-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QYcRU27dduXRYPs/ehqfuGKCpKd8G3EOt+l+co50ED3kuAlmc/yHxLEIi1od8i4K a0YGFJCL/lMoaX4n+HF2dQ== 0001002334-02-000047.txt : 20020528 0001002334-02-000047.hdr.sgml : 20020527 20020528124239 ACCESSION NUMBER: 0001002334-02-000047 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPACE LAUNCHES FINANCING INC CENTRAL INDEX KEY: 0001098009 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 980178621 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27873 FILM NUMBER: 02663268 BUSINESS ADDRESS: STREET 1: 56 QUAI GUSTAVE ADOR STREET 2: GENEVA CITY: SWITZERLAND CH 1206 STATE: CA ZIP: 92629 MAIL ADDRESS: STREET 1: 29351 PASTO RD STREET 2: STE B CITY: DANA POINT STATE: CA ZIP: 92629 10KSB 1 d01ked.txt 10KSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 2001 [ ] 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 0-27873 SPACE LAUNCHES FINANCING, INC. (Exact name of small business issuer in its charter) Nevada 98-0178621 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 56 Quai Gustave Ador, Geneva, Switzerland CH-1206 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (949) 489-2400 ------------------- Securities registered pursuant to Section 12(b) of the Act: None ---------------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 ----------------------------- 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. YES X NO Check if there is no 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-K or any amendment to this Form 10-K. [ X ] State issuer's revenues for its most recent fiscal year: None The aggregate market value of the voting stock held by non-affiliates of the registrant as of December 31, 2002 was $59,775,204 based on a last sale price of $1.81 on April 23, 2002. The number of shares outstanding of the issuer's classes of Common Stock as of April 23, 2002: Common Stock, $.001 Par Value - 53,710,864 Shares DOCUMENTS INCORPORATED BY REFERENCE: NONE PART I Item 1. DESCRIPTION OF BUSINESS Space Launches Financing, Inc., a Nevada corporation, formerly Transcendent Corporation (the "Company"), was incorporated on February 11, 1997. The Company was originally organized to develop, manufacture and market specialty channels in Toronto, Ontario Canada. This business was not successful and in November 1997 the Company changed its business objectives to financing satellite launches. Because of the lack of growth in this industry segment the Company determined to seek for any other business opportunity. In a Current Report on Form 8-K dated February 5, 2002, the Company reported the acquisition of Poly Derm, Inc. Poly Derm, Inc. has acquired technology related to an injectable substance, to treat wrinkles and skin defects. The technology is the subject of a pilot study and the University of Iowa Hospital and Clinics, under an FDA study. Item 2. DESCRIPTION OF PROPERTY Not applicable. Item 3. LEGAL PROCEEDINGS Not Applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2001. 2 PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Information The Company's Common Stock has been listed on the NASD OTC Electronic Bulletin Board sponsored by the National Association of Securities Dealers, Inc. under the symbol "SPCL" since 1997. There has been limited trading of the Common Stock. On April 23, 2002, the last sale price of the Common Stock was $1.81. (b) Holders As of April 23, 2002, there were approximately 120 holders of Company common stock and one holder of Series A preferred stock. (c) Dividends The Company has not paid any dividends on its common stock. The Company currently intends to retain any earnings for use in its business, and therefore does not anticipate paying cash dividends in the foreseeable future. Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Company has had limited operations to date. In November 1997 the Company raised $100,000 in an offering of common stock. Subsequent to the end of fiscal 2001, the Company effected the acquisition of Poly Derm, Inc. See "Item 1 - Description of Business." Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the Company required to be included in Item 7 are appended to this Annual Report following the signature page. Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The Company's former independent accountant Thurman, Shaw & Co., LC ("Thurman, Shaw") resigned from that capacity on September 4, 2001. The report by Thurman, Shaw on the financial statements of the Company dated March 16, 2001, including balance sheets as of December 31, 2000 and 1999 and the statements of operations, cash flows and statement of stockholders' equity for the years ended December 31, 2000 and 1999 and the period inception (February 11, 1997) to December 31, 2000 did not contain an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. During the period covered by the financial statements through the date of resignation of the former accountant, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. On October 4, 2001 the Company engaged Pritchett, Siler & Hardy, P.C. as its new independent accountants. Prior to the engagement of Pritchett, Siler & Hardy, P.C., the Company did not consult with Pritchett, Siler & Hardy, P.C., on the application of accounting principles to any specific transaction nor the type of audit opinion that might be rendered on the Company's financial statements. Thurman, Shaw was provided by the disclosure set forth above and provided the Company with a letter to the effect that it did not disagree with the above statements as far as they related to Thurman, Shaw. A copy of Thurman Shaw's letter is filed as an exhibit to the Company's Current Report on Form 8-K dated September 4, 2001. 3 PART III Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. Directors and Executive Officers The members of the Board of Directors of the Company serve until the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the Board of Directors. Information as to the directors and executive officers of the Company is as follows: Name Age Position Philip Faris 37 President and Director Luc Badel 64 Secretary and Director Mr. Faris was elected to the Board in February 2002 and Mr. Badel in 2001. Item 10. EXECUTIVE COMPENSATION No compensation in any form was paid through December 31, 2001. Directors currently receive no compensation for their duties as directors. Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information relating to the beneficial ownership of Company common stock by those persons beneficially holding more than 5% of the Company capital stock, by the Company's directors and executive officers, and by all of the Company's directors and executive officers as a group. The address of each officer and director is care of the Company.
Percentage Name of Number of of Outstanding Stockholder Shares Owned(1) Common Stock Philip Faris -- -- Luc Badel -- -- Patricia Jean Jenkins 6,806,580 12.7% Michael Magliochetti 6,806,580 12.7% Steve Preiss 1,701,645 12.7% Liz Hill Enterprises, Ltd. 5,371,084 10.0% Sangate Enterprises, Inc.(2) 10,400,000 16.9% Road Town-Pasea Estate P.O. Box 3149 Tortola British Virgin Islands Operadora Financiera de Inversiones 4 Comercio S.A. Via Espana y Calle Columbia Panama (3) (3) 4
All officers and directors as a group (2 persons) -- -- (1) Unless otherwise noted below, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. For purposes hereof, a person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held by any other person) and which are exercisable within 60 days from the date hereof, have been exercised. (2) Includes options to purchase 8,000,000 shares at a price of $.50 per share. (3) Does not include 1,000 shares of Series A Preferred Stock, which give this holder the right to elect two-thirds of the Company's board of directors. Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not Applicable. 5 PART IV Item 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following exhibits of the Company are included herein. Exhibit No. Document Description 2. Plan of purchase, sale, reorganization, arrangement, liquidation or succession. 2.1. Agreement and Plan of Reorganization, dated January 20, 2002, between the Registrant and PolyDerm, Inc.(1) 3. Articles of Incorporation and Bylaws 3.1. Articles of Incorporation(2) 3.2 Articles of Amendment(3) 3.3 Bylaws(4) 4. Instruments defining the rights of security holders 4.1 Option Agreement(5) 16. Letter on change in certifying accountant(6) (1) Incorporated by reference to such exhibit as filed with the Company's Current Report on Form 8-K dated February 5, 2002. (2) Incorporated by reference to exhibit 2.1 as filed with the Company's registration statement on Form 10-SB, File No. 0-27873. (3) Incorporated by reference to exhibit 2.2 as filed with the Company's registration statement on Form 10-SB, File No. 0-27873. (4) Incorporated by reference to exhibit 2.3 as filed with the Company's registration statement on Form 10-SB, File No. 0-27873. (5) Incorporated by reference to exhibit 3.1 as filed with the Company's registration statement on Form 10-SB, File No. 0-27873. (6) Incorporated by reference to such exhibit as filed with the Company's Current Report on Form 8-K dated September 4, 2001. (b) Reports on Form 8-K. A Current Report on Form 8-K was filed to report the change of auditors. This Report is described under Item 8 of this Annual Report. 6 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 April 23, 2002. SPACE LAUNCHES FINANCING, INC. By: /s/Philip Faris President 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 on April 23, 2002. By: /s/ Philip Faris President, Chief Financial Officer and Director By: /s/ Luc Badel Secretary and Director 7 SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2001
SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] CONTENTS PAGE -- Independent Auditors' Report 1 Balance Sheet, December 31, 2001 2 Statements of Operations, for the years ended December 31, 2001 and 2000 and for the period from inception on February 11, 1997 through December 31, 2001 3 -- Statement of Stockholders' Equity, from inception on February 11, 1997 through December 31, 2001 4 - 5 Statements of Cash Flows, for the years ended December 31, 2001 and 2000 and for the period from inception on February 11, 1997 through December 31, 2001 6 -- Notes to Financial Statements 7 - 10
10 - - INDEPENDENT AUDITORS' REPORT Board of Directors SPACE LAUNCHES FINANCING, INC. Geneva, Switzerland We have audited the accompanying balance sheet of Space Launches Financing, Inc. [a development stage company] at December 31, 2001 and the related statements of operations, stockholders' equity and cash flows for the year ended December 31, 2001 and for the period from inception on February 11, 1997 through December 31, 2001. 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. The financial statements of Space Launches Financing, Inc. [a development stage company] as of and for the year ended December 31, 2000 were audited by other auditors whose report, dated March 16, 2001, expressed an unqualified opinion on those statements. The financial statements as of December 31, 2000 reflect an accumulated deficit of $28,570. The other auditors' report has been furnished to us, and our opinion, insofar as it relates to the amounts included for such prior periods, is based solely on the report of the other auditors. 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, based on our audit and the report of the other auditors, the financial statements audited by us present fairly, in all material respects, the financial position of Space Launches Financing, Inc. [a development stage company] as of December 31, 2001 and the results of its operations and its cash flows for the year ended December 31, 2001 and for the period from inception on February 11, 1997 through December 31, 2001 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has no on-going operations, raising substantial doubt about the ability of the Company to continue as a going concern. Management's plans in regards to these matters are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. PRITCHETT, SILER & HARDY, P.C. March 27, 2002 Salt Lake City, Utah
SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] BALANCE SHEET ASSETS December 31, 2001 ----------- CURRENT ASSETS: Cash $ 111,127 ----------- Total Current Assets 111,127 ----------- $ 111,127 ------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 79 ----------- Total Current Liabilities 79 ----------- STOCKHOLDERS' EQUITY: Preferred stock, $.00001 par value, 1,000,000 shares authorized, 1,000 shares issued and outstanding 0 Common stock, $.00001 par value, 99,000,000 shares authorized, 24,069,884 shares issued and outstanding 241 Capital in excess of par value 141,379 Deficit accumulated during the development stage (30,572) ----------- Total Stockholders' Equity 111,048 ----------- $ 111,127 -------------
The accompanying notes are an integral part of this financial statement.
SPACE LAUNCHES FINANCING, INC. A Development Stage Company] STATEMENTS OF OPERATIONS For the From Inception Years ended on February 11, December 31, 1997 Through __________________________ December 31, 2001 2000 2001 ------------ ----------- ---------- REVENUE $ - $ - $ - EXPENSES: General and administrative 6,508 893 51,943 ------------ ----------- ---------- LOSS BEFORE OTHER INCOME (6,508) (893) (51,943) OTHER INCOME: Interest income 4,506 6,523 21,371 ------------ ----------- ---------- INCOME (LOSS) BEFORE INCOME TAXES (2,002) 5,630 (30,572) CURRENT TAX EXPENSE - - - DEFERRED TAX EXPENSE - - - ------------ ----------- ---------- NET INCOME (LOSS) $ (2,002) $ 5,630 $ (30,572) ------------ ----------- ---------- EARNINGS (LOSS) PER COMMON SHARE $ (.00) $ .00 $ (.00) ------------ ----------- ----------
The accompanying notes are an integral part of these financial statements.
SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] STATEMENT OF STOCKHOLDERS' EQUITY FROM THE DATE OF INCEPTION ON FEBRUARY 11, 1997 THROUGH DECEMBER 31, 2001 Deficit Accumulated Preferred Stock Common Stock Capital in During the ____________________ ______________________ Excess of Development Shares Amount Shares Amount Par Value Stage --------- --------- ----------- --------- --------- ----------- BALANCE, February 11, 1997 - $ - - $ - $ - $ - Issuance of 42,000 shares of common stock for cash of $2,100, or $.05 per share, February 11, 1997 - - 42,000 1 2,099 - Issuance of 1,840 shares of common stock for cash of $30,826, or $16.75326087 per share, April 16, 1997 - - 1,840 0 30,826 - Issuance of 2,000 shares of common stock for cash of $5,000, or $2.50 per share, July 25, 1997 - - 2,000 0 5,000 - Issuance of 24,000 shares of common stock for debt of $3,694, or $.15391667 per share, August 1, 1997 - - 24,000 0 3,694 - Issuance of 24,000,000 shares of common stock for cash of $100,000, or $.0041667 per share, net of offering costs of $10,000, August 1, 1997 - - 24,000,000 240 89,760 - Issuance of 8,000,000 options to purchase common stock for services rendered valued at $10,000, or $.00125 per option, August 1, 1997 - - - - 10,000 - Issuance of 1,000 shares of Series A preferred stock for business plans and contact names valued at $.01, or $.00001 per share, August 1, 1997 1,000 0 - - (0) - Issuance of rounding shares - - 44 0 (0) - Net income (loss) for the period ended December 31, 1997 - - - - - (42,301) --------- --------- ----------- --------- --------- ----------- BALANCE, December 31, 1997 1,000 0 24,069,884 241 141,379 (42,301) Net income (loss) for the year ended December 31, 1998 - - - - - 4,209 [Continued] SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] STATEMENT OF STOCKHOLDERS' EQUITY FROM THE DATE OF INCEPTION ON FEBRUARY 11, 1997 THROUGH DECEMBER 31, 2001 [CONTINUED] Deficit Accumulated Preferred Stock Common Stock Capital in During the ____________________ ______________________ Excess of Development Shares Amount Shares Amount Par Value Stage --------- --------- ----------- --------- --------- ----------- BALANCE, December 31, 1998 1,000 0 24,069,884 241 141,379 (38,092) Net income (loss) for the year ended December 31, 1999 - - - - - 3,892 --------- --------- ----------- --------- --------- ----------- BALANCE, December 31, 1999 1,000 0 24,069,884 241 141,379 (34,200) Net income (loss) for the year ended December 31, 2000 - - - - - 5,630 --------- --------- ----------- --------- --------- ----------- BALANCE, December 31, 2000 1,000 0 24,069,884 241 141,379 (28,570) Net income (loss) for the year ended December 31, 2001 - - - - - (2,002) --------- --------- ----------- --------- --------- ----------- BALANCE, December 31, 2001 1,000 $ 0 24,069,884 $ 241 $ 141,379 $ (30,572) -------- -------- ---------- -------- -------- ----------
The accompanying notes are an integral part of this financial statement.
SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] STATEMENTS OF CASH FLOWS For the From Inception Year ended on February 11, December 31, 1997 Through __________________________ December 31, 2001 2000 2001 ------------ ----------- ---------- Cash Flows Provided by Operating Activities: Net Income (loss) $ (2,002) $ 5,630 $ (30,572) Adjustments to reconcile net income (loss) to net cash used by operating activities: Changes in assets and liabilities: Increase in accounts payable 79 - 79 ------------ ----------- ---------- Net Cash Provided (Used) by Operating Activities (1,923) 5,630 (30,493) ------------ ----------- ---------- Cash Flows Provided by Investing Activities - - - ------------ ----------- ---------- Net Cash Used by Investing Activities - - - ------------ ----------- ---------- Cash Flows Provided by Financing Activities: Proceeds from sale of common stock - - 141,620 ------------ ----------- ---------- Net Cash Provided by Financing Activities - - 141,620 ------------ ----------- ---------- Net Increase (Decrease) in Cash (1,923) 5,630 111,127 Cash at Beginning of Period 113,050 107,420 - ------------ ----------- ---------- Cash at End of Period $ 111,127 $ 113,050 $ 111,127 ------------ ----------- ---------- Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - $ - Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities: For the year ended December 31, 2001: None For the year ended December 31, 2000: None The accompanying notes are an integral part of these financial statements. SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Space Launches Financing, Inc. ("the Company") was organized under the laws of the State of Nevada on February 11, 1997 as Transcendent Corporation to develop, manufacture and market a variety of specialty chemicals to industrial, commercial and retail clients. On November 26, 1997, the Company changed its name from Transcendent Corporation to Space Launches Financing, Inc. The Company is considered a development stage company as defined in Statement of Financial Accounting Standards No. 7. The Company will be very dependent on the skills, talents and abilities of management to successfully implement its business plan. Due to the Company's lack of capital, it is likely that the Company will not be able to compete with larger and more experienced entities for business opportunities which are lower risk and are more attractive for such entities. Business opportunities in which the Company may participate will likely be highly risky and speculative. Since inception, the Company's activities have been limited to organizational matters. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors. Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents. Earnings (Loss) Per Share - The computation of earnings (loss) per share is based on the weighted average number of shares outstanding during the period presented in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share" [See Note 6]. Accounting 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, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimated. Recently Enacted Accounting Standards - Statement of Financial Accountin Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142, "Goodwill and Other Intangible Assets", SFAS No. 143, "Accounting for Asset Retirement Obligations", and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", were recently issued. SFAS No. 141, 142, 143 and 144 have no current applicability to the Company or their effect on the financial statements would not have been significant. Restatement - On November 27, 1997, the Company effected a 1-for-200 reverse stock split. Subsequently, the Company effected a 4-for-1 forward stock split. The financial statements have been restated, for all periods presented, to reflect these stock splits [See Notes 2 and 7]. SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] NOTES TO FINANCIAL STATEMENTS NOTE 2 - CAPITAL STOCK Preferred Stock - The Company has authorized 1,000,000 shares of preferred stock, $.00001 par value, with such rights, preferences and designations and to be issued in such series as determined by the Board of Directors. On August 1, 1997, the Company issued 1,000 shares of Series A preferred stock for business plans and contact names valued at $.01, or $.00001 per share. Each share of Series A preferred stock is entitled to one vote in the election of the Company's directors, just as with common stock shares. By unanimous vote, the holders of Series A preferred stock may elect two-thirds of the Company's Board of Directors. Each share of Series A preferred stock is entitled to $.01, if available, in the event of liquidation, dissolution, or winding up of the Company. Series A preferred shareholders have the right of first refusal should shares of Series A preferred stock be sold. The Company had 1,000 shares of Series A preferred stock issued and outstanding at December 31, 2001 [See Note 7]. Common Stock - The Company has authorized 99,000,000 shares of common stock with a par value of $.00001. On February 11, 1997, in connection with its organization, the Company issued 42,000 shares of its previously authorized, but unissued common stock. The shares were issued for