UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended FEBRUARY 28, 2006
OR
[_] 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
OR
[_] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of event requiring this shell company report: Not applicable
ALLSHIPS LTD.
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(Exact name of Registrant as specified in its charter)
ALLSHIPS LTD.
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(Translation of Registrant's name into English)
BERMUDA
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(Jurisdiction of incorporation or organization)
Covenant House
85 Reid Street
Hamilton, Bermuda HM 12
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the
Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common stock, $0.000167 par value
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Title of class
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
As of February 28, 2006, there were 45,230,693 shares of the registrant's
common stock outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
[_] Yes [X] No
If this report is an annual report or transition report, indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
[_] Yes [X] No
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.
[X] Yes [_] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [X]
Indicate by check mark which financial statement item the registrant has
elected to follow.
[_] Item 17 [X] Item 18
If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).
[X] Yes [_] No
FORWARD-LOOKING STATEMENTS
AllShips Ltd., or the Company, desires to take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe harbor
legislation. This document and any other written or oral statements made by us
or on our behalf may include forward-looking statements, which reflect our
current views with respect to future events and financial performance. The words
"believe," "except," "anticipate," "intends," "estimate," "forecast," "project,"
"plan," "potential," "will," "may," "should," "expect" and similar expressions
identify forward-looking statements.
Please note in this annual report, "we," "us," "our," "The Company," all refer
to AllShips Ltd.
The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties
and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections.
In addition to these important factors and matters discussed elsewhere herein,
important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies, fluctuations in currencies and interest rates,
general market conditions, including fluctuations in charterhire rates and
vessel values, changes in demand in the dry-bulk shipping industry, changes in
the Company's operating expenses, including bunker prices, drydocking and
insurance costs, changes in governmental rules and regulations or actions taken
by regulatory authorities, potential liability from pending or future
litigation, general domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events, and other
important factors described from time to time in the reports filed by the
Company with the Securities and Exchange Commission.
TABLE OF CONTENTS
Page
PART I ......................................................................1
Item 1 Identity of Directors, Senior Management and Advisers........1
Item 2 Offer Statistics and Expected Timetable......................1
Item 3 Key Information..............................................1
Item 4 Information on the Company...................................4
Item 4A Unresolved Staff Comments....................................6
Item 5 Operating and Financial Review and Prospects.................6
Item 6 Directors, Senior Management and Employees...................7
Item 7 Major Shareholders and Related Party Transactions............8
Item 8 Financial information........................................9
Item 9 The offer and Listing.......................................10
Item 10 Additional Information......................................10
Item 11 Quantitative and Qualitative Disclosures
about Market Risk...........................................13
Item 12 Description of Securities Other than Equity Securities......13
PART II .....................................................................13
Item 13 Defaults, Dividend Arrearages and Delinquencies.............13
Item 14 Material Modifications to the Rights of Security
Holders and Use of Proceeds.................................13
Item 15 Controls and Procedures.....................................13
Item 16A Audit Committee Financial Expert............................13
Item 16B Code of Ethics..............................................13
Item 16C Principal Accountant Fees and Services......................13
Item 16D Exemptions from the Listing Standards for
Audit Committees............................................14
Item 16E Purchases of Equity Securities by the Issuer and
Affiliated Purchasers.......................................14
PART III ....................................................................14
Item 17 Financial Statements........................................14
Item 18 Financial Statements........................................14
Item 19 Exhibits....................................................14
PART I
Item 1 Identity of Directors, Senior Management and Advisers
Not Applicable.
Item 2 Offer Statistics and Expected Timetable
Not Applicable.
Item 3 Key Information
A. Selected Financial Data
The following table sets forth our selected financial data as of February 28,
2002 and 2003, February 29, 2004, and February 28, 2005 and 2006 and for each of
the five years in the period ended February 28, 2006. The following information
should be read in conjunction with Item 5 "Operating and Financial Review and
Prospects" and the financial statements and related notes included herein. The
selected financial data for the fiscal years 2004, 2005 and 2006 are derived
from our financial statements and notes thereto which have been prepared in
accordance with U.S. generally accepted accounting principles ("US GAAP")
included elsewhere in this annual report. The selected financial data for the
fiscal years 2002 and 2003 are derived from our financial statements and related
notes previously filed with the Securities and Exchange Commission, restated for
the matters described below.
Year Ended February 28, Year Ended
2002 2003 February 29,2004 Year Ended February 28,
Restated (1) Restated (1) Restated (1) 2005 2006
------------ ------------ ------------ ---- ----
(in U.S. dollars)
STATEMENT OF LOSS
Revenue $0 $0 $0 $0 $0
General & administrative expenses (124,755) (95,506) (60,040) (189,017) (216,377)
Net Loss (124,755) (95,506) (60,040) (189,017) (216,377)
Preferential deemed dividend 0 0 0 (1,500,000) 0
Loss attributable to common stockholders $(124,755) $(95,506) $(60,040) $(1,689,017) $(216,377)
Loss per common share, basic and diluted(2) (0.02) (0.01) (0.01) (0.06) (0.00)
Weighted average basic and diluted
shares outstanding 7,164,419 7,947,828 10,060,165 27,095,500 45,230,693
Year Ended February 28, Year Ended
2002 2003 February 29,2004 Year Ended February 28,
Restated (1) Restated (1) Restated (1) 2005 2006
------------ ------------ ------------ ---- ----
(in U.S. dollars)
BALANCE SHEET DATA
(at period end)
Current assets, including cash 1,146 7,019 5,528 312,842 125,686
Total assets 1,146 7,019 5,528 312,842 125,686
Current liabilities 194,095 268,474 69,030 158,971 188,192
Total liabilities 194,095 268,474 69,030 158,971 188,192
Stockholders' equity / (Deficit) (192,949) (261,455) (63,502) 153,871 (62,506)
(1) In 2006, the Company restated its financial statements previously issued for
the years ended February 28, 2002, February 28, 2003 and February 29, 2004 (see
Note 9 of our audited financial statements included in this annual report), in
order to (a) account for stock-based compensation of 270,000 shares at $0.05 per
share at the date they were granted (year ended February 29, 2004) instead of
accruing their $13,500 fair value in the prior year ended February 28, 2003, (b)
(i) account for stock-based compensation of 90,000 shares at $0.15 per share at
the date they were granted (year ended February 28, 2003); such stock-based
compensation was not previously recorded and (ii) reclassify the par value of
such shares ($15) from Additional Paid in Capital to Common Stock at the date of
their physical issuance (year ended February 29, 2004), (c) reverse accrual for
legal expenses which had already been paid (initially paid in the year ended
February 28, 2002), (d) account for stock-based compensation of 270,000 shares
at $ 0.05 per share at the date they were granted (year ended February 28, 2005)
instead of accruing the fair value of shares issued of $ 13,500 prior to their
grant date in the year ended February 29, 2004, (e) reclassify, as of February
29, 2004, as a liability $52,690 representing the fair value of 1,053,807 shares
issued at $ 0.05 per share to settle stockholder's advances from Common stock
and Additional paid-in capital to Due to related parties, as these shares were
not physically issued until May 2004. Although the agreement with the
Stockholder for such settlement was concluded in February 2004, the liability to
the stockholder should not have been derecognized in the financial statements
until the shares were actually issued in settlement of the outstanding advances
due to stockholder, and (f) adjust, for the year ended February 29, 2004, the
weighted average number of common shares to 10,060,165 shares, compared to
12,808,298 shares previously reported, to reflect the number of days outstanding
from the grant date of the shares. There was no effect on the loss per common
share.
(2) The effect of the above restatement on loss per common share for the years
ended February 28, 2002, February 28, 2003 and February 29, 2004, was $(0.00),
$(0.00) and $(0.00) per share, respectively.
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk factors
The company has identified the following risk factors as significant. The order
in which they appear is not intended to reflect our management's prioritizing of
such risks.
WE HAVE A HISTORY OF LOSSES AND CANNOT BE CERTAIN TO ACHIEVE POSITIVE CASH FLOW.
We had net losses of $216,377, $189,017 (before a preferential deemed dividend
of $1,500,000) and $60,040 for the years ended February 28, 2006, February 28,
2005 and February 29, 2004. In addition, we had an accumulated deficit of
$3,397,169 through February 28, 2006. At present we do not have any revenue
producing operations and we anticipate monthly operating expenses of
approximately $18,000, including administration, salaries, listing and audit
costs.
Even if we acquire an operating entity or individual assets, we cannot be
certain that we will achieve or sustain positive cash flow or profitability from
our operations. Our net losses and negative cash flow are likely to continue
even longer than we currently anticipate if we do not acquire a viable operating
entity or asset and if we do not attract and retain qualified personnel. Our
ability to achieve our objectives is subject to financial, competitive,
regulatory, legal, technical and other factors, many of which are beyond our
control.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO ASSESS PAST PERFORMANCE AND
FUTURE PROSPECTS. There is only limited historical operating and financial
information on which to base an evaluation of our performance and prospects. We
have acquired and disposed of one company since our inception in March 1998. Any
company which we may acquire in the future may be in a completely different
business than the company that we previously owned. This limits the
comparability of our operating and financial information from period to period.
