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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________to__________
Commission File Number: 022307
NAVA LEISURE USA, INC.
(Exact name of registrant as specified in charter)
IDAHO
84-1368850
------------------------------
-------------------------
State or other jurisdiction of
(I.R.S. Employer I.D. No.)
incorporation or organization
253 Ontario #1, P.O. Box 3303, Park City, Utah
84060
(Address of principal executive offices)
(Zip Code)
Issuer's telephone number, including area code: (801) 649-
5060
Securities registered pursuant to section 12(b) of the
Act:
Title of each class
Name of each exchange on which registered
None N/A
Securities registered pursuant to section 12(g) of the Act:
Title of each class
Name of each exchange on which registered
Common stock, par value $0.0005 None
Check whether the Issuer (1) filed all reports required
to be filed by section 13 or 15(d) of the Exchange Act
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 the past 90
days. (1) Yes [ ] No [X ] (2) Yes [X] No [ ]
Check if disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form and
no disclosure will 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-KSB or
any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal
year: $-0-
State the aggregate market value of the voting stock
held by nonaffiliates computed by reference to the price at
which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past
60 days: The Company does not have an active trading
market and it is, therefore, difficult, if not impossible,
to determine the market value of the stock. To the
knowledge of the Company, no bid or asked quotation is
available at this time, nor at any time in the last sixty
days. The Company has 3,000,025 shares of its common stock
outstanding, of which 599,258 shares are held by
nonaffiliates.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated
by reference and the part of the Form 10-KSB (e.g., part I,
part II, etc.) into which the document is incorporated: (1)
Any annual report to security holders; (2) Any proxy or
other information statement; and (3) Any prospectus filed
pursuant to rule 424(b) or (c) under the Securities Act of
1933: NONE
PART I, ITEM 1: DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
NAVA LEISURE USA, INC. (the "Company") was organized on
April 1, 1964 under the laws of the State of Idaho as Felton
Products, Inc., having the stated purpose of engaging in
various investment activities, without limitation of its
general corporate powers to engage in any lawful activities.
The Company engaged in limited investment and business
development operations and, from the time of its inception,
the Company has underwent several name changes and business
changes.
On September 1, 1987, the Company changed its name to
Ink & Imagers, Inc. There is no record of any business
operations during the period the Company was known as Ink &
Imagers, Inc. On November 16, 1988, the Company's name was
changed to its present form, NAVA LEISURE USA, Inc. in
anticipation of the acquisition of an operating business
incorporated in Delaware with a similar name, NAVA LEISURE
USA, INC., a Delaware corporation (hereinafter, NAVA
(Delaware)). The acquisition and related stock exchange
agreement was never completed, and all rights and interest
in the Company and the NAVA (Delaware) subsidiary were
confirmed to the Company by an Order Pursuant to Stipulation
of the District Court for Idaho, Sixth Judicial District, on
December 11, 1995.
The Company never engaged in an active trade or
business throughout the period from 1988 to 1995. The only
activity involved the lawsuit to rescind the NAVA (Delaware)
business acquisition agreement, which was never completed in
the first instance. The acquisition agreement was
rescinded and voided by court order dated December 11,
1995. Furthermore, any exchanges of stock related thereto
were canceled and made null and void by the same court
order, and all certificates related thereto were returned to
the Company. Accordingly, NAVA (Delaware) again became a
wholly-owned subsidiary of the Company. On December 16,
1995, a special meeting of the board of directors was held
for the purpose of canceling all shares of common and
preferred stock issued by the Company pursuant to the
rescinded NAVA (Delaware) transaction. The court order,
stipulation, and the board action terminated all further
issues in dispute regarding the litigation over the NAVA
(Delaware) transaction.
The present promoters of the Company obtained control
between 1987 and 1988 by acquiring then-controlling
shareholders interests in the then-defunct and inactive
Felton Products, Inc., for purposes of the business
acquisition which failed in 1988. The promoters are the
President of the Company, J. Rockwell Smith, and three major
shareholders, namely Edward F. Cowle, H.D. Williams and
David Williams.
