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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2000 Commission File Number - 33-42498
SUN EXPRESS GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 65-024624
- ------------------------------------ -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1515 University Drive Suite
111-C Coral Springs, Florida 33065
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 662-4928
---------------------------
Securities registered pursuant to Section 12 (b) of the Act: None.
------------------
Securities registered pursuant to Section 12 (g) of the Act: Common Stock.
------------------
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 twelve months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing for the past 90 days.
Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
24,996,198 shares of common stock, $.0001 par value, were issued and outstanding
on June 10, 2001.
The aggregate market value of the Registrant's common stock held by
nonaffiliates of the Registrant as of the close of business on May 22, 2001(an
aggregate of 24,250,000 shares out of a total of 24,996,198 shares outstanding
at that time) was $00.00 computed by reference to the closing bid price of
$00.00 on June 11, 2001.
PART I
ITEM 1. BUSINESS
(a) DEVELOPMENT OF BUSINESS
Sun Express Group, Inc. (the "Company"), which owned and operated the successful
Destination Sun Airways, has been inactive since selling its assets to Air Tran
Airways in 1994.
Until September of 2000, the Company was constrained by a non-compete agreement
that was executed as a part of the sale of assets in 1994.
The Company is now seeking new business opportunities and has begun to identify
possible new areas of operation.
(b) FINANCIAL INFORMATION AB0UT OPERATING SEGMENTS
Not applicable. The Company has been inactive since 1994.
(c) NARRATIVE DESCRIPTION OF BUSINESS
The Company is now seeking new business opportunities and has begun to identify
possible new areas of operation.
EMPLOYEES
As of May 22, 2001, the Company had no employees.
ITEM 2. DESCRIPTION OF PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 1, 2000, the Board of Directors approved a reverse split of the
outstanding common shares of the Company on a 1 share for 4 shares basis
pursuant to a vote of the majority of the outstanding shares of the Company.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock has never traded.
(b) As of May 22, 2001, the approximate number of holders of record of the
Company's common stock was 351.
(c) The Company has never paid cash dividends on its common stock. The Company
presently intends to retain any future earnings to finance the expansion of its
business and does not anticipate that any cash dividends will be paid in the
foreseeable future. Future dividend policy will depend on the Company's
earnings, capital requirements, expansion plans, financial conditions, and other
relevant factors.
ITEM 6. SELECTED FINANCIAL DATA
The tables below set forth, in summary form, selected financial data of the
Company. This data, which is not covered by the independent auditors' report,
should be read in conjunction with the consolidated financial statements and
notes thereto which are included elsewhere herein.
Year Ended July 31,
- ---------------------------------------------------------------
2000 1999 1998 1997 1996
- --------- ----------- ----------- ---------- -----------
Selected Operating Results:
Net sales
$0 $0 $0 $0 $0
Gross profit
$0 $0 $0 $0 $0
Earnings from continuing operations
($122) ($34745) $56971) $0 $0
Earnings from discontinued operations, net of income taxes
$0 $0 $0 $0 $0
- ------- ------- ------- ------- -------
Net earnings
($55) ($34612) ($56893) $0 $0
======= ======= ======= ======= =======
Basic and diluted earnings per common share:
Earnings from continuing operations
$0 $0 $0 $0 $0
Earnings from discontinued operations
$0 $0 $0 $0 $0
- ------- ------- ------- ------- -------
Net earnings
$0 $0 $0 $0 $0
======= ======= ======= ======= =======
Selected Balance Sheet Data as of July 31, 2000
Current assets $ 1,130.00
Current liabilities $ 0
Total assets $ 1,130.00
Total liabilities $ 0
Retained earnings $ 0
Stockholders' equity $ 1,130.00
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
YEAR ENDED JULY 31, 2000 COMPARED TO YEAR ENDED JULY 31, 1999
Not applicable.
YEAR ENDED JULY 31, 1999 COMPARED TO YEAR ENDED JULY 31, 1998
Not applicable.
LIQUIDITY AND CAPITAL RESOURCES
None.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data are included under
Item 14(a)(l) and (2) of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
GUY T. LINDLEY has been a Director of the Company since May 9, 1990. Mr. Lindley
is the Company's President. Mr. Lindley was a stockholder and director of
Northeastern and was instrumental in its development. Mr. Lindley was a member
of the Board of Directors of Northeastern from 1980 until 1985. Mr. Lindley
owned 80% of the outstanding voting stock of Northeastern from 1980 through
1981. As of the end of 1982, Mr. Lindley owned less than 5% of the outstanding
voting stock of Northeastern. Mr. Lindley was Chairman of the Audit Committee
from 1980 through 1983 and was in charge of contract affairs from 1984 until
January, 1985. His primary responsibility was the negotiation of contracts and
agreements for Northeastern. He was an Executive Director of Doctor Health Care
Group and Medical Care Development Corporation of Coral Gables, Florida from
March, 1985 through April, 1987. Mr. Lindley was the Vice President responsible
for corporate planning from August, 1984 through August, 1990 with Palm Beach
Technologies, Inc., which is extensively involved in aerospace, airline,
cellular telecommunications and textile investment. During that period, he was
also a member of the Board of Directors.
