SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number: 33-1986-LA
TeleMall Communications, Inc.
-------------------------------------------------
(Exact name of registrant as Specified in its Charter)
Nevada 88-022660
- ------------------------ ------------------------
(State of Incorporation) (I.R.S. Employer ID No.)
5030 Paradise Rd., #C-213, Las Vegas, Nevada 89119-1214
--------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number Including Area Code: (702)736-8899
-------------
Indicate by check X whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of September 30, 1996: 3,989,105 Shares of Common Stock,
$.001 par value
Dated February 11, 1997
TELEMALL COMMUNICATIONS, INC.
SEC FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Attached are three (3) copies of the Registrant's Financial Statements for
the period ended September 30, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Registrant, formerly known as Vegas Ventures, Inc., a dormant/inactive
company, acquired 100% of TeleMall Network, Inc. in June, 1996, pursuant to
which the Registrant's name was changed to TeleMall Communications, Inc. The
directors of Vegas Ventures resigned and were replaced by the slate of directors
of TeleMall Network, Inc. and TeleMall Communications, Inc. (now the Registrant)
continued to operate the business as a public entity.
The Registrant filed a Form 8-K on June 27, 1996 and attached its Audited
Financial Statements for TeleMall Network, Inc. as of May 31, 1996 and for
TeleMall Communications, Inc. as of June 5, 1996.
Significant Financial Statement changes include: Current Liabilities
increased from $1,291 at December 31, 1995 to $298,631 at September 30, 1996.
Current liabilities for the period ended June 30, 1996 were $241,535. The
increase in accounts payable is attributable to increased accounts payable for
the Registrant; Total Stockholders Equity increased from $1,578,709 at December
31, 1995 to $5,288,039 at September 30, 1996. Total Shareholders Equity
increased from $5,044,895 at June 30, 1996 to $5,288,039 at September 30, 1996
due to an increase in the Registrant's accumulated deficit. Current Assets
increased to $3,614,416 at September 30, 1996 compared to $0 and $3,611,790 for
the periods ended December 31, 1995 and June 30, 1996 respectively. Property and
Equipment remained at $71,970 and Other Assets at $1,623,311 for the three month
period ended September 30, 1996 in comparison to the period ended June 30, 1996;
Revenues increased from $0 for the period ended December 31, 1995 to $121,546
during the three months ended September 30, 1996. Revenues for the three month
period ended June 30, 1996 were $56,197 compared to $121,456 for the three month
period ended September 30, 1996. Net income for the year ended December 31, 1995
was $0 compared to ($805) for the three month period ended June 30, 1996 and
($305,487) for the three months ended September 30, 1996. This increase in net
operating losses is attributable to the Registrant's commencing operations and
hiring employees and others to sell the Registrant's products and services as
well as the costs of these products and services.
The increase in Assets is the result of the exchange of 310,000 shares of
$10.00 par value Series A Convertible, Redeemable Preferred Stock of the
Registrant, which replaces the TeleMall Network Series A Preferred Stock, which
was issued in exchange for an inventory of Len Garon Artwork, of $3,100,000, as
set forth in Footnote 7 to the "Notes to Financial Statements"; and the exchange
of 200,000 shares of said Series A Convertible Redeemable Preferred Stock of the
Registrant's Preferred Stock in exchange for said 200,000 shares of the TeleMall
network Series A $10.00 par value Preferred Stock; which were issued for 100,000
shares at $20 per share of Aristocrat Endeavor Fund (British Virgin Islands)
resulting in an addition to assets of $2,000,000. A contemplated redemption of
$500,000 formerly anticipated to occur in August 1996 (subject to a 5%
redemption fee) did not occur. Management currently anticipates that the
redemption will occur in the Spring of 1997. See Footnote 8 to the "Notes to
Financial Statements."
Management believes it is important to understand that although Registrant
now has 30 employees, its senior management group has been operating in their
present capacities together for only seven months, during which time the current
Business Plan, Marketing Analysis, and extensive promotional, marketing and
advertising materials have been developed, and the Registrant's negotiations
with vendors and customers have only recently reached a point where significant
revenue creating agreements have materialized. At this time, Management is
focusing its efforts on the implementation of its Inter-Active Home Office
Business Systems (the "Home Based System"). As a result, the Direct Response and
As-Seen-On TV kiosks are currently on hold. Additionally, the proposed Vegas
Heat retail store location was leased to another entity.
