SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
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[ ] 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: 33-20185
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NEW SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0454377
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3040 East Commercial Blvd., Ft. Lauderdale, Florida 33308
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(Address of principal executive office and zip code)
(954) 772-2297
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(Issuer's telephone number)
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(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for at least
the past 90 days. Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
On October 31, 2001, there were 3,353,000 shares of the Registrant's
Common Stock issued and outstanding.
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NEW SYSTEMS, INC.
INDEX
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - September 30, 2001 (Unaudited)
Statement of Operations - Three months and nine months
ended September 30, 2001 and 2000 (Unaudited).
Statement of Cash Flows - Nine months ended September
30, 2001 and 2000 (Unaudited).
Notes to Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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NEW SYSTEMS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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NEW SYSTEMS. INC.
BALANCE SHEET
September 30, 2001
(UNAUDITED)
ASSETS
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CURRENT ASSETS:
Cash in bank $ 23,519
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Total Current Assets 23,519
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TOTAL ASSETS $ 23,519
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
Accounts payable $ 1,912
Note payable - affiliate 25,000
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TOTAL LIABILITIES $ 26,912
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Stockholders' Deficit:
Common Stock, par value $.001;
250,000,000 shares authorized;
3,353,000 shares issued and
outstanding $ 3,353
Additional paid-in capital 822,793
Deficit accumulated during
development stage (829,539)
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Stockholders' Deficit (3,393)
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TOTAL LIABILITY AND
STOCKHOLDERS' DEFICIT $ 23,519
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The accompanying notes are an integral part of these unaudited
financial statements.
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NEW SYSTEMS, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Nine Months
ended September 30, ended September 30,
2001 2000 2001 2000
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REVENUES:
Interest income $ 180 $ - $ 346 $ -
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GENERAL AND
ADMINISTRATIVE EXPENSES:
Consulting fees
- related party - - 360,000 -
Other 2,079 1,677 7,148 23,558
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2,079 1,677 367,148 23,558
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Net Loss $ (1,899) $ (1,677) $ (366,802) $ (23,558)
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Net loss per share $ - $ - $ (.15) $ (.02)
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Weighted average common shares
used in per share calculation 3,353,000 1,200,002 2,393,131 1,200,002
========== ========== ========== ===========
The accompanying notes are an integral part of these unaudited
financial statements.
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NEW SYSTEMS, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months
ended September 30,
2001 2000
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CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (366,802) $ (23,558)
Adjustments for:
Changes in current assets
and liabilities (7,608) 23,586
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Net cash flow provided (used)
by operating activities (374,410) 28
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Net cash flow from financing
activities 397,000 -
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Net increase (decrease) in cash 22,590 28
Cash at beginning of period 929 1,047
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Cash at end of period $ 23,519 $ 1,075
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The accompanying notes are an integral part of these unaudited financial
statements
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NEW SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
NOTE 1 - ACCOUNTING POLICIES AND OTHER DISCLOSURES
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The condensed financial statements included in this Form 10-
QSB Report are unaudited and have been prepared to provide
information with respect to the interim three month and nine
month periods ending September 30, 2001 and 2000, at a time
when New Systems, Inc. (the "Company") is in a development
stage. These financial statements have also been prepared
assuming that the Company will obtain adequate financing to
continue as a going concern. Due to losses since its
inception and inasmuch as the Company is currently not
engaged in any revenue producing activities, such financing
will most likely be obtained through the issuance of its
equity securities. The Company currently has 250,000,000
shares of Common Stock, par value $0.001 per share (the
"Common Stock") authorized for issuance of which 3,353,000
shares are issued and outstanding. The issuance of any
additional shares of Common Stock will result in the dilution
of the Company's current shareholders.
Previously, the Company sought to enter into a reorganization
or merger with a business venture or a business entity, which
was or had the potential to be successful. The consummation
of such a transaction would likely require the additional
issuance of a substantial number of shares of Common Stock,
which would substantially dilute the Company's existing
stockholders.
The Company believes it has found a suitable business
opportunity to enter into a business combination with Tremor
Entertainment, Inc. ("Tremor"). On August 21, 2001, the
Company, New Tremor Acquisition Corp. ("Acquisition"), a
wholly-owned subsidiary of the Company, and Tremor entered
into an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which each outstanding share of common stock,
without par value, of Tremor ("Tremor Common Stock"), after
giving effect to a 1-for-6000 split of Tremor Common Stock,
will be converted into 2,000 shares of Common Stock of the
Company, and Acquisition will be merged with and into Tremor
and Tremor will continue as a wholly-owned subsidiary of the
Company. Consummation of the merger is subject to various
conditions, including, among other things, receipt of the
approval of Tremor's shareholders.
