-----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, NbgA3PMp3B1iqRN3swBGIAvov6HeHH9MVfeyhM8RZVs3JIAAQjhJ18oQEvrSQ7WQ 1uqpM0TfZjmwjbzvI6mqLA== 0000316128-98-000006.txt : 19980422 0000316128-98-000006.hdr.sgml : 19980422 ACCESSION NUMBER: 0000316128-98-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980421 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEXWEIGHT CORP CENTRAL INDEX KEY: 0000316128 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 480680109 STATE OF INCORPORATION: KS FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-09476 FILM NUMBER: 98597731 BUSINESS ADDRESS: STREET 1: 2133 E 9400 S STREET 2: SUITE 151 CITY: SANDY STATE: UT ZIP: 84093 BUSINESS PHONE: 8019440701 MAIL ADDRESS: STREET 1: 2133 E 9400 SOUTH STREET 2: SUITE 151 CITY: SANDY STATE: UT ZIP: 84093 10QSB 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended February 28, 1998 [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 (no fee required) for the transition period from ____________________ to _____________________ Commission file number: 0-9476 FLEXWEIGHT CORPORATION (Name of Small Business Issuer in Its Charter) Kansas 48-0680109 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 2133 East 9400 South, Suite 151, Sandy, Utah 84093 --------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (801) 944-0701 (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No XX The number of shares outstanding of Registrant's common stock ($0.10 par value) as of February 19, 1998 was 4,958,078. Total of Sequentially Numbered Pages: 6 Exhibit Index on Page: 6 1 TABLE OF CONTENTS PART 1 ITEM 1. FINANCIAL STATEMENTS..................................................3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............3 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................4 SIGNATURES............................................................5 INDEX TO EXHIBITS.....................................................6 PART I - -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Unless otherwise indicated, the term "Company" refers to Flexweight Corporation and its former subsidiaries and predecessors. Unaudited interim financial statements including a balance sheet for the Company as of the fiscal quarter ended February 28, 1998 and statements of operations and statements of cash flows for the interim period up to the date of such balance sheet and the comparable period of the preceding fiscal year are attached hereto as Pages F-1 through F-8 and are incorporated herein by this reference. This section intentionally left blank. 3 INDEPENDENT AUDITORS' REPORT The Board of Directors Flexweight Corporation (A Development Stage Company) Salt Lake City, Utah We have audited the accompanying balance sheet of Flexweight Corporation (a development stage company) as of August 31, 1997 and the related statements of operations, stockholders' equity (deficit), and cash flows for the years ended August 31, 1997 and 1996 and from inception on November 26, 1962 through August 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Flexweight Corporation (a development stage company) as of August 31, 1997 and the results of its operations and its cash flows for the years ended August 31, 1997 and 1996 and from its inception on November 26, 1962 through August 31, 1997 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is a development stage company and has no operating capital which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Jones, Jensen & Company November 11, 1997 F-1 FLEXWEIGHT CORPORATION (A Development Stage Company) UNAUDITED FINANCIAL STATEMENTS February 28, 1998 C O N T E N T S Unaudited Balance Sheet .....................................................F-3 Unaudited Statements of Operations ......................................... F-4 Unaudited Statements of Cash Flows ......................................... F-5 Notes to the Unaudited Financial Statements ................................ F-6 See notes to unaudited financial statements F-2 FLEXWEIGHT CORPORATION (A Development Stage Company) Unaudited Balance Sheet ASSETS February 28, 1998 CURRENT ASSETS Cash $ - _ Total Current Assets -_ TOTAL ASSETS $ - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 10,133 Taxes payable (Note 5) 12,500 Total Current Liabilities 22,633 STOCKHOLDERS' EQUITY (DEFICIT) Common stock: 5,000,000 shares authorized of $0.10 par value, 4,958,078 shares issued and outstanding 495,808 Additional paid-in capital 1,040,508 Deficit accumulated during the development stage (1,558,949) Total Stockholders' Equity (Deficit) (22,633) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ - The accompanying notes are an integral part of these financial statements F-3 FLEXWEIGHT CORPORATION (A Development Stage Company) Unaudited Statements of Operations From Inception on November 26, For the 6 Months Ended 1962 Through February 28, February 28, 1997 1996 1998 REVENUES $ - $ - $ - LOSS FROM DISCONTINUED OPERATIONS (NOTE 3) - - (2,048,687) GAIN FROM DISPOSITION OF DISCONTINUED OPERATIONS (Note 3) 220,888 - 499,871 NET INCOME (LOSS) $ 220,888 $ - $ (1,548,816) NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.04 $ - $ - The accompanying notes are an integral part of these financial statements F-4
