-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2Xb9xGCWQKQQFpU5VCLlOwc8bvIeJEprKpk/2YmgK4ow7sz/0tYOByGibkXieo/ qT4awvC+kXBM4KDzD4jjHA== 0001041183-98-000001.txt : 19981222 0001041183-98-000001.hdr.sgml : 19981222 ACCESSION NUMBER: 0001041183-98-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 ITEM INFORMATION: FILED AS OF DATE: 19981221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARITIME TRANSPORT & TECHNOLOGY INC CENTRAL INDEX KEY: 0000027850 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 112196303 STATE OF INCORPORATION: NY FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-08880 FILM NUMBER: 98772586 BUSINESS ADDRESS: STREET 1: 108 MAIN STREET CITY: NEW YORK STATE: NY ZIP: 12167-1137 BUSINESS PHONE: 2124253158 MAIL ADDRESS: STREET 1: 108 MAIN STREET CITY: STAMFORD STATE: NY ZIP: 12167-1137 8-K 1 CHANGE OF CONTROL AND REVERSE MERGER. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 May 3, 1998 Date of Report (Date of earliest event reported) MARITIME TRANSPORT & TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) New York 0-8880 11-2196303 (State or other jur- (Commission (IRS Employer isdiction of incor- File Number) Identification No.) poration) 1535 Memphis Junction Road, Bowling Green, Kentucky 42101. (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (502) 781 - 8453 (Former name or former address, if changed since last report.) No change. 108 Main St., Stamford, NY 12167-1137 Item 1. Change in Control of Registrant (a) The Registrant has experienced change in control. On May 3, 1998, George Bergleitner, the Company's President and a director resigned, and Paul Clark was appointed as both President. On the same day, May 3, 1998 The Company entered into a reverse merger with B.G. Banking Equipment, Inc., a privately held Kentucky corporation having its principal place of business at 1535 Memphis Junction Road, Bowling Green, Kentucky 42101-0531. This merger had an effective date of June 1, 1998. In that transaction, the Company purchased all of the outstanding shares of B.G. Banking Equipment, Inc., in exchange for 11,282,250 shares of the Company's common stock. The majority shareholders of B.G. Banking Equipment, Inc., Paul D. Clark and Roberta Clark, each received 5,250,000 shares of the Company's common stock each, in exchange for 3,500,000 shares of the common stock of B.G. Banking Equipment, Inc. which they previously held. Prior to this exchange, the Company had done a ten for one reverse split which had left the Company with 3,848,455 common shares issued and outstanding. After the completion of the merger, the Clarks collectively hold 10,500,000 shares of the Company's common stock out of a total of 15,130,705 common shares issued and outstanding, or 69% of the Company's total issued and outstanding common stock. (b) There are no arrangements by which a change in control will occur in the future. Item 2. Acquisition of Assets On May 3, 1998 The Company entered into a reverse merger with B.G. Banking Equipment, Inc., ("BBI") a privately held Kentucky corporation having its principal place of business at 1535 Memphis Junction Road, Bowling Green, Kentucky 42101-0531. In that transaction, the Company purchased all of the outstanding shares of B.G. Banking Equipment, Inc., in exchange for 11,282,250 shares of the Company's common stock. The principle followed in determining the amount of shares of the Company's common stock issued per share of BBI's common stock was that the while the Company had no assets, it has intrinsic value as a publicly traded shell while BBI had assets but was privately held. None of the people who sold the common stock of BBI to the Company had any previous material relationships with the registrant or any of its officers, directors, or majority shareholders, except for George Bergleitner, the Company's previous president and a past director until his resignation on May 3, 1998, who owned 150,000 shares of BBI, and Paul D. Clark, the company's current president and a director, who was one of the majority shareholders of BBI. The company bought the following numbers of BBI shares from the following people: Paul D. Clark 3,500,000 Roberta Clark 3,500,000 Albert Blankenship 71,500 Andrew Seim 150,000 Alexander C. Brosda 150,000 George C. Bergleitner, Jr. 150,000 No funds were transferred as part of this transaction. The Asset Acquisition Agreement is attached hereto as Exhibit 1. Item 3. Bankruptcy or Receivership Not applicable. Item 4. Changes in Registrant's Certifying Public Accountant. Not applicable. Item 5. Other events. None reported. Item 6. Resignations of Registrant's Directors George Bergleitner, who was previously the Company's President and a Director, resigned effective immediately on May 3, 1998. The letter of resignation of Mr. Bergleitner from both posts is attached hereto as Exhibit 2. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. The financial statements giving effect to the acquisition are attached hereto as Exhibit 3. Item 8. Change in Fiscal Year Not applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf the undersigned hereunto duly authorized. Date: September _8_, 1998 MARITIME TRANSPORT & TECHNOLOGY, INC. BY:_/s/Paul d. Clark________ Paul D. Clark President EXHIBIT 1 - ACQUISITION AGREEMENT AGREEMENT OF BUSINESS COMBINATION BY STOCK EXCHANGE AGREEMENT dated this 3rd day of May, 1998, by and between B.G. BANKING EQUIPMENT, INC., a Kentucky corporation having its principal place of business at 1535 Memphis Junction Road, Bowling Green, Kentucky 42101-0531 ("Seller" or the "Company"), a New York corporation, and MARITIME TRANSPORT & TECHNOLOGY, INC., a New York corporation having its principal address at 1535 Memphis Junction Road, Bowling Green, Kentucky 42101-0531 ("MTT" or "Maritime"). This Agreement shall be effective as of June 1, 1998, hereinafter referred to as the "Closing Date". W I T N E S S E T H WHEREAS, Seller is desirous of exchanging all of its capital stock for stock in Maritime; and WHEREAS, Maritime is desirous of acquiring all of the issued and outstanding capital stock of the Seller; IT IS NOW THEREFORE AGREED that in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. Exchange of Stock. 1.1 Subject to the terms and conditions of this Agreement and the performance by the parties hereto of their respective obligations hereunder, Seller shall cause the Company to exchange, transfer, convey, assign and deliver to MTT, and MTT shall receive, acquire and accept on the Closing Date (as such term is hereinafter defined) all of the issued and outstanding capital stock of Seller upon the terms and conditions set forth herein after. 1.2 The transfer of the Stock as herein provided shall be effected by delivery of stock certificates representing all of the issued and outstanding securities of the Seller, along with stock powers executed by all shareholders of the Seller. Company covenants that (i) it will, at any time and from time to time after the Closing Date, execute and deliver such other instruments of transfer and conveyance and do all such further acts and things as may be reasonably requested by MTT to transfer and deliver to MTT or to aid and assist MTT in collecting and reducing to possession, any and all of the Assets; (ii) MTT, after the Closing Date, shall have the right and authority to collect, for the account of MTT, all checks, notes and other evidences of indebtedness or obligations to make payment of money and other items which shall be transferred to MTT as provided herein and to endorse with the name of Company any such checks, notes or other instruments received after the Closing Date; and (iii) Company will transfer and deliver to MTT any cash or other property that Company may receive after the Closing Date in respect of or arising out of the business conducted by Company. After the Closing Date, at reasonable times and upon reasonable notice, Company shall have access to the books and records conveyed to MTT hereunder, and MTT shall have access to any minute books, stock books and similar corporate records retained by Company. 1.3 Company covenants that between the date hereof and the Closing Date and, if reasonably requested by MTT, after the Closing Date, Seller shall use its best efforts to obtain the consent of any parties to any contracts, licenses, leases, commitments, sales orders, purchase orders or other agreements being assigned by Company to MTT hereunder as shall be reasonable requested by MTT. If any such required consent is not obtained, this agreement shall not constitute an agreement to assign the instrument relating thereto, however Seller shall cooperate with MTT in any reasonable arrangement to provide for MTT the benefits under any such contract, license, lease, commitment, sales order, purchase order or other agreement, including enforcement, at the cost and for the benefit of MTT, of any and all rights of Company against the other party thereto arising out of the breach or cancellation by such party. 