Other than the rescinded acquisition transaction and
related litigation regarding NAVA (Delaware), the Company
has remained inactive since before 1988, until just
recently. On November 1, 1996, the directors determined
that the Company should become active in seeking potential
operating businesses and business opportunities with the
intent to acquire or merge with such businesses. The
Company then began to consider and investigate potential
business opportunities. The Company is considered a
development stage company and, due to its status as a
shell corporation, its principal business purpose is to
locate and consummate a merger or acquisition with a private
entity. Because of the Company's current status having no
assets and no recent operating history, in the event the
Company does successfully acquire or merge with an operating
business opportunity, it is likely that the Company's
present shareholders will experience substantial dilution
and there will be a probable change in control of the
Company.
The selection of a business opportunity in which to
participate is complex and risky. Additionally, as the
Company has only limited resources, it may be difficult to
find favorable opportunities. There can be no assurance
that the Company will be able to identify and acquire any
business opportunity which will ultimately prove to be
beneficial to the Company and its shareholders. The Company
will select any potential business opportunity based on
management's business judgment.
The Company voluntarily filed a registration statement
on Form 10-SB in order to make information concerning itself
more readily available to the public. Management believes
that being a reporting company under the Securities Exchange
Act of 1934, as amended (the Exchange Act), could provide
a prospective merger or acquisition candidate with
additional information concerning the Company. In addition,
management believes that this might make the Company more
attractive to an operating business opportunity as a
potential business combination candidate. As a result of
filing its registration statement, the Company is obligated
to file with the Commission certain interim and periodic
reports including an annual report containing audited
financial statements. The Company intends to continue to
voluntarily file these periodic reports under the Exchange
Act even if its obligation to file such reports is suspended
under applicable provisions of the Exchange Act. Any person
reviewing this information is advised to refer to the
Companys Form 10-SB for additional information.
Any target acquisition or merger candidate of the
Company will become subject to the same reporting
requirements as the Company upon consummation of any such
business combination. Thus, in the event that the Company
successfully completes an acquisition or merger with another
operating business, the resulting combined business must
provide audited financial statements for at least the two
most recent fiscal years or, in the event that the combined
operating business has been in business less than two years,
audited financial statements will be required from the
period of inception of the target acquisition or merger
candidate.
The Company has no recent operating history and no
representation is made, nor is any intended, that the
Company will be able to carry on future business activities
successfully. Further, there can be no assurance that the
Company will have the ability to acquire or merge with an
operating business, business opportunity or property that
will be of material value to the Company.
Management plans to investigate, research and, if
justified, potentially acquire or merge with one or more
businesses or business opportunities. The Company currently
has no commitment or arrangement, written or oral, to
participate in any business opportunity and management
cannot predict the nature of any potential business
opportunity it may ultimately consider. Management will
have broad discretion in its search for and negotiations
with any potential business or business opportunity.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's administrative offices are located at
253 Ontario No. 1, P.O. Box 3303, Park City, Utah, 84060,
which are the offices of its president, J. Rockwell Smith.
Mr. Smith allows the Company to utilize these facilities
without charge. The Company does not own or control any
material property.
The Company obtained one-hundred percent (100%)
ownership and control of a Delaware subsidiary also named
NAVA LEISURE USA, INC., by stipulation and judgment
effective December 11, 1995 (i.e., NAVA (Delaware), as noted
Supra, at Part I, Item 1). Since NAVA (Delaware) is also an
inactive corporation which has never engaged in an active
trade or business of any kind, the asset (100% stock of NAVA
(Delaware)) is valued at zero (-0-) in the auditors report,
and is not a material asset to the Company. Similarly, a
monetary judgment associated with that proceeding in favor
of the Company is considered uncollectible and subject to a
100% valuation allowance in the auditors report, and is not
a material asset to the Company.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are pending at this time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS
No matters were submitted to a vote of shareholders of
the Company during the fiscal year ended June 30, 1998, nor
since that time until the date of this Form 10-KSB filing.
