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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
December 31, 1998 33-27042-NY
- ------------------------- ----------------------
FINANCIAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 93-0996537
- ---------------------------- ----------------------
(State of other jurisdiction (IRS Employer
of incorporation) Identification Number)
P. O. Box 974, Rancho Santa Fe, California 92067
- ------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (760) 756-3018
--------------
Securities registered pursuant to Section 12(b) of the Act:
NONE NONE
------ ------
(Title of Each Class) (Name of Each Exchange
on which Registered)
Securities registered pursuant to Section 12 (g) of the Act:
Common
(Title of Class)
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.
(1) Yes No X ** (2) Yes X No
----- ----- ----- -----
The number of shares of the Common Stock of the registrant outstanding as of
December 31, 1998 was 3,704,900. The aggregate common stock held by
non-affiliates on December 31, 1998 was approximately 204,900 shares.
** Form 10-Q was not filed for 1999 and 2000 until August, 2000.
FORM 10-K INDEX
PART I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security
Holders 3
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholders Matters 4
Item 6. Selected Financial Matters 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 8. Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 7
PART III
Item 10. Directors and Executive Officers of Registrant 7
Item 11. Executive Compensation 7
Item 12. Security Ownership of Certain Beneficial
Owners and Management 8
Item 13. Certain Relationships and Related Transactions 8
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 8
A-1 Financial statements at December 31, 1998 Financial statements
at December 31, 1997 Financial statements at December 31, 1996
A-2 Financial statement schedules (None)
A-3 Exhibits (None)
B Reports on Form 8-K
Item 1. Business
--------
GENERAL
Financial Express Corporation (the "Company") was originally incorporated
in the state of Nevada on January 5, 1989 as Harley Equities, Ltd., to purchase,
merge with or acquire any business or assets which management believed had the
potential for being profitable. During May of 1991, through a series of
transactions, Harley acquired all of the outstanding stock of Financial Express
Corporation, a company organized to develop and commercialize a distinctive
nationwide service for processing and clearing checks and related bank
transactions. The only assets of the acquired Company consisted of intangible
assets comprised of intellectual properties, vendor relationships and customer
relationships established during the development of the service. Concurrent with
the acquisition, the Company changed the Corporate name to Financial Express,
Corporation. The Company expended all of its liquidity during 1991 in the search
for financing in order to properly develop and market its product.
During 1996, the development of this business was abandoned and the
intangible assets were written off.
The Company is currently in the process of searching for financing and/or
potential merger candidates to carry on the Company's existing or other business
opportunities.
The Company currently has no employees.
Item 2. Properties
----------
The Company does not currently own or lease any properties. The directors
provide office space at no charge to the Company.
Item 3. Legal Proceedings
-----------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
3
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters
---------------------------
(a) Market Information
There is no market information established for the Company.
(b) Holders
The approximate number of shareholders of record of the Common Stock of the
Company as of December 31, 1998 was 35.
(c) Dividends
The Company has never paid a cash dividend and intends to retain earnings,
if any, for use in its business and does not presently intend to pay any cash
dividends on its Common Stock.
(d) Stock transactions
On May 1, 1991, the Registrant issued 3,500,000 shares of its Common Stock
in exchange for all of the issued and outstanding Common Stock of Financial
Express Corporation, Westlake, California, a business recently organized to
develop and commercialize a distinctive nationwide service of processing the
clearance of checks and related bank items. Prior to the completion of such
transaction, there was issued and outstanding 138,000 Common Shares of the
Registrant. The shareholders of Financial Express Corporation acquiring the
shares of the Registrant are Phil E. Pearce, Frank G. Baldwin and D. Lee Falls,
who acquired 1,166,667, 1,166,666 and 1,166,666 shares, respectively of the
Registrant. Simultaneously with the completion of the transaction, Messrs.
Pearce, Falls and Baldwin were elected directors of the Company and following
completion of the transaction Howard Bronson, Isidor Friedenberg and Donald
Weinberger resigned as officers and directors of the Company. Such resignations
did not involve any disagreement with the Registrant. The Board of Directors has
elected Mr. Pearce, Chairman, Mr. Falls, President, and Mr. Baldwin, Executive
Vice President and Secretary of the Company. Following completion of the
transaction, each of them own 31.6% of the issued and outstanding Common Stock
of the Registrant.
