expenses of $49,553 during the nine month period ending February 28,
1998, the Company has less than four months of current liquid assets to operate
its business, assuming no revenues are earned in the near future and that the
Company is unable to raise capital from third-party sources.
Liquidity and Financial Resources at February 28, 1998
In the three month period ending on February 28, 1998, the Company raised
$56,000 for working capital through the sale of short-term promissory notes from
Firebird Partners, an investment entity controlled by a director, Douglas
Friedenberg. In February, 1998 the Company paid the principal amount outstanding
and all accrued interest on the notes owing to Firebird Capital from the
proceeds of the sale of a 10% $550,000 Debenture and 1,100,000 warrants to
purchase common stock that the Company sold in February, 1998. The Debenture
matures on October 31, 1998, and if the Company defaults on the payment of the
outstanding principal and interest due on the Debenture at maturity, the same
shall be converted into common stock at rate of 60% of the $.30 exercise price
on the warrants, or $.18 per share. The warrants are exercisable upon issuance
and expire on February 1, 2001. If the average closing bid price of the
Company's common stock equals or exceeds $.60 for twenty consecutive trading
days then the Company has the right, upon providing the warrantholders with
twenty days prior written notice, to redeem all the outstanding warrants for
$.001 per share.
In the nine month period, the Company had total liabilities of $622,895 and a
deficit of $154,200 in shareholders' equity. Of the total liabilities, $550,000
represents the principal amount of the Debenture the remaining balances consists
of $71,962 of accounts payable and $933 of payroll taxes. However, the Company
had an accumulated deficit of $2,152,022.
Upon the completion of its 60-Day Plan on February 15, 1998, the Company has
acquired the ability to produce, market and sell its products directly through
its own internal sales staff, or through established distributors of
construction products. In addition to generating revenues from the sale of its
products (See Subsequent Events), the Company has the ability to raise
approximately $500,000-$1,000,000 through the sale of debt or equity instruments
over the next twelve months to sustain its operations, if the Company is
unsuccessful in selling its products.
3
<PAGE>
Subsequent Events
On April 14, 1998, the Company announced its first truckload sale of Novacrete
Multi-Purpose mortar to one of Canada's largest distributors of construction
products. The sale represents a shipment of 44,000 pounds of product, or 800
pre-packaged 55-pound bags of mortar products.
Part II Other Information
Item 1. Legal Proceedings
On June 26, 1997, the Company commenced an action against Mr. Jan Sulkiewicz and
certain persons he controls for breach of contract and to secure certain
equipment and intellectual property that is owned by the Company, but is
allegedly being wrongfully withheld by Mr. Sulkiewicz. Since the filing of the
lawsuit, Mr. Sulkiewicz has returned some equipment, however the remaining
issues are still being litigated. The Company believes that this lawsuit will be
adjudicated in its favor. Stratford Acquisition Corporation v. Jan Sulkiewicz,
et. al., Ontario Court (General Division), Index No. 97- CV-126925.
On August 12, 1997, a shareholder, Mel Greenspoon, commenced an action against
the Company and its former President, Mr. A. Roy MacMillan, to enjoin the
Company and Mr. MacMillan from taking any action that would restrict the sale of
common stock that he allegedly owns. Mr. Greenspoon is one of the shareholders
that are subject to the following lawsuit. The Company has raised several
defenses to this action and believes the lawsuit is without merit. Mel
Greenspoon v. Stratford Acquisition Corporation, et. al., Ontario Court (General
Division), Index No. 97-CV-126814.
On August 27, 1997, the Company commenced an action against 46 separate
shareholders seeking, principally, to cancel approximately 1,800,000 shares of
common stock and certain stock options which it believes were unlawfully issued.
In addition, the Company has asserted additional claims in this litigation
against certain defendants, who were former directors and officers of the
Company, for breach of their fiduciary duties of care and loyalty to the
Company. The Company believes that this lawsuit will be adjudicated in its
favor. Stratford Acquisition Corporation v. 10222 Investments, et. al., United
States District Court, District of Minnesota, Index No. 97-1954.
A former director and officer of the Company, Barbara Robinson, who is also a
defendant in the lawsuit Stratford Acquisition Corporation v. 10222 Investments,
et. al., filed a lawsuit Barbara Robinson v. The Canadian Bar Insurance, et.al.
v. Stratford Acquisition Corporation and Arthur Smith, Ontario Court (General
Division), Index No. 97-CV-129642A to seek payment for employment disability
insurance that she alleges was due to her under two disability
4
<PAGE>
insurance policies. The defendant insurance companies have denied any wrongdoing
and, in fact, have filed a third-party complaint against the Company and its
former director and President, Arthur Smith, alleging that Ms. Robinson and her
former employer at the time, Mr. Arthur Smith's law office, and Mr. Arthur
Smith, as a director and officer of the Company, made misrepresentations with
respect to Ms. Robinson's employment status and her alleged disabilities at the
time she was employed by Stratford. Ms. Robinson had received payments under
disability policies prior to joining the Company for physical ailments that
pre-existed her employment at the Company. The Company believes it has no
obligations to Ms. Robinson or the insurance companies.
