-----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, Ugj7/SlZ9uDM06ZgqvHE2Z//L6uhXESObdCDi1MvWyBGe3PLNP6JKgoO9TQ80SgW xSk7WgwWhpeDb5wdYXVWsQ== 0001028596-00-000325.txt : 20001215 0001028596-00-000325.hdr.sgml : 20001215 ACCESSION NUMBER: 0001028596-00-000325 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOLMES MICROSYSTEMS INC CENTRAL INDEX KEY: 0000832100 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 760238860 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-18257 FILM NUMBER: 789330 BUSINESS ADDRESS: STREET 1: 57 WEST 200 SOUTH STREET 2: SUITE 310 CITY: SALT LAKE CITY STATE: UT ZIP: 84119 BUSINESS PHONE: 8013599300 MAIL ADDRESS: STREET 1: 57 WEST 200 SOUTH STREET 2: SUITE 310 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 FORMER COMPANY: FORMER CONFORMED NAME: BLACK WING CORP DATE OF NAME CHANGE: 19890426 10QSB 1 0001.txt QUARTERLY REPORT FOR OCTOBER 31, 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended October 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to __________ Commission File Number: 000-18257 HOLMES MICROSYSTEMS, INC. (Exact name of Registrant as specified in charter) TEXAS 91-1939829 State or other jurisdiction of I.R.S. Employer I.D. No. incorporation or organization 57 West 200 South, Suite 310, Salt Lake City, UT 84101 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (801) 269-9500 Check whether the Issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the 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. (1) Yes [X] No [ ] (2) Yes [X] No [ ] State the number of shares outstanding of each of the Issuer's classes of common equity as of the latest practicable date: At December 11, 2000, there were 1,171,285 shares of the Registrant's Common Stock outstanding. PART I Item 1. Financial Statements The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB, for the year ended January 31, 2000. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] CONDENSED BALANCE SHEETS [Unaudited] ASSETS
October 31, January 31, 2000 2000 ------------- ------------- CURRENT ASSETS $ - $ - ------------- ------------- Total Current Assets - - ------------- ------------- $ - $ - ============= ============= LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 32,421 $ 30,383 Accounts payable related party 2,240 - ------------- ------------- Total Current Liabilities 34,661 30,383 ------------- ------------- STOCKHOLDERS' (DEFICIT): Preferred stock Series A $.001 par value 100,000 shares authorized 3,750 shares issued and outstanding 4 4 Preferred stock Series B $.001 par value 5,000 shares authorized, 0 shares issued and outstanding - - Common stock, $.001 par value, 49,000,000 shares authorized, 1,171,285 shares issued and outstanding 1,171 1,171 Additional paid in capital 5,001,730 5,001,730 Retained deficit (5,001,104) (5,001,104) Deficit accumulated during the development stage (36,462) (32,184) ------------- ------------- Total Stockholders' (Deficit) (34,661) (30,383) ------------- ------------- $ - $ - ============= =============
Note: The balance sheet at January 31, 2000, was taken from the audited financial statements at that date and condensed. The accompanying notes are an integral part of these unaudited condensed financial statements. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] CONDENSED STATEMENTS OF OPERATIONS [Unaudited]
From Re-entering of Development For the Three For the Nine Stage on Months Ended Months Ended February 1, October 31, October 31, 1994 through ------------------------ ----------------------- October 31, 2000 1999 2000 1999 2000 ----------- ----------- ----------- ----------- ----------- REVENUE $ - $ - $ - $ - $ - COST OF SALES - - - - - ----------- ----------- ----------- ----------- ----------- GROSS PROFIT - - - - - EXPENSES: General and Administrative 591 - 4,278 - 36,462 ----------- ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS BEFORE INCOME TAXES (591) - (4,278) - (36,462) CURRENT TAX EXPENSE - - - - - DEFERRED TAX EXPENSE - - - - - NET LOSS $ (591) $ - $ (4,278) $ - $ (36,462) ----------- ----------- ----------- ----------- ----------- LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.07) =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these unaudited condensed financial statements. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] CONDENSED STATEMENTS OF CASH FLOWS [Unaudited]