4
(d) Stock transactions (continued)
In connection with these transactions, the holders of Underwriter's Unit
Purchase Warrant Agreements and Certificates issued by the Registrant in
connection with the Registrant's initial public offering in June, 1990, agreed
to cancel their demand registration rights and limit their piggy-back
registration rights such that they not be exercisable after expiration of the
Registrant's Class A or Class B Redeemable Stock Purchase Warrants. In addition,
Westminster Securities Corporation, who acted as underwriter in connection with
the Registrant's firm commitment public offering, agreed to a modification of
Section 5 of the Registrant's Underwriting Agreement respecting the
underwriter's "first right of refusal" on future offerings to limit such right
to public offerings of the securities of the Registrant in amounts not to exceed
$5,000,000.
Item 6. Selected Financial Data
-----------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Revenues -- -- -- -- --
Net profit (loss) (2,500) ( 2,500) ( 2,500) (96,323) (72,890)
Net profit (loss)
per share (.00) (.00) (.00) (.03) (.02)
Total assets -- -- -- -- 93,823
Working Capital (15,800) (13,300) (10,800) (8,300) (5,800)
5
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
---------------------
The following results of operations for the fiscal years ended December 31,
1996, 1997 and 1998 should be read in conjunction with the financial statements
and notes pertaining thereto appearing elsewhere in this Form 10-K.
1998 1997 1996
----------- ----------- -----------
Revenues $ -- $ -- $ --
Expenses 2,500 2,500 2,500
----------- ----------- -----------
Net loss (2,500) (2,500) $ ( 2,500)
=========== =========== ===========
Weighted average common
shares outstanding 3,704,900 3,704,900 3,704,900
=========== =========== ===========
Loss per common share $ (.001) $ (.001) $ (.001)
=========== =========== ===========
The Company's activity during the fiscal year ended December 31, 1998
consisted primarily of exploring various financing and investment opportunities.
As discussed in Note 1 to the Financial Statements, the Company's continued
existence is dependent upon its ability to resolve its liquidity problems by the
acquisition of additional equity financing, or the achievement of profitable
operations. Management believes that profitable operations will be achieved
within the next two years, based upon the Company's current planned operating
activities made possible by various possible equity and debt capital options.
Liquidity. The Company currently has a short-term liquidity problem, as
evidenced by its current working capital deficit of $(15,800). However,
management is confident that it will able to raise additional equity capital,
due to the prospects for success with the possible new businesses.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO DECEMBER 31, 1997
Operating expenses were insignificant due to company's inactivity.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO DECEMBER 31, 1996
Operating expenses were insignificant due to the company's lack of working
capital. The Company has no fixed operational financial commitments and
management was able to avoid incurring any significant expenses during the year.
6
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Reference is made to the financial statements included later in this report
under Item 14.
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
--------------------------------------------------
Name Age Position
- ---- --- --------
Phil E. Pierce 69 Chairman, Treasurer and
Director
Frank G. Baldwin 68 President, Secretary, and
Director
The Directors will serve until the next annual meeting of shareholders or
until their successors have been elected.
The Officers are elected annually by the Directors and serve at the
discretion of the Board of Directors.
Item 11. Executive Compensation
----------------------
None.
7
Item 12. Security Ownership of Certain Beneficial
-----------------------------------------
Owners and Management
---------------------
Name and Address of Number of Shares of Percentage
Beneficial Owner Common Stock Owned of Ownership
- ---------------- ------------------ ------------
Phil E. Pearce 1,166,666 31.5%
6624 Greenleaf Court
Charlotte, NC 28270
D. Lee Falls 1,166,667 31.5%
633 W. Fifth Street, #3675
Los Angeles, CA 90071
Frank G. Baldwin 1,166,667 31.5%
P. O. Box 974
Rancho Santa Fe, CA 92067
--------- ----
All Officers and Directors
as a group 3,500,000 94.5%
========= ====
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
None.