FLEXWEIGHT CORPORATION (A Development Stage Company) Unaudited Statements of Cash Flows From Inception on November 26, For the 6 Months Ended 1962 Through February 28, February 28, 1998 1997 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) ........................................... $ 220,888 $ -- $ (1,769,704) Adjustments to reconcile net loss to net cash used by operating activities: Loss on discontinued operations ............................. -- -- 303,243 Gain on disposal of assets .................................. -- -- (278,983) Stock issued for services ................................... -- -- 105,612 Increase (decrease) in accounts and taxes payable ........... (220,888) -- 233,388 Net Cash Used by Operating Activities .................... -- -- (1,406,444) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment ....................................... -- -- (124,208) Net Cash Used by Investing Activities .................... -- -- (124,208) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable ................................. -- -- 350,000 Issuance of common stock for cash ........................... -- -- 1,180,652 Net Cash Provided by Financing Activities ................ -- -- 1,530,652 NET INCREASE (DECREASE) IN CASH ............................... -- -- -- CASH AT BEGINNING OF PERIOD ................................... -- -- -- CASH AT END OF PERIOD ......................................... $ -- $ -- $ -- CASH PAID FOR: Interest .................................................... $ -- $ -- $ -- Income taxes ................................................ $ -- $ -- $ -- NON CASH FINANCING ACTIVITIES Common stock issued for services ............................ $ -- $ -- $ 105,612 The accompanying notes are an integral part of these financial statements
F-5 FLEXWEIGHT CORPORATION (A Development Stage Company) Notes to the Unaudited Financial Statements February 28, 1998 NOTE 1 - ORGANIZATION AND HISTORY The Company was incorporated under the laws of the State of Kansas on November 26, 1962 under the name of 'Flexweight Drillpipe Company, Inc.' The purpose of the Company was to engage in manufacturing and marketing of double-wall drill pipe. It changed its name to 'Flexweight Corporation' on September 11, 1967. The Company filed for Chapter 11 bankruptcy protection on June 25, 1987. In September 1995, the Company's only asset, a building, was foreclosed upon. a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected an August 31 year end. b. Cash and Cash Equivalents Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. c. Loss Per Share The computations of loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. d. Provision for Taxes At February 28, 1998, the Company had net operating loss carryforwards of approximately $1,500,000 that may be offset against future taxable income through 2012. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation account of the same amount. e. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. The accompanying notes are an integral part of these financial statements F-6 FLEXWEIGHT CORPORATION (A Development Stage Company) Notes to the Unaudited Financial Statements February 28, 1998 NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to seek a merger with an existing, operating company. Until that time, shareholders of the Company have committed to meeting its minimal operating needs. NOTE 3 - DISCONTINUED OPERATIONS The Company has been inactive since August 1995. All activity subsequent to August 1995 is relating to the discontinued operations. The following is a summary of income (loss) from operations of the Company. Revenue $ 729,587 Expenses (2,778,274) Loss from Discontinued Operations $ (2,048,687) Write-off of assets $ (295,373) Gain on write off of debt $ 795,244 Gain on Disposal of Discontinued Operations $ 499,871 NOTE 4 - STOCK TRANSACTIONS On August 8, 1996, the Board of Directors approved to issue 878,504 and 97,612 shares of common stock to A-Z Professional Consultants and Park Street Investments, Inc. for consulting fees valued at $87,850 and $9,761, respectively. In June 1997, the Company issued a total of 80,000 shares of its common stock to its officers for services they rendered valued at $8,000. NOTE 5 - TAXES PAYABLE The taxes payable pertain to personal property taxes payable on equipment and machinery which the Company no longer owns. On March 8, 1998, The Company settled personal property taxes owed to Barton County Kansas of $223,255 by paying $12,500. NOTE 6 - SUBSEQUENT EVENTS On April 8, 1998, the Shareholders