-----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, LC27XPlUnEjSOr8+LBNyXB2guXuImIOqbYXQhNlKIfSgGNDrY0CbRTARjZaXAgx8 KA6YKgzhPhI0Rpw1ZUUM4w== 0000725752-97-000019.txt : 19971110 0000725752-97-000019.hdr.sgml : 19971110 ACCESSION NUMBER: 0000725752-97-000019 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19971107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERIT DIVERSIFIED INTERNATIONAL INC CENTRAL INDEX KEY: 0000725752 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 942906927 STATE OF INCORPORATION: UT FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-12423 FILM NUMBER: 97709703 BUSINESS ADDRESS: STREET 1: 4570 CAMPUS DR STREET 2: 307 CITY: NEWPORT BEACH STATE: CA ZIP: 92667 BUSINESS PHONE: 7142522102 MAIL ADDRESS: STREET 1: 4570 CAMPUS DR CITY: NEWPORT BEACH STATE: CA ZIP: 92667 10-K 1 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 Date of Report August 31, 1996 MERIT DIVERSIFIED INTERNATIONAL, INC. (exact name of registrant as specified in its charter) Nevada 0-12423 94-2906927 (state or other jurisdiction (commission file (IRS Employer of incorporation) number) Identification No.) 25320 Bellanca Way, Torrance CA 90505 (address of principal executive office) (zip code) (310) 326-3871 (registrant's telephone number) Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value (Title of class) Indicate by check mark whether the registrant (1) has file 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 _____ No___X_____ The aggregate market value of the voting stock held by non-affiliates of the registrant: Currently the Company's stock is thinly traded. There are 942,423 shares held by non-affiliates. The average bid and ask price for the period covered by this Form 10-K was $1.125 per share. Using this value of $1.125 per share, the aggregate market value is estimated at $1,060,226. Number of common shares, without par value, outstanding as of August 31, 1996 was 16,209,316. MERIT DIVERSIFIED INTERNATIONAL, INC. FORM 10-K FISCAL YEAR ENDED AUGUST 31, 1996 TABLE OF CONTENTS Page Part I Item 1 Business 3 Item 2 Properties 3 Item 3 Legal Proceedings 4 Item 4 Submission of Matters to a Vote of Security Holders 4 Part II Item 5 Market for Registrant's Common Stock and Related Stockholder Matters 4 Item 6 Selected Financial Data 4 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 5-6 Item 8 Consolidated Financial Statements and Supplementary Data 7-18 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 19 Part III Item 10 Directors and Executive Officers of the Registrant 19 Item 11 Executive Compensation 19 Item 12 Security Ownership of Certain Beneficial Owners and Management 19-20 Item 13 Certain Relationships and Related Transactions 20 Part IV Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K 20 Signatures 21 MERIT DIVERSIFIED INTERNATIONAL, INC. PART I ITEM 1: BUSINESS (General) A. The Company Merit Diversified International, Inc. ("the Company") currently has no operations and no cash flow or operating capital. The Company is considered to be a development stage company and will continue to be classified as such until the Company initiates business operations. B. History of Operations The Company was incorporated in the State of Utah in 1983, subsequently reincorporating in the State of Nevada. Initially the Company published a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. Since 1988 the Company has made several attempts to acquire and operate various businesses. All efforts have proven to be unsuccessful. In 1994, the Company purchased from Phalanx, Ltd., certain rights to molds and designs of exclusive jewelry. These were purchased with 27,000,000 shares of the Company's common stock. Originally valued at $270,000 this investment proved to be worthless. Major shareholders of the Company sued for return of the shares. On February 9, 1995 the Superior Court of the County of Maricopa, Arizona decided that the 27,000,000 shares were improperly given and denied those shares voting rights. On March 23, 1995 a shareholders meeting was held where those shares were rescinded and returned to the Company. In April 1996, the Company approved a 20 to 1 reverse stock split. Subsequent to the stock split, the Company approved a merger with a company, NEAT, Inc., a Nevada corporation, through the issuance of 13,000,000 shares of common stock, with the intent of marketing a certain new technology and combining the companies. Both parties chose not to continue the merger, however NEAT, Inc. intends to infuse new technology and business operations into the Company. During February 1997, NEAT, Inc. returned 13,000,000 shares to the Company. There is no assurance that the potential business will be successful or placed into operation by the Company. As of August 31, 1996, the Company has no employees and no operating assets. The Company continues to meet its