The SEC has made inquiries of the Company relating to certain accounting and
financial reporting issues arising from the Company's quarterly filings in 1996
and 1995. The SEC's investigation is believed to be directed at the actions and
omissions of former directors, officers, employees and advisors of the Company
that were employed by, or associated with, the Company prior to November 29,
1996.
Item 2. Changes in Securities
In the three month period ended February 28, 1998, the Company issued 247,500
shares of its $.001 par value common stock. Of the 247,500 shares, 150,000
shares were sold pursuant to an exemption from registration under Regulation S
to two offshore investment funds that are managed by Douglas Friedenberg, a
director of the Company, at the then current market price of $.24 per share. The
remaining 97,500 shares were granted to the Company's Acting President, Daniel
W. Dowe. Mr. Dowe became Acting President of the Company on November 17, 1997
and agreed to accept part of his compensation in stock at the rate of 30,000
shares per month until February 28, 1998. Accordingly the 97,500 shares
represent a grant of stock for three and one-half months of service.
In February, the Company sold a 10% $550,000 Debenture that matures on October
31, 1998 (the "Debenture"). The Debenture shall be convertible into common stock
at a rate of 60% of the $.30 per share exercise price of the Warrant, only if
the Company defaults on repayment of the outstanding principal and interest due
at maturity of the Debenture.
As further consideration for the Debenture, the Company issued warrants to
purchase 1,100,000 shares of the Company's common stock, each warrant having an
expiration date of February 1, 2001 and an exercise price of $.30 per share of
common stock issuable upon exercise of the warrant. If the average closing bid
price of the Company's common stock equals or exceeds $.60 for twenty
consecutive trading days then the Company has the right, upon providing the
warrantholders with twenty days prior written notice, to redeem all the
outstanding warrants for $.001 per share.
5
<PAGE>
In the three month period ending on February 28, 1998, the Company issued a
total of 245,000 options to purchase common stock to four persons, as follows.
For agreeing to serve as Chairman of the Company as of November 17, 1997,
William K. Lavin was granted the additional 100,000 options that were issued to
him on October 17, 1997, but which did not originally vest until October 17,
1998. The options granted to Mr. Lavin on November 17, 1997, are exercisable
upon grant and expire on October 17, 2002 and have an exercise price of $.40 per
share. On January 15, 1998, the Company issued 200,000 stock options to Edward
J. Malloy for agreeing to serve as a director of the Company. Of the 200,000
stock options, 100,000 were exercisable upon grant and the remaining 100,000
stock options do not vest until January 15, 1999. These stock options expire on
January 15, 2003 and have an exercise price of $.40 per share. On December 2,
1998, the Company granted a stock option for 25,000 shares to its general
manager as part of an annual performance review. The stock options are
exercisable upon grant and expire on December 2, 2000 and have an exercise price
of $.30 per share. On February 9, 1998, the Company issued a stock option for
20,000 shares, to Investor Communications Corporation (ICC) for investor
relations services. ICC served as the Company's investor relations consultant
pursuant to a written agreement which provide for it to receive a stock option
for 5,000 shares each month of its contract. The stock options issued to ICC
were exercisable upon grant and expire five years thereafter, and have an
exercise price of $.25 per share. The 20,000 stock options were for services
rendered from September to December 1997.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable. The Company is planning to hold the next annual
meeting of shareholders in May,1998.
Item 5. Other Information
Not Applicable.
6
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
Exhibits
- --------
None.
Reports on Form 8-K
- -------------------
Form 8-K filed on Incorporated by reference
November 14 1997 to the Form 8-K Report
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, Stratford Acquisition Corporation has duly caused this
report to be signed on its behalf by the undersigned person who is duly
authorized to sign on behalf of the Registrant and as chief accounting officer.
STRATFORD ACQUISITION CORPORATION
By:
------------------------------
Daniel W. Dowe
President and Chief Executive
Officer
Date: April 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> May-31-1998
<PERIOD-START> Dec-1-1997
<PERIOD-END> Feb-28-1998
<CASH> 209,239
<SECURITIES> 0
<RECEIVABLES> 12,264
<ALLOWANCES> 0
<INVENTORY> 124,027
<CURRENT-ASSETS> 345,660
<PP&E> 112,407
<DEPRECIATION> 0
<TOTAL-ASSETS> 468,695
<CURRENT-LIABILITIES> 622,895
<BONDS> 0
0
0
<COMMON> 11,939
<OTHER-SE> (166,139)
<TOTAL-LIABILITY-AND-EQUITY> (154,200)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (225,809)
<LOSS-PROVISION> (22,281)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (248,090)
<INCOME-TAX> 0
<INCOME-CONTINUING> (248,090)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (248,090)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