approved, among other matters, a 1 for 100 Reverse Split of the Company's Common Stock, par value $0.10, and to amend the Articles of Incorporation to increase the number of authorized shares from 5,000,000 to 25,000,000. F-7 - -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS - -------------------------------------------------------------------------------- The Company was originally incorporated under the name Flexweight Drillpipe Company in 1958. From 1958 to late 1961, the Company acted as a distributor of oil field equipment, representing several manufacturers. In 1961, the Company commenced the manufacture of a double-wall flexible weight pipe used in oil field drilling, and couplings, devices which join lengths of pipe in a pipeline system. The Company also provided tool joint welding services, machine shop and custom repair work including rebuilding drilling rigs and their components principally in the State of Kansas. Beginning in 1982, the Company experienced significant losses from operations largely as a result of contraction of the oil field supply industry. On March 11, 1985, the Company filed for protection in the U.S. Bankruptcy Court for the District of Kansas. The Company's secured creditors demanded complete liquidation, sales of inventory, machines, tools and office furniture. The sale was held on June 12, 1986. The secured creditors agreed to cancel all debt not satisfied by the proceeds distribution of the liquidation sale resulting in a $1,721,483 reduction of secured indebtedness. Certain officers and directors of the Company purchased machines, tools and inventory in the liquidation sale with plans to lease such assets to the Company and then later exchange the assets for stock once a plan of reorganization was approved. Following the approval of a plan of reorganization and discharge from bankruptcy, the Company continued to operate on a limited basis and attempted to expand into other business industries. The Company ultimately discontinued operations and liquidated remaining assets on or about April 8, 1994. The Company has not had revenues from operations in either of the last two fiscal years. The Company does not currently produce any products or provide any services. The Company has no employees, full or part time, aside from its officers and directors. The Company is actively seeking to recover from its significant decline in operations and subsequent period of dormancy. The Company's plan of operations for 1998 centers around its quest to find a suitable merger or acquisition target with which it can combine or which it can acquire. Although the Company is seeking to effect a merger or acquisition, there can be no assurances that it will be able to do so, or if a combination is achieved, that it will be profitable, worthwhile or sustainable. On September 1, 1997, the Company executed a Consulting Agreement with Park Street Investments, Inc. Pursuant to the agreement, Park Street was retained to assist the Company in locating a suitable target for merger of acquisition, and to provide financial consulting services, marketing and public relations services. As consideration for these services, the Company is obligated to issue a quantity of the Company's common stock sufficient to give Park Street up to 15% of the Company's total outstanding Common Stock upon Park Street successfully locating a merger or acquisition candidate and facilitating the Company's planned merger or acquisition. Park Street may be deemed to be a control person of the Company by virtue of this contract or by virtue of the fact that Tammy Gehring, the Company's president and a director is an employee of Park Street. 4 The Company is substantially dependent on Park Street Investments. Presently, the Company is unable to satisfy its cash requirements without the services provided by Park Street, which has made limited cash advances to the Company to assist the Company in meeting its short-term cash needs. Park Street has also agreed to provide the Company with services necessary to sustain the day to day operations of the Company. The Company can provide no assurances that Park Street will continue to provide the services or make the advancements necessary to sustain the Company. The Company will need to raise additional financing in the next 12 months and the Company intends to raise such funds through a private or public offering of its common stock once it has successfully completed a merger or acquisition. However, given the Company's absence of cash flow and history of losses, there is a substantial risk that the Company will not be able to raise the capital necessary to make a subsequent merger or acquisition successful. In an attempt to prepare the Company for a successful merger or acquisition with another business entity, the Company agreed to settle its debt obligation to Barton County, Kansas. The original amount of debt claimed by