WE ARE SUBJECT TO RISKS AS WE MAKE ACQUISITIONS. As part of our business
strategy, we intend to acquire, make investments in, as yet unidentified
operating companies and assets. Any such future acquisitions, investments would
involve risks, such as:
- incorrect assessment of the value, strengths and weaknesses of
acquisition and investment opportunities;
- underestimating the difficulty of integrating the operations and
personnel of newly acquired companies with other companies we may
acquire;
- the potential disruption of any ongoing business, including possible
diversions of resources and management time; and
- the threat of impairing relationships with employees and customers as
a result of changes in management or ownership.
We cannot assure you that we will be successful in overcoming these risks.
Moreover, we cannot be certain that any desired acquisition, investment or asset
could be made in a timely manner or on terms and conditions acceptable to us.
Neither can we assure you that we will be successful in identifying attractive
acquisition candidates. We expect that competition for such acquisitions may be
significant. We may compete with others who have similar acquisition strategies,
many of whom may be larger and have greater financial and other resources than
us.
An additional risk associated with acquisitions is that many attractive
acquisition candidates do not have audited financial statements and have varying
degrees of internal controls. Although we may believe that the available
financial information for a particular business is reliable, we cannot guarantee
that a subsequent audit would not reveal matters of significance, including with
respect to liabilities, contingent or otherwise. We expect that, from time to
time in the future, we will enter into acquisition agreements, the pro forma
effect of which is not known and cannot be predicted.
WE DO NOT EXPECT TO PAY DIVIDENDS. We do not anticipate paying cash dividends in
the foreseeable future.
RISKS INHERENT IN INTERNATIONAL OPERATIONS. We are not currently conducting
business. In the future, however, we may acquire an operating company or asset
located outside of the United States. If we acquire a non-U.S. operating
company, it is possible that a substantial portion of our business may be
conducted outside of the United States. In this event, our operations could be
subject to various risks such as the possibility of the loss of revenue,
property or equipment due to expropriation, nationalization, war, insurrection,
terrorism or civil disturbance, the instability of foreign economies, currency
fluctuations, and devaluations, adverse tax policies and governmental activities
that may limit or disrupt markets, restrict payments or the movement of funds or
result in the deprivation of contract rights. Additionally, our ability to
compete could be adversely affected by foreign governmental regulations that
encourage or mandate the hiring of local contractors, or by regulations that
require foreign contractors to employ citizens of, or purchase supplies from
vendors in, a particular jurisdiction. We could also be subject to taxation in a
number of jurisdictions, and the final determination of our tax liabilities
might involve the interpretation of the statutes and requirements of various
domestic and foreign taxing authorities. Any of these risks could have an
adverse effect on our operations.
DEPENDENCE ON KEY EMPLOYEES. Our growth and profitability are dependent upon,
among other things, the abilities and experience of our management team
including Mr. George Economou, our Chairman and Director. If the services of Mr.
George Economou or our other directors or executive officers became unavailable,
our business, financial condition and results of operations could be adversely
affected. In addition, if the services of Mr. Christopher Thomas become
unavailable we may face situations where our internal control over financial
reporting may not be effective as explained elsewhere in this Form 20-F.
RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW. We are incorporated under the laws of
Bermuda. Principles of law relating to such matters as the validity of corporate
procedures, the fiduciary duties of our management and directors and the rights
of our shareholders, are governed by Bermuda law and our Memorandum of
Association and Bye-laws. Such principles of law may differ from those that
would apply if we were incorporated in a jurisdiction in the United States.
Investors may have more difficulty in protecting their interests in the face of
actions by management, directors or controlling shareholders than would
shareholders of a corporation incorporated in a United States jurisdiction.
Under Bermuda law, a director generally owes a fiduciary duty only to the
company, not to the company's shareholders. Our shareholders may not have a
direct cause of action against our directors. In addition, Bermuda law does not
provide a mechanism for our shareholders to bring a class action lawsuit under
Bermuda law. Further, our bye-laws provide that we must indemnify our directors,
officers and members of committees to the fullest extent authorized by law. For
further information concerning our Memorandum of Association and Bye-laws, see
"Item 10 - Additional Information - Memorandum and Articles of Association."
In addition, there is uncertainty as to whether the courts of Bermuda would
enforce (i) judgments of United States courts obtained against us or our
officers and directors predicated upon the civil liability provisions of the
securities laws of the United States or any state or (ii) in original actions
brought in Bermuda, liabilities against us or such persons predicated upon the
securities laws of the United States or any state.
Item 4 Information on the Company
A. History and Development of The Company.
We were originally organized under the laws of Bermuda on March 24, 1998 under
the legal name, "Omninet International Ltd." The term of the Company is
perpetual. We amended our memorandum of association on June 30, 1998 in order to
increase the amount of our authorized common stock to 25,000,000 shares, par
value $0.001. On April 10, 2000, we further amended our memorandum of
association to increase the amount of our authorized common stock to 150,000,000
shares, par value $.000167. On March 18, 2005 we changed our name to AllShips
Ltd. and on September 28, 2004 we issued 30,000,000 additional common shares and
increased our share capital by $300,000. The name change was made to better
reflect the future anticipated business of the Company which is to own and
operate ocean-going cargo vessels.
We are a Bermuda exempted company. A Bermuda exempted company is legislatively
exempt from Bermuda's usual requirement that Bermuda-formed businesses be 60%
owned by Bermuda citizens. A Bermuda exempted company may reside in Bermuda, but
must carry on its business transactions in other countries. Bermuda exempted
companies may not own real estate in Bermuda. There is no income tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by a Bermuda exempted company or its shareholders to the
Bermuda Government.
A Bermuda exempted company is required to pay an annual fee to the Bermuda
Registrar by January 31 of each year. Annual fees are calculated based upon the
exempted company's assessable capital (authorized share capital plus any share
premiums) as of August 31 of the prior year. Exempted companies with assessable
capital of between $0 - $12,000, $12,001 - $120,000 and $120,001 - $1,200,000
must pay fees of $1,780, $3,635 and $5,610, respectively. Annual fees continue
to increase as the amount of assessable capital increases above $1,200,000. As
of August 31, 2005, we had assessable capital of $25,000 (150,000,000 authorized
shares of common stock with par value of $.000167). Accordingly, our annual fee
for the Year 2006 was $3,635. If an exempted company fails to timely pay its
annual fee, the Bermuda Registrar will charge that company $300 as a late fee in
addition to the annual fee. In extreme cases, the Bermuda Registrar may cause
the exempted company's charter to be suspended or revoked so that it is no
longer permitted to operate in Bermuda.
In addition, a Bermuda exempted company may apply under the Exempted
undertakings Tax Protection Act, 1966 for an assurance from the Bermuda
government that any tax imposing legislation will not be applied to the company
until after March 2016. We were granted such tax assurance on March 30, 1998.
Except as described above, we are subject to the laws and regulations applicable
to Bermuda-based corporations. Although Bermuda law at present is structured to
encourage foreign investment, there can be no assurance that future laws and
regulations will not have a negative impact on our operations. See also "Risks
Inherent in International Operations" in Item 3.D. above. At present, we are not
aware of any special country risks, such as existing or probable government
regulations, that could materially affect our operations.
B. Business Overview
We are a company who intends to own and operate ship operating businesses or to
acquire ocean-going cargo vessels. We are not presently engaged in any business.
Our only plan of operation is seeking a viable shipping business or ships to
acquire. At present, we have not identified another business or asset suitable
for acquisition. Over the next 12 months, we intend to continue our search to
acquire suitable shipping businesses or individual vessels.
In general, we intend to identify potential acquisitions through research and
referrals. Once identified, we will screen the target to determine whether or
not it might be suitable for acquisition. The initial screening will consist of
an evaluation of the candidate's potential, which may include factors such as
estimated future growth and income. If an existing shipping company is
identified as a potential target, we will conduct a detailed analysis of the
cost of acquisition, the target's fair market value, the prospective rate of
return on an investment in the target and the likelihood of achieving such
return. The detailed analysis may vary for each target and include criteria such
as an evaluation of the target against comparable companies in the shipping
industry, scrutiny of the target's financial condition and future earnings
potential and discounted cash flow analysis. We are particularly interested in
identifying and acquiring shipowning companies and/or individual ocean-going
cargo vessels. If we decide that a company is a suitable acquisition candidate,
we anticipate that we will enter into an agreement to acquire such target,
subject to obtaining any financing and approvals necessary to carryout the
transaction.
We will need additional financing or future profitability to continue as a going
concern. We will also need additional capital in order to acquire either a
shipping company or ocean-going vessel. We plan to raise such funds through a
private placement of common stock or by borrowing from a lending institution.
There can be no assurance that we will be able to raise such funds. See "Item 5
- - Operating and Financial Review and Prospects".