PART IV
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
----------------------------------------------------------------
A-1 Financial statements at December 31, 1998,
1997 and 1996
A-2 Financial statement schedules (None)
A-3 Exhibits (None)
B Reports on Form 8-K
May 1, 1991
8
Henson & Company, CPA's
87 North Raymond Avenue Sixth Floor
Pasadena, CA 91103
(626) 792-0666 Fax (626) 683-0099
Stephen Henson, CPA Elizabeth Henson, CPA
To the Board of Directors
Financial Express Corporation
We have audited the accompanying balance sheets of Financial Express Corporation
at December 31, 1998 and 1997 and the related statements of operations,
stockholders' equity, and cash flows for each of the years ended December 31,
1998, 1997 and 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides 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 Financial Express Corporation
at December 31, 1998 and 1997, and the results of operations, changes in
stockholders' equity and cash flows for each of the years ended December 31,
1998, 1997, and 1996 in conformity with generally accepted accounting
principles.
The accompanying 1998 financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 1, at December
31, 1998 the Company has no working capital and faces uncertainty with respect
to the prospects of acquiring and/or operating a successful business in the
future. These facts raise substantial doubt as to the Company's ability to
continue as a going concern. Management's plans as to these matters are
described in note 1. The 1998 financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Pasadena, California By: /s/ Stephen Henson
-----------------------------------------
June 22, 2000 Stephen Henson, CPA
9
FINANCIAL EXPRESS CORPORATION
Balance Sheets
December 31, 1998 and 1997
Assets
1998 1997
--------- ---------
Intangible assets,
net of accumulated
amortization of $351,950
and $351,950 $ -- $ --
--------- ---------
Total assets $ -- $ --
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accrued professional fees $ 13,650 $ 11,150
Due to officer 2,150 2,150
--------- ---------
Total current liabilities 15,800 13,300
Stockholders' equity:
Common stock $.001 par value;
25,000,000 shares
authorized; 3,704,900
issued and outstanding 3,705 3,705
Additional paid in-capital 408,641 408,641
Accumulated deficit (428,146) (425,646)
--------- ---------
Total stockholders' equity (15,800) (13,300)
--------- ---------
Total liabilities
and stockholders' equity $ -- $ --
========= =========
See accompanying notes
10
FINANCIAL EXPRESS CORPORATION
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998, 1997 and 1996
1998 1997 1996
----------- ----------- -----------
Income $ -- $ -- $ --
Operating expenses:
Amortization -- -- --
Legal and
professional fees 2,500 2,500 2,500
----------- ----------- -----------
Total operating expenses 2,500 2,500 2,500
----------- ----------- -----------
Net loss $ (2,500) $ ( 2,500) $ ( 2,500)
=========== =========== ===========
Loss per share $ (.00) $ (.00) $ (.00)
=========== =========== ===========
Weighted average
shares outstanding 3,704,900 3,704,900 3,704,900
=========== =========== ===========
See accompanying notes
11
FINANCIAL EXPRESS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998, 1997, and 1996
Additional Total
Common Stock Paid In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
Balances at December 31, 1995 3,704,900 $ 3,705 $ 408,641 $(420,646) $ (8,300)
Net loss -- -- -- (2,500) (2,500)
--------- --------- --------- --------- ---------
Balances at December 31, 1996 3,704,900 3,705 408,641 (423,146) (10,800)
Net loss -- -- -- (2,500) (2,500)
--------- --------- --------- --------- ---------
Balances at December 31, 1997 3,704,900 3,705 408,641 (425,646) (13,300)
Net loss -- -- -- (2,500) (2,500)
--------- --------- --------- --------- ---------
Balances at December 31, 1998 3,704,900 $ 3,705 $ 408,641 $(428,146) $ (15,800)
========= ========= ========= ========= =========
See accompanying notes
12
FINANCIAL EXPRESS CORPORATION
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998, 1997 and 1996
1998 1997 1996
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,500) $(2,500) $(2,500)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Amortization -- -- --
(Increase) decrease in:
Accounts
receivable - officer -- -- --
Increase (decrease) in:
Bank overdraft -- -- --
Accrued liabilities 2,500 2,500 2,500
------- ------- -------
Net cash used
by operating activities -- -- --
------- ------- -------
NET INCREASE IN CASH -- -- --
CASH - BEGINNING OF PERIOD -- -- --
------- ------- -------
CASH - END OF PERIOD $ -- $ -- --
======= ======= =======
See accompanying notes
13
FINANCIAL EXPRESS CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
1. Summary of significant accounting principles
--------------------------------------------
General
-------
Financial Express Corporation (the "Company") was originally
incorporated in the State of Nevada on January 5, 1989, as Harley
Equities, Inc. ("Harley"), and was formed to purchase, merge with or
acquire any business or assets which management believed had the
potential for being profitable. Through a series or transactions, Harley
acquired all of the stock of Financial Express Corporation, a Delaware
corporation organized to develop and commercialize a distinctive
nationwide service for processing and clearing checks and other bank
transactions. The only assets of the acquired Company consisted of
intangible assets comprised of intellectual properties, vendor
relationships and customer relationships established during the
development of the service. In connection with the transaction, the
Company changed its name to Financial Express Corporation.