organizational obligations through the contribution of capital by major shareholders. The Company has continued its efforts to acquire, merge with or enter into other forms of business combinations. It is presently unknown whether any transaction will be successfully concluded. ITEM 2: PROPERTIES None ITEM 3: LEGAL PROCEEDINGS None ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the OTC Bulletin Board. The quote below is from the "Pink Sheets" and the OTC Bulletin Board. These numbers represent an average. The Company's stock was thinly traded in fiscal year ended August 31, 1996. Bid High .25 Low .25 Ask High 2.25 Low 1.75 ITEM 6: SELECTED FINANCIAL DATA The following information is derived from the consolidated financial statements included elsewhere herein. All information presented below should be read in conjunction with the Consolidated Financial Statements and Notes included elsewhere in this Form 10K. For Year Ended August 31 1996 1995 1994 1993 1992 Net Sales 0 0 0 0 0 Net Income (Loss) 0 0 (21,418) (17,650) (247,760) Earnings (Loss) per Share NIL NIL 0 0 (.02) Cash Dividends per Share 0 0 0 0 0 Total Assets 0 0 0 16,418 16,300 Long Term Notes Payable 0 0 0 0 0 Total Stockholders' Equity (8,000) (8,000) (109,677) (93,269) (103,464)
Balance of Page Left Blank Intentionally ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS The information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" below includes "forward looking statements" within the meaning of Section 27A of the Securities Act, and is subject to the safe harbor created by that section. Factors that could cause actual results to differ materially from these contained in the forward looking statements are set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations". Year Ended August 31, 1996 and 1995 The Company has no assets and has not engaged in any operational activities during the past five years. At present, the Company has no employees. The Company does not expect any changes unless the Company concludes a merger or other business combination. During the years ended August 31, 1996 and 1995, the Company had no operations. The Company maintained its existence through contributions from its shareholders to satisfy its general and administrative expenses. As detailed on the accompanying consolidated statements of cash flows, there were no significant adjustments between the net loss and net change in cash. Due to the nature of the Company's activities, the Company's prospects for the future are dependent on a number of variables which cannot be predicted. Generally, after identifying a potential business opportunity, the Company could incur significant costs in evaluating the desirability of an acquisition or other form of business combination. Should the Company determine to proceed with the business combination, the transaction costs could be significant. Thereafter, results of operation would likely be materially affected by the business acquired or merge with the Company. The Company has continued its efforts to acquire, merge with or enter into another form of business combination with another entity, and the Company plans to continue these efforts in the future fiscal year. It is presently unknown whether any transaction will be successfully concluded. Liquidity and Capital Resources Year Ended August 31, 1996 The Company currently does not have adequate reserves to satisfy its short term obligations. The Company is currently seeking private placement funding to maintain its obligation until such time as its operations can generate cash flow. No guarantee can be made that the current development stage search for an operational business or private funding will be successful. The Company is able to continue because the major shareholders continue to cover administrative expenses. No guarantee can be made that the major shareholders will continue to cover these expenses. ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS (Continued) The Company considers it current cash and cash equivalent balances inadequate to satisfy its cash requirements for the next twelve months. Legal and accounting and other expenses required could increase significantly in connection with any contemplated business combination. The Company may not have the liquidity and capital resources to consummate such business combination. Due to the nature of the Company's present activities, however the Company is unable to predict its likely expenditure for professional fees and other expenses. The Company has no major capital commitments nor access to mechanisms to fund working or operating capital, and there can be no assurance that it will be successful in its efforts to raise additional capital to maintain its plan of operation. (Balance of Page Left Blank Intentionally) MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) Item 8-Financial