Since our formation, we have explored entering into certain businesses but
commenced operations in only one business. In particular:
o In the spring of 1998, we explored providing Internet services to
users in the United Kingdom. On July 2, 1998, we acquired all of the
issued and outstanding shares (254,453 shares) of the common stock of
Colloquium Ltd. ("Colloquium"), a Scotland based provider of
connectivity and value-added Internet services to the United Kingdom,
in exchange for 954,964 shares of our common stock.
o Colloquium generated net operating losses from the date of its
acquisition until May 26, 1999. As Colloquium's losses increased, it
became clear that additional financing would be required in order to
fund its operations, and we were not certain when, if ever, Colloquium
would achieve profitability. These factors, among others, led to
disagreement between our management and that of Colloquium. In order
to avoid continuing liabilities, our Board of Directors determined to
sell Colloquium even if that involved realizing a one-time loss. On
May 26, 1999, we contributed $24,000 to the capital of Colloquium and
thereafter sold all of the issued and outstanding shares of Colloquium
to Brian McMillan and others in exchange for 479,988 of our shares
held by them. We incurred a loss upon the sale of Colloquium because
Colloquium's poor operating performance negatively impacted the
subsidiary's value.
o On September 8, 1998, we entered into a Plan and Agreement of Merger -
Reorganization with E&M Management, Inc. whereby, subject to numerous
terms and conditions, E&M was to be merged with and into us and we
would be the surviving corporation. E&M was a development stage
company originally incorporated in Nevada on November 2, 1992. E&M was
not engaged in any operations; however, trades in E&M's common stock
were quoted on the OTC Bulletin Board. As of October 15, 1999, E&M had
not obtained the requisite approval of the merger by its shareholders
as required by Nevada law and, on November 2, 1999, the companies
terminated the merger agreement by executing a Mutual Termination
Agreement and Release. We do not believe that we incurred any
liabilities as a result of termination of the merger agreement.
o During the fiscal year ended February 28, 2002, we entered into
negotiations for the acquisition of an Australian software company.
Because basic terms could not be agreed upon with that company's
management, we terminated our negotiations for such transaction before
any letter of intent or other agreements were prepared or executed.
o Since March 2002, we explored the acquisition of several companies,
however, no formal negotiations or agreements were entered into.
C. Organizational Structure
We are not a member of any group of companies. We do not presently have any
subsidiaries, although if we are successful in implementing our plan of
operation and identifying a company to acquire, we may form or acquire one or
more subsidiaries for such acquisition.
D. Property, Plant and Equipment
We do not own any material property, plant, or equipment. We have no material
assets except for cash in the amount of $117,408 as of February 28, 2006. We
have no office facilities or real property holdings. Our registered office is
located at the offices of Atlantic Corporate Management, Warner Building, 85
Reid Street, Hamilton, Bermuda HM 12. Our registered office address is provided
by Atlantic Corporate Management Ltd., our corporate Secretary, in exchange for
an annual fee of $4,000. Atlantic Corporate Management Ltd. can terminate this
arrangement for any reason at 120 days notice. We believe that our existing
arrangement is adequate to meet our current needs.
Item 4A Unresolved Staff Comments
None.
Item 5 Operating and Financial Review and Prospects
A. Operating Results
The following discussion is based on our audited financial data for the years
ended February 28, 2006, 2005 and 2004. In the period between July 2, 1998 and
May 26, 1999, we were engaged in the business of providing connectivity and
value added Internet services through our subsidiary Colloquium. We discontinued
our Internet-related operations on May 26, 1999 when we sold Colloquium due to
increasing net operating losses. We are not presently engaged in that or any
other business, and our sole activity is seeking shipping companies and
individual ocean-going cargo vessels to acquire. We have not begun new
operations since selling Colloquium because we have not acquired any company or
individual asset.
The Company's expenses are primarily administrative in nature and include
salaries, professional fees, legal fees, and transfer agent fees. Our general
and administrative expenses increased from $189,017 in 2005 to $216,377 in 2006
primarily due to higher audit fees. Our general and administrative expenses
increased from $60,040 in 2004 to $189,017 in 2005 primarily due to increased
directors' remuneration expenses. Similarly, our net loss for 2006 was $216,377
compared to a net loss in 2005 and 2004 of $189,017 and $60,040, respectively.
The 2005 net loss does not include a preferential deemed dividend (see Note 5 to
our audited financial statements) of $1,500,000 which increased the 2005 loss
attributable to common stockholders to $1,689,017.
B. Liquidity and Capital Resources
As of February 28, 2006, our total cash and cash equivalents was $117,408 and
our total current assets were $125,686 and our current liabilities were
$188,192. At the prior year end of February 28, 2005 our total cash and cash
equivalents was $312,842 and our total current assets were $312,842 and our
current liabilities were $158,971.
During our fiscal year ending February 28, 2006 and 2005, the Company derived
most of its operating capital from the issuance of 30,000,000 shares at $0.01
thereby raising $300,000 on September 28, 2004. We have no planned capital
expenditures at this time; however the implementation of our business plan will
require additional capital.
Operating activities absorbed cash of $190,185 in the year ended February 28,
2006, compared to $21,700 in the year ended February 28, 2005 and $244,460 in
the year ended February 29, 2004. This amount was used for administrative
expenses, including salaries accounting and legal.
Investing activities for 2006 absorbed $5,249 being advances to a related party.
For 2005 and 2004 there was no net cash used in or provided by investing
activities.
Net cash provided by financing activities was $0 for 2006, compared to $332,292
for 2005 and $242,970 for 2004. The 2005 amount reflects the proceeds ($300,000)
from issuance of common stock and advances ($32,292) we received from our
stockholders and certain related parties. The 2004 amount represents advances
from our then major stockholder.
Our working capital deficit, defined as the excess of our current assets over
our current liabilities, was $62,506 at February 28, 2006 compared to a surplus
of $153,871 at February 28, 2005.
We do not presently have any borrowing facility established with a financial
institution. We will require additional capital to fund our operations in the
future. We anticipate raising such additional capital through a private offering
of our securities or by borrowing from a lending institution.
C. Research and Development, Patents and Licenses
Not applicable.
D. Trend Information
Not applicable as the Company is not an operating company.
E. Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Item 6 Directors, Senior Management and Employees
A. Directors and Senior Management
The following sets forth the name of our directors, executive officers and key
employees, the positions and offices held by each such person, and the period
each such person has held such position.
Name Position Held and Term
- ---- ----------------------
George Economou Chairman and Director since August 23, 2004.
Aristidis Ioannidis Director since August 23, 2004.
Christopher J. Thomas Director since August 23, 2004.
Atlantic Corporate Management Secretary from January 1, 2004.
The following is a description of the business experience and other positions
held by each of our directors and key employees:
George Economou - has been actively involved in the shipping industry for over
25 years. After graduating from the Massachusetts Institute of Technology in
1976 with a B.A. and an M.S. in Naval Architecture and Marine Engineering and an
M.S. in Shipping and Shipbuilding Management, George Economou commenced working
as a Superintendent Engineer in Thenamaris Ship Management in Greece. From 1978
until 1981 he worked as Sale and Purchase Manager at Brokerage and Management in
New York. From 1981 to 1986 he held the position of General Manager of Oceania
Maritime Agency in New York. In 1986 he invested and participated in the
formation of numerous individual shipping companies. Mr. Economou is also on the
board of directors of DryShips Inc., a company with securities registered under
the Securities Exchange Act of 1934.
Aristidis Ioannidis - graduated from Newcastle University with a B.Sc.(Hons) in
Naval Architecture. He graduated after moving to MIT with an M.S. in Naval
Architecture and Marine Engineering and an M.S. in Shipping and Shipbuilding
Management. He has worked in the shipping industry for over thirty years and has
held senior executive management positions in both shipyards and shipping
companies. In 1998 he was appointed as General Manager of Cardiff Marine Inc.
Christopher J. Thomas - is our Chief Financial Officer. Since November 2001, Mr.
Thomas has been an independent financial consultant to numerous international
shipowning and operating companies. Mr. Thomas is also on the board of directors
of DryShips Inc. and TOP Tankers Inc. each of which is a publicly traded company
with securities registered under the Securities Exchange Act of 1934, From 1999
to 2004, Mr. Thomas was the Chief Financial Officer and a director of Excel
Maritime Carriers Ltd. Prior to joining Excel, he was Financial Manager of
Cardiff Marine Inc. Mr. Thomas holds a degree in Business Administration from
Crawley University, England.
Atlantic Capital Management is a Bermuda corporation providing professional
services to other Bermuda corporations. The Company entered into a contract for
Atlantic Capital Management to serve as the registered office and secretary of
the Company effective as of January 1, 2004.
B. Compensation
During the year ended February 28, 2006 an aggregate of $55,000 compensation was
paid to our officers or directors in their capacity as officers and directors.
We did not set aside any amounts during the last fiscal year to provide pension,
retirement or similar benefits for our directors and officers. On June 5, 2000,
our shareholders approved our 2000 Outside Directors' Stock Option Plan and set
aside 100,000 shares of our common stock for issuance there under. Under the
terms of the Outside Directors' Plan, each non-employee director will
automatically be eligible to receive an option, which option may be granted by a
committee of our board of directors, to purchase 5,000 shares of our common
stock for each year that he serves as our director. Our shareholders also
approved our 2000 Stock Incentive Plan and set aside 1,100,000 shares of our
common stock for issuance there under. The Stock Incentive Plan allows a
committee of our Board of Directors to make awards of a variety of equity-based
incentives to officers and key employees including stock awards, options to
purchase shares of company common stock, stock appreciation rights, phantom
shares, dividend equivalent rights and similar rights; and is intended to
enhance our ability to attract and retain key personnel. As of the date of this
Annual Report, no options have been granted pursuant to the Outside Directors'
Plan or the Stock Incentive Plan.
C. Board Practices
The Company's directors are elected by the shareholders at our annual general
meeting, and serve a term of one year or until their successors are appointed
and duly elected to office. Executive officers are appointed by our Board of
Directors and serve a term of one year or until their successors are appointed.
The Company does not presently have a compensation committee and has not yet
appointed an audit committee. The Company's entire board of directors is
performing the functions of an audit committee. There are no director services
contracts that provide for benefits upon termination of service.