2. Assumption of Liabilities. MTT assumes all liabilities of Company set forth on the attached financial statement of the Seller attached hereto as Exhibit A which the Seller represents and warrants to have not appreciably changed from the date of issuance of said financial statement until the date of Closing. If any material increase in total liabilities has occurred the Seller will disclose the same in writing to MTT at or prior to closing. 3. Closing. The Closing hereunder (the "Closing") shall take place at the offices of Roger L. Fidler, Esq., 163 South Street, Hackensack, NJ 07601 or at such other place as may be agreed by MTT and Company (the "Closing Date"). 4. Exchange Terms; Allocation. 4.1 In consideration of the exchange and transfer of the Assets herein contemplated, on the Closing Date, MTT shall deliver to Seller's shareholders, as set forth on Exhibit B, certificates for 11,282,250 shares of Maritime's sole class of common stock on the date of closing. 4.2 Upon the conclusion of this transaction, MTT represents that the total number of issued and outstanding shares of MTT shall be no greater than 4,000,000 and that no other shares of any class or kind of MTT shall have been issued. 5. Representations and Warranties of Seller. Seller hereby represents and warrants as follows: 5.1 Company is a corporation duly organized, validly existing and in good standing under the laws of Kentucky and has full power and authority to own its properties and carry on its business as and in the places where such properties are now owned or such business is now being conducted. On or before closing, Seller shall establish to the satisfaction of MTT that it has title to the Assets set forth on its financial statements. Complete and correct copies of the Certificate of Incorporation of Company and all amendments thereto, certified in each case by the Secretary of State of Kentucky, and of the By-Laws of Company, and all amendments thereto, certified by the Secretary of Company, have been or will be delivered to MTT on or prior to the Closing Date by Company. Company is duly qualified to do business and is in good standing in all jurisdictions in which such qualification is necessary because of the character of the properties owned by it or the nature of its activities. Company has taken no action and has not failed to take any action, which action or failure would preclude or prevent MTT from conducting the business of Company in the manner heretofore conducted. 5.2 Company has obtained written approval of over two-thirds of its stockholders and is fully empowered by them to enter into this transaction. 5.3 Seller has full power and authority, corporate and otherwise, to enter into this agreement on behalf of the Company and to cause the Company to assume and perform its, his or her obligations hereunder. The execution and delivery of this agreement and the performance by Company of its obligations hereunder have been duly authorized by the Board of Directors of Company and no further action or approval, corporate or otherwise, is required in order to constitute this agreement as a binding and enforceable obligation of Company. The execution and delivery of this agreement and the performance by Company of its obligations hereunder do not and will not violate any provision of the Certificate of Incorporation or By-Laws of Company and do not and will not conflict with or result in any breach of any condition or provision of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the Assets by reason of the terms of any contract, mortgage, lien, lease, agreement indenture, instrument, judgment or decree to which Company is a party or which is or purports to be binding upon Company or which affects or purports to affect any of the Assets. 5.4 No action, approval, consent or authorization, including but not limited to any action, approval, consent or authorization by any governmental or quasi-governmental agency, commission, board, bureau or instrumentality is necessary as to Company in order to constitute this agreement as a binding and enforceable obligation of Company in accordance with its terms. 6. Representations and Warranties of MTT. MTT hereby represents and warrants that on the closing date all of the following will be true: 6.1 MTT is a corporation duly organized, validly existing and in good standing under the laws of New York. MTT is not presently conducting any business in any location. Complete and correct copies of the Certificate of incorporation of MTT and all amendments thereto, certified in each case by the Secretary of State of the State of New York, and of the By-Laws of MTT, and all amendments thereto, certified by the Secretary of MTT, have been or will be delivered to Company on or prior to the Closing Date by MTT. MTT will present at closing a Certificate of good standing or its equivalent. MTT has taken no action and has not failed to take any action, which action or failure would preclude or prevent Company from conducting the business of Company in the manner heretofore conducted. 6.2 MTT has no authorized or outstanding securities other than its common stock, $.001 par value per share (the "Common Stock"), which consists of 80,000,000 authorized shares of which not more than 4,000,000 shares are currently outstanding. All outstanding Common stock is duly authorized, validly issued, fully-paid and non-assessable (except for such statutory and constitutional obligations as may be imposed notwithstanding full payment for and valid issuance of such shares), and there are no presently issued or outstanding securities of MTT convertible into common stock nor are there any outstanding options, warrants, agreements, rights or commitments of any kind relating to the authorized but unissued Common Stock. All transfer taxes, if any, with respect to transfers of securities of MTT made prior to the date hereof have been paid. All of the common stock is owned, both beneficially and of record, free of any security interests, liens, pledges, claims, charges, escrows encumbrances, options, rights of first refusal, mortgages, indentures, security agreements or other contracts (whether or not relating in any way to credit or the borrowing of money) and the designated owner thereof has the unrestricted right to vote such Common Stock. 6.3 MTT's Board of Director's will recommend to all shareholders, as soon as practicable after receipt of Company's certified financial statements, approval of the transaction contemplated herein and obtain written consent to take such acts and actions as may be deemed necessary or advisable by counsel to Company to fully empower MTT and its Board of Directors to enter into and consummate this transaction. 6.4 MTT has full power and authority, corporate and otherwise, to enter into this agreement and to assume and perform its, his or her obligations hereunder. The execution and delivery of this agreement and the performance by MTT of its obligations hereunder have been duly authorized by the Board of Directors of MTT and no further action or approval is required in order to constitute this agreement as a binding and enforceable obligation of MTT. Written consent to this transaction from the majority shareholders of MTT will be provided at Closing. Further, MTT will provide an opinion of counsel at closing opining to the legality of the issuance of the shares, and the corporate status of MTT. The execution and delivery of this agreement and the performance by MTT of its obligations hereunder do not and will not violate any provision of the Certificate of Incorporation or By-Laws of MTT and do not and will not conflict with or result in any breach of any condition or provision of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of its assets by reason of the terms of any contract, mortgage, lien, lease, agreement, instrument, judgment or decree to which MTT is a party or which is or purports to be binding upon Company or which affects or purports to affect any of its assets. 6.5 No action, approval, consent or authorization, including but not limited to any action, approval, consent or authorization by any governmental or quasi-governmental agency, commission, board, bureau or instrumentality is necessary as to MTT in order to constitute this agreement as a binding and enforceable obligation of MTT in accordance with its terms. 