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NEW SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
NOTE 1 - ACCOUNTING POLICIES AND OTHER DISCLOSURES (Cont'd)
Certain terms and conditions of the merger may change prior
to closing. The Company has been informed that at a special
meeting of the shareholders of Tremor held on October 30,
2001, the Merger Agreement was approved by a majority of the
outstanding shares of Tremor Common Stock and series A
preferred stock. If a closing occurs following the merger,
former shareholders of Tremor will own, in the aggregate,
approximately 90.5% of the issued and outstanding Common
Stock of the Company, assuming no additional issuances of
Common Stock of the Company during the period between the
signing and the closing of the Merger Agreement.
Tremor is a developer of interactive entertainment software
for the most popular video game consoles, including Sony
PlayStation, Sega Dreamcast and Microsoft's upcoming Xbox.
Tremor creates software that provides immersive game
experiences by combining advanced technology with engaging
content, vivid graphics and rich sounds. Tremor currently
has an agreement with Microsoft under which Tremor is
creating a major original product for Microsoft's Xbox.
Xbox, which is planned for release in November 2001, will
represent Microsoft's first foray into video game hardware.
At this time, all of Tremor's development activities are
being dedicated to the completion of the game.
The Company's report on Form 10-KSB for the year ended
December 31, 2000, contains financial statements which have
been audited by an independent certified public accounting
firm and their report on the Company's financial statements
is contained therein. Additional information regarding the
Company's activities since inception, the accounting policies
followed by the Company and other pertinent financial
disclosures are contained in the footnotes accompanying the
audited financial statements in such Report. The footnotes
to the unaudited financial statements are an integral part
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NEW SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
of the financial statements and have been prepared in
conformity with generally accepted accounting principles for
the interim periods presented and in accordance with the
rules and regulations of the U.S. Securities and Exchange
Commission.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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The Company is not currently engaged in any business operations but
has sought a suitable business to acquire or an entity with which it
could enter into an acquisition, merger or similar combination
transaction. The form of any such reorganization cannot be determined
until a suitable business opportunity is presented. The Company has
very limited financial resources and therefore management relied on its
recent shareholder association with Ram Venture Holdings Corp ("RAMVH")
to provide the Company with sufficient financial resources to continue
its search for an entity or business which the Company can acquire or
enter into a reorganization. During the quarter ended September 30,
2001, management relied on RAMVH to provide introductions to individuals
who may facilitate locating a business or entity interested in being
acquired or reorganizing with the Company, with the intent to take
advantage of any reasonable business proposal presented which management
believed would provide the Company and its stockholders with a viable
business opportunity. The final decision in determining whether to
complete any acquisition or reorganization would be made by the board
of directors unless otherwise required by applicable law, the articles
of incorporation, its bylaws or by contract. Consequently, prior
stockholders' approval of any acquisition or reorganization would only
be sought if required.
Any investigation of specific business opportunities and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments requires substantial time and attention
from management. Investigation will also result in the Company
incurring expenses for the payment of accountants, attorneys, and
possibly others involved in such an inquiry. If a decision is made not
to consummate, participate or complete the acquisition of a business
opportunity, expenses incurred will not be recoverable. Furthermore,
there can be no assurance that the Company's participation in any
business opportunity will ultimately be successful.
The Company believes it has found a suitable business opportunity
to enter into a business combination with Tremor Entertainment Inc., a
California corporation ("Tremor"). On August 21, 2001, the Company, New
Tremor Acquisition Corp. ("Acquisition"), a wholly-owned subsidiary of
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the Company and Tremor entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which each outstanding share of common
stock, without par value, of Tremor ("Tremor Common Stock"), after
giving effect to a 1-for-6000 split of Tremor Common Stock, will be
converted into 2,000 shares of Common Stock of the Company, and
Acquisition will be merged with and into Tremor and Tremor will survive
as a wholly-owned subsidiary of the Company. Consummation of the merger
is subject to various conditions, including, among other things, receipt
of the approval of Tremor's shareholders. Certain terms and conditions
of the merger may change prior to closing. The Company has been
informed that at a special meeting of the shareholders of Tremor held
on October 30, 2001, the Merger Agreement was approved by a majority of
the outstanding shares of Tremor Common Stock and series A preferred
stock. If a closing occurs following the merger, former shareholders
of Tremor will own, in the aggregate, approximately 90.5% of the issued
and outstanding Common Stock of the Company, assuming no additional
issuances of Common Stock of the Company during the period between the
signing and the closing of the Merger Agreement.
Tremor is a developer of interactive entertainment software for the
most popular video game consoles, including Sony PlayStation, Sega
Dreamcast and Microsoft's upcoming Xbox. Tremor creates software that
provides immersive game experiences by combining advanced technology
with engaging content, vivid graphics and rich sounds. Tremor currently
has an agreement with Microsoft under which Tremor is creating a major
original product for Microsoft's Xbox. Xbox, which is planned for
release in November 2001, will represent Microsoft's first foray into
video game hardware. At this time, all of Tremor's development
activities are being dedicated to the completion of the game.