ROBERT J. MUNSON has been a Director of the Company since May 1, 1991. Mr.
Munson is presently the Vice President in charge of Sales and Marketing for
Neurowave, Inc., a medical supply company since October, 1990, and was
previously the Vice President in charge of Sales and Marketing of Medical
Resources International, which manufactures medical gloves from July, 1988 until
October, 1990. Mr. Munson was previously the Executive Vice President of Medical
Supply Company of Florida from February, 1965 through July, 1988 and was
responsible for sales and marketing.
EDWARD L. REID, H, M.D. has been a Director of the Company since May 9, 1990.
Dr. Reid is a physician in his own practice since 1969, specializing in internal
medicine and endocrinology. Dr. Reid was a director of International Airline
Support Group from October, 1989 through January, 1991, which was involved with
the sale of airline parts. Prior to that time, he was the Director and President
of Medical Care Development Corp. from October, 1986 through June, 1988, and was
the Secretary/Treasurer of its wholly-owned subsidiaries Bayside Medical
Equipment, Inc. and Bayside Home Health, Inc. From January, 1987 through June,
1988. Those companies provided medical services and home health care. Dr. Reid
was a director of the John T. McDonald Foundation, which was a not-for-profit
corporation that oversaw the operations of Doctor's Hospital and Larkin General
Hospital in Miami from December, 1985 through January, 1988. Dr. Reid has been
published numerous times and has been an instructor and Professor of Medicine at
the University of Miami School of Medicine.
ITEM 11. EXECUTIVE COMPENSATION
There are no paid executives at this time.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GUY T. LINDLAY owns 487,500 shares of common stock.
EDWARD L. REID owns 34,250 shares of common stock.
ROBERT J. MUNSON owns 12,500 shares of common stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1 AND 2. CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The consolidated financial statements and financial statement schedule listed on
the index to consolidated financial statements on page F-l are filed as part of
this Form l0-K.
(b) REPORTS ON FORM 8-K
None
(c) EXHIBITS
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 11th day of June,
2001.
SUN EXPRESS GROUP, INC.
By: /s/ GUY T. LINDLAY
-----------------------
Guy T. Lindley
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant, and
in the capacities and on the date indicated.
Signatures Title Date
/s/ GUY T. LINDLAY Director, President and CEO June 18, 2001
/s/ ROBERT J. MUNSON Director and Secretary June 18, 2001
/s/ EDWARD L. REID Director June 18, 2001
Index to Consolidated Financial Statements
Page
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet as of July 31, 2000 F-3
Consolidated Statements of Operations for the years ended
July 31, 2000, July 31, 1999 and July 31, 1998 F-4
Consolidated Statements of Stockholders' Equity for the years ended July 31,
2000, July 31, 1999 and July 31, 1998 F-5
Consolidated Statements of Cash Flows for the years ended July 31, 2000, July
31, 1999 and July 31, 1998 F-6
Notes to Consolidated Financial Statements F-7
All other schedules have been omitted as the required information is
inapplicable or the information required is presented in the consolidated
financial statements or the notes thereto.
F-1
Independent Auditors' Report
To the Board of Directors of:
Sun Express Group, Inc.
We have audited the accompanying balance sheets of Sun Express Group, Inc. as of
July 31, 2000 and 1999 and the related statements of operations, changes in
stockholders' equity (deficiency) and cash flows for the years ended July 31,
2000, 1999 and 1998. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as 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 Sun Express Group, Inc. as of July
31, 2000 and 1999 and the results of its operations and its cash flows for the
years ended July 31, 2000, 1999 and 1998, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company's inactive status and accumulated losses of
$4,214,934 raise substantial doubt about its ability to continue as a going
concern. Management's Plan in regards to these matters is also described in Note
6. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
May 18, 2001
F-2
Sun Express Group, Inc.