Statements Index to Consolidated Financial Statements 1996, 1995 and 1994 Consolidated Financial Statements: Page Report of Independent Certified Public Accountants 8 Balance Sheets as of August 31, 1996 and 1995 9 Statements of Operations for the Years Ended August 31, 1996, 1995 and 1994 10 Statements of Stockholders' Equity for the Years Ended March 31, 1996, 1995 and 1994 11 Statements of Cash Flows for the Years Ended August 31, 1996, 1995 and 1994 12 Summary of Accounting Policies and Notes to Consolidated Financial Statements 13-17 Schedules- II Valuation and Qualifying Accounts 18 Mark Shelley CPA 110 S. Mesa Dr. #1 Mesa, AZ 85210 (602) 833-4054 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Merit Diversified International, Inc. I have audited the accompanying balance sheet of Merit Diversified International, Inc., a development stage company, as of August 31, 1996 and 1995 and the related statements of operations, stockholders' equity and cash flows for the three years ended August 31, 1996. My responsibility is to express an opinion on these financial statements based on my audit. I did not audit the statements prior to the year ended August 31, 1992. Other auditors audited those statements. I have conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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. I believe that my audit provides a reasonable for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Merit Diversified International, Inc. as of August 31, 1996 and 1995 and the results of their operations and their cash flows for the three years ended August 31, 1996 in conformity with generally accepted accounting principles. Mark Shelley CPA April 7, 1997 MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) CONSOLIDATED BALANCE SHEETS August 31, 1996 1995 Assets $ - $ - Total Assets $ - $ - Liabilities and Shareholders' Equity Current liabilities Accounts and taxes payable $ 8,000 $ 8,000 Total current liabilities 8,000 8,000 Commitments and contingencies Shareholders' Equity Common Stock-no par value; 50,000,000 shares authorized, 16,209,316 and 23,225,554 issued and outstanding as of 1996 and 1995, respectively 1,332,349 1,332,349 Additional paid-in capital 1,122,215 1,122,215 Accumulated deficit-accumulated during the developmental stage (2,462,564) (2,462,564) Total shareholders' equity (8,000) (8,000) Total liabilities and shareholders' equity $ - $ - See Notes to Consolidated Financial Statements MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS Inception Years Ended August 31, 1996 1995 1994 to 1995 Net revenue $ - $ - $ - $ - Costs and expenses: General and administrative - - 5,000 2,244,147 Depreciation and amortization - - - 6,200 Income (loss) from operations - - (5,000) (2,250,347) Other income (expense): Interest expense - - - (22,518) Loss on sale of fixed assets - - (918) (918) Loss on sale of investments - - (15,500) (269,800) Income from debt adjustment - - - 86,419 Total other income (expense) - - (16,418) (206,817) Income before taxes on income - - (21,418) (2,457,164) Taxes on income - - - 5,400 Net income (loss) - - (21,418) (2,462,564) Net income (loss) per share nil nil 0.00 Weighted average number of shares and share equivalents outstanding 19,717,435 36,525,554 30,962,450 See Notes to Consolidated Financial Statements MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years ended August 31, 1995, 1994, and 1993: Common Stock Paid in Accumulated Treasury Stockholders' Shares Amount Capital (Deficit) Stock Equity Balance, August 31, 1993 22,825,554 1,318,349 1,033,528 (2,441,146) 4,000 (93,269) Purchase of Phalanx rights 27,000,000 - - - - - Contribution to paid- in-capital - - 5,010 - - 5,010 Cancellation of treasury shares - (4,000) - - (4,000) - Net loss - - - (21,418) - 21,418) Balance, August 31, 1994 49,825,554 1,314,349 1,038,538 (2,462,564) - (109,677) Issuance of stock 400,000 18,000 - - - 18,000 Contribution to paid- in-capital - - 83,677 - - 83,677 Rescission of Phalanx shares (27,000,000) - - - - - Net loss - - - - - - Balance, August 31, 1995 23,225,554 $1,332,349 $1,122,215 ($2,462,564) - (8,000) Purchase of consulting 25,000,000 Reverse stock split (45,814,276) Purchase of stock 13,000,000 Purchase of consulting 798,038 Net loss - Balance, August 31, 1996 16,209,316 $1,332,349 $1,122,215 ($2,462,564) - (8,000) See Notes to Consolidated Financial Statements
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents Years ended August 31, 1996 1995 1994 Operating activities: Net income (loss) $ - $ - $ (21,418) Adjustments to reconcile net loss to cash used in operating activities: Depreciation expense - - - Loss on devaluation - - 16,418 Changes in operating assets and liabilities: Accounts payable - (40,323) 5,000 Cash provided by (used in) operating activities - (40,323) - Investing activities: Net decrease in notes payable