D. Employees
We have no full time or part time employees, except for senior management and
the Board of Directors.
E. Share Ownership
Other than as set forth below under "Item 7 - Major Shareholders and Related
Party Transactions," as of August 24, 2006, none of our directors or officers
owned any of our common stock.
Item 7 Major Shareholders and Related Party Transactions
A. Major Shareholders
To the best of our management's knowledge, the following are the only owners of
more than 5% of the Company's issued and outstanding common stock as at August
24, 2006.
No. of Percentage
Name Shares Owned of Class
---- ------------ --------
Eurotrade Marine Inc.(1) 16,103,227 35.60%
Fairmont Services Corp. 10,064,517 22.25%
Gulfwind Maritime Inc. 6,038,710 13.35%
(1) Mr. George Economou, our Chairman and director, controls the Entrepreneurial
Spirit Foundation, a Liechtenstein foundation that beneficially owns 100% of
Eurotrade Marine Inc.
None of the above shareholders have different voting rights from other
shareholders of the Company. All of our common shares have equal voting rights.
B. Related Party Transactions
In the years ended February 28 2006, 2005 and February 29, 2004 we paid $0,
$5,142 and $2,000, respectively, to Barons SA and Barons Financial Services S.A.
in respect of financial services provided to the Company. Both companies are
controlled by Mr. Eric Kohn, the Company's controlling shareholder and director
until August 23, 2004. As of February 28, 2005 and 2006, there were no amounts
due to these two companies.
On September 9, 2003 and February 28, 2004, the Board of Directors resolved to
issue 4,889,855 shares and 1,053,807 shares, respectively, to settle advances
from Mr. Eric Kohn in the amounts of $244,493 and $52,690, respectively. The
4,889,855 shares and the 1,053,807 shares were issued on October 7, 2003 and on
May 28, 2004, respectively. Further, on August 3, 2004, the Board of Directors
resolved to issue 645,832 shares to settle advances from Mr. Eric Kohn in the
amount of $32,292. The 645,832 shares were issued on August 11, 2004.
In the year ended February 28, 2005 Cardiff Marine Inc. ("Cardiff"), a company
with which we are under common control, made direct payments to third parties on
behalf of us up to an amount of $30,219 for some of our operating expenses. The
account with Cardiff as of February 28, 2005 was settled in January 2006.
In the year ended February 28, 2006 we made direct payments to third parties on
behalf of Cardiff up to an amount of $5,249. The account with Cardiff as of
February 28, 2006 was settled in July 2006.
The General Manager of Cardiff is also one of the Company's directors.
C. Interests of Experts and Counsel
Not Applicable.
Item 8 Financial information
A. Consolidated Statements and Other Financial Information.
See Item 18.
Legal Proceedings
Except as described below, no legal proceedings are known to us to be
contemplated, or threatened by or against us, by any party including any
governmental authority.
In 1999, we commenced litigation in Bermuda against Colloquium, Brian McMillan
and Catherine Matherson (two former directors) in relation to the withdrawal of
$50,691 from our bank account and seeking the return of the approximately
$24,000 paid by us into Colloquium's treasury as part of the May 26, 1999
Agreement for the sale of Colloquium, a copy of which was filed as Exhibit 3.3
to our Form 20-F filed on December 16, 1999. We claimed that the withdrawal of
funds was unauthorized and that the $24,000 payment made to Colloquium under the
May 26, 1999 agreement was made in error after a material default under that
agreement by Brian McMillan and Colloquium. A default judgment was obtained in
Bermuda against the defendants for $74,691, plus interest and costs. On June 29,
1999, we initiated an interdict proceeding in the Court of Session in Scotland
seeking an injunction to prevent the disposal of assets and seeking the
repayment of $50,691. We initiated the interdict proceeding in Scotland because
the defendants and their assets are located in that country.
Colloquium, Brian McMillan and Catherine Matherson have appealed the judgment in
Bermuda, seeking to set aside the default judgment on the grounds that the
defendants were improperly served notice of the Bermuda proceedings and that the
default judgment was obtained in error.
In April 2002, the Bermuda court overturned our previous judgment against
Colloquium, and held that Scotland was the appropriate jurisdiction for such
litigation. The litigation in Scotland has presently ceased, and no additional
expenses for such matter are anticipated by Management.
In November, 2001 the amount of Pound Sterling 10,000 (equivalent to $15,000)
was deposited to a Special Deposit account held with the Royal Bank of Scotland,
in the name of the Accountant of Court, as security of Colloquium's judicial
expenses to await the outcome of the litigation. This amount was expensed in the
year ended February 28, 2002. At that time, Colloquium's judicial expenses were
estimated to be in the region of approximately Pound Sterling 15,000.
In 2004 we entered into negotiations for an out of court settlement with
Colloquium representatives who requested a payment towards their judicial
expenses; however, such negotiations proved unsuccessful and, since then there
has been no communication from Colloquium representatives. According to our
legal counsel there is reasonable possibility that we will be required to pay
for Colloquium's judicial expenses. However, the ultimate outcome of this
litigation cannot be determined.
Dividend policy
The Company has not paid dividends in any of the last three fiscal years and we
have no plans to pay dividends in the foreseeable future.
B. Significant Changes
Not Applicable.
Item 9 The offer and Listing
A. Offer and listing details
Three Most Recent Years - Annual Highs and Lows (1)
Low High
--- ----
2004 N/A N/A
2005 N/A N/A
2006 N/A N/A
- ----------
(1) Since the inception of the quoting of the Company's stock on the OTC
Bulletin Board, the only trade occurred on August 6, 2001 at a price of $0.475.
B. Plan of Distribution
Not applicable.
C. Markets
Our common stock is eligible for trading on the pink sheets under the symbol
OMILF.PK. As of August 24, 2006, we had 30 stockholders of record, of which our
shareholder register indicates 3 have addresses in the United States. Our common
stock was first quoted on the OTC Bulletin Board on August 6, 2001. The last
quoted closing price of the common stock on the OTC Bulletin Board was $0.475
per share. There has been no trading activity in our stock other than the trade
on August 6, 2001.
Item 10 Additional Information
A. Share Capital
Not Applicable
B. Memorandum and articles of association
Company's Objects and Purposes
The objects for which the Company was formed and incorporated are: to carry on
the business of developing, designing, marketing, selling, researching and
dealing in information technology, office automation, electronic equipment,
computers and computer programs, data transmission products and systems and
related equipment and supplies of all kinds; to provide facility management
services by the accommodation, maintenance, supervision and management of
computer installations, computer hardware and software and all appurtenances
thereof, as agent for the buyer or hirer of such installations and equipment;
and to act as consultants, managers and advisors in connection with the business
described in objects (i) and (ii). The objects for which the Company was formed
also include paragraphs (b) to (n) and (p) to (u) inclusive of the Second
Schedule to the Bermuda Companies Act, 1981 (the "Companies Act") which such
items include: the business of: packaging of goods of all kinds; buying, selling
and dealing in goods of all kinds; designing and manufacturing of goods of all
kinds; mining and quarrying and exploration for metals, minerals, fossil fuels
and precious stones of all kinds and their preparation for sale or use;
exploring for, the drilling for, the moving, transporting and refining petroleum
and hydro carbon products including oil and oil products; scientific research
including the improvement, discovery and development or processes, inventions,
patents and designs and the construction, maintenance and operation of
laboratories and research centres; land, sea and air undertakings including the
land, ship and air carriage of passengers, mails and goods of all kinds; ships
and aircraft owners, managers, operators, agents, builders and repairers;
acquiring owning, selling, chartering, repairing or dealing in ships and
aircraft; travel agents, freight contractors and forwarding agents; dock owners,
wharfingers, warehousemen; ship chandlers and dealing in rope, canvas oil and
ship stores of all kinds; all forms of engineering; farmers, livestock breeders
and keepers, graziers, butchers, tanners and processors of and dealers in all
kinds of live and dead stock, wool, hides, tallow, grain, vegetables and other
produce; acquiring by purchase or otherwise and holding as an investment
inventions, patents, trade marks, trade names, trade secrets, designs and the
like; buying, selling, hiring, letting and dealing in conveyances of any sort;
employing, providing, hiring out and acting as agent for artists, actors,
entertainers of all sorts, authors, composers, producers, directors, engineers
and experts or specialists of any kind; to acquire by purchase or otherwise and
hold, sell, dispose of and deal in real property situated outside Bermuda and in
personal property of all kinds wheresoever situated; and to enter into any
guarantee, contract of indemnity or suretyship and to assure, support or secure
with or without consideration or benefit the performance of any obligation of
any person or persons and to guarantee the fidelity of individuals filling or
about to fill situations or trust or confidence. The Company also has the powers
as set out in clause no. 7 of the memorandum of association.
Modification of Rights
Subject to the Companies Acts, all or any of the special rights for the time
being attached to any class of shares for the time being issued may from time to
time (whether or not the Company is being wound up) be altered or abrogated with
the consent in writing of the holders of not less than seventy-five percent of
the issued shares of that class or with the sanction of a resolution passed at a
separate general meeting of the holders of such shares voting in person or by
proxy. To any such separate general meeting, all the provisions of our bye-laws
as to general meetings of the Company shall apply, but so that the necessary
quorum shall be two or more persons holding or representing by proxy any of the
shares of the relevant class, that every holder of shares of the relevant class
shall be entitled on a poll to one vote for every such share held by him and
that any holder of shares of the relevant class present in person or by proxy
may demand a poll.