LIQUIDITY, CAPITAL RESOURCES AND RESULTS OF OPERATIONS
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At September 30, 2001, the Company had $23,519 in current and total
assets, as compared to $929 at December 31, 2000, and a shareholders'
deficiency of ($3,393) as compared to a shareholders' deficiency of
($38,591) at December 31, 2000. The increase in current and total assets
was the result of the Company's increase in cash and the increase in
shareholders' equity was the result of the Company's issuance of common
stock during the period.
Working capital, if any, obtained in the future will be used to
prepare and file all periodic reports, as required by the Securities and
Exchange Act of 1934. During the nine months ended September 30, 2001,
the Company was not engaged in any business operations or in any other
commercial activities.
Since its inception on or about December 10, 1987, the Company has
not engaged in any profitable operations and has utilized all funds
received from its initial public offering attempting to conduct viable
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commercial operations. It is not anticipated that the Company will
generate any revenue in the future unless an operating business
opportunity is located and a merger or other form of reorganization is
consummated. The Company intends to investigate various business
opportunities. The effort will likely result in management incurring
out of pocket expenses and expenses associated with legal and accounting
services. Such costs and expenses will increase the financial burden
on the Company with no guarantee that any benefit will result from the
expenditures or from the efforts of management.
At present, the Company does not own any property. The Company
maintains its business address at a minimal cost at the office of one
of its stockholders, RAM Venture Holding Corp. Administrative services,
including the use of fixtures, furniture and equipment, and the use of
employees to provide secretarial and bookkeeping services, are provided
to the Company at minimal cost by RAM Venture Holdings Corp. and the
Company's current officers and directors.
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PART II
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Item 1. LEGAL PROCEEDINGS
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Not applicable.
Item 2. CHANGE IN SECURITIES
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Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
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Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Subsequent Vote of Security Holders
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On October 3, 2001, the Company received a written consent,
in lieu of a stockholders' meeting, from RAM Venture Holdings
Corp. ("RAMVH") and KM Financial Inc. ("KM"), as proxies for
Tremor, the holder of a majority of the issued and
outstanding shares of Common Stock of the Company. The
written consent approved the Merger Agreement and an
amendment to the Company's articles of incorporation to
change the Company's corporate name to "Tremor Entertainment
Inc." to be effective immediately after the merger upon the
filing of an amendment with the Secretary of State of Nevada.
Item 5. OTHER INFORMATION
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Change in Control of Registrant
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The Company was informed that on or about July 23, 2001, the
Company's shareholders, RAMVH and KM sold a total of
1,800,000 shares of its Common Stock, representing almost
fifty-four percent (54%) of the Company's issued and
outstanding Common Stock to Tremor, for aggregate
consideration of $505,000. As a result of this transaction,
Tremor acquired majority control of the Company. Pursuant
to the stock purchase agreement entered into among RAMVH, KM
and Tremor, Tremor granted to RAMVH and to KM a proxy to
vote the 1,800,000 shares, in Tremor's name at any meeting
of stockholders of the Company or in connection with any
written consent of the stockholders of the Company in lieu
of a meeting thereof, which proxy shall terminate
automatically at the effective time of the merger without any
further action on the part of any party thereto.
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Proposed Merger of the Registrant
---------------------------------
On August 21, 2001, the Company, Acquisition and Tremor
entered into the Merger Agreement pursuant to which each
outstanding share of Tremor Common Stock, after giving effect
to a 1-for-6000 split of Tremor Common Stock, will be
converted into 2,000 shares of Common Stock of the Company,
and Acquisition will be merged with and into Tremor and
Tremor will survive as a wholly-owned subsidiary of the
Company. Consummation of the merger is subject to various
conditions, including, among other things, receipt of the
approval of Tremor's shareholders. Certain terms and
conditions of the merger may change prior to closing. The
Company has been informed that at a special meeting of the
shareholders of Tremor held on October 30, 2001, the Merger
Agreement was approved by a majority of the outstanding
shares of Tremor Common Stock and series A preferred stock.
If a closing occurs following the merger, former shareholders
of Tremor will own, in the aggregate, approximately 90.5% of
the issued and outstanding Common Stock of the Company,
assuming no additional issuances of Common Stock of the
Company during the period between the signing and the closing
of the Merger Agreement.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) There are no exhibits required to be filed for the
period covered by this Report.
(b)(i) On August 24, 2001, the Company filed a Report on
Form 8-K announcing a change in accountants from
Hansen Barnett & Maxwell to Baum & Company, P.A.
(ii) On August 24, 2001, the Company filed a Report on
Form 8-K announcing that the Company entered into
an Agreement and Plan of Merger with New Tremor
Acquisition Corp. and Tremor Entertainment, Inc.
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SIGNATURES
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In accordance with the requirements of the Exchange Act, the Issuer
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEW SYSTEMS, INC.
November 8, 2001 By:___/s/Norman H. Becker________
Norman H. Becker, President
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