During 1995, the development of the check clearing business was
abandoned and the intangible assets were fully amortized.
Presentation
------------
The Company's 1998 financial statements have been presented on the
basis that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. As shown in the financial statements, the Company has a
working capital deficit, and currently has not been able to bring its
product to the marketplace. While the Company expects profits over the
long term, the Company is currently seeking additional working capital
and equity capital to fund the marketing and further development of the
Company's product. The Company is continuing to pursue various
investment and merger opportunities in its efforts to reach its
investment and business objectives.
The Company's continued existence is dependent upon its ability to
finance continued product development and marketing programs by the
acquisition of additional equity or debt financing, or in the
procurement of a suitable merger candidate. While pursuing such
opportunities, the Company must continue to operate on the limited
resources by the Company's officers.
14
FINANCIAL EXPRESS CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
1. Summary of significant accounting principles (continued)
--------------------------------------------------------
Intangible assets
-----------------
Intangible assets are carried at cost, and are comprised of
intellectual properties and vendor and potential customer relationships.
Amortization is provided using the straight-line method over five years.
2. Capitalization
--------------
In June 1990 the Company sold on a firm commitment basis 16,000 units
at $6.00 per unit. Each unit consisted of one share of common stock par
value of $.001 and sixteen Redeemable Stock Purchase Warrants each
warrant capable of purchasing one share of common stock as follows:
Exercise
Warrants Total Price
Class Per Unit Warrants Expiration date Per Share
----- -------- -------- --------------- ---------
A 16 256,000 June 1, 2002 $5.50
B 16 256,000 June 1, 2002 $6.00
3. Stock Transactions
------------------
On March 26, 1991 the Company issued 15,000 shares of common stock to
certain officers of Westminster Securities Corporation holding
Underwriters Purchase Warrants in exchange for their agreement to
modifications (see May 1, 1991 stock transaction below) to the
Underwriting Agreement and Underwriters Purchase Warrant Agreements.
On May 1, 1991, The Company issued 3,500,000 shares of its common
stock in exchange for all the issued and outstanding common stock of
Financial Express Corporation, a development stage enterprise organized
to develop and commercialize a distinctive nationwide service of
processing the clearance of checks and related bank items.
During 1990, the Company retained Howard Bronson and Co. to act as its
financial public relations counsel. In 1991, in connection therewith and
for prior services rendered, the Company issued 51,500 shares of common
stock to Howard Bronson and Co.
15
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, hereunto duly authorized
FINANCIAL EXPRESS CORPORATION
By: /s/ Frank Baldwin Date: June 16, 2000
---------------------------- -------------
Frank Baldwin
President and director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following person on behalf of the Registrant and
in the capacity and on the date indicated.
NAME & POSITION DATE
/s/ Phil E. Pierce June 19, 2000
- ------------------------------- ---
Phil E. Pierce, Chairman
and Director
/s/ Frank G. Baldwin June 16, 2000
- ------------------------------- ---
Frank G. Baldwin, Executive Vice
President, Secretary and Director
16