6.6 Since the date of the last financial statement attached hereto as Exhibit A, there have been no adverse changes in the financial condition, assets, liabilities, properties or business of MTT and MTT has not: 6.7.1 authorized, issued, sold or converted any securities, or entered into any agreement with respect thereto; 6.7.2 declared, set aside or made any dividend or other distribution or purchased, redeemed or reclassified any of their capital stock or effected any stock split, stock dividend, exchange or recapitalization or entered into any agreement in respect of the foregoing; 6.7.3 incurred any damage, destruction or similar loss, whether or not covered by insurance, materially affecting their businesses or properties; 6.7.4 sold, assigned or transferred. any of their tangible assets or any patent, trademark, tradename, copyright, license, franchise, design or other intangible assets or properties; 6.7.5 mortgaged, pledged, granted or suffered to exist any lien or other encumbrance or charge on any of their assets or properties, tangible or intangible; 6.7.6 waived any rights of material value or canceled, discharged, satisfied or paid any material debts or claims; 6.7.7 incurred any obligation or liability (absolute or contingent, liquidated or unliquidated, choate or inchoate); 6.7.8 leased or effected any transfer of any of their assets or properties; 6.7.9 entered into, made any amendment of or terminated any lease, material contract or license; 6.7.10 amended their Certificate of Incorporation or By-Laws; 6.7.11 effected any change in their accounting practices, procedures or methods; 6.7.12 became obligated to make any payment to any shareholder of MTT in any capacity, or entered into any transaction of any nature with any shareholder of MTT in any capacity; 6.7.13 increased the compensation payable to any of their directors, officers or employees or became obligated to increase any such compensation; 6.7.14 entered into any transaction other than in the ordinary course of business, or changed in any way any of their business policies or practices. 6.8 MTT is not a party to or has any contract or commitment of any kind or nature whatsoever, written or oral, formal or informal, including, without limitation, any lease, license, franchise, employment, maintenance, consultant or commission agreement, pension, profit-sharing, bonus, stock purchase, stock option, retirement, severance, hospitalization, accident, insurance or other plan or arrangement involving employee benefits, contract with any labor union or contract for services, materials, supplies, merchandise, inventory or equipment, for the sale or purchase of any of its services, products or assets, for the borrowing of money or for a line or letter of credit, with any current or former director, officer or employee of MTT which will be in effect on the Closing Date, with any government or agency thereof, pursuant to which its right to compete with any entity or person in the conduct of its business is restrained or restricted for any reason or in any way, guaranteeing the performance, liabilities or obligations of any Entity or person, for capital improvements or expenditures or with any contractor or subcontractor for in excess of $100.00, for charitable contributions aggregating in excess of $100.00, or involving in excess of $100.00 in cash over its term (including any periods covered by any options to renew by any party). 6.9. MTT has no liabilities except as shown on its financial statements, no contracts or other obligations whatsoever including any contingent liabilities. 7. Financial Statements. Company shall deliver to MTT, as soon after the Closing Date as practicable, but in no event more than 30 days after the Closing Date, certified financial statements substantially confirming the representations made to date regarding Company's financial condition, obligations and commitments. These financial statements will be in a form acceptable to the United States Securities and Exchange Commission for consolidation with MTT's financial statements and will be in compliance with generally accepted accounting principles and Regulation SX promulgated under the Securities Act of 1933, as amended, and as it applies to corporations which have registered securities upon Form 10 or Form 10SB under the 1934 Securities exchange Act. After closing, the new management represents that it will timely file all forms required by the United States Securities and Exchange Commission and shall promptly file for listing on NASDAQ as soon as NASDAQ listing requirements are met. 8. Miscellaneous. a) This Agreement shall constitute the entire agreement of the parties hereto and may not be amended, except by written consent of the parties hereto in writing executed by them. b) This Agreement shall be construed according to the laws of the State of New York and shall be enforceable in any court of competent jurisdiction located in the State of New York. c) This Agreement shall inure to the benefit of the parties and their successors in interest, if any, but shall not otherwise be assignable. d) Where in this Agreement one gender or the other is used, of the singular or the plural is used, and if to effect the intent of the parties hereto the use of the other gender or number is needed then it is understood that such gender or both or such number or both is implied. e) This Agreement may be executed in counterparts and receipt of facsimile transmission of signatures shall be sufficient to effect acceptance of this Agreement, although the parties hereto agree to submit within a reasonable time duplicate original signed copies of this Agreement to each other. 9. Indemnification. Each party to this Agreement shall indemnify and hold harmless each other party at all times after the date of closing against and in respect of any liability, damage or deficiency, all actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including attorney's fees incident to any of the foregoing, resulting from any misrepresentation, breach of covenant or warranty for non-fulfillment of any agreement on the part of such party under this Agreement, or from any misrepresentation in or omission from any certificate furnished or to be furnished to a party hereunder. Subject to the terms of this Agreement, the defaulting party shall reimburse the other party or parties on demand for any reasonable payments made by said parties at any time after the date of closing, in respect to any liability or claim to which the foregoing indemnity relates, if such payment is made after reasonable notice to the other party to defend or satisfy the same, and such party failed to defend or satisfy the same. 10. Expenses. Seller shall pay all expenses of the transaction. IN WITNESS WHEREOF THE PARTIES HERETO, HAVING BEEN DULY AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND SEALS ON THE DATE FIRST ABOVE WRITTEN. MARITIME TRANSPORT & TECHNOLOGY, B.G. BANKING EQUIPMENT, INC. INC. BY:__/s/ Paul D. Clark___________ BY:__/s/ Paul D. Clark_____ Paul D. Clark Paul D. Clark PRESIDENT PRESIDENT EXHIBIT 2 George Bergleitner 108 Main St. Stamford, NY 12167-1137 Paul Clark Maritime Transport & Technology, Inc. 1535 Memphis Junction Road Bowling Green, Kentucky 42101 Dear Paul, Effective immediately, I am resigning as both a director and as President of Maritime Transport & Technology, Inc. My final act as president of the corporation was to ensure that the company is current in all of its financial reports as required by the Securities and Exchange Commission under the Securities Exchange Act of 1934. Sincerely, /s/ George Bergleitner George Bergleitner EXHIBIT 3 MARITIME TRANSPORT & TECHNOLOGY, INC. Pro Forma Condensed Financial Statements (Unaudited) The following unaudited proforma combined condensed financial statements present a combined balance sheet and related statements of income, cash flows and stockholders' equity of Maritime Transport & Technology, Inc. (the "Company"), B.G. Banking Equipment, Inc., ("B.G. Banking") and Financial Building Equipment Exchange, Inc., ("FBEE"), Kentucky corporations. giving effect to the reverse acquisition and using the purchase method of accounting for the proposed combination pursuant to an Agreement of Business Combination, the ("Agreement"), which was dated on May 3, 1998. The combination with B.G. Banking and FBEE is reflected using the purchase method of accounting, whereby the Company will issue 11,282,250 shares of common stock in exchange for all of the issued and outstanding shares of B.G. Banking and FBEE. The pro forma combined condensed balance sheet as of May 31, 1998 and the related statements of income for the year ended May 31, 1998 giving effect to the proposed transactions as if they had been in effect throughout the periods presented. The information shown is based upon numerous assumptions and estimates and is not necessarily indicative of the results of future operations of the combined entities or the actual results that would have occurred had the transaction been consummated during the periods indicated . These statements should be read in conjunction with the consolidated financial statements of the Company, and the financial statements of B.G. Banking and FBEE included herein.