From Re-entry of Development For the Nine Stage on Months Ended February 1, October 31, 1994 through ----------------------- October 31, 2000 1999 2000 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (4,278) $ - $ (36,462) Adjustments to reconcile net loss to net cash used by operating activities: Common stock issued for services - - 1,800 Changes in assets and liabilities: Increase in accounts payable 2,038 - 32,422 Increase in accounts payable related party 2,240 - 2,240 ----------- ----------- ----------- Net Cash (Used) by Operating Activities - - - ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: - - - ----------- ----------- ----------- Net Cash (Used) by Investing Activities - - - ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: - - - ----------- ----------- ----------- Net Cash Provided by Financing Activities - - - ----------- ----------- ----------- Net Increase in Cash - - - Cash at Beginning of the Period - - - ----------- ----------- ----------- Cash at End of the Period $ - $ - $ - =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ - $ - $ - Income taxes $ - $ - $ - SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: For the nine months ended October 31, 2000: None For the nine months ended October 31, 1999: None
The accompanying notes are an integral part of these unaudited condensed financial statements. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Holmes Microsystems, Inc. (the Company) was organized under the laws of the State of Texas on January 20, 1988, under the name of Blackwing Corporation. On April 4, 1989, Blackwing Corporation, a publicly held corporation, acquired all of the issued and outstanding shares of a company known as Surface Tech, Inc., which was originally known as Holmes Microsystems, Inc. The transaction had been accounted for as a recapitalization of Holmes Microsystems, Inc. in a manner similar to a reverse purchase. Accordingly, Holmes Microsystems, Inc. has been treated as the surviving entity. As part of this transaction, Blackwing Corporation changed its name to Holmes Microsystems Inc. and the original Holmes Microsystems Inc., which was then a wholly owned subsidiary, was dissolved. Until the fiscal year ended January 31, 1994, the Company had been engaged in the sale of modems which provide data and facsimile capabilities for portable computers. The Company had used the trade name "Fax Em" as an overall description of its products. As of the year ended January 31, 1994, the Company ceased all sales and operations and became totally inactive. The Company is considered to have re-entered into a new development stage on February 1, 1994. CONDENSED FINANCIAL STATEMENTS - The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at October 31, 2000 and 1999 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's January 31, 2000 audited financial statements. The results of operations for the periods ended October 31, 2000 are not necessarily indicative of the operating results for the full year. DEVELOPMENT STAGE The Company is considered a development stage company as defined in SFAS no. 7. LOSS PER SHARE - The computation of loss per share of common stock is based on the weighted average number of shares outstanding during the periods presented, in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share" [See Note 7]. CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows, the Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents. ACCOUNTING ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that effect the reported amounts of assets and liabilities, the disclosures 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 estimated by management. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONITNUED] RECENTLY ENACTED ACCOUNTING STANDARDS Statement of Financial Accounting Standards (SFAS) No. 136, "Transfers of Assets to a not for profit organization or charitable trust that raises or holds contributions for others", SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities deferral of the effective date of FASB Statement No. 133 (an amendment of FASB Statement No. 133.),", SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities and Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No. 53 and Amendment to SFAS No 63, 89 and 21", and SFAS No. 140, "Accounting to Transfer and Servicing of Financial Assets and Extinguishment of Liabilities", were recently issued SFAS No. 136, 137, 138, 139 and 140 have no current applicability to the Company or their effect on the financial statements would not have been significant. RESTATEMENT The financial statements have been restated for all periods presented to reflect a 1 for 100 reverse stock split effective June 25, 1999 (See Note 5). NOTE 2 COMMITMENTS AND CONTINGENCIES Management believes that the Company is not liable for any existing liabilities related to its former operations, as the amounts were assumed by the Company's president for stock (approximately $27,000 remain outstanding as of the date of the financial statements) [See Note 5]. At January 31, 2000 there is the possibility that creditors and others seeking relief, which if not paid by the Company's president, may cause the Company to be included in claims and or lawsuits. The Company is not currently named nor is it aware of any such claims or suits against the Company. No amounts have been reflected or accrued in these financial statements for any contingent liability. NOTE 3 - INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. At October 31, 2000, the Company has available unused operating loss carryforwards of approximately $36,400, which may be applied against future taxable income and which expire in various years through 2020. The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized in the financial statements for the loss carryforwards. The net deferred tax assets are approximately $12,300 as of October 31, 2000 with an offsetting valuation allowance at each year end of the same amount, resulting in a change of $1,500 in the valuation allowance during the period ending October 31, 2000. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS NOTE 4 - RELATED PARTY TRANSACTIONS MANAGEMENT COMPENSATION During the periods presented, the Company did not pay any compensation to its officers and directors. OFFICE SPACE - The Company has not had a need to rent office space. An officer/shareholder of the Company is allowing the Company to use his office as a mailing address, as needed, at no expense to the Company. CHANGE IN MANAGEMENT During the year ended January 31, 2000, the Company had a change in the officers and Board of Directors of the Company. NOTE 5 CAPITAL STOCK PREFERRED STOCK The Company has authorized 100,000 shares of Series A preferred stock, $.001 par value. At October 31, 2000 there are 3,750 shares issued and outstanding. The Company has also authorized 5,000 shares of Series B preferred stock. At October 31, 2000 there are no shares issued or outstanding. During January 2000, a shareholder of the company contributed 3,750 shares Series A preferred stock back to the Company. The shares were immediately cancelled. COMMON STOCK SPLIT During the year ended January 31, 2000 the Company completed a 1 for 100 reverse common stock split. An additional 59 common shares were issued as fractional shares, due to rounding up to the next whole share. These financial statements have been retro-actively re-stated to reflect the change. COMMON STOCK ISSUED During January 2000, the Company issued 29,400 shares of common stock in exchange for 840 shares of series B preferred stock. During January 2000, the Company issued 20,600 shares of common stock for cancellation of a note payable in the amount of $83,333 (or $4.05 per share). During January 2000, the Company issued 593,711 shares of common stock to an officer/shareholder for assumption and settlement of the Company's judgements from prior operations in the amount of $386,798 (or $.65 per share). During January 2000, the Company issued 30,000 shares of common stock to an individual for service rendered valued at $1,800 (or $.06 per share). During January 2000, the Company issued 17,000 shares of common stock for cancellation of notes payable totaling $140,413. HOLMES MICROSYSTEMS, INC. [A Development Stage Company] NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS NOTE 6 GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has no on-going operations and has incurred losses since its inception. Further, the Company has current liabilities in excess of assets and has no working capital to pay its expenses. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through sales of its common stock or through a possible business combination with another company. There is no assurance that the Company will be successful in raising this additional capital or achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 7 EARNINGS (LOSS) PER SHARE The following data show the amounts used in computing income (loss) per share and the effect on income and the weighted average number of shares of dilutive potential common stock for the three and nine months ended October 31, 2000 and 1999 and for the period from the re-entering of development stage on February 1, 1994 through October 31, 2000:
From the Re-entering of Development Stage on For the Three For the Nine February Months Ended Months Ended 1, 1994 October 31, October 31, Through ------------------- ------------------- October 2000 1999 2000 1999 31, 2000 --------- --------- --------- --------- --------- Loss from continuing operations available to common stock holders (numerator) $ (591) $ - $ (4,278) $ - $(36,462) Weighted average number of common shares outstanding used in earnings per share during the period 1,171,226 480,515 1,171,226 480,515 557,323