Balance Sheets
July 31, 2000 and 1999
2000 1999
----------- -----------
Assets
Current Assets
Cash $ 1,130 $ 6,164
----------- -----------
Total Current Assets 1,130 6,164
Property and equipment -- 6,452
----------- -----------
Total Assets $ 1,130 $ 12,616
=========== ===========
Liabilities and Stockholders' Equity (Deficiency)
Current Liabilities
Advances from Directors $ -- $ 67,491
Loans payable to officer -- 318,108
----------- -----------
Total Current Liabilities -- 385,599
----------- -----------
Stockholders' Equity (Deficiency)
Common stock, $0.001 par value, 100,000,000 shares authorized,
24,996,198 and 24,991,198 issued and outstanding $ 24,996 $ 24,991
Additional paid-in capital 4,191,068 3,816,905
Accumulated deficit (4,214,934) (4,214,879)
----------- -----------
Total Stockholders' Equity (Deficiency) 1,130 (372,983)
----------- -----------
Total Liabilities and Stockholders' Equity (Deficiency) $ 1,130 $ 12,616
=========== ===========
See accompanying notes to financial statements
F-3
Sun Express Group, Inc.
Statements of Operations
Years Ended July 31, 2000, 1999 and 1998
2000 1999 1998
------------ ------------ ------------
Expenses
General and administrative $ 122 $ 14,950 $ 41,746
Professional fees -- 3,073 14,245
Rent -- 4,971 --
Travel and entertainment -- 11,751 980
------------ ------------ ------------
Total Expenses 122 34,745 56,971
Other Income
Interest income 67 133 (78)
------------ ------------ ------------
Net Loss $ (55) $ (34,612) $ (56,893)
============ ============ ============
Net loss per common share - basic and diluted $ -- $ -- $ --
============ ============ ============
Weighted average number of common shares
outstanding - basic and diluted 24,991,676 24,983,928 13,037,581
============ ============ ============
See accompanying notes to financial statements
F-4
Sun Express Group, Inc.
Statement of Changes in Stockholders' Equity (Deficiency)
Years Ended July 31, 2000, 1999 and 1998
Common Stock Additional
------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance, July 31, 1997 2,500,000 $ 2,500 $ 3,726,612 $(4,123,374) $ (394,262)
Common stock issued for cash 22,482,498 22,482 67,448 -- 89,930
Capital contributions -- -- 22,845 -- 22,845
Net loss, 1998 -- -- -- (56,893) (56,893)
----------- ----------- ----------- ----------- -----------
Balance, July 31, 1998 24,982,498 $ 24,982 $ 3,816,905 $(4,180,267) $ (338,380)
Common stock issued for rent 8,700 9 -- -- 9
Net loss, 1999 -- -- -- (34,612) (34,612)
----------- ----------- ----------- ----------- -----------
Balance, July 31, 1999 24,991,198 24,991 3,816,905 (4,214,879) (372,983)
Forgiveness of notes and loans by related parties -- -- 374,163 -- 374,163
Common stock issued for services 5,000 5 -- -- 5
Net loss, 2000 -- -- -- (55) (55)
----------- ----------- ----------- ----------- -----------
Balance, July 31, 2000 24,996,198 $ 24,996 $ 4,191,068 $(4,214,934) $ 1,130
=========== =========== =========== =========== ===========
See accompanying notes to financial statements.
F-5
Sun Express Group, Inc.
Statements of Cash Flows
Years Ended July 31, 2000, 1999 and 1998
----------------------------------------
2000 1999 1998
--------- --------- ---------
Cash Flows from Operating Activities:
Net loss $ (55) $ (34,612) $ (56,893)
Adjustment to reconcile net loss to net cash used in
operating activities:
Stock based expense 5 9 --
--------- --------- ---------
Net Cash Used in Operating Activities (50) (34,603) (56,893)
Cash Flows from Investing Activities:
Purchase of furniture -- (6,452) --
Advances to affiliate -- -- (43,244)
--------- --------- ---------
Net Cash Used in Investing Activities -- (6,452) (43,244)
Cash Flows from Financing Activities:
Repayment of related party loans (4,984) -- (5,000)
Proceeds from issuance of common stock -- -- 89,930
Proceeds from capital contributions -- -- 22,845
Expenses paid by affiliate -- 39,450 --
--------- --------- ---------
Net Cash (Used in) Provided by Financing Activities (4,984) 32,998 107,775
--------- --------- ---------
Net (Decrease) Increase in Cash (5,034) (1,605) 7,638
Cash - Beginning of Period 6,164 7,769 131
--------- --------- ---------
Cash - End of Period $ 1,130 $ 6,164 $ 7,769
========= ========= =========
Supplemental Disclosure of Non-Cash Financing Activities:
At July 31, 2000, two related parties accepted $6,452 of furniture to settle
certain liabilities and forgave the remaining liabilities of $374,163. The
forgiveness was treated as contributed capital due to the related party nature
of the transaction.
See accompanying notes to financial statements.
F-6
Sun Express Group, Inc.
Notes to Financial Statements
Years Ended July 31, 2000, 1999 and 1998
Note 1 Nature of Operations and Summary of Significant Accounting Policies
(A) Nature of Operations
Sun Express Group, Inc. (the "Company") was incorporated in Florida in May
1990. The Company was incorporated for the purpose of obtaining air carrier
certification.