Directors
Our directors are elected by a majority of the votes cast by stockholders
entitled to vote. There is no provision for cumulative voting. Our board of
directors shall be such number not less than two as the Company in general
meeting from time to time determines.
Each director shall be elected to serve until re-elected or his successor is
appointed at the next annual general meeting, except in the event of his death,
resignation, removal, or the earlier termination of his term of office. The
Company, in general meeting, has the authority to fix the amounts which shall be
payable to the members of the board of directors for attendance at any meeting
or for services rendered.
Stockholder Meetings
Under our bye-laws, annual stockholder meetings will be held at a time and place
selected by our board of directors. The meetings may be held in or outside of
Bermuda. The Company in general meeting or the Board may fix any date as the
record date for any dividend, distribution, allotment or issue or for the
purpose of identifying the persons entitled to receive notices of general
meetings.
Limitations on Liability and Indemnification of Officers and Directors
The Companies Acts authorize corporations to limit or eliminate the personal
liability of directors and officers to corporations and their stockholders for
monetary damages for breaches of directors' fiduciary duties.
Our bye-laws provide that we must indemnify our directors, officers and members
of committees to the fullest extent authorized by law. We are also expressly
authorized to advance certain expenses (including but not limited to an amount
paid to settle an action, satisfy a judgment, liabilities under contract, tort
and statute or any applicable foreign law or regulations and all reasonable
legal and other costs and expenses properly payable to our directors, officers
and members of committees. We believe that these indemnification provisions are
useful to attract and retain qualified directors and executive offices.
The indemnification provisions in our amended memorandum of association and
bye-laws may discourage stockholders from bringing a lawsuit against directors
for breach of their fiduciary duty. These provisions may also have the effect of
reducing the likelihood of derivative litigation against directors, officers and
members of committees, even though such an action, if successful, might
otherwise benefit us and our stockholders. In addition, your investment may be
adversely affected to the extent we pay the costs of settlement and damage
awards against directors, officers and members of committees pursuant to these
indemnification provisions.
There is currently no pending material litigation or proceeding involving any of
our directors, officers, members of committees or employees for which
indemnification is sought.
Election and Removal of Directors
The Company may in special general meeting called for that purpose remove a
director provided notice of any such meeting shall be served upon the director
concerned not less than 14 days before the meeting and he shall be entitled to
be heard at that meeting. This provision may discourage, delay or prevent the
removal of incumbent officers and directors.
Limited Actions by Stockholders
Anything which may be done by resolution of the Company in general meetings or
by resolution of a meeting of any class of shareholders of the Company, may,
without a meeting and without any previous notice being required, be done by
resolution in writing signed by all shareholders who at the date of the
resolution would be entitled to attend the meeting and vote on the resolution.
The Board shall convene and the Company shall hold general meetings as annual
general meetings in accordance with the requirements of the Companies Acts at
such times and places as the Board shall appoint. The Board may, whenever it
thinks fit, and shall, when required by the Companies Acts, convene general
meetings other than annual general meetings which shall be called special
general meetings.
C. Material Contracts
We have no material contracts, as currently we do not have any operations.
D. Exchange Controls
Under Bermudan law, there are currently no restrictions on the export or import
of capital, including foreign exchange controls or restrictions that affect the
remittance of dividends, interest or other payments to non-resident holders of
our common stock.
E. Taxation
United States Taxation
Not Applicable.
Bermuda Tax Considerations
We are a Bermuda exempted company. A Bermuda exempted company is legislatively
exempt from Bermuda's usual requirement that Bermuda-formed businesses be 60%
owned by Bermuda citizens. There is no income tax, withholding tax, capital
gains tax, capital transfer tax, estate duty or inheritance tax payable by a
Bermuda exempted company or its shareholders to the Bermuda Government.
F. Dividends and paying agents
Not Applicable.
G. Statement by experts
Not Applicable.
H. Documents on display
We file reports and other information with the SEC. These materials, including
this annual report and the accompanying exhibits, may be inspected and copied at
the public reference facilities maintained by the Commission at 100 F Street,
N.E., Washington, D.C. 20549, or from the SEC's website http://www.sec.gov. You
may obtain information on the operation of the public reference room by calling
1 (800) SEC-0330 and you may obtain copies at prescribed rates.
I. Subsidiary information
Not Applicable.
Item 11 Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 12 Description of Securities Other than Equity Securities
Not Applicable.
PART II
Item 13 Defaults, Dividend Arrearages and Delinquencies
None.
Item 14 Material Modifications to the Rights of Security Holders and Use of
Proceeds
None.
Item 15 Controls and Procedures
(a) Disclosure Controls and Procedures. An evaluation of the effectiveness of
the Company's disclosure controls and procedures as of the end of the period
covered by this report was carried out under the supervision, and with the
participation of the Principal Executive Officer and Principal Financial
Officer. Disclosure controls and procedures are defined under Securities and
Exchange Commission ("SEC") rules as controls and other procedures that are
designed to ensure that information required to be disclosed by a company in the
reports that it files under the Exchange Act is recorded, processed, summarized
and reported within required time periods. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
issuer's management, including its Principal Executive and Principal Financial
officers, or persons performing similar functions, as appropriate, to allow
timely decisions regarding required disclosure. As a result of the material
weaknesses described below which resulted in the restatement of the Company's
financial statements for the years ended February 29, 2004 and February 28, 2003
and 2002, as explained elsewhere in this Form 20-F, the Principal Executive
Officer and Principal Financial Officer concluded that the Company's disclosure
controls and procedures were not effective as of February 28, 2006 and 2005 and
as of February 29, 2004. Since February 28, 2006, management has made changes to
remediate the material weaknesses described below. The Company's Principal
Executive Officer and Principal Financial Officer believe that the material
weaknesses in the Company's internal control over financial reporting with
respect to the matters which resulted in the restatement of the Company's
financial statements have been remediated by improving their understanding of
the requirements of U.S. generally accepted accounting principles with respect
to accrued legal expenses, stock-based compensation and settlement of
liabilities with common stock. Furthermore, procedure has been put in place to
review minutes of the meetings of the Board of Directors and Shareholders before
issuing financial statements to ensure any matters reviewed and approved by the
Board of Directors or shareholders having financial statement impact are
properly reflected therein. We evaluated the effectiveness of the Company's
disclosure controls and procedures at July 31, 2006. Based on that evaluation
the Principal Executive Officer and Principal Financial Officer concluded that
the Company's disclosure controls and procedures were effective to provide
reasonable assurance that the information required to be disclosed by the
Company in reports filed under the Securities Exchange Act of 1934 as amended,
is recorded, processed, summarised and reported within the time periods
specified in the SEC's rules and regulations.
(b) Management's Report on Internal Control Over Financial Reporting. Although
the Company is not required to file the report required by Item 15(b) of Form
20-F for its fiscal years ended February 29, 2004, or February 28, 2005 or 2006,
the Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934, as amended). Internal control over
financial reporting cannot provide absolute assurance of achieving financial
reporting objectives because of its inherent limitations. Effective internal
control over financial reporting can only provide reasonable assurance that the
objectives of the control process are met. Internal control over financial
reporting is a process that involves human diligence and compliance and is
subject to lapses in judgment and breakdowns resulting from human failures.
Internal control over financial reporting also can be circumvented by collusion
or improper management override. Because of such limitations, there is a risk
that material misstatements may not be prevented or detected on a timely basis
by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore it
is possible to design into the process safeguards to reduce, though not
eliminate, this risk. Further, the design of internal control over financial
reporting includes the consideration of the benefits of each control relative to
the cost of the control.
In the Company's 2005 annual report on Form 20-F, filed on August 30, 2005, in
the section entitled "Item 15 - Controls and Procedures - Changes in Internal
Controls" management stated its belief that the Company's disclosure controls
and procedures were adequate to enable the Company to comply with its disclosure
obligations. As a result of the restatement of its financial statements
management has concluded that material weaknesses in internal control over
financial reporting existed as of February 28, 2006 and 2005 and as of February
29, 2004.
A material weakness is a control deficiency, or a combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.
The Company restated its financial statements previously issued for the years
ended February 28, 2002, February 28, 2003 and February 29, 2004, in order to
(a) account for stock-based compensation of 270,000 shares at $0.05 per share at
the date they were granted (year ended February 29, 2004) instead of accruing
their $13,500 fair value in the prior year ended February 28, 2003, (b) (i)
account for stock-based compensation of 90,000 shares at $0.15 per share at the
date they were granted (year ended February 28, 2003); such stock-based
compensation was not previously recorded and (ii) reclassify the par value of
such shares ($15) from Additional Paid in Capital to Common Stock at the date of
their physical issuance (year ended February 29, 2004), (c) reverse accrual for
legal expenses which had already been paid (initially paid in the year ended
February 28, 2002), (d) account for stock-based compensation of 270,000 shares
at $ 0.05 per share at the date they were granted (year ended February 28, 2005)
instead of accruing the fair value of shares issued of $ 13,500 prior to their
grant date in the year ended February 29, 2004, (e) reclassify, as of February
29, 2004, as a liability $52,690 representing the fair value of 1,053,807 shares
issued at $ 0.05 per share to settle stockholder's advances from Common stock
and Additional paid-in capital to Due to related parties, as these shares were
not physically issued until May 2004. Although the agreement with the
Stockholder for such settlement was concluded in February 2004, the liability to
the stockholder should not have been derecognized in the financial statements
until the shares were actually issued in settlement of the outstanding advances
due to stockholder, and (f) adjust, for the year ended February 29, 2004, the
weighted average number of common shares to 10,060,165 shares, compared to
12,808,298 shares previously reported, to reflect the number of days outstanding
from the grant date of the shares. There was no effect on the loss per common
share.