Management was unable to implement the business activities of each of its
three Divisions since it was unsuccessful in completing its proposed private
offering. Additionally, the Registrant did not go forward with its planned
secondary offering due to the market conditions at the time which were not
favorable to offerings for businesses such as Registrant. The Registrant has not
yet been successful in raising the capital to completely and fully fund each
division and thus, has put these divisional operations on hold.
In the event the Registrant is successful in increasing its cash capital by
approximately $1,000,000, it plans to complete its Home Based System division
and concentrate on marketing and selling that system.
Mailings of promotional materials to the Registrant's 8,000 Network
Marketing representatives may generate net revenues to sustain the Division
through the recruitment of new Members and
Representatives, annual fees, purchase of promotional materials, and from the
Registrant's sale of its products and services. It is anticipated the majority
of new representatives will participate in Home Based Business Packages offered
by the Registrant. The Home Based Business System will be available to all
Registrant's Representatives. Details of the program are currently being
finalized. However, it is management's opinion that once introduced, the System
will, in effect, revolutionize the conventional representative program. The
computer-based System will provide professional, efficient technologies required
to assist all Registrant's Representatives to maximize their efforts towards
financial independence. The Registrant anticipates the introduction of the Home
Based Business System will enable the Registrant to deliver indisputable,
tangible value to its Representatives, a fact that could propel the
Representative Program beyond most other Network marketing organizations.
In addition to an immediate revenue source for the registrant, the Home
Based System will substantially reduce ongoing costs of printing and postage,
historically very high in Networking Industry.
Currently, the Member/Representative program is generating approximately
$40,000 in gross revenue monthly, a figure expected to increase with the
introduction of the Home Based Business System.
PART II OTHER INFORMATION
Items 1,2, 3 and 4 are Inapplicable
Item 5. Other Matters.
Resignation of Officers and Directors.
On or about February 4, 1997, the Registrant accepted the resignations of
Thomas Wells (Director, President and Chief Operating Officer), Kenneth
Johanning (Director and Senior Vice President - Retail Stores) and Robert
Lawrence (Director). The Registrant has not appointed any new directors and
continues with a Board of three directors.
Item 6. Exhibits and Reports on Form 8-K
N/A
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Telemall Communications, Inc.
Date February 11, 1997 /s/
-----------------------------------------
Rick Sullivan, Chairman and President
/s/
-----------------------------------------
Roy Giorgi, Chief Financial Officer
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
Current Assets September 30, 1996 December 31, 1995
- -------------- ------------------ -----------------
Cash 2,479 0
Aristocrat Mutual Fund (Fn.8) 500,000 0
Inventory (Fns. 1 and 7) 3,101,061 0
Prepaid expenses 10,876 0
---------- ---------
Total Current Assets 3,614,416 0
---------- ---------
Property and Equipment
Office furniture and equipment 65,979 0
Capitalized Equipment leases 6,000 0
---------- ---------
71,979 0
Less: Accumulated depreciation (20,041) 0
---------- ---------
Net Property and Equipment 51,938 0
---------- ---------
Investment in Stock (Fn. 5) 0 1,580,000
---------- ---------
Other Assets
Aristocrat Mutual Fund (Fn. 8) 1,500,000 0
Tape Production costs net
of amortization of $12,472 19,706 0
Distributor list 79,440 0
Trademark costs 22,539 0
---------- ---------
Total Other Assets 1,621,685 0
---------- ---------
Total Assets 5,288,039 1,580,000
---------- ---------
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities September 30, 1996 December 31, 1995
- ------------------- ------------------ -----------------
Accounts Payable 231,669 1,291
Accrued liabilities 19,797 0
Notes Payable (Fn. 9) 41,000 0
Current portion of capital
leases 6,165 1,291
---------- ----------
Total Current Liabilities 298,631 1,291
---------- ----------
Long-Term Liabilities
Note Payable (Fn. 9) 250,000 0
---------- ----------
Total Long Term Liabilities 250,000 0
---------- ----------
Total Liabilities 548,631 0
---------- ----------
Stockholders' Equity
Common stock: 50,000,000
shares authorized at $.001 per
share par value; issued and
outstanding 3,789,100 shares at
September 30, 1996;
14,961,000 shares at December
31, 1995 3,789 14,961
Convertible preferred
stock: 10,000,000 shares
authorized at $10.00 stated
value per share, issued and
outstanding 510,000 shares at
September 30, 1996, 0 shares
at December 31, 1995 5,100,000 0
Paid in capital 1,167,885 2,789,722
Accumulated deficit (1,532,266) (1,225,974)
---------- ----------
Total Stockholders' Equity 4,739,408 1,578,709
---------- ----------
Total Liabilities and
Stockholders' Equity 5,288,039 1,580,000
---------- ----------
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
CONSOLIDATED INCOME STATEMENTS
(unaudited)
For the Three
Months Ended Year to Date
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues 121,546 0 177,743 0
-------- -------- -------- --------
Operating
Expenses:
Selling, general and
administrative
expenses 421,995 0 476,109 0
Depreciation 2,412 0 3,216 0
Amortization 1,626 0 2,710 0
-------- -------- -------- --------
Total Operating
Expenses: (426,033) 0 (482,035) 0
-------- -------- -------- --------
Operating Income (304,487) 0 (304,292) 0
Interest Expense (1,000) 0 (2,000) 0
-------- -------- -------- --------
Net Income before
Taxes (305,487) 0 (306,292) 0
Provision for
income taxes 0 0 0 0
-------- -------- -------- --------
Net Income (305,487) 0 (306,292) 0
-------- -------- -------- --------
Per share calculations are Nil per share.