During the fiscal year ended July 31, 1993, the Company was advised by the
Department of Transportation under the "use or lose" rule that the pending
operating authority was subject to being rescinded because of the inability
of the Company to commence operations as a result of the lack of capital
and liquidity. Due to the inability of the Company to secure sufficient
working capital, the Board of Directors elected to suspend certification
efforts, dispose of or abandon existing assets, and seek settlement of
existing indebtedness.
The only activity of the Company during the year ended July 31, 1994 was
completion of the sale to Conquest Sun Airlines Inc., a subsidiary of
Conquest Airlines Corp. (a/k/a Conquest Industries, Inc.) of Austin, Texas
of the pending DOT and FAA certification and certification materials. The
sale was for the consideration of $63,000 in cash funds and 112,340 shares
of the Conquest Sun Airlines Corp. (a/k/a Conquest Industries, Inc.) and
Air Tran Inc. (a spin-off subsidiary of Conquest Airlines, Corp.).
The Company has been inactive since 1994 and all expenses related to
managements' efforts to identify an acquisition or merger candidate or new
line of business.
(B) Use of Estimates
In preparing financial statements, management is required 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 revenues and expenses during the reported period.
Actual results may differ from these estimates.
(C) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with original maturities of three months or less
at the time of purchase to be cash equivalents.
(D) Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109,
deferred tax assets and liabilities are recognized for the
F-7
Sun Express Group, Inc.
Notes to Financial Statements
Years Ended July 31, 2000, 1999 and 1998
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the year which includes the
enactment date.
Note 2 Investments
The 112,340 shares of Conquest Airlines, Inc. and Air Tran Inc. are carried on
the books of the Company at zero value since 1995. In the opinion of management,
the shares do not have an ascertainable market value since the underlying
companies are no longer active.
Note 3 Loans Payable to Officer and Advances from Directors
Loans payable to officer and advances from directors at July 31, 1999, were
non-interest bearing and due on demand.
During 2000, the officer and directors forgave the remaining $374,163 balance of
the loans. The $374,163 was considered contributed capital due to the related
party nature of the transaction.
Note 4 Stockholders' Equity (Deficiency)
During fiscal 1998, the Company issued 22,482,498 common shares for cash of
$89,930 and received $22,845 of contributed capital from directors.
During the fiscal year 1999, 8,700 common shares were issued as consideration
for the use of office space. The shares were valued at a nominal $9 based on the
last shares issued for cash during 1998.
During the fiscal year 2000, the Company amended its articles to increase the
authorized shares to 100,000,000.
During the fiscal year 2000, the Company's Board of Directors approved a 1-for-4
reverse split of the Company's common stock. Accordingly, the Company
reclassified $74,989 of the common stock to additional paid-in capital. The
common stock amount of shares and per share amounts are restated retroactively
in the accompanying financial statements to reflect the reverse split.
During the fiscal year 2000, the Company issued 5,000 common shares for
consulting services. The shares were valued at a nominal $5 based on the last
shares issued for cash in 1998.
F-8
Sun Express Group, Inc.
Notes to Financial Statements
Years Ended July 31, 2000, 1999 and 1998
Note 5 Income Taxes
There was no income tax expense for the periods ended July 31, 2000, 1999 and
1998 due to the Company's net losses.
The Company's tax expense differs from the "expected" tax expense for the years
ended July 31, 2000, 1999 and 1998, (computed by applying the Federal Corporate
tax rate of 34% to loss before taxes), as follows:
2000 1999 1998
-------- -------- --------
Computed "expected" tax expense (benefit) $ (19) $(11,768) $(19,343)
Effect of net operating losses 19 11,768 19,343
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at July 31, 2000, 1999 and 1998 are as
follows:
2000 1999 1998
----------- ----------- -----------
Deferred tax assets:
Net operating loss carryforward $ 1,433,078 $ 1,433,059 $ 1,421,291
----------- ----------- -----------
Total gross deferred tax assets
Less valuation allowance (1,433,078) (1,433,059) (1,421,291)
----------- ----------- -----------
Net deferred tax assets $ -- $ -- $ --
=========== =========== ===========
The net operating loss carryforward at July 31, 2000 was approximately
$4,214,900. Usage of the net operating loss carryforward may be limited if a
change in ownership or change in business of the Company occurs.
Note 6 Going Concern
As reflected in the accompanying financial statements, the Company is inactive
and has an accumulated deficit of $4,214,934 through July 31, 2000. The ability
of the Company to continue as a going concern is dependent on the Company's
ability to identify an acquisition or merger candidate or new line of business.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Management is seeking an acquisition or merger candidate. Management believes
the actions presently being taken allow the Company to continue as a going
concern.
F-9