MARITIME TRANSPORT & TECHNOLOGY, INC. CONSOLIDATED PROFORMA BALANCE SHEET MAY 31, 1998 Financial Maritime Building Consolidated Transport & B.G. Banking Equipment Maritime Transport & Technology, Inc. Equipment, Inc. Exchange, Inc. Adjustments Technology, Inc. Assets Current assets Cash and cash equivalents $-0- $40,639 $34,950 $75,589 Accounts receivable 253,859 56,227 310,086 Inventory 87,763 86,032 173,795 Note receivable 13,200 13,200 Corporate income taxes receivable 5,358 3,567 8,925 Prepaid expenses 1,200 1,200 Current assets 385,819 193,976 579,795 Capital assets-net 26,901 17,142 44,043 Other assets Loans receivable - non affiliated 27,499 27,499 Loans receivable-shareholder 34,081 17,870 51,951 Loan receivable affiliate 39,400 39,400 Security deposit 805 805 Total other assets 101,785 17,870 119,655 Total assets $-0- $514,505 $228,988 $743,493 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $150,959 $47,454 $198,413 Customer deposits 61,406 61,406 Corporate income tax payable 1,580 1,580 Investor loans payable 131,500 131,500 Notes payable-bank 7,274 102,064 109,338 Total current liabilities 1,580 351,139 149,518 502,237 Long term liabilities Note payable - bank 13,855 13,855 Total liabilities 364,994 149,518 514,512 Capital stock Common stock-authorized 80,000,000 common shares, par value $.01 each, at May 31, 1998 the shares (4,000) outstanding was 15,130,705 38,485 2,000 2,000 112,823 151,308 Additional paid in capital 346,360 116,158 462,518 Retained earnings (386,425) 147,511 77,470 (224,981) (386,425) Total stockholders' equity (1,580) 149,511 79,470 -0- 227,401 Total liabilities and stockholders' equity $-0- $514,505 $228,988 $-0- $743,493
MARITIME TRANSPORT & TECHNOLOGY, INC. POFORMA CONSOLIDATED STATEMENT OF OPERATIONS MAY 31, 1998 Financial Consolidated Maritime B.G. Banking Building Maritime Transport Transport & Equipment, Inc Equipment & Technology, Inc. Technology, Inc. Exchange, Inc. Adjustments Revenue $-0- $869,482 $196,320 $1,065,802 Costs of goods sold -0- 393,008 72,007 465,015 Gross profit -0- 476,474 124,313 600,787 Operations: General and administrative 53 520,030 162,340 682,423 Depreciation and amortization -0- 24,983 20,955 45,938 Total expense 53 545,013 183,295 728,361 Income before corporate taxes (68,539) (58,982) (127,521) Corporate income taxes Other income and expenses Interest Income 2,244 402 2,646 Interest expense (6,922) (6,922) Total other income and expenses 2,244 (6,520) (4,276) Net income (loss) $53 $(66,295) $65,502 $(740) Net income (loss) per share -basic $(0.00) $(0.00) $0.00 $0.00 Number of shares outstanding-basic 15,130,705 15,130,705 15,130,705 15,130,705
MARITIME TRANSPORT & TECHNOLOGY, INC. PROFORMA CONSOLIDATED STATEMENT OF CASH FLOWS Financial Consolidated Maritime Transport Building Maritime Transport & Technology, Inc. B.G. Banking Equipment & Technology, Inc. Equipment, Inc Exchange, Inc Adjustments CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(53) $(66,295) $(65,502) $(131,850) Depreciation 24,983 20,955 45,938 Account receivables (96,773) (31,134) (127,907) Inventory (6,404) (3,000) (9,404) Federal taxes receivable 618 618 Prepaid expenses (1,200) (1,200) Accounts payable and accrued expenses 64,113 (17,001) 47,112 Customer deposits payable 18,919 (6,066) 12,853 Corporate taxes payable (19,749) (5,211) (24,960) TOTAL CASH FLOWS FROM OPERATIONS (53) (82,406) (106,341) (188,800) CASH FLOWS FROM INVESTING ACTIVITIES Capital assets (39,682) (39,682) Note receivable-affiliate (39,400) 23,345 ( 16,055) Note receivable- non affiliate (4,423) (4,423) TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (83,505) 23,345 (60,160) CASH FLOWS FROM FINANCING ACTIVITIES Loan payable- investors 131,500 131,500 Note payable-bank 21,129 101,239 122,368 TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 152,629 101,239 253,868 NET INCREASE (DECREASE) IN CASH (53) (13,282) 18,243 4,908 CASH BALANCE BEGINNING OF PERIOD 53 53,921 16,707 70,681 CASH BALANCE END OF PERIOD $-0- $40,639 $34,950 $75,589
MARITIME TRANSPORT & TECHNOLOGY, INC. PROFORMA CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY Additional Accumulated Common Stock Common paid in deficit during Stock capital development stage Total June 1, 1994 38,484,549 384,845 $-0- $(384,845) $-0- May 31, 1995 Net profit 1,579 1,579 May 31, 1995 38,484,549 $384,845 $-0- $(383,266) $1,579 May 31, 1996 Net profit 1,866 1,866 May 31, 1996 38,484,549 384,845 $-0- (381,400) 3,445 May 31, 1997 Net loss (4,952) (4,952) May 31, 1997 38,484,549 384,845 $-0- $(386,372) $(1,527) April 14, 1998(1) 3,848,455 38,485 346,360 (386,372) (1,527) May 3, 1998(2) 11,282,250 112,823 116,158 228,981 May 31, 1998 Net loss (53) (53) May 31, 1998 15,130,705 $151,308 462,518 $(386,425) 227,401 (1) Reflects a 10 to 1 reverse split. (2) Reflects the issuance of shares for acquisitions valued at $.02 per share.
Note 1 - Organization of Company and Issuance of Common Stock a. Creation of the Company Maritime Transport & Technology, Inc. (the "Company") was formed under the laws of the State of New York on June 26, 1968 under the name of Inter-County Premium Advancing Corp. with an authorized capital of 200 common shares, no par value. On May 21, 1969, the Company amended its certificate of incorporation changing its name to Inter County Premium Advancing Corp. and amending the authorized number of shares to 2,000,000, $.01 par value. On November 15, 1971, the Company amended its certificate of incorporation changing its name to IPA Enterprises Corp. On June 22, 1976, the Company amended its certificate of incorporation changing its name to Delhi Chemicals, Inc. On April 2, 1981 the Company amended its certificate of incorporation changing its name to Delhi Consolidated Industries, Inc. On April 11, 1989, the Company amended its certificate of incorporation changing its name to Maritime Transport & Technology, Inc. and increasing the number of shares authorized to 40,000,000 common shares with a par value of $.01. A correction to the amendment to the certificate of incorporation dated April 11, 1989 was filed changing the number of common shares authorized to issue to 80,000,000 shares, $.01 par value. b. Description of the Company On May 31, 1998, the Company completed the acquisition of B.G. Banking Equipment, Inc., ("B.G. Banking") and Financial Building Equipment Exchange, Inc., ("FBEE"), Kentucky corporations. The Company is in the business of buying, selling, trading and refurbishing of financial equipment for banks and other financial institutions c. Issuance of Common Stock The number of common shares outstanding at May 31, 1997 is 38,484,549. No other shares have been issued. . On May 3, 1998, the Company reverse split the number of shares of common stock outstanding in a ratio of 1 for 10 restating the number of shares outstanding to 3,848,455. On May 3, 1998, the Company authorized for issuance 11,282,250 shares of common stock pursuant to an Agreement of Business Combination, the ("Agreement"), with B.G. Banking and FBEE. On May 31, 1998, the shares of common stock were released from escrow. Note 2-Summary of Significant Accounting Policies a. Basis of Financial Statement Presentation The proforma consolidated financial statements presented consist of the proforma balance for the Company of as of May 31, 1998, and the proforma balance sheet for B.G. Banking and FBEE as of May 31, 1998 and the related proforma statements of operations, retained earnings and cash flows for the year ended May 31, 1998 for the Company, and the related proforma statements of operations, retained earnings and cash flows for the nine months ended May 31, 1998 for B.G. Banking and FBEE. b. Cash and Cash Equivalents The Company treats temporary investments with a maturity of less than three months as cash. d. Earnings per share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No. 128"). Statement No. 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of basic and diluted earnings per share by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing net income by the total number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could dilute the shares in computing the earnings of the Company such as common stock which may be issuable upon exercise of outstanding common stock options or the conversion of debt into common stock. Pursuant to the requirements of the Securities and Exchange Commission, the calculation of the pro forma shares used in computing pro forma basic and diluted EPS include the pro forma shares of common stock outstanding as of May 31, 1998. The pro forma Shares used in calculating basic and diluted net income per share were as follows: May 31, 1998 Total number common shares outstanding 3,848,455 Effect of the issuance of shares pursuant to the Agreement 11,282,250 Total shares outstanding 15,130,705 e. Revenue recognition Revenue is recognized when products are shipped or services are rendered. f. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 3 - Acquisition of Subsidiaries On May 3, 1998, The Company entered into an Agreement with B.G. Banking and FBEE, pursuant to which the Company and an affiliated entity controlled my Paul and Roberta Clark exchanged all the issued and outstanding shares of common stock of these entities for 11,282,250 shares of Maritime's common stock. The shares of common stock were released from escrow on May 31, 1998. The transaction has been accounted for as a reverse acquisition and using the purchase method of accounting with historic costs being the basis of valuation, and accordingly, the accompanying financial statements include the results of operations of the consolidated operations from the effective date of the acquisition May 31, 1998. In a separate private transaction, the principals of the Company acquired on in December, 1997 27,943,370 shares of Maritime's common stock, which subsequently reverse split in a ratio of 10 to 1 on April 14, 1998. Note 4 - Related Party transactions a. Leased Office Space For the year ended May 31, 1998, the Company leases office space from the Company's President rent free on a month to month basis at Apt. 7A, 161 West 15th Street, New York, N.Y. 1011. The Company has entered into a three year lease with Paul Clark, President of the Company, for the lease of an aggregate of 23,976 square feet of office and warehouse space located at Building 1535 Memphis Junction Road, Bowling Green, Kentucky, 42101 for a monthly rent of $ 5,000 pursuant to a lease dated August 1, 1998 for 3 years. b. Officer Salaries No officer received a salary or other benefits in excess of $100,000. b. Due to Related Parties Certain officers of the Company have the following amounts due as of August 31, 1997 and May 31, 1998 aggregating $34,081 and $133,844 respectively. These amounts are payable on demand without interest. c. Managerial Relationship Mr. Paul Clark is the President of both the Company, B.G. Banking and FBEE. Paul and Roberta Clark are husband and wife. d. Change in Managerial Control On May 3, 1998, The Company entered into an Agreement with B.G. Banking and FBEE, pursuant these affiliated entities controlled my Paul and Roberta Clark exchanged all the issued and outstanding shares of common stock of these entities for 11,282,250 shares of Maritime's common stock. Note 5 - Marketable Securities, Available for Sale The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that investments in equity securities that have readily determinable fair values and investments in debt securities be classified in three categories: held-to-maturity, trading and available-for-sale. Based on the nature of the assets held by the Company and Management's investment strategy, the Company's investments have been classified as available-for-sale. Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available-for-sale are carried at estimated fair value, as determined by quoted market prices, with unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. At May 31, 1998, the Company had no investments that were classified as trading or held-to-maturity as defined by the Statement. The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at May 31, 1998:
Gross Gross Estimated Unrealized Unrealized Fair ` Cost Gains Gains Value ------ ------------- ------------- ------------- Cash $10 $-0- $-0- $10 Total cash and cash equivalents $10 $-0- $-0- $10 == === === ===
The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at May 31, 1998 for B.G. Banking:
Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 23,698 $-0- $ -0- $ 23,698 Total cash and cash equivalents $ 23,698 $-0- $ -0- $ 23,698
The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at May 31, 1998 for FBEE:
Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 34,950 $-0- $-0- $34,950 Total cash and cash equivalents $ 34,950 $-0- $-0- $34,950
Note 6 - Capital Assets a. Inventory Inventory has been recorded at the lower of cost or market under the first-in-first-out method. Inventory components for B.G. Banking as of May 31, 1998 were goods available for sale aggregating $72,852. Inventory components for FBEE as of May 31, 1998 were goods available for sale aggregating $86,032. b. Capital Assets Capital Assets for B.G. Banking consisted of the following at May 31, 1998: Asset Equipment and tools $ 46,344 Autos and trucks 81,572 Office equipment 24,895 Leasehold improvements 13,745 Total $166,556 Less accumulated depreciation 139,655 Total $ 26,901 Capital Assets for FBEE consisted of the following at May 31, 1998: Office equipment $ 8,668 Autos and trucks 83,997 Equipment and tools 44,148 Total assets 136,813 Less accumulated depreciation 119,671 Net assets $ 17,142 Note 7 - Bank Loans Payable a. Loans Due South Central Bank of Bowling Green, Inc. B.G. Banking is obligated to repay a loan payable to the South Central Bank of Bowling Green, Inc. in the principal amount of $8,052 in 36 equal monthly installments of $263.54 beginning January 16, 1998 with interest at 11%. The balance due at May 31, 1998 is $7,077. The loan is secured by a 1992 Ford truck. B.G. Banking is obligated to repay a loan payable to the South Central Bank of Bowling Green, Inc. in the principal amount of $14,052 in 40 equal monthly installments of $342.66 beginning June 20, 1998 with interest at 7.75%. The balance due at May 31, 1998 is $14,052. The loan is secured by a 19925 Buick Park Avenue. b. First American National Bank FBEE is obligated to repay a balance of $100,500 at May 31, 1998 against a $150,000 line of credit with interest at prime plus 2%. Interest is billed monthly. The line of credit is secured personally by the residence of Paul and Roberta Clark. c. Note Payable South Central Bank of Bowling Green, Inc. FBEE is obligated to repay the balance of $1,564 as of May 31, 1998 in equal monthly installments of $273.47. The note is secured by a Ford F-150 truck. Note 8 - Loans Payable Investors On January 1, 1998, B.G. Banking conducted a private placement offering 3,000,000 shares of common stock at $1.00 per share. As of May 31, 1998, the Company received an aggregate of $131,500. The moneys received are reflected as an investor loan payable until the shares of common stock are issued by the Company. Note 9 - Income Taxes The Company provides for the tax effects of transactions reported in the financial statements. The provision if any, consists of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities, if any, represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of May 31, 1996 and 1997, the Company had no material current tax liability, deferred tax assets, or liabilities to impact on the Company's financial position because the deferred tax asset related to the Company's net operating loss carry forward and was fully offset by a valuation allowance. At May 31, 1997, the Company has net operating loss carry forwards for income tax purposes of $224,981. These carry forward losses are available to offset future taxable income, if any, and expire in the year 2010. The Company's utilization of this carry forward against future taxable income may become subject to an annual limitation due to a cumulative change in ownership of the Company of more than 50 percent. The components of the net deferred tax asset as of May 31, 1998 are as follows: Deferred tax asset: Net operating loss carry forward $ 76,935 Valuation allowance $(76,981) Net deferred tax asset $ -0- The Company recognized no income tax benefit for the loss generated for the year ended May 31, 1997 and 1998. The Company recognized no income tax benefit from the loss generated in the year ended May 31, 1997. SFAS No. 109 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company's ability to realize benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize significant revenue from the sale of its products, the Company believes that a full valuation allowance should be provided. Note 10 - Commitments and Contingencies Financial consulting Agreements During the year, the Company entered into various financial consulting agreements with various clients under similar terms and conditions. As of May 31, 1998, all financial consulting relationships had been completed. Note 11 - Business and Credit Concentrations The amount reported in the financial statements for cash, trade accounts receivable and investments approximates fair market value. Because the difference between cost and the lower of cost or market is immaterial, no adjustment has been recognized and investments are recorded at cost. Financial instruments that potentially subject the company to credit risk consist principally of trade receivables. Collateral is generally not required. Note 12 - Development Stage Company The Company was considered to be a development stage company with minimal operations. The Company was dependent upon the financial resources of the Company's management for its continued existence. Since its reorganization, the Company has acquired operating entities with sufficient cash flow to sustain operations. The Company will continue to require additional funds to complete its planned expansion plans for a larger market share of the Company's present business, hire additional staff and finance increased inventory levels. THOMAS P. MONAHAN CERTIFIED PUBLIC ACCOUNTANT 208 LEXINGTON AVENUE PATERSON, NEW JERSEY 07502 (973) 790-8775 To The Board of Directors and Shareholders of Financial Building Equipment Exchange, Inc. I have audited the accompanying consolidated balance sheet of Financial Building Equipment Exchange, Inc. as of August 31, 1997 and the related consolidated statements of operations, cash flows and shareholders' equity for the years ending August 31, 1996 and 1997. These consolidated financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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 and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Financial Building Equipment Exchange, Inc. as of August 31, 1997 and the related consolidated statements of operations, cash flows and shareholders' equity for the years ending August 31, 1996 and 1997 in conformity with generally accepted accounting principles. /s/Thomas Monahan Thomas P. Monahan, CPA July 20, 1998 Paterson, New Jersey