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
INCEPTION TO SEPTEMBER 30, 1996
(unaudited)
Deficit
Accumulated
Common Stock During the Total
----------------- Paid in Development Stockholders'
Issued Amount Capital Stage Equity (Deficit)
------ ------ ------- ----- ----------------
Balance at
November 3,
1986
(inception) -- -- -- -- --
Shares of
common
stock issued
in November
1986 in
exchange for
cash ($.08
per share):
Officers and
directors 75,000 75 5,925 -- 6,000
Related
parties 5,000 5 395 -- 400
Net loss for
period -- -- -- (163) (163)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1986 80,000 80 6,320 (163) 6,237
Shares of
common stock
issued in
public stock
offering at
$1.00 per
share in
September
1987 (net of
offering
costs of
$66,512) 201,000 201 6,320 -- 134,488
Shares of
common stock
issued in
October 1987
for services
in connection
with public
stock
offering 750,000 750 (750) -- --
Net Loss for
the year -- -- -- (3,128) (3,128)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1987 1,031,000 1,031 139,857 (3,291) 137,597
Net Loss for
the year -- -- -- (137,557) (137,557)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1988 1,031,000 1,031 139,857 (140,848) 40
Shares of
common stock
issued in
April 1989
for cash $.22
per share) 45,000 45 9,955 -- 10,000
Shares of
common stock
issued in
July 1989 for
services 760,000 760 (760) -- --
Net Loss for
the year -- -- -- (9,748) (9,748)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1989 1,836,000 1,836 149,052 (150,596) 292
Shares of
common stock
issued in
January 1990
for services 3,155,000 3,155 (3,155) -- --
Net Loss for
the year -- -- -- (500) (500)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1990 4,991,000 4,991 145,897 (151,096) (208)
Net Loss for
the year -- -- -- (4,363) (4,363)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1991 4,991,000 4,991 145,897 (155,459) (4,571)
Shares of
common stock
issued in
August 1992
to related
parties for
consulting
services
($.01 per
share) 1,470,000 1,470 18,530 -- 20,000
Shares of
common stock
issued in
August 1992
in exchange
for
unimproved
real estate
($.41 per
share) 6,400,000 6,400 2,627,395 -- 2,633,795
Net Loss for
the year -- -- -- (59,049) (59,049)
---------- ------ --------- ---------- ---------
Balance at
December 31,
1992 12,861,000 12,861 2,791,822 (214,508) 2,590,175
---------- ------ --------- ---------- ---------
Shares of
common stock
issued March
30, 1993 in
exchange for
services 250,000 250 (250) -- --
Net Profit
(Loss) for
the year -- -- -- 0 0
---------- ------ --------- ---------- ---------
Balance at
December 31,
1993 13,111,000 13,111 2,791,572 214,508 2,590,175
Net (loss)
for the year -- -- -- (1,011,466) 0
---------- ------ --------- ---------- ---------
Balance at
December 31,
1994 13,111,000 13,111 2,791,572 (1,225,974) 1,578,709
Shares of
common stock
issued
October 1,
1995 in
exchange for
services 1,850,000 1,850 (1,850) -- --
Net Profit
(Loss) for
the year -- -- -- 0 0
---------- ------ --------- ---------- ---------
Balance at
December 31,
1995 14,961,000 14,961 2,789,722 (1,225,974) 1,578,709
Deficit
Accumulated
Common Stock Preferred Stock During the Total
------------ --------------- Paid in Development Stockholders'
Issued Amount Issued Amount Capital Stage Equity (Defecit)
------ ------ ------ ------ ------- ----- ----------------
Balance at
December 31,
1995 14,961,000 14,961 2,789,922 (1,225,974) 1,578,709
Return of
Company
shares in
exchange for
investment
shares
distributed
to
shareholders (6,400,000) (6,400) (1,573,600) -- (1,580,000)
---------- ------ --------- ---------- ---------
8,561,000 8,561 1,216,122 (1,225,974) (1,291)