Management has concluded that the Company's internal control over financial
reporting was not effective as of February 28, 2006 and 2005 and as of February
29, 2004, solely as a result of the restatement of the Company's results as
described above (for Management's remediation actions see discussion in (a)
above).
(c) Attestation Report of Independent Registered Public Accounting Firm
Not applicable
(d) Changes in Internal Controls
There have been no significant changes in our internal controls subsequent to
the date of our most recent evaluation of internal controls.
Item 16A Audit Committee Financial Expert
The Company has not appointed an Audit Committee or an Audit Committee financial
expert because the Company is not currently an operating company and the Board
has determined that the full Board of Directors is able to more efficiently
perform the Audit Committee functions.
Item 16B Code of Ethics
The Company has not adopted a code of ethics because the Company is not an
operating company.
Item 16C Principal Accountant Fees and Services.
Audit Fees
Our principal Accountants for the year ended February 28, 2006 and 2005 were
Ernst & Young (Hellas), Certified Auditors Accountants S.A. For the audit of
2006 and 2005 they billed us Euro 68,250 and Euro 54,494, respectively. There
were no tax and audit related fees billed.
We have not paid any other fees to our Accountants except as listed above. All
fees paid to our Accountants are approved in advance by our Board of Directors.
Item 16D Exemptions from the Listing Standards for Audit Committees
Not Applicable.
Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not Applicable.
PART III
Item 17 Financial Statements
See Item 18
Item 18 Financial Statements
The financial statements in response to this item are set forth on pages F-1
through F-13 and are filed as a part of this annual report.
Item 19 Exhibits
Exhibit Number Description
- -------------- -----------
1.1 Memorandum of Association of the Company, as amended by that
certain Certificate of Deposit of Memorandum of Increase of
Share Capital dated June 30, 1998 (filed as Exhibit 1.1 to
the Company's Form 20FR12G filed as of March 14, 2000, No.
001-15559, and incorporated herein by reference).
1.2 Bye-laws of the Company (filed as Exhibit 1.2 to the
Company's Form 20FR12G filed as of December 1, 1999, No.
001-15559, and incorporated herein by reference).
2.1 Form of Share Certificate (filed as Exhibit 2.1 to the
Company's Form 20FR12G filed as of December 1, 1999, No.
001-15559, and incorporated herein by reference).
12.1 Rule 13a-14(a) / 15d-14(a) Certification of Principal
Executive Officer
12.2 Rule 13a-14(a) / 15d-14(a) Certification of Principal
Financial Officer
13.1 Certification of Principal Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
13.2 Certification of Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
ALLSHIPS LTD.
(FORMERLY OMNINET INTERNATIONAL LTD.)
Index To Financial Statements
Page
Report of Independent Registered Public Accounting Firm F-2
Balance Sheets as of February 28, 2005 and 2006 F-3
Statements of Loss for the years ended February 29, 2004
(as restated), February 28, 2005 and February 28, 2006 F-4
Statements of Stockholders' Equity (Deficit) for
the years ended February 29, 2004 (as restated),
February 28, 2005 and February 28, 2006 F-5
Statements of Cash Flows for the years ended February 29, 2004
(as restated), February 28, 2005 and February 28, 2006 F-6
Notes to Financial Statements F-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
AllShips Ltd.
(Formerly Omninet International Ltd.)
We have audited the accompanying balance sheets of AllShips Ltd. as of February
28, 2005 and 2006 and the related statements of loss, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
February 28, 2006. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
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 AllShips Ltd. at February 28,
2005 and 2006 and the results of its operations and its cash flows for each of
the three years in the period ended February 28, 2006, in conformity with U.S.
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully described in Note 3, the Company
has no source of revenue, has continued to incur losses, and has a working
capital deficiency and stockholders' deficit. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to this matter are also described in Note 3. The financial
statements do not include any adjustments relating to the recoverability of
assets or the amounts of liabilities that may result from the outcome of this
uncertainty.
As further discussed in Note 9 to the financial statements, the Company restated
its financial statements as of and for the year ended February 29, 2004 with
respect to an accrual for legal expenses, stock-based compensation and
settlement of liabilities with common stock.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece,
August 22, 2006
ALLSHIPS LTD.
(Formerly Omninet International Ltd.)
Balance Sheets
February 28, 2005 and 2006
(Expressed in U.S. Dollars)
2005 2006
---- ----
ASSETS
CURRENT ASSETS
Cash $ 312,842 $ 117,408
Prepaid expenses - 3,029
Due from a related party - 5,249
----------- -----------
Total current assets 312,842 125,686
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 7,763 $ 28,500
Accrued liabilities 120,989 159,692
Due to a related party 30,219 -
----------- -----------
Total current liabilities 158,971 188,192
=========== ===========
COMMITMENTS AND CONTINGENCIES (Note 8) - -
=========== ===========
STOCKHOLDERS' EQUITY / (DEFICIT)
Common stock, $0.000167 par value;
150,000,000 shares authorized;
44,873,897 and 45,230,693 issued
and outstanding as at February 28,
2005 and 2006, respectively 7,495 7,555
Additional paid-in capital 3,327,168 3,327,108
Accumulated deficit (3,180,792) (3,397,169)
----------- -----------
Total stockholders' equity (deficit) 153,871 (62,506)
----------- -----------
Total liabilities and stockholders'
equity (deficit) $ 312,842 $ 125,686
=========== ===========
The accompanying notes are an integral part of these financial statements.
ALLSHIPS LTD.
(Formerly Omninet International Ltd.)
Statements of Loss
For the years ended February 29, 2004, February 28, 2005 and February 28, 2006
(Expressed in U.S. Dollars)
2004 2005 2006
---- ---- ----
(as restated,
see Note 9)
General and administrative expenses $ (58,040) $ (183,875) $ (216,377)
General and administrative expenses - related party (2,000) (5,142) -
----------- ------------ -----------
Net Loss $ (60,040) $ (189,017) $ (216,377)
=========== ============ ===========
Preferential deemed dividend (Note 5) $ - $ (1,500,000) $ -
----------- ------------ -----------
Net loss attributable to common stockholders $ (60,040) $ (1,689,017) $ (216,377)
=========== ============ ===========
Loss per common share, basic and diluted $ (0.01) $ (0.06) $ (0.00)
=========== ============ ===========
Weighted average number of common shares, basic and diluted 10,060,165 27,095,500 45,230,693
=========== ============ ===========
The accompanying notes are an integral part of these financial statements.
ALLSHIPS Ltd.
(Formerly Omninet International Ltd.)
Statements of Stockholders' Equity (Deficit)
For the years ended February 29, 2004, February 28, 2005 and February 28, 2006
(Expressed in U.S. Dollars)
Common Stock Additional
Comprehensive ------------------------- Paid-in Accumulated
Loss # of Shares Par Value Capital Deficit Total
---- ----------- --------- ------- ------- -----
Balance, March 1, 2003, as restated (Note 9) 7,924,403 $ 1,321 $ 1,168,959 $ (1,431,735) $ (261,455)
Common stock issued in settlement of
stockholders' advances 4,889,855 817 243,676 - 244,493
Common stock issued in settlement of
directors' stock-based compensation 270,000 48 13,452 - 13,500
Common stock issued in settlement of
directors' stock-based compensation 90,000 15 (15) - -
Net loss (60,040) - - - (60,040) (60,040)
Comprehensive loss (60,040)
Balance, February 29, 2004,
as restated (Note 9) 13,174,258 $ 2,201 $ 1,426,072 $ (1,491,775) $ (63,502)
Common stock issued in settlement of
stockholders' advances 645,832 108 32,184 - 32,292
Common stock issued in settlement of
stockholders' advances 1,053,807 176 52,514 - 52,690
Issuance of common stock 30,000,000 5,010 294,990 - 300,000
Preferential deemed dividend - - 1,500,000 (1,500,000) -
Stock-based compensation expense - - 21,408 - 21,408
Net loss (189,017) - - - (189,017) (189,017)
Comprehensive loss (189,017)
Balance, February 28, 2005 44,873,897 $ 7,495 $ 3,327,168 $ (3,180,792) $ 153,871
Common stock issued in settlement of
directors' stock-based compensation 356,796 60 (60) - -
Net loss (216,377) - - - (216,377) (216,377)
Comprehensive loss (216,377)
Balance, February 28, 2006 45,230,693 7,555 3,327,108 (3,397,169) (62,506)
The accompanying notes are an integral part of these financial statements.
ALLSHIPS LTD.
(Formerly Omninet International Ltd.)