PART II , ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company is not aware of any quotations for its
common stock, now or at any time within the past nine years.
The Company has made an application to the NASD for the
Company's shares to be quoted on the OTC Bulletin Board. The
Company's application to the NASD consists of current
corporate information, financial statements and other
documents as required by Rule 15c2-1-1 of the Securities
Exchange Act of 1934, as amended. Inclusion on the OTC
Bulletin Board, once obtained, permits price quotations for
the Company's shares to be published by such service. The
Company is not aware of any established trading market for
its common stock nor is there any record of any reported
trades in the public market in recent years. The Company's
common stock has not traded in a public market since 1988.
Since its inception, the Company has not paid any dividends
on its Common Stock, and the Company does not anticipate
that it will pay dividends in the foreseeable future. At
June 30, 1998, the Company had 387 shareholders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Company is considered a development stage company
with no assets or capital and with no operations or income
since approximately 1988. The costs and expenses associated
with the preparation and filing of this registration
statement and other operations of the Company have been paid
for by shareholders of the Company, specifically H. D.
Williams. It is anticipated that the Company will require
only nominal capital to maintain the corporate viability of
the Company and necessary funds will most likely be provided
by the Company's existing shareholders or its officers and
directors in the immediate future. However, unless the
Company is able to facilitate an acquisition of or merger
with an operating business or is able to obtain significant
outside financing, there is substantial doubt about its
ability to continue as a going concern.
In the opinion of management, inflation has not and
will not have a material effect on the operations of the
Company until such time as the Company successfully
completes an acquisition or merger. At that time, management
will evaluate the possible effects of inflation on the
Company as it relates to its business and operations
following a successful acquisition or merger.
During the next twelve months, the Company will
actively seek out and investigate possible business
opportunities with the intent to acquire or merge with one
or more business ventures. Because the Company lacks funds,
it may be necessary for the officers and directors to either
advance funds to the Company or to accrue expenses until
such time as a successful business consolidation can be
made. Management intends to hold expenses to a minimum and
to obtain services on a contingency basis when possible.
Further, the Company's directors will forego any
compensation until such time as an acquisition or merger can
be accomplished and will strive to have the business
opportunity provide their remuneration. However, if the
Company engages outside advisors or consultants in its
search for business opportunities, it may be necessary for
the Company to attempt to raise additional funds. As of the
date hereof, the Company has not made any arrangements or
definitive agreements to use outside advisors or consultants
or to raise any capital. In the event the Company does need
to raise capital most likely the only method available to
the Company would be the private sale of its securities.
Because of the nature of the Company as a development stage
company, it is unlikely that it could make a public sale of
securities or be able to borrow any significant sum from
either a commercial or private lender. There can be no
assurance that the Company will be able to obtain additional
funding when and if needed, or that such funding, if
available, can be obtained on terms acceptable to the
Company.
The Company does not intend to use any employees, with
the possible exception of part-time clerical assistance on
an as-needed basis. Outside advisors or consultants will be
used only if they can be obtained for minimal cost or on a
deferred payment basis. Management is confident that it will
be able to operate in this manner and to continue its search
for business opportunities during the next twelve months.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth
immediately following the signature page to this form 10-
KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified
public accountants with respect to accounting practices or
procedures or financial disclosure.
PART III, ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS,
PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(a) OF THE EXCHANGE ACT
The following table sets forth as of June 30, 1998, the
name, age, and position of each executive officer and
director of the Company.
Name Age Position
J. Rockwell Smith 59 President and
Director
Jim Ruzicka 55 Vice-President and
Director
James Kerr 43 Secretary-Treasurer
and Director
All directors hold office until the next annual meeting
of stockholders and until their successors have been duly
elected and qualified. There are no agreements with respect
to the election of directors.