cash of $2,100 (or $.05 per share). On April 16, 1997, the Company issued 1,840 shares of its previously authorized, but unissued common stock. The shares were issued for cash of $30,826 (or $16.75326087 per share). On July 25, 1997, the Company issued 2,000 shares of its previously authorized, but unissued common stock. The shares were issued for cash of $5,000 (or $2.50 per share). On August 1, 1997, the Company issued 24,000 shares of its previously authorized, but unissued common stock. The shares were issued for cash of $3,694 (or $.15391667 per share). On August 1, 1997, in connection with a private offering, the Company issued 24,000,000 shares of its previously authorized, but unissued common stock. The shares were issued for cash of $100,000 (or $.004 per share). In connection with the private offering, the Company also issued 8,000,000 options to purchase common stock for services rendered valued at $10,000, which has been accounted for as a stock offering costs and has been netted against the proceeds. Stock Options - On August 1, 1997, in connection with a private offering of common stock, the Company issued 8,000,000 options to purchase common stock at $.50 per share for services rendered valued at $10,000, or $.00125 per option. The options vested March 18, 1998 and are exercisable through December 31, 2004. Stock Split - On November 27, 1997, the Company effected a 200 to 1 reverse stock split and issued 44 rounding shares. The financial statements have been restated, for all periods presented, to reflect this stock split. SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] NOTES TO FINANCIAL STATEMENTS NOTE 3 - RELATED PARTY TRANSACTIONS Management Compensation - For the years ended December 31, 2001 and 2000, the Company did not pay any compensation to any officer or director of the Company. Office Space - The Company has not had a need to rent office space. An officer/shareholder of the Company is allowing the Company to use his offices as a mailing address, as needed, at no expense to the Company. NOTE 4 - INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS 109 requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. The Company has available at December 31, 2001, unused operating loss carryforwards of approximately $30,600 which may be applied against future taxable income and which expire in various years through 2021. The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards. The net deferred tax assets are approximately $10,400 and $9,700 as of December 31, 2001 and 2000, respectively, with an offsetting valuation allowance of the same amount resulting in a change in the valuation allowance of approximately $700 during the year ended December 31, 2001. NOTE 5 - GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has no on-going operations, raising substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of its common stock or through a possible business combination with another company. There is no assurance that the Company will be successful in raising this additional capital or achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. SPACE LAUNCHES FINANCING, INC. [A Development Stage Company] NOTES TO FINANCIAL STATEMENTS NOTE 6 - EARNINGS (LOSS) PER SHARE The following data shows the amounts used in computing earnings (loss) per share:
For the From Inception Years ended on February 11, December 31, 1997 Through _________________________ December 31, 2001 2000 2001 ------------ ----------- ---------- Net income (loss) available to common shareholders (numerator) $ (2,002) $ 5,630 $ (30,572) ------------ ----------- ---------- Weighted average number of common shares outstanding used in earnings (loss) per share for the period (denominator) 24,069,884 24,069,884 21,766,878 ------------ ----------- ----------
At December 31, 2001 the Company had 8,000,000 outstanding options which were not used in the computation of earnings (loss) per share because their effect would be anti-dilutive. Dilutive earnings (loss) per share was not presented, as the Company had no common equivalent shares for all periods presented that would affect the computation of diluted earnings (loss) per share. NOTE 7 - SUBSEQUENT EVENTS Agreement and Plan of Reorganization - On February 5, 2002, the Company entered into an agreement and plan of reorganization with PolyDerm, Inc. The agreement calls for the Company to issue 29,640,969 shares of common stock with 24,069,884 shares issued to PolyDerm, Inc. shareholders for all 2,652,200 shares of common stock of PolyDerm, Inc. and with 5,571,085 shares issued to consultants. The Company will also pay $100,000 and sign a $50,000 note payable to the consultants. The note payable is expected to accrue interest at 6% per annum and be due on demand. The agreement also calls for the Company to cancel 1,000 shares of Series A preferred stock, change its name to PolyDerm, Inc., and effect a 4-for-1 forward stock split. The financial statements have been restated, for all periods presented, to reflect this stock split. In connection with the merger, the Company's officer resigned and new officers were appointed. Final consummation of the merger is not guaranteed. -----END PRIVACY-ENHANCED MESSAGE-----