Statements of Cash Flows
For the years ended February 29, 2004, February 28, 2005 and February 28, 2006
(Expressed in U.S. Dollars)
2004 2005 2006
---- ---- ----
(as restated,
see Note 9)
Cash flows from operating activities
Net Loss $ (60,040) $ (189,017) $(216,377)
Non cash items:
Stock-based compensation expense 13,500 21,408 -
Changes in operating assets and liabilities:
Prepaid expenses 1 3,278 (3,029)
Accounts payable (199,254) 6,756 20,737
Accrued liabilities 1,333 105,656 38,703
Due to/from related parties - 30,219 (30,219)
Net cash used in operating activities $ (244,460) $ (21,700) $(190,185)
Cash flows from investing activities
Advances to related parties - - (5,249)
Net cash used in investing activities - - (5,249)
Cash flows from financing activities
Proceeds from issuance of common stock - 300,000 -
Advances from stockholder and related parties 269,970 32,292 -
Cash repaid to stockholder and related parties (27,000) - -
Net cash provided by financing activities $ 242,970 $ 332,292 $ -
Net (decrease) increase in cash (1,490) 310,592 (195,434)
Cash, beginning of year 3,740 2,250 312,842
Cash, end of year $ 2,250 $ 312,842 $ 117,408
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash financing activities:
Settlement of advances from stockholder with shares of common stock
$ 244,493 $ 84,982 $ -
The accompanying notes are an integral part of these financial statements.
AllShips Ltd.
(Formerly Omninet International Ltd.)
Notes to Financial Statements February 28, 2005 and 2006
(Expressed in United States Dollars)
1. Basis of Presentation and General Information:
The accompanying financial statements include the accounts of AllShips Ltd.
(the "Company") which was incorporated in Bermuda on March 24, 1998 under
the name of Omninet International Ltd. On August 20, 2004 the Company's
major stockholder (Mr. Eric Kohn) sold his shares in the Company
(representing approximately 69% of the Company's outstanding common stock)
to 8 Marshall Island companies beneficially owned by Mr. George Economou
and members of his family (the "New Majority Stockholders"), at a price of
$ 0.06 per share. The Company was renamed to AllShips Ltd. on March 18,
2005. The Company has no operations.
2. Significant Accounting Policies:
(a) Basis of Preparation: The accompanying financial statements have been
prepared in accordance with U.S. generally accepted accounting
principles.
(b) Use of Estimates: The preparation of financial statements in
conformity with U.S. 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.
(c) Foreign Currency Translation: The functional currency of the Company
is the U.S. dollar. The Company's books of accounts are maintained in
U.S. dollars. Transactions involving other currencies during the year
are converted into U.S. dollars using the exchange rates in effect at
the time of the transactions. At the balance sheet dates, monetary
assets and liabilities, which are denominated in other currencies, are
translated to reflect the reporting date exchange rates. Resulting
gains or losses are included in General and administrative expenses in
the accompanying statements of loss. There were no material gains or
losses during any of the periods presented.
(d) Stock-Based Compensation: Stock-based compensation related to employee
service and shares issued to non-employee directors for services
provided as directors is recognized using the intrinsic value method
in accordance with Accounting Principles Board Opinion No. 25
Accounting for Stock Issued to Employees ("APB 25"), and thus there is
no compensation expense for options granted with exercise prices equal
to the fair value of common stock on the date of grant. Compensation
expense associated with awards that immediately are vested or
attributable to past services is recognized when granted and
Additional paid-in capital is credited. Upon issuance of the awarded
shares, their par value is reclassified from Additional paid-in
capital to Common stock.
(e) Loss Per Common Share: Basic loss per common share is computed by
dividing the net loss attributable to common stockholders by the
weighted average number of common shares outstanding during the year.
Diluted loss per common share reflects the potential dilution that
could occur if securities or other contracts to issue common stock
result in the issuance of such stock. The Company had no dilutive
securities during the periods presented. For purposes of computing
basic and diluted loss per common share, shares without vesting
conditions committed to be issued under stock-based compensation
arrangements or in settlement of stockholders' advances are considered
outstanding on the grant date or the date the shares were actually
issued in settlement of the outstanding advances due to stockholders,
respectively. Net loss attributable to common stockholders for the
year ended February 28, 2005 includes a preferential deemed dividend
of $1,500,000, as further discussed in Note 5.
(f) Recent Accounting Pronouncements:
SFAS No.123(R): On December 16, 2004, the Financial Accounting
Standards Board (FASB) issued FASB Statement No. 123 (revised 2004),
Share-Based Payment, which is a revision of FASB Statement No. 123,
Accounting for Stock-Based Compensation. Statement 123(R) supersedes
APB Opinion No. 25, Accounting for Stock Issued to Employees, and
amends FASB Statement No. 95, Statement of Cash Flows. Generally, the
approach in Statement 123(R) is similar to the approach described in
Statement 123. However, Statement 123(R) requires all share-based
payments to employees, including grants of employee stock options, to
be recognized in the income statement based on their fair values. Pro
forma disclosure is no longer an alternative. Statement 123(R) must be
adopted no later than March 1, 2006. Early adoption will be permitted
in periods in which financial statements have not yet been issued. The
Company will adopt Statement 123(R) on March 1, 2006. Statement 123(R)
permits public companies to adopt its requirements using one of two
methods:
o A "modified prospective" method in which compensation cost is
recognized beginning with the effective date (a) based on the
requirements of Statement 123(R) for all share based payments
granted after the effective date and (b) based on the
requirements of Statement 123 for all awards granted to employees
prior to the effective date of Statement 123(R) that remain
unvested on the effective date.
o A "modified retrospective" method which includes the requirements
of the modified prospective method described above, but also
permits entities to restate based on the amounts previously
recognized under Statement 123 for purposes of pro forma
disclosures either (a) all prior periods presented or (b) prior
interim periods of the year of adoption.
The Company plans to adopt Statement 123(R) using the
modified-prospective method. The Company currently applies the
intrinsic value method of accounting for share-based payments in
accordance with APB 25. Historically, the Company has limited its
share-based payments activity to grants of Company shares with no
future vesting conditions to non-employee directors for their services
as directors (a practice that has been discontinued since November
2004) and, as such, there is no pro forma impact for the application
of FAS 123 for all periods presented. Furthermore, the Company does
not anticipate that adoption of Statement 123(R) will have a material
impact on its results of operations, financial position or cash flows.
SFAS No.154: In May 2005, the FASB issued FASB Statement No. 154,
"Accounting Changes and Error Corrections" (SFAS No. 154). SFAS No.
154 is a replacement of APB Opinion No. 20, "Accounting Changes" (APB
20) and FASB Statement No. 3, "Reporting Accounting Changes in Interim
Financial Statements" (SFAS No. 3). SFAS No. 154 provides guidance on
the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application as the required
method for reporting a voluntary change in accounting principle. APB
20 previously required that most voluntary changes in accounting
principle be recognized by including in net income of the period of
the change the cumulative effect of changing to the new accounting
principle. SFAS No. 154 provides guidance for determining whether
retrospective application of a change in accounting principle is
impracticable and for reporting a change when retrospective
application is impracticable. SFAS No. 154 also requires that a change
in method of depreciation, amortization, or depletion for long-lived,
nonfinancial assets be accounted for as a change in accounting
estimate that is effected by a change in accounting principle. APB 20
previously required that such a change be reported as a change in
accounting principle. SFAS No. 154 carries forward many provisions of
APB 20 without change, including the provisions related to the
reporting of a change in accounting estimate, a change in the
reporting entity, and the correction of an error. SFAS No. 154 also
carries forward the provisions of SFAS No. 3 that govern reporting
accounting changes in interim financial statements. SFAS No. 154 is
effective for accounting changes and corrections of errors made in
fiscal years beginning after December 31, 2005. The Company will adopt
this pronouncement beginning March 1, 2006.
3. Liquidity:
The Company has no source of revenues and has continued to incur losses. As
of February 28, 2006, the Company had negative working capital of $62,506
and stockholders' deficit of an equal amount. In order for the Company to
continue as a going concern it will require additional funding from its
stockholders or borrowings from a lending institution. Management's
intention is to seek such funding; however, there can be no assurance that
the Company will be able to raise such funding.
4. Related Party Transactions:
General and administrative expenses in the accompanying statements of loss
for 2004, 2005 and 2006 include $2,000, $5,142 and $0, respectively, paid
to Barons S.A. and Barons Financial Services S.A. in respect of financial
services provided to the Company. Both companies were controlled by Mr.
Eric Kohn, the Company's controlling shareholder and director until August
23, 2004. As of February 28, 2005 and 2006, there were no amounts due to
these two companies.
On September 9, 2003 and February 28, 2004, the Board of Directors resolved
to issue 4,889,855 shares and 1,053,807 shares, respectively, to settle
advances from Mr. Eric Kohn in the amounts of $244,493 and $52,690,
respectively. The 4,889,855 shares and the 1,053,807 shares were issued on
October 7, 2003 and on May 28, 2004, respectively. Further, on August 3,
2004, the Board of Directors resolved to issue 645,832 shares to settle
advances from Mr. Eric Kohn in the amount of $32,292. The 645,832 shares
were issued on August 11, 2004 (Note 5).
The amount of $30,219 included in the accompanying February 28, 2005
balance sheet represents amounts due to Cardiff Marine Inc. ("Cardiff"), a
related through common control company, as a result of Cardiff's direct
payments to third parties, on behalf of the Company, of some of the
Company's operating expenses. Cardiff is beneficially owned by the
Company's New Majority Stockholders. The account with Cardiff as of
February 28, 2005 was settled in January 2006.
The amount of $5,249 included in the accompanying February 28, 2006 balance
sheet represents amounts due from Cardiff as a result of the Company's
direct payments to third parties, on behalf of Cardiff. The account with
Cardiff as of February 28, 2006 was settled in July 2006.
The General Manager of Cardiff is also one of the Company's directors.