Set forth below is certain biographical information
regarding the Company's executive officers and directors.
J. Rockwell Smith has been President and a director of
the Company since 1987. From 1977 to 1989, Mr. Smith owned
and operated his own construction company in Park City,
Utah, named Rocky Smith Construction, which supervised
construction projects in this resort community. From 1990
to the present, Mr. Smith has been employed as a driver by
the Park City Transportation Company. Mr. Smith studied
engineering at Seattle University and the University of
Washington.
Jim Ruzicka is the Vice-President of the Company, and
has been a director of the Company since August 15, 1998.
For the last five years (and previously), Mr. Ruzicka has
been the owner-operator of a ski tour package company doing
business in Utah, Colorado, Jackson Hole, Wyoming, and Lake
Tahoe, California. Prior to 1983, he owned and operated
seven restaurants in Chicago, Illinois and surrounding
suburbs. He attended Aurora College in Aurora, Illinois,
studying liberal arts without receiving a degree.
James Kerr has been Secretary-Treasurer and a director
of the Company since 1995. Since 1994, Mr. Kerr has worked
as an independent production manager and/or lighting
technician for a number of companies situated in and around
Salt Lake City, Utah, including Great Day Ltd., Video West,
Bonneville Communications, Scopes, Garcia & Carlisle,
Rutherford Productions, Stillson & Stillson, and Advantage
Video. In 1993, Mr. Kerr was employed in equipment repair
and maintenance for Redman Movies & Stories of Salt Lake
City, Utah, and as a ski test programmer for Great Day Ltd.
of Utah. Previously, he has operated his own business as a
self-employed independent auto mechanic.
To the knowledge of management, during the past five
years, no present or former director or executive officer of
the Company: (1)filed a petition under the federal
bankruptcy laws or any state insolvency law, nor had a
receiver, fiscal agent or similar officer appointed by a
court for the business or property of such person, or any
partnership in which he was a general partner at or within
two years before the time of such filing, or any corporation
or business association of which he was an executive officer
at or within two years before the time of such filing; (2)
was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations
and other minor offenses); (3) was the subject of any order,
judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from or otherwise limiting, the
following activities: (i) acting as a futures commission
merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as
an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee
of any investment company, or engaging in or continuing any
conduct or practice in connection with such activity; (ii)
engaging in any type of business practice; or (iii) engaging
in any activity in connection with the purchase or sale of
any security or commodity or in connection with any
violation of federal or state securities laws or federal
commodities laws; (4) was the subject of any order,
judgment, or decree, not subsequently reversed, suspended,
or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the
right of such person to engage in any activity described
above under this Item, or to be associated with persons
engaged in any such activity; (5) was found by a court of
competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any
federal or state securities law, and the judgment in such
civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or
vacate; (6) was found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading
Commission to have violated any federal commodities law, and
the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been
subsequently reversed, suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company's Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in connection therewith,
directors, officers, and beneficial owners of more than 10%
of the Company's Common Stock are required to file on a
timely basis certain reports under Section 16 of the
Exchange Act as to their beneficial ownership of the
Company's Common Stock. The following table sets forth, as
of the date of this report, the name and relationship of
each person who failed to file on a timely basis any reports
required pursuant to Section 16 of the Exchange Act:
Name Position Report to be
filed*
J. Rockwell Smith President and Director Form
3
Jim Ruzicka Vice President and Director Form
3
James Kerr Secretary-Treasurer and Director
Form 3
Edward F. Cowle 10% or greater beneficial
owner Form 3
David Williams 10% or greater beneficial owner
Form 3
H.D. Williams 10% or greater beneficial owner
Form 3
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY
The Company has not had a bonus, profit sharing, or
deferred compensation plan for the benefit of its employees,
officers or directors. The Company has not paid any salaries
or other compensation to its officers, directors or
employees for the years ended June 30, 1997 and 1998, nor at
any time during 1998. Further, the Company has not entered
into an employment agreement with any of its officers,
directors or any other persons and no such agreements are
anticipated in the immediate future. It is intended that the
Company's directors will forego any compensation until such
time as an acquisition or merger can be accomplished and
will strive to have the business opportunity provide their
remuneration. As of the date hereof, no person has accrued
any compensation from the Company.