Barton County against the Company was $223,255. This debt was incurred by the Company during 1985 and 1986 and wass related to personal property tax liabilities. On November 26, 1997, the Company executed a Settlement Agreement with Barton County, Kansas pursuant to which the Company was obligated to pay $12,500 to Barton County within 90 days of the date of the Agreement. According to the agreement, upon Barton County's receipt of such payment from the Company, the County would release any and all liens held against the Company. On March 9, 1998 Barton County received the $12,500 payment and issued the Company a paid in full tax receipt. It is likely that if the Company locates a merger or acquisition candidate, the Company will be required to issue a substantial number of shares of its Common Stock to facilitate the planned merger or acquisition. It is expected that such an issuance of shares would likely dilute the ownership interest of the Company's current shareholders to a substantial degree. - -------------------------------------------------------------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - -------------------------------------------------------------------------------- On April 8, 1998 at 10:15 a.m. there was a special meeting of the shareholders held at 10100 Petunia Way, Sandy, Utah 84093. Proxies had been solicited and the following matters were addressed: Proposal 1 To reelect of Tammy Gehring, Cliff Halling and BonnieJean C. Tippetts to the Company's board of directors. Proposal 2 To amend the Company's Articles of Incorporation to increase the number of authorized shares of the Company's common stock, par value $0.10 ("Common Stock"), from 5,000,000 to 25,000,000. Proposal 3 To approve a 1-for-100 reverse stock split of the Company's Common Stock which shall affect the Common Stock currently issued and outstanding but not the Common Stock authorized for issuance. Proposal 4 To ratify the selection of Jones, Jensen & Company as the Company's independent auditors for the fiscal year to end August 31, 1998. The Board recommended in the Proxy Statement that shareholders vote FOR each of the proposals to be presented at the special meeting. No solicitation in opposition to the management's nominees was received prior to, nor presented at the special meeting. All of the above proposals were passed by the margins displayed in the table below. 5 VOTING RESULTS Proposal FOR AGAINST ABSTAIN NON-VOTE -------- --- ------- ------- -------- Election of Tammy Gehring 2,794,093 11,333 5,200 0 Election of BonnieJean Tippets 2,760,093 45,333 5,200 0 Election of Cliff Halling 2,800,093 5,333 5,200 0 Proposal 2 2,512,277 14,900 3,983 278,956 Proposal 3 2,737,643 52,700 20,283 0 Proposal 4 2,799,793 7,500 3,333 0 - -------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - -------------------------------------------------------------------------------- (a) Index to Exhibits. Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits beginning on page 6 of this Form 10-QSB. The Index to Exhibits is incorporated herein by this reference. (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the quarter ended February 28, 1998. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 14TH day of April 1998. Flexweight Corporation /s/ Tammy Gehring Tammy Gehring, President 6 INDEX TO EXHIBITS EXHIBIT PAGE DESCRIPTION NO. NO. 3(i) * Articles of Incorporation, filed in Kansas on November 26, 1962 under the name of Flexweight Drillpipe Company, Inc., incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1989. 3(ii) * By-Laws of the Company as filed in Kansas on November 26, 1962, incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1989. MATERIAL CONTRACTS 10(i)(a) * Consulting Agreement by and between Flexweight Corporation and A&Z Professional Consultants, Inc. dated March 1, 1996, incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1997. 10(i)(b) * Consulting Agreement between the Company and Park Street Investments, dated July 1, 1997, incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1997. 10(i)(c) * Mutual Agreement to Terminate dated April 1, 1997 between the Company and A-Z Professional Consultants, incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1997. 10(i)(d) * Settlement Agreement between the Company and Barton County, Kansas, incorporated herein by reference from the Company's report on Form 10-K for the fiscal year ended August 31, 1997. 7 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINES SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED AUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S February 28, 1998 QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000316128 FLEXWIGHT CORPORATION 1 U. S. DOLLARS YEAR AUG-31-1998 DEC-01-1997 FEB-28-1998 1 0 0 0 0 0 0 0 0 0 22,633 0 0 0 495,808 (518,441) 0 0 0 0 0 0 0 0 0 0 0 210,755 0 0 210,755 0.04 0.04
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