Reverse 10
for 1 split (7,704,900) (7,705) 7,705 0
---------- ------ --------- ---------- ---------
856,100 856 1,223,827 (1,225,974) (1,291)
Issuance of
common stock
for
acquisition
of Telemall
Network,
Inc. shares 2,933,000 2,933 (55,942) (53,009)
Preferred
stock issued
by TeleMall
Network,
Inc. 510,000 5,100,000 5,100,000
Net Profit
for period
ended
September
30, 1996 (306,292) (306,292)
---------- ------ ------- --------- --------- ---------- ---------
Balance,
September
30, 1996 3,789,100 3,789 510,000 5,100,000 1,167,885 (1,532,266)
---------- ------ ------- --------- --------- ---------- ---------
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Month Period Ended
September 30,
-------------------------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) (306,292) 0
Adjustments to reconcile net loss to
net loss to net cash provided (used) in
operating activities
Depreciation and amortization 5,926 0
(Increase) in trademark cost (22,539) 0
(Increase) in inventory (3,101,061) 0
Increase in accounts payable 230,378 0
Increase in accrued expenses 19,797 0
(Increase) in tape production costs (22,416) 0
(Increase) in distribution costs (79,440) 0
(Increase) in prepaids (10,876) 0
---------- -------
NET CASH (USED) BY OPERATING ACTIVITIES (3,286,523) 0
---------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investment in stock 1,580,000 0
(Increase) in office furniture, equipment (55,154) 0
(Increase) in mutual fund (2,000,000) 0
---------- -------
NET CASH (USED) IN INVESTING ACTIVITIES (475,154) 0
---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in notes payable 291,000 0
Increase in capital leases 6,165 0
Surrender common shares/investment stock (1,580,000) 0
Increase in preferred stock 5,100,000 0
Issuance of common shares for acquisition
of TeleMall Network, Inc. (53,009) 0
-------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 3,764,156 0
---------- -------
NET INCREASE IN CASH, BEGINNING OF PERIOD
2,479 0
---------- -------
CASH, BEGINNING OF PERIOD 0 0
---------- -------
CASH, END OF PERIOD 2,479 0
---------- -------
TELEMALL COMMUNICATIONS, INC.
(formerly Las Vegas Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(unaudited)
Note 1 Summary of Significant Accounting Policies:
This summary of significant accounting policies of TELEMALL COMMUNICATIONS,
INC. (the "Company") (formerly Vegas Ventures, Inc.) (a development stage
company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management, which is responsible for the integrity and
objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in preparation of
the financial statements.
(a) Organization and Business Nature:
The Company was incorporated in the State of Nevada on November 3,
1996 as Ed-Phills, Inc. Since inception, the Company has been engaged
in organizational activities. The Corporation changed its name from
Ed-Phills, Inc. on August 24, 1992 to Vegas Ventures, Inc. Vegas
Ventures, Inc. changed its name to TeleMall Communications, Inc. on
June 4, 1996.
(b) Depreciation:
Depreciation is provided by the straight-line method at rates
calculated to amortize cost over the estimated useful lives of
respective assets. Upon sale or retirement of the respective assets,
the related cost and accumulated depreciation are eliminated from the
accounts, and gains or losses are reflected in income. Repair and
maintenance expenditures, not anticipated to extend original asset
lives, are changed to income as incurred.
(c) Inventory:
Inventory is stated at the lower cost or market and includes
$3,100,000 of artwork, stored in a warehouse in Jenkintown,
Pennsylvania (see note 7).