COMPENSATION TABLE: None; no form of compensation was paid
to any officer or director at any time during the last three
fiscal years.
CASH COMPENSATION
There was no cash compensation paid to any director or
executive officer of the Company during the fiscal years
ended June 30 1998, 1997, or 1996.
BONUSES AND DEFERRED COMPENSATION: None.
COMPENSATION PURSUANT TO PLANS: None.
PENSION TABLE: None.
OTHER COMPENSATION: None.
COMPENSATION OF DIRECTORS: None.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT:
There are no compensatory plans or arrangements of any kind,
including payments to be received from the Company, with
respect to any person which would in any way result in
payments to any such person because of his or her
resignation, retirement, or other termination of such
person's employment with the Company or its subsidiaries, or
any change in control of the Company, or a change in the
person's responsibilities following a change in control of
the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:
The following table sets forth information, to the best
knowledge of the Company as of September 18, 1998, with
respect to each person known by the Company to own
beneficially more than 5% of the Company's outstanding
common stock, each director of the Company and all directors
and officers of the Company as a group.
Name and Address of Amount and Nature of
Percent
Beneficial Owner Beneficial Ownership
of Class
Edward F. Cowle 682,680
22.8%
201 East 87th Street, Suite 6C
New York, NY 10128
David Williams 418,608
14.0%
62 West 400 South
Salt Lake City, Utah 84101
H. D. Williams 372,096
12.4%
62 West 400 South
Salt Lake City, Utah 84101
Mark William McWhirter 198,452
6.6%
3629 Steven White Drive
San Pedro, CA 90731
Dr. M.R. Moeen-Ziai 198,450
6.6%
5024 Abuela Drive
San Diego, CA 92124
Jim Ruzicka 174,404
5.8%
P.O. Box 3813
Park City, UT 84060
Sarasanan Blaendra 173,795
5.8%
439 West 233rd Street
Carson, CA 90745
Assieh Sedaghati 173,646
5.8%
5011 Abuela Drive
San Diego, CA 92124
(Management table appears next page)
Management:
J. Rockwell Smith, President 8,636
0.3%
P.O. Box 3303
Park City, UT 84060
Jim Ruzicka 174,404
5.8%
P.O. Box 3813
Park City, UT 84060
All Directors and Executive 183,040
6.1%
Officers as a Group
(3 persons in group)
- --------------------------------
Note: The Company has been advised that each of the persons
listed above has sole voting, investment, and dispositive
power over the shares indicated above. Percent of Class
(third column above) is based on 3,000,025 shares of common
stock outstanding on June 30, 1998.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS:
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
To the best of Management's knowledge, during the
fiscal year ended June 30, 1998, there were no material
transactions, or series of similar transactions, since the
beginning of the Company's last fiscal year, or any
currently proposed transactions, or series of similar
transactions, to which the Company was or is to be a party,
in which the amount involved exceeds $60,000, and in which
any director or executive officer, or any security holder
who is known by the Company to own of record or beneficially
more than 5% of any class of the Company's common stock, or
any member of the immediate family of any of the foregoing
persons, has an interest. H.D. Williams has advanced funds
to pay for attorneys fees and accounting fees for the
preparation of the Form 10-SB and Form 10-KSB, and will
continue to advance such funds as needed for future
reporting and compliance, for which he will be reimbursed by
the Company when, or if, funds become available to the
Company. These shareholder advances totaled $10,781 in the
fiscal year ended June 30, 1998, and $22,769 since
inception.
CERTAIN BUSINESS RELATIONSHIPS:
During the fiscal year ended June 30, 1998, there were
no material transactions between the Company and its
management.