FINANCIAL BUILDING EQUIPMENT EXCHANGE, INC. BALANCE SHEET May 31, August 31, 1998 1997 Unaudited Assets Current assets Cash and cash equivalents $16,707 $34,950 Accounts receivable 25,093 56,227 Inventory 83,032 86,032 Note receivable 13,200 13,200 Federal income tax receivable 4,205 3,567 Current assets 142,237 193,976 Capital assets-net 38,097 17,142 Other assets Loan receivable affiliate 618 Loan receivable-shareholder 41,215 17,870 Total other assets 41,833 17,870 Total assets $222,167 $228,988 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $60,235 $47,454 Customer deposits 6,066 Notes payable-bank 5,045 102,064 Corporate tax payable 5,849 Total current liabilities 77,195 149,518 Long term liabilities Note payable - bank Total liabilities Capital stock Common stock-authorized 2,000 common shares, par value $1.00 each, at August 31, 1997 and May 31, 1998 the number of shares outstanding was 2,000 respectively. 2,000 2,000 Retained earnings 142,972 77,470 Total stockholders' equity 144,972 79,470 Total liabilities and stockholders' equity $222,167 $228,988
FINANCIAL BUILDING EQUIPMENT EXCHANGE, INC. STATEMENT OF OPERATIONS For the nine For the nine For the year For the year months ended May months ended May ended ended 31, 31, August 31, 1996 August 31, 1997 1997 1998 Unaudited Unaudited Revenue $358,923 $402,547 $315,479 $196,320 Costs of goods sold 160,406 166,304 111,668 72,007 Gross profit 198,517 236,243 203,811 124,313 Operations: General and administrative 178,291 157,364 94,312 162,340 Depreciation and amortization 19,186 22,111 21,342 20,955 Total expense 197,477 179,475 115,654 183,295 Income before corporate taxes (58,982) Corporate income taxes Other income and expenses Interest Income 402 Interest expense (6,922) Total other income and expenses (6,520) Net income (loss) $1,040 $56,768 $88,157 $(65,502) Net income (loss) per share -basic Number of shares outstanding-basic
FINANCIAL BUILDING EQUIPMENT EXCHANGE, INC. STATEMENT OF CASH FLOWS For the nine For the nine For the year For the year months ended months ended ended ended May 31, May 31, August 31, August 31, 1997 1998 1996 1997 Unaudited Unaudited Net income (loss) $(1,719) $56,768 $88,157 $(65,502) Depreciation 19,186 22,111 21,342 20,955 Adjustments to reconcile net income (loss) to net cash Account receivables (13,174) (8,572) (21,064) (31,134) Inventory 34,291 (23,204) (23,422) (3,000) Prepaid expenses 618 400 Federal taxes receivable (4,605) 618 Accounts payable and accrued expenses (24,706) 59,485 18,411 (12,781) Customer deposits payable 14,900 (12,234) (14,284) (6,066) Corporate taxes payable (1,038) 5,849 (5,211) TOTAL CASH FLOWS FROM OPERATIONS 23,753 100,603 69,140 (102,121) CASH FLOWS FROM INVESTING ACTIVITIES Capital assets (27,907) (33,902) (36,720) Notes receivable (13,200) (8,700) Due from affiliate 3,105 (618) 26,963 Due to affiliate 7,548 (7,548) Loan receivable-shareholder (41,215) (52,152) 23,345 TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (17,254) (96,483) (70,609) 23,345 CASH FLOWS FROM FINANCING ACTIVITIES Notes payable (1,977) (5,589) 97,019 TOTAL CASH FLOWS FROM FINANCING ACTIVITIES (1,977) (5,589) 97,019 NET INCREASE (DECREASE) IN CASH 4,522 (1,469) (1,469) 18,243 CASH BALANCE BEGINNING OF PERIOD 13,654 18,176 18,176 16,707 CASH BALANCE END OF PERIOD $18,176 $16,707 $16,707 $34,950
FINANCIAL BUILDING EQUIPMENT EXCHANGE, INC. STATEMENT OF STOCKHOLDERS EQUITY Common Stock Common Stock Retained Date Earnings Total 09-01-1995 2,000 $2,000 $85,164 $87,164 08-31-1996 Net profit 1,040 1,040 08-31-1996 2,000 $2,000 $86,204 $88,204 08-31-1997 Net profit 56,768 56,768 08-31-1997 2,000 $2,000 $142,972 $144,972 Unaudited 05-31-1998 Net profit (65,502) (65,502) 05-31-1998 2,000 $2,000 $77,470 $79,470
Note 1 - Organization of Company and Issuance of Common Stock a. Creation of the Company Financial Building Equipment Exchange, Inc. (the "Company") was formed under the laws of Kentucky on October 12, 1989 and is authorized to issue 2,000 shares of common stock, no par value each. b. Description of the Company The Company is in the business of buying, selling, trading and refurbishing of finacial equipment for banks and other finacial institutions. c. Issuance of Capital Stock On October 13, 1989, the Company issued an aggregate of 2,000 shares of common stock to Paul and Roberta Clark in consideration for an aggregate of $2,000. Note 2 - Summary of Significant Accounting Policies a. Basis of Financial Statement Presentation The financial statements presented consist of the balance sheet of the Company as at August 31, 1997 and the unaudited balance sheet as of May 31, 1998 and the related statements of operations, stockholders equity and cash flows for the years ended August 31, 1996 and 1997 and the related unaudited statements of operations, stockholders equity and cash flows for the nine months ended May 31, 1997 and 1998. b. Cash and cash equivalents The Company treats temporary investments with a maturity of less than three months as cash. c. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives using the straight line methods over a period of five years. Maintenance and repairs are charged against income and betterment's are capitalized. d. Earnings per share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No. 128"). Statement No. 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of basic and diluted earnings per share by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing net income by the total number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could dilute the shares in computing the earnings of the Company such as common stock which may be issuable upon exercise of outstanding common stock options or the conversion of debt into common stock. Pursuant to the requirements of the Securities and Exchange Commission, the calculation of the shares used in computing basic and diluted EPS include the shares of common stock outstanding as of May 31, 1998. Shares used in calculating basic and diluted net income per share were as follows: Year ended Year ended Nine months Nine months August 31, August 31, May 31, May 31, 1996 1997 1997 1998 -------------------------------------------------------------- Total number common shares outstanding 1,000 1,000 1,000 1,000 e. Revenue recognition Revenue is recognized when products are shipped or services are rendered. f. Selling and Marketing Costs Selling and Marketing - Certain selling and marketing costs are expensed in the period in which the cost pertains. Other selling and marketing costs are expensed as incurred g. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. h. Significant Concentration of Credit Risk At August 31, 1997 and May 31, 1998, the Company has concentrated its credit risk by maintaining deposits in several banks. The maximum loss that could have resulted from this risk totaled $-0- and $-0- respectively which represents the excess of the deposit liabilities reported by the banks over the amounts that would have been covered by the federal insurance. i. Asset Impairment The Company adopted the provisions of SFAS No. 121, Accounting for the impairment of long lived assets and for long-lived assets to be disposed of effective January 1, 1996. SFAS No. 121 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the estimated undiscounted cash flows to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. There was no effect of such adoption on the Company's financial position or results of operations. Note 3 - Sale of Company On April 15, 1998, the Company entered into an Agreement of Business Combination, the ("Agreement"), with Maritime Transport & Technology, Inc., a New York corporation, pursuant to which the Company and an affiliated entity controlled my Paul and Roberta Clark exchanged all the issued and outstanding shares of common stock of these entities for 11,282,250 shares of Maritime's common stock. The transaction has been accounted for as a reverse acquisition and using the purchase method of accounting with historic costs being the basis of valuation, and accordingly, the accompanying financial statements include the results of operations of the consolidated operations from the effective date of the acquisition May 31, 1998. Note 4 - Marketable Securities, Available for Sale The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that investments in equity securities that have readily determinable fair values and investments in debt securities be classified in three categories: held-to-maturity, trading and available-for-sale. Based on the nature of the assets held by the Company and Management's investment strategy, the Company's investments have been classified as available-for-sale. Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available-for-sale are carried at estimated fair value, as determined by quoted market prices, with unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. At August 31, 1997, the Company had no investments that were classified as trading or held-to-maturity as defined by the Statement. The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at August 31, 1996: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 16,707 $-0- $ -0- $ 16,707 Total cash and cash equivalents $ 16,707 $-0- $ -0- $ 16,707 The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at May 31, 1998: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 34,950 $-0- $-0- $34,950 Total cash and cash equivalents $ 34,950 $-0- $-0- $34,950 Note 6 - Capital Assets Capital Assets for the Company consisted of the following at August 31, 1997: Office equipment $ 8,668 Autos and trucks 87,136 Equipment and tools 43,897 Total assets 139,700 Less accumulated depreciation 101,603 Net assets $38,097 Capital Assets for the Company consisted of the following at May 31, 1998: Office equipment $ 8,668 Autos and trucks 83,997 Equipment and tools 44,148 Total assets 136,813 Less accumulated depreciation 119,671 Net assets $ 17,142 Note 7 - Related Party transactions a. Issuance of Shares of Capital Stock The Company issued and aggregate of 1,000 shares of common stock to Paul and Roberta Clark in consideration for $2,000. b. Managerial Relationship Mr. Paul Clark is the President of both the Company and Financial Building Equipment Exchange, Inc. c. Change in Managerial Control On April 15, 1998, the Company exchanged all of its issued and outstanding shares of common stock in exchange for 11,282,250 shares of Maritime pursuant to Agreement. This Agreement enables the Company to have majority managerial and financial control in the decision making process of the Maritime. In a separate private transaction, the principals of the Company acquired on in December, 1997 27,943,370 shares of Maritime's common stock, which subsequently reverse split in a ratio of 10 to 1 on April 14, 1998. Note 8 - Income Taxes The Company provides for the tax effects of transactions reported in the financial statements. The provision if any, consistsof taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities, if any represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of August 31, 1997 and May 31, 1998, the Company's current tax liability was $14,389 and $3,567 respectively. Note 9 - Bank Notes Payable a. First American National Bank The Company is obligated to repay a balance of $100,500 at May 31, 1998 against a $150,000 line of credit with interest at prime plus 2%. Interest is billed monthly. The line of credit is secured personally by the residence of Paul and Roberta Clark. b. Note Payable South Central Bank of Bowling Green, Inc. The Company is obligated to repay the balance of $1,564 as of may 31, 1998 in equal monthly installments of $273.47. The note is secured by a Ford F-150 truck. THOMAS P. MONAHAN CERTIFIED PUBLIC ACCOUNTANT 208 LEXINGTON AVENUE PATERSON, NEW JERSEY 07502 (973) 790-8775 To The Board of Directors and Shareholders of B.G. Banking Equipment, Inc. I have audited the accompanying consolidated balance sheet of B.G. Banking Equipment, Inc. as of August 31, 1997 and the related consolidated statements of operations, cash flows and shareholders' equity for the years ending August 31, 1996 and 1997. These consolidated financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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 and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of B.G. Banking Equipment, Inc. as of August 31, 1997 and the related consolidated statements of operations, cash flows and shareholders' equity for the years ending August 31, 1996 and 1997 in conformity with generally accepted accounting principles. /s/ Thomas P. Monahan Thomas P. Monahan, CPA July 20, 1998 Paterson, New Jersey
B.G. BANKING EQUIPMENT, INC. BALANCE SHEET August 31, May 31, 1997 1998 Assets Current assets Cash and cash equivalents $53,921 $40,639 Accounts receivable 157,086 253,859 Inventory 78,359 84,763 Corporate income taxes receivable 5,358 Prepaid expenses 1,200 Current assets 289,366 385,819 Capital assets-net 12,200 26,901 Other assets Loans receivable - non affiliated 23,076 27,499 Loans receivable-shareholder 34,081 34,081 Loan receivable affiliate 39,400 Security deposit 805 805 Total other assets 57,962 101,785 Total assets $359,528 $514,505 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $86,846 $150,959 Customer deposits 42,487 61,406 Corporate income tax payable 14,389 Notes payable - investors 131,500 Notes payable-bank 7,274 Total current liabilities 1,143,722 351,139 Long term liabilities Note payable - bank 13,855 Total liabilities 364,994 Capital stock Common stock-authorized 2,000 common shares, par value $1.00 each, at August 31, 1997 and May 31, 1998 the number of shares outstanding was 2,000 respectively. 2,000 2,000 Retained earnings 213,806 147,511 Total stockholders' equity 215,806 149,511 Total liabilities and stockholders' equity $359,528 $514,505
B.G. BANKING EQUIPMENT, INC. STATEMENT OF OPERATIONS For the nine For the nine For the year For the year months ended May months ended May ended ended 31, 31, August 31, 1996 August 31, 1997 1997 1998 Unaudited Unaudited Revenue $774,930 $1,096,756 $714,874 $869,482 Costs of goods sold 375,868 533,787 382,234 393,008 Gross profit 399,062 562,969 332,640 476,474 Operations: General and administrative 378,015 467,235 264,207 520,030 Depreciation and amortization 9,678 11,097 13,908 24,983 Total expense 387,693 478,330 278,115 545,013 Income before corporate taxes 11,369 84,639 54,525 (68,539) Corporate income taxes 2,559 16,032 11,757 Other income and expenses Interest Income Interest income 350 2,107 725 2,244 Total other income and expenses 350 2,107 725 2,244 Net income (loss) $8,460 $70,714 $43,493 $(66,295) Net income (loss) per share -basic Number of shares outstanding-basic
B.G. BANKING EQUIPMENT, INC. STATEMENT OF CASH FLOWS For the nine For the nine For the year For the year months ended months ended ended ended May 31, May 31, August 31, August 31, 1997 1998 1996 1997 Unaudited Unaudited Net income (loss) $8,460 $70,714 $43,493 $(66,295) Depreciation 9,678 11,097 13,908 24,983 Adjustments to reconcile net income (loss) to net cash Account receivables 4,056 (72,427) 3,092 (96,773) Inventory (70,600) 1,491 (33,514) (6,404) Prepaid expenses (3,887) 3,887 (16,913) (1,200) Accounts payable and accrued expenses 72,403 (10,790) (25,338) 64,113 Customer deposits payable 2,564 2,063 (11,407) 18,919 Corporate taxes payable 6,400 12,389 5,870 (19,749) TOTAL CASH FLOWS FROM OPERATIONS 29,074 18,424 (20,809) (82,406) CASH FLOWS FROM INVESTING ACTIVITIES Capital assets (656) (7,227) (5,820) (39,682) Note receivable-affiliate (1,284) (222) (124,163) Note receivable- non affiliate (4,423) TOTAL CASH FLOWS FROM INVESTING ACTIVITIES 9,621 (8,511) (6,042) (168,268) CASH FLOWS FROM FINANCING ACTIVITIES Loan payable- investors 131,500 Note payable-bank 21,129 TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 152,629 NET INCREASE (DECREASE) IN CASH 28,986 9,913 (26,851) (13,282) CASH BALANCE BEGINNING OF PERIOD 15,022 44,008 44,008 53,921 CASH BALANCE END OF PERIOD $44,008 $53,921 $17,157 $40,639
B.G. BANKING EQUIPMENT, INC. STATEMENT OF STOCKHOLDERS EQUITY Common Stock Common Stock Retained Date Earnings Total 09-01-1995 2,000 $2,000 $134,632 $136,632 08-31-1996 Net profit 8,460 8,460 08-31-1996 2,000 $2,000 $143,092 $145,092 08-31-1997 Net profit 70,714 70,714 08-31-1997 2,000 $2,000 $213,806 $215,806 Unaudited 05-31-1998 Net loss (66,295) (66,295) 05-31-1998 2,000 $2,000 $147,511 $149,511