5. Common Stock:
Under the Company's Articles of Incorporation the Company's authorized
capital stock consists of 150,000,000 shares of common stock, par value
$0.000167 per share. The Board of Directors shall have the authority to
establish series of preferred stock and to designate preferences and
relative, participating, optional or special rights and qualifications,
limitations or restrictions.
During the year ended February 29, 2004 the following issuances of common
stock took place:
o On September 18, 2003, (a) 20,000 shares to each of Mssrs Jeffrey
Conyers, Michael Schroter and Martin Horst and (b) 30,000 shares to
Mr. Eric Kohn, as compensation for services as directors. These shares
were valued at a price of $0.15 per share, the estimated fair market
value at the date of grant as determined by management. As these
shares were granted on November 6, 2002, the related compensation
expense was recorded in the financial statements for the fiscal year
2003;
o On October 7, 2003, 4,889,855 shares to Mr. Eric Kohn at a price of
$0.05 per share in settlement of cash advances received from Mr. Kohn;
and
o On January 16, 2004, (a) 60,000 shares to each of Mssrs Jeffrey
Conyers, Michael Schroter and Martin Horst and (b) 90,000 shares to
Mr. Eric Kohn, as compensation for services as directors. These shares
were valued at a price of $0.05 per share, the estimated fair market
value at the date of grant as determined by management.
During the year ended February 28, 2005 the following issuances of common
stock took place:
o On May 28, 2004 and on August 11, 2004, 1,053,807 shares and 645,832
shares, respectively, to Mr. Eric Kohn at a price of $0.05 per share
in settlement of cash advances received from Mr. Kohn; and
o On October 6, 2004, 30,000,000 shares to the Company's New Majority
Stockholders at a price of $0.01 per share for a total cash
consideration of $300,000. The difference between the fair value of $
0.06 per share as evidenced by the share purchase which occurred in
August 2004 between unrelated parties (as discussed in Note 1, above)
and the issuance at $ 0.01 per share, is accounted for and reflected
as a preferential deemed dividend, increasing the 2005 loss
attributable to common stockholders and the accumulated deficit by $
1,500,000.
During the year ended February 28, 2006 the following issuances of common
stock took place:
o On January 18, 2006, the Company issued 90,000 shares, 88,932 shares,
88,932 shares and 88,932 shares to its former directors Messrs Eric
Kohn, Jeffrey Conyers, Michael Schroter and Martin Horst,
respectively. These shares were granted to the former directors as
compensation for their services rendered for the year ended February
29, 2004 and for the period from March 1, 2004 to August 23, 2004, the
date they resigned and as approved at the annual general meeting held
on November 12, 2004. These shares were valued at a price of $0.06 per
share, the estimated fair market value at the grant date as determined
by the management and the related expense is included in General and
administrative expenses in the accompanying 2005 statement of loss.
6. Taxation:
Under Bermuda law the Company is not required to pay any taxes in Bermuda
on either income or capital gains. The company has received Tax Assurance
from the Minister of Finance in Bermuda indicating that in event of any
subsequent legislation imposing such taxes, the Company will be exempted
from resulting taxation until the year 2016.
7. Stock Option Plans
On June 5, 2000, Company's stockholders approved the 2000 Outside
Directors' Stock Option Plan and set aside 100,000 shares of the Company's
common stock for issuance there under. Under the terms of the Outside
Directors' Plan, each non-employee director will automatically be eligible
to receive an option, which option may be granted by a committee of the
board of directors, to purchase 5,000 shares of our common stock for each
year that he serves as our director.
Company's stockholders also approved our 2000 Stock Incentive Plan and set
aside 1,100,000 shares of our common stock for issuance there under. The
Stock Incentive Plan allows our Board of Directors to grant certain of our
key employees options to purchase our common stock, and is intended to
enhance our ability to attract and retain key personnel. The Stock
Incentive Plan allows a committee of the Board of Directors to make awards
of a variety of equity-based incentives to employees including stock
awards, options to purchase shares of company common stock, stock
appreciation rights, phantom shares, dividend equivalent rights and similar
rights.
As of February 28, 2006 no options, shares or rights have been issued or
granted under either of the above plans.
8. Commitments and Contingencies
In 1999, the Company commenced litigation in Bermuda against two former
directors of Colloquium Ltd. ("Colloquium") (a former subsidiary of the
Company) and an entity related to them, in relation to the withdrawal of
$50,691 from Colloquium's bank account and seeking the return of the
approximately $24,000 paid by the Company to Colloquium in 1999 within the
context of an agreement to sell Colloquium back to its original
shareholders. The Company claimed that the withdrawal of funds was
unauthorized and that the $24,000 was paid after a material default under
the agreement with the former shareholders of Colloquium and accordingly is
seeking the return of these funds from these individuals. A default
judgment was obtained in Bermuda against the defendants for $74,691, plus
interest and costs. On June 29, 1999, the Company initiated an interdict
proceeding in the Court of Session in Scotland seeking an injunction to
prevent the disposal of assets and seeking the repayment of $50,691,
because the defendants and their assets are located in that country.
Colloquium appealed the judgment in Bermuda, seeking to set aside the
default judgment on the grounds that the defendants were improperly served
notice of the Bermuda proceedings and that the default judgment was
obtained in error. On November 13, 2001 the amount of Pound Sterling 10,000
(equivalent to $15,000) was deposited to a Special Deposit account held
with the Royal Bank of Scotland, in the name of the Accountant of Court, as
security of Colloquium's judicial expenses to await the outcome of the
litigation. This amount was expensed in the year ended February 28, 2002.
At that time, Colloquium's judicial expenses were estimated to be in the
region of approximately Pound Sterling 15,000. In April 2002, the Bermuda
court overturned the previous judgment against Colloquium, and held that
Scotland was the appropriate jurisdiction for such litigation. In 2004, the
Company entered into negotiations for an out of court settlement with
Colloquium representatives who requested a payment towards their judicial
expenses; however, such negotiations proved unsuccessful and, since then
there has been no communication from Colloquium representatives. According
to the Company's legal counsel, there is a reasonable possibility that the
Company will be required to pay for Colloquium's judicial expenses.
However, the ultimate outcome of this litigation cannot be determined.
9. Restatement of Previously Issued Financial Statements:
The Company has restated the financial statements previously issued for the
year ended February 29, 2004 in order to:
(a) account for stock-based compensation of 270,000 shares at $ 0.05 per share
at the date they were granted (year ended February 29, 2004) instead of
accruing their $13,500 fair value in the prior year ended February 28,
2003,
(b) (i) account for stock-based compensation of 90,000 shares at $ 0.15 per
share at the date they were granted (year ended February 28, 2003); such
stock-based compensation was not previously recorded and (ii) reclassify
the par value of such shares ($ 15) from Additional Paid in Capital to
Common Stock at the date of their physical issuance (year ended February
29, 2004),
(c) reverse accrual for legal expenses which had already been paid (initially
paid in the year ended February 28, 2002),
(d) account for stock-based compensation of 270,000 shares at $ 0.05 per share
at the date they were granted (year ended February 28, 2005) instead of
accruing the fair value of shares issued of $ 13,500 prior to their grant
date in the year ended February 29, 2004,
(e) reclassify as a liability $52,690 representing the fair value of 1,053,807
shares issued at $ 0.05 per share to settle stockholder's advances from
Common stock and Additional paid-in capital to Due to related parties, as
these shares were not physically issued until May 2004. Although the
agreement with the Stockholder for such settlement was concluded in
February 2004, the liability to the stockholder should not have been
derecognized in the financial statements until the shares were actually
issued in settlement of the outstanding advances due to stockholder, and
(f) adjust the weighted average number of common shares to 10,060,165 shares,
compared to 12,808,298 shares previously reported, to reflect the number of
days outstanding from the grant date of the shares. There was no effect on
the loss per common share.
Additional Total
Common paid-in Accumulated Stockholders'
Stockholders Equity (Deficit): Stock capital Deficit Deficit
-------------- ------------ -------------- ---------------
February 29, 2004, as previously reported 2,362 1,465,101 (1,506,775) (39,312)
- - Adjustments
(b) Reflect the issuance of 90,000
shares, granted in November 2002, in
September 2003. 15 13,485 (13,500) -
(c) Reverse accrual for legal expenses
already paid. - - 15,000 15,000
(d) Reverse accrual for 270,000 shares
granted in November 2004 (subsequent
to year-end). - - 13,500 13,500
(e) Reflect as Due to related party
rather than Additional paid-in
capital and Common Stock,
shareholders advances converted to
equity for which the respective
shares were issued subsequent to
year-end. (176) (52,514) - (52,690)
-------------- ------------ -------------- ---------------
February 29, 2004, as restated 2,201 1,426,072 (1,491,775) (63,502)
============== ============ ============== ===============
Statement of Loss: Net Loss
---------------
Fiscal year ended February 29, 2004, as
previously reported (60,040)
- - Adjustments
(a) Account for 270,000 shares granted in
October 2003 and issued in January 2004.
(13,500)
(d) Reverse accrual for 270,000 shares
granted in November 2004 (subsequent to
year-end). 13,500
---------------
Fiscal year ended February 29, 2004, as restated
(60,040)
===============
The registrant here by certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AllShips, Ltd.
---------------------------------
(Registrant)
Dated: August 29, 2006
/s/ Christopher Thomas
---------------------------
Christopher Thomas
Principal Financial Officer
SK 23113 0001 697276