INDEBTEDNESS OF MANAGEMENT:
To the best of Management's knowledge, during the
fiscal year ended June 30, 1998, there were no material
transactions, or series of similar transactions, since the
beginning of the Company's last fiscal year, or any
currently proposed transactions, or series of similar
transactions, to which the Company was or is to be a party,
in which the amount involved exceeds $60,000, and in which
any director or executive officer, or any security holder
who is known by the Company to own of record or beneficially
more than 5% of any class of the Company's common stock, or
any member of the immediate family of any of the foregoing
persons, has an interest.
TRANSACTIONS WITH PROMOTERS:
The Company was organized more than thirty-three years
ago; hence transactions between the Company and its
promoters or founders are long since expired by their terms
or by operation of law, and therefore are not deemed to be
material. Furthermore, to the best knowledge of management,
no such transactions exist.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K:
(a)(1)FINANCIAL STATEMENTS. The following financial
statements are included in this report:
Title of Document
Page
Report of Jones, Jensen & Company, Certified Public
Accountants................................................
12 Balance Sheet as of June 30, 1998
............................................................
..................................... 13
Statements of Operations for the fiscal years ended June 30,
1998 and 1997 and from inception on
April 1, 1964 through June 30, 1998
............................................................
................................. 14
Statements of Stockholders' Equity from inception on April
1, 1964 to June 30, 1998 .................. 15 Statements
of Cash Flows for the fiscal years ended June 30, 1998 and
1997 and from inception on
April 1, 1964 through June 30, 1998
............................................................
............................... 16 Notes to Financial
Statements
............................................................
........................................... 17
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following
financial statement schedules are included as part of this
report: None.
(a)(3)EXHIBITS. The following exhibits are included as
part of this report:
Exhibit No. SEC Ref. No. Title of Document
Location
Item 3 Articles of Incorporation and Bylaws
3.01 Articles of Incorporation and all amendments
*
pertaining thereto
3.02 By-laws *
Item 4 Instruments Defining the Rights of
Shareholders
4.01 Specimen Stock Certificate
*
Item 21 Subsidiaries of the Small Business
Issuer
21.01 Subsidiary Schedule - Nava Leisure USA,
Inc. (Delaware) *
* Incorporated by reference from the Companys
registration statement on Form 10-SB filed with the
Commission, SEC file No. 022307.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, this report has been signed below
by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:
NAVA LEISURE USA, INC.
(Registrant)
By: __ /s/_J. Rockwell
Smith
Date: September 18, 1998 J. ROCKWELL
SMITH, President and
Director, Principal Executive Officer
By: __ /s/_J. Rockwell
Smith
Date: September 18, 1998 J. ROCKWELL
SMITH, President and
Director
By: __ /s/_Jim Ruzicka
Date: September 18, 1998 Jim Ruzicka,
Vice President and
Director
By: __ /s/_James Kerr
Date: September 18, 1998 James Kerr,
Secretary-Treasurer and
Director
NAVA LEISURE USA, INC. (A Development Stage Company) FINANCIAL STATEMENTS June 30, 1998CONTENTS Independent Auditors' Report 3 Balance Sheet 4 Statements of Operations 5 Statements of Stockholders' Equity (Deficit) 6 Statements of Cash Flows 8 Notes to the Financial Statements 10 INDEPENDENT AUDITORS' REPORT Board of Directors Nava Leisure USA, Inc. Salt Lake City, Utah We have audited the balance sheet of Nava Leisure USA, Inc. (a development stage company) as of June 30, 1998 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended June 30, 1998 and 1997 and from inception on April 1, 1964 through June 30, 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 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 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 Nava Leisure USA, Inc. as of June 30, 1998 and the results of its operations and its cash flows for the years ended June 30, 1998 and 1997 and from inception on April 1, 1964 through June 30, 1998 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company is a development stage company with no established source of revenues. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Jones, Jensen & Company Salt Lake City, Utah August 5, 1998 /* WordPerfect WARNING - No Equivalent EDGAR Representation */ /* WordPerfect Structure - Footer A Beginning */ The accompanying notes are an integral part of these financial statements. /* WordPerfect Structure - Footer A Ending */ NAVA LEISURE USA, INC. (A Development Stage Company) Balance Sheet ASSETS June 30, 1998 CURRENT ASSETS Cash $ - Total Current Assets - TOTAL ASSETS $ - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 3,100 Total Current Liabilities 3,100 STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, 5,000,000 shares authorized at $0.001 par value; Series A preferred stock, 1,100,000 shares authorized, -0- shares issued and outstanding - Series B preferred stock, 100,000 shares authorized at $1.00 par value; -0- shares issued and outstanding - Common stock, 50,000,000 shares authorized at $0.0005 par value; 3,000,025 shares issued and outstanding 1,500 Capital in excess of par value 32,019 Deficit accumulated during the development stage (36,619 ) Total Stockholders' Equity (Deficit) (3,100 ) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ - - NAVA LEISURE USA, INC. (A Development Stage Company) Statements of Operations From Inception on April 1, For the Years Ended 1964 Through June 30, June 30, 1998 1997 1998 REVENUE $ - $ - $ - EXPENSES - - - OPERATING LOSS - - - LOSS ON DISCONTINUED OPERATIONS (10,374 ) (7,810 ) (36,619) NET LOSS $ (10,374 ) $ (7,810 ) $ (36,619) NET LOSS PER SHARE $ (0.00 ) $ (0.00 ) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,000,025 3,000,025 NAVA LEISURE USA, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) Deficit Accumulated Capital in During the Common Stock Excess of Development Shares Amount Par Value Stage Balance, April 1, 1965 - $ - $ - $ - Issuance of common stock for cash from inception on April 1, 1965 through June 30, 1993 at approximately $0.0036 per share 3,000,025 1,500 9,250 - Contribution of capital through payment of expenses by shareholder - - 500 - Net loss from inception on April 1, 1964 through June 30, 1993 - - - (13,110 ) Balance, June 30, 1993 3,000,025 1,500 9,750 (13,110 ) Contribution of capital through payment of expenses by shareholder - - 1,405 - Net loss for the year ended June 30, 1994 - - - (2,169 ) Balance, June 30, 1994 3,000,025 1,500 11,155 (15,279 ) Contribution of capital through payment of expenses by shareholder - - 2,027 - Net loss for the year ended June 30, 1995 - - - (1,602 ) Balance, June 30, 1995 3,000,025 $ 1,500 $ 13,182 $ (16,881 ) NAVA LEISURE USA, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) Deficit Accumulated Capital in During the Common Stock Excess of Development Shares Amount Par Value Stage Balance, June 30, 1995 3,000,025 $ 1,500 $ 13,182 $ (16,881 ) Contribution of capital through payment of expenses by shareholder - - 653 - Net loss for the year ended June 30, 1996 - - - (1,554 ) Balance, June 30, 1996 3,000,025 1,500 13,835 (18,435 ) Contribution of capital through payment of expenses by shareholder - - 7,403 - Net loss for the year ended June 30, 1997 - - - (7,810 ) Balance, June 30, 1997 3,000,025 1,500 21,238 (26,245 ) Contributed capital - - 10,781 - Net loss for the year ended June 30, 1998 - - - (10,374 ) Balance, June 30, 1998 3,000,025 $ 1,500 $32,019 $ (36,619 ) NAVA LEISURE USA, INC. (A Development Stage Company) Statements of Cash Flows From Inception on April 1, For the Years Ended 1964 Through June 30, June 30, 1998 1997 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (10,374 ) $ (7,810 ) $ (36,619 ) Adjustments to reconcile net loss to cash used by operating activities: Expenses paid by shareholder 10,781 7,403 22,769 Increase (decrease) in accounts payable (407 ) 407 3,100 Net Cash Provided (Used) by Operating Activities - - (10,750 ) CASH FLOWS FORM INVESTING ACTIVITIES - - - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock - - 10,750 Net Cash Provided (Used) by Financing Activities - - 10,750 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - - - CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ - $ - NAVA LEISURE USA, INC. (A Development Stage Company) Statements of Cash Flows From Inception on April 1, For the Years Ended 1964 Through June 30, June 30, 1998 1997 1998 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ - $ - $ - Income taxes paid $ - $ - $ - NAVA LEISURE USA, INC. (A Development Stage Company) Notes to the Financial Statements June 30, 1998 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Organization The financial statements presented are those of Nava Leisure USA, Inc. (a development stage company) (the Company). The Company was incorporated on April 1, 1964 in the State of Idaho as Felton Products, Inc. for the purpose of engaging in investing activities. On October 13, 1987, the Company issued 12,000,000 of its previously unissued authorized shares to acquire the assets of Copytex. In connection with this agreement, the Company changed its name to Ink & Imagers, Inc. On October 3, 1988, the Company rescinded the agreement with Copytex. The shares issued pursuant to the agreement were returned and canceled. On November 30, 1988, the Company entered into an agreement with Nava Leisure USA, Inc. (Nava), whereby, it would acquire all of the issued and outstanding stock of Nava in exchange for 18,730,900 shares of its common stock, 1,002,000 shares of its series A preferred stock and 89,670 shares of its series B preferred stock. In connection with this agreement, the Company changed its name to Nava Leisure USA, Inc. On December 15, 1995, the Company rescinded the agreement due to non-performance by Nava. All shares issued per the agreement were canceled and the cancellation was shown retroactively. (Note 2). The Company is currently inactive, and is seeking other business opportunities through mergers and acquisitions. b. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year end. c. Net Loss Per Share The computation of net loss per share of common stock is based on the weighted average number of shares outstanding during the period. d. Cash Equivalents For purposes of the Statement of Cash Flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. NAVA LEISURE USA, INC. (A Development Stage Company) Notes to the Financial Statements June 30, 1998 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) e. Provision for Taxes The Company accounts for income taxes using Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement 109, the liability method is used in accounting for income taxes. As of June 30, 1998, the Company had net operating loss carryforwards of approximately $36,000 that may be offset against future taxable income through 2013. The tax benefit of the net loss carryforwards is offset by a valuation allowance of the same amount due to the uncertainty that the carryforwards will be used before they expire. f. Stock Split On October 27, 1988, the Company effected a split of its common shares outstanding on a 1.5-for-1 basis. The financial statements have been retroactively restated to reflect the effects of this stock split. g. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - LITIGATION On September 26, 1994, a shareholder of the Company filed a lawsuit against the Company and the shareholders (the Shareholders) that received shares of the of the Company's stock per the exchange agreement between the Company and Nava Leisure USA, Inc. (a Delaware corporation). The lawsuit alleged that the terms of the agreement had not been fulfilled, and that the exchange agreement should be unwound as a result of the non-performance. The lawsuit also sought damages from the shareholders in the amount of $35,000 on behalf of the Company. On December 11, 1995, a default judgment was recorded in favor of the shareholder who had filed the lawsuit. The judgment ordered that the Exchange Agreement be rescinded, that the shares issued per the Exchange Agreement be returned to the Company, and that the Company be awarded damages warded. Due to the uncertainty that the Company will collect any of the damages, the amount has been offset in full by a valuation allowance. NAVA LEISURE USA, INC. (A Development Stage Company) Notes to the Financial Statements June 30, 1998 NOTE 3 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to seek a merger with an existing, operating company. Currently, the stockholders are committed to covering all operating expenses and other costs until sufficient revenues are generated. NOTE 4 - RELATED PARTY TRANSACTIONS During the years ended June 30, 1998 and 1997, a shareholder of the Company paid expenses on its behalf in the amounts of $10,781 and $7,403, respectively. These amounts were contributed by the shareholder to the capital of the Company.