Dilutive earnings per share was not presented, as the Company had no common equivalent shares for all periods presented that would effect the computation of diluted earnings (loss) per share. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company had no revenues from operations during the fiscal year ended January 31, 2000, or during the first nine months ended October 31, 2000. Management of the Company is in the process of settling all of the outstanding liabilities of the Company and attempting to repurchase or convert the outstanding preferred shares. When current management took control of the Company in December 1996, Mr. Eardley began the process of attempting to settle the outstanding obligations and convert or repurchase the outstanding preferred stock. At the commencement of last year he agreed to assume all of the outstanding judgements and promissory notes and attempt to settle these individually using his own funds. In September 1999, this agreement was memorialized in writing and Mr. Eardley agreed, subject to shareholder approval, to accept 610,711 post 100-for-1 reverse split shares as consideration for such assumption. In connection with attempting to locate a new business venture, the Company reverse split the outstanding common stock at the rate of one share for each 100 shares outstanding. The reverse split was effective December 29, 1999. The Company now intends to take advantage of any reasonable business proposal presented which management believes will provide the Company and its stockholders with a viable business opportunity. The Company has no funds with which to pursue a new business venture. The president of the Company has offered to advance an undetermined amount of funds for the Company to seek and locate a potential merger or acquisition candidate, and to postpone repayment of such advances until a new business venture is acquired. In addition, he has negotiated with counsel to perform legal services for the Company and to postpone payment for such services until a merger or acquisition transaction is completed. Management anticipates that it will negotiate with the owners of the new business venture to repay the advances from him and to pay the legal costs incurred by the Company through the consummation of an acquisition or merger. Mr. Eardley estimates that he will be able to advance sufficient funds to the Company to meet the Company's cash needs until a transaction with a new business venture can be consummated, but the amount of such funds will be contingent upon the costs of locating and consummating a transaction with a new business venture, which costs are impossible to estimate. If the funds advanced by the president are insufficient to locate a suitable business opportunity, he may seek additional advances on behalf of the Company from Mr. Howard M. Oveson, a principal shareholder of the Company. There is presently no agreement or specific arrangement with Mr. Oveson to provide such additional funds and there is no assurance that such funds would be available. The Company may also seek equity financing if additional funds are necessary through the sale of shares of its common stock. It is very unlikely that traditional forms of financing, such as bank loans, would be available to the Company. The investigation of specific business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and will require the Company to incur costs for payment of accountants, attorneys, and others. If a decision is made not to participate in or complete the acquisition of a specific business opportunity, the costs incurred in a related investigation will not be recoverable. Further, even if an agreement is reached for the participation in a specific business opportunity by way of investment or otherwise, the failure to consummate the particular transaction may result in the loss to the Company of all related costs incurred. Currently, management is not able to determine the time or resources that will be necessary to locate and acquire or merge with a business prospect. There is no assurance that the Company will be able to acquire an interest in any such prospects, products, or opportunities that may exist or that any activity of the Company, regardless of the completion of any transaction, will be profitable. If and when the Company locates a business opportunity, management of the Company will give consideration to the dollar amount of that entity's profitable operations and the adequacy of its working capital in determining the terms and conditions under which the Company would consummate such an acquisition. Potential business opportunities, no matter which form they may take, will most likely result in substantial dilution for the Company's shareholders due to the likely issuance of stock to acquire such an opportunity. If management fails to locate and complete a transaction with a merger candidate, it is likely that current management would resign and that the Company would eventually be dissolved by the State of Texas. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HOLMES MICROSYSTEMS, INC. Date: December 12, 2000 By /s/ Kip Eardley, President -------------------------- EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 0000832100 HOLMES MICROSYSTEMS, INC. 9-MOS JAN-31-2000 OCT-31-2000 0 0 0 0 0 0 0 0 0 34,661 0 4 0 1,171 5,001,730 0 0 0 0 0 0 0 0 (591) 0 0 0 0 0 (591) 0 0
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