(d) Fiscal Year:
The Company operates on a calendar year end basis.
(e) Basis of Corporation
The Company prepares its financial statements and federal income taxes
on the accrual basis of accounting.
Note 2 Acquisitions:
Effective June 4, 1996 the Company exchanged 2,933,000 shares of its
common stock for all the outstanding common shares of TeleMall Network
Incorporated ("TeleMall"). TeleMall was incorporated in Nevada on May
12, 1994 and its main business activity is merchandising products over
television.
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(unaudited)
(continued)
Note 3 Options, Warrants and Preferred Stock Conversion Features:
There are no options or warrants outstanding against the common stock of
the Company. The convertible preferred stock provides for the stock
TeleMall Communications, Inc. at the option of the shareholders. The
conversion option provides for redemption release stages over time with no
expiration date as to the conversion option.
Note 4 Divided Policy:
The Company has not yet adopted a policy regarding dividends.
Note 5 Investment in Stock:
On June 30, 1992, the Company entered into an agreement to acquire a 5/6
interest in three parcels of unimproved real property located in the Las
Vegas, Nevada metropolitan area in exchange for 6,400,000 shares of the
Company's common stock. The three parcels were appraised at $3,157,555 for
the 5/6 interest and were subject to two loans totaling $466,635 plus
accrued interest of $35,541, and unpaid property taxes of $9,862.
On August 16, 1993 the Company files for relief in Chapter XI Federal
Bankruptcy, in case number BK-S- 93-21874-LBR.
Effective January 4, 1994 the Company was successful in proviing a plan of
reorganization which primarily provided for the sale of the 5/6 interest in
the three parcels of unimproved real estate for 395,000 shares of preferred
voting stock of C.E.C., a public company. The buyer of the vacant parcels
also assumed the debt associated with the unimproved parcels.
The Company was subsequently successful in obtaining a dismissal from the
Chapter XI proceedings.
In May 1996 the 395,000 shares of C.E.C. stock held by the Company was
exchanged for the 6,400,000 shares originally issued for the vacant
parcels. The Company then cancelled all of the 6,400,000 shares.
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(unaudited)
(continued)
Note 6 Common Stock:
On August 24, 1992, the Company approved a 10 to 1 reverse stock split. All
references in the Financial Statements to shares of common stock and per
share data reflest the August 24, 1992 changes.
In May, 1996 the Company aproved a 10 to 1 reverse split and the
corresponding effect is reflected in the current period in order to relate
to the stock activity for the pre and post acquisition transaction.
Note 7 Artwork:
Inventory of Len Garon Artwork was acquired
from Cable Print Network Marketing in exchange
for 310,000 shares of TeleMall Network, Inc.
Redeemable Convertible Preferred Stock valued
@ $10/share $3,100,000
==========
In the event the preferred shares or their equivalent in common shares do
not have a market price of at least $3,100,000 within two years, the
Company, at its option, shall return the artwork or issue additional shares
to compensate for the deficiency.
Note 8 Securities:
Investment in Aristocrat endeaver Fund consists of 100,000 shares at
$20/share which was exchanged for 200,000 shares of TeleMall Network, Inc.
Convertible Preferred Stock valued @ $10/share.
The investment is in the form of a Mutual Fund held in the British Virgin
Islands. The Company's management anticipates a redemption of $500,000 of
shares shortly after the hold is released on the redemption period which is
anytime after August 1, 1996. The redemption fee is five percent (5%) of
the redeemed and the fee decreases each year thereafter.
Note 9 Notes Payable:
Officer and director - demand note 16,000
Officer and directoe - demand note 25,000
Total Current Liability 41,000
Officer and Director - Due After One year 250,000
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(unaudited)
(continued)
Note 10 Income Taxes:
At September 30, 1996, the Company has federal net operating loss
carryforward of $1,532,266 for financial accounting and federal income tax
purposes. Utilizaion of the net operating loss in any taxable year during
the carryforward period may be subject to an annual limitaion due to the
ownership change limitations imposed by the tax law.
The net operating losses will expire at various dates commencing in the
year 2006 through 2011.
The deferred tax asset consists of the future benefit of net operating loss
carryforwards. A valuation allowance limits the recognition of the benefit
of deferred tax assets until realization is reasonably assured by future
profitability.
The following is a summary of deferred taxes:
Deferred asset 417,145
Valuation allowance (417,145)
Total 0