Note 1. Organization of Company and Issuance of Common Stock a. Creation of the Company B.G. Banking Equipment, Inc., (the "Company") was formed under the laws of Kentucky on March 10, 1977 as AAA Alarms and Services, Inc. with an authorized capitalization of 1,000 common shares, $1.00 par value each. On September 1, 1993 the certificate of incorporation was amended changing the name of the Company to B.G. Banking Equipment, Inc. b. Description of the Company The Company is in the business of buying, selling, trading and refurbishing of financial equipment for banks and other financial institutions. c. Issuance of Capital Stock On March 11, 1997, the Company issued an aggregate of 2,000 shares of common stock to Roberta Clark and Paul Clark in consideration for $2,000 or $1.00 per share. Note 2-Summary of Significant Accounting Policies a. Basis of Financial Statement Presentation The financial statements presented consist of the balance sheet of the Company as at August 31, 1996 and 1997 and the unaudited balance sheet as of May 31, 1998 and the related statements of operations, stockholders equity and cash flows for the years ended August 31, 1996 and 1997 and the related unaudited statements of operations, stockholders equity and cash flows for the nine months ended May 31, 1997 and 1998. b. Cash and cash equivalents The Company treats temporary investments with a maturity of less than three months as cash. c. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives using the straight line methods over a period of five years. Maintenance and repairs are charged against income and betterment's are capitalized. d. Earnings per share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No. 128"). Statement No. 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of basic and diluted earnings per share by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing net income by the total number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could dilute the shares in computing the earnings of the Company such as common stock which may be issuable upon exercise of outstanding common stock options or the conversion of debt into common stock. Pursuant to the requirements of the Securities and Exchange Commission, the calculation of the shares used in computing basic and diluted EPS include the shares of common stock outstanding as of May 31, 1998. Shares used in calculating basic and diluted net income per share were as follows: Year ended Year ended Nine months Nine months August 31, August 31, May 31, May 31, 1996 1997 1997 1998 ----------------------------------------------------------- Total number common shares outstanding 2,000 2,000 2,000 2,000 e. Revenue recognition Revenue is recognized when products are shipped or services are rendered. f. Selling and Marketing Costs Selling and Marketing - Certain selling and marketing costs are expensed in the period in which the cost pertains. Other selling and marketing costs are expensed as incurred g. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. h. Significant Concentration of Credit Risk At August 31, 1997 and May 31, 1998, the Company has concentrated its credit risk by maintaining deposits in several banks. The maximum loss that could have resulted from this risk totaled $-0- and $-0- respectively which represents the excess of the deposit liabilities reported by the banks over the amounts that would have been covered by the federal insurance. i. Asset Impairment The Company adopted the provisions of SFAS No. 121, Accounting for the impairment of long lived assets and for long-lived assets to be disposed of effective January 1, 1996. SFAS No. 121 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the estimated undiscounted cash flows to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. There was no effect of such adoption on the Company's financial position or results of operations. Note 3 - Sale of Company On April 15, 1998, the Company entered into an Agreement of Business Combination, the ("Agreement"), with Maritime Transport & Technology, Inc., a New York corporation, pursuant to which the Company and an affiliated entity controlled my Paul and Roberta Clark exchanged all the issued and outstanding shares of common stock of these entities for 11,282,250 shares of Maritime's common stock. The transaction has been accounted for as a reverse acquisition and using the purchase method of accounting with historic costs being the basis of valuation, and accordingly, the accompanying financial statements include the results of operations of the consolidated operations from the effective date of the acquisition May 31, 1998. Note 4 - Loan Receivable The Company advanced $38,500, pursuant to Note Receivable to Morgan Glass & Mirror, Inc., dated January 1, 1997 with interest at 10.5%. The principal plus interest is due on demand. At August 31, 1997 and May 31, 1998, the net balance due the Company is $38,000 and $13,598 respectively. The Company advanced $13,900, pursuant to Note Receivable to AAA Alarm Systems, Inc. dated May 31, 1998 with interest at 10.5%. The principal plus interest is due on demand. At August 31, 1997 and May 31, 1998, the net balance due the Company is $13,900 and $13,900 respectively. Note 5 - Marketable Securities, Available for Sale The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that investments in equity securities that have readily determinable fair values and investments in debt securities be classified in three categories: held-to-maturity, trading and available-for-sale. Based on the nature of the assets held by the Company and Management's investment strategy, the Company's investments have been classified as available-for-sale. Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available-for-sale are carried at estimated fair value, as determined by quoted market prices, with unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. At August 31, 1997, the Company had no investments that were classified as trading or held-to-maturity as defined by the Statement. The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at August 31, 1997: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 53,921 $-0- $ -0- $ 53,921 Total cash and cash equivalents $ 53,921 $-0- $ -0- $ 53,921 The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at May 31, 1998: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value Cash $ 23,698 $-0- $ -0- $ 23,698 Total cash and cash equivalents $ 23,698 $-0- $ -0- $ 23,698 Note 6 - Assets a. Inventory Inventory has been recorded at the lower of cost or market under the first-in-first-out method. Inventory components as of August 31, 1997 and May 31, 1998 were goods available for sale aggregating $78,359 and $72,852 respectively. b. Capital Assets Capital Assets for the Company consisted of the following at August 31, 1997: Equipment and tools $ 34,154 Autos and trucks 54,078 Office equipment 24,895 Leasehold improvements 13,745 Total $126,872 Less accumulated depreciation 114,672 Total $ 12,200 Capital Assets for the Company consisted of the following at May 31, 1998: Asset Equipment and tools $ 46,344 Autos and trucks 81,572 Office equipment 24,895 Leasehold improvements 13,745 Total $166,556 Less accumulated depreciation 139,655 Total $ 26,901 Note 7 - Related Party transactions a. Issuance of Shares of Capital Stock The Company issued and aggregate of 2,000 shares of common stock to Paul and Roberta Clark in consideration for $2,000. b. Due to Related Parties Certain officers of the Company have the following amounts due as of August 31, 1997 and May 31, 1998 aggregating $34,081 and $133,844 respectively. These amounts are payable on demand without interest. c. Managerial Relationship Mr. Paul Clark is the President of both the Company and Financial Building Equipment Exchange, Inc. d. Change in Managerial Control On April 15, 1998, the Company exchanged all of its issued and outstanding shares of common stock in exchange for 11,282,250 shares of Maritime pursuant to Agreement. This Agreement enables the Company to have majority managerial and financial control in the decision making process of the Maritime. In a separate private transaction, the principals of the Company acquired on in December, 1997 27,943,370 shares of Maritime's common stock, which subsequently reverse split in a ratio of 10 to 1 on April 14, 1998. e. Lease of Office Space The Company rents an aggregate of 23,976 square feet of office and warehouse space from Paul Clark, the Company's President, located at Building 1535 Memphis Junction Road, Bowling Green, Kentucky, 42101 for a monthly rent of $ 5,000 pursuant to a lease dated August 1, 1998 for 3 years. Note 8 - Income Taxes The Company provides for the tax effects of transactions reported in the financial statements. The provision if any, consists of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities, if any represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of August 31, 1997 and May 31, 1998, the Company's current tax liability was $5,849 and $-0- respectively. Note 9 - Bank Loans Payable Loans Due South Central Bank of Bowling Green, Inc. The Company is obligated to repay a loan payable to the South Central Bank of Bowling Green, Inc. in the principal amount of $8,052 in 36 equal monthly installments of $263.54 beginning January 16, 1998 with interest at 11%. The balance due at May 31, 1998 is $7,077. The loan is secured by a 1992 Ford truck. The Company is obligated to repay a loan payable to the South Central Bank of Bowling Green, Inc. in the principal amount of $14,052 in 40 equal monthly installments of $342.66 beginning June 20, 1998 with interest at 7.75%. The balance due at May 31, 1998 is $14,052. The loan is secured by a 19925 Buick Park Avenue. Note 10 - Loans Payable Investors On January 1, 1998, the Company conducted a private placement offering 3,000,000 shares of common stock at $1.00 per share. As of May 31, 1998, the Company received an aggregate of $131,500. The moneys received are reflected as an investor loan payable until the shares of common stock are issued by the Company. EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from financial statements for the six month period ended June 31, 1998 and is qualified in its entirety by reference to such financial statements. 12-MOS MAY-31-1998 MAR-31-1998 75,589 0 237,234 0 158,884 495,032 303,369 259,326 743,493 502,237 0 0 0 151,308 76,093 743,493 0 0 0 53 0 0 0 (53) 0 (53) 0 0 0 (53) (0.00) (0.00)
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