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 November 30, 1997
[ ] 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
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 November 30, 1997 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-7 and are incorporated herein by this reference.
[THIS SPACE IS INTENTIONALLY LEFT BLANK]
FLEXWEIGHT CORPORATION
(A Development Stage Company)
UNAUDITED FINANCIAL STATEMENTS
November 30, 1997
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
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Unaudited Balance Sheet
ASSETS
November 30,
1997
CURRENT ASSETS
Cash .......................................................... $ --
-----------
Total Current Assets ....................................... --
TOTAL ASSETS ............................................... $ --
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable .............................................. $ 10,133
Taxes payable (Note 5) ........................................ 223,255
-----------
Total Current Liabilities .................................. 233,388
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 .............. (1,769,704)
-----------
Total Stockholders' Equity (Deficit) ....................... (233,388)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ..... $ --
===========
See notes to unaudited financial statements.
F-3
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Unaudited Statements of Operations
From
Inception on
November 26,
For the 3 Months Ended 1962 Through
November 30, November 30,
1997 1996 1997
----------- ------------ ----------
REVENUES .............................. $ -- $ -- $ --
LOSS FROM DISCONTINUED
OPERATIONS (NOTE 3) .................. -- -- (2,048,687)
GAIN FROM DISPOSITION OF
DISCONTINUED OPERATIONS (Note 3) ..... -- -- 278,983
- --------------------------------------- ---------- ---------- -----------
NET INCOME (LOSS) ..................... $ -- $ -- $(1,769,704)
========== ========== ===========
NET INCOME (LOSS) PER
SHARE OF COMMON STOCK ................ $ -- $ --
========== ===========
See notes to unaudited financial statements
F-4
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Unaudited Statements of Cash Flows
From
Inception on
November 26,
For the 3 Months Ended 1962 Through
November 30, November 30,
1997 1996 1997
--------------- --------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ............................................... $ -- $ -- $(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 ............... -- -- 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
See notes to unaudited financial statements
F-5
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Notes to the Unaudited Financial Statements
November 30, 1997
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 November 30, 1997, 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.
F-6
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Notes to the Unaudited Financial Statements
November 30, 1997
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 574,356
------------
Gain on Disposal of Discontinued Operations $ 278,983
============
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.
- --------------------------------------------------------------------------------
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.
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 advancements 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 is $223,255. This debt was incurred by the
Company during 1985 and 1986 and is 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 is obligated to pay
$12,500 to Barton County within 90 days of the date of the Agreement. Upon
Barton County's receipt of such payment from the Company, the County will
release any and all liens held against the Company.
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 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 November 30, 1997.
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 24TH day of February 1998.
Flexweight Corporation
/S/ Tammy Gehring
-------------------------
Tammy Gehring, President
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.