UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 31, 1998 Commission file number 000-18257 HOLMES MICROSYSTEMS, INC. (Exact name of registrant as specified in its charter) TEXAS 91-1939829 (State or other jurisdiction of (IRS Identification Number) Employer incorporation or organization) 57 West 200 South, Suite 310 Salt Lake City, Utah (Address of principal executive offices) 84101 (Zip Code) (801) 269-9500 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock as of July 31, 1998: 48,051,547 PART I ITEM 1 Statement of Financial Position as of July 31, 1998 and January 31, 1998 Statement of Operations for the Three and Six Month Periods Ended July 31, 1998 Statement of Changes in Stockholders' Equity for the Three Month Period Ended July 31, 1998 Statement of Cash Flows for the Three and Six Month Periods Ended July 31, 1998 Notes to Financial Statements as of July 31, 1998 HOLMES MICROSYSTEMS, INC. Statement of Financial Position as of (UNAUDITED) July 31, 1998 and January 31, 1998 ASSETS July 31, January 31, 1998 1998 CURRENT ASSETS $ -0- $ -0- TOTAL ASSETS $ -0- $ -0- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Judgements payable $ 526,711 $ 526,711 Notes payable 84,000 84,000 Total current liabilities 610,711 610,711 STOCKHOLDERS' EQUITY Preferred stock - series A; $.001 par value; 100,000 shares authorized; 7,500 shares issued and outstanding; 8 % noncumlative convertible 8 8 Preferred stock - series B; $.001 par value; 5,000 shares authorized; 840 shares issued and outstanding; 10 % cumlative convertible 1 1 Common stock; $.001 par value; 49,000,000 shares authorized 48,051,547 shares issued and outstanding 48,051 48,051 Additional paid-in capital 4,342,333 4,342,333 Accumulated deficit (5,001,104) (5,001,104) Total stockholders' equity (610,711) (610,711) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -0- $ -0- HOLMES MICROSYSTEMS, INC. Statement of Operations for the Three and Six (UNAUDITED) Month Periods Ended July 31, 1998 Three Six Months Months REVENUES $ -0- $ -0- OPERATING EXPENSES -0- -0- NET INCOME $ -0- $ -0- NET INCOME PER SHARE $ -0- $ -0- HOLMES MICROSYSTEMS, INC. Statement of Changes in Stockholders' Equity for (UNAUDITED) The Three Month Period Ended July 31, 1998 Additional Preferred Preferred Common Stock Paid-in Accumulated Total Stock Stock Shares Amount Capital Deficit Series A Series B Shares Amount Shares Amount Balances as of April 30, 1998 7,500 $ 8 840 $ 1 48,051,547 $48,051 $4,342,333 $(5,001,104) $(610,711) Net Income -0- -0- Balances as of July 31, 1998 7,500 $ 8 840 $ 1 48,051,547 $48,051 $4,342,333 $(5,001,104) $(610,711) HOLMES MICROSYSTEMS, INC. Statement of Cash Flows for the Three and Six (UNAUDITED) Month Periods Ended July 31, 1998 Three Six Months Months CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ -0- $ -0- CASH AT BEGINNING OF YEAR -0- -0- CASH AT END OF YEAR $ -0- $ -0- HOLMES MICORSYSTEMS, INC. Notes to Financial Statements (UNAUDITED) as of July 31, 1998 The financial statements of Holmes Microsystems, Inc. included herein, have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, Holmes Microsystems, Inc. believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in Holmes Microsystems, Inc. annual report on Form 10-K for the fiscal year ended January 31, 1998. The financial statements included herein reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. The results for interim periods are not necessarily indicative of trends or of results to be expected for a full year. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The company has been dormant since the fiscal year ended January 31, 1994. During the quarter ended July 31, 1998, there were no revenues and no expenses. The company has no assets, and has current liabilities of $610,711. These current liabilities are comprised of judgements of $526,711 and overdue notes payable of $84,000. PART II ITEM 1 LEGAL PROCEEDINGS There are twelve judgements against the company for a total of $526,711. ITEM 2 CHANGES IN SECURITIES NONE ITEM 3 DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5 OTHER INFORMATION NONE ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K NONE SIGNATURES Pursuant to the requirements of Section 13 of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Holmes Microsystems, Inc. (Registrant) Dated: By Kip Eardley President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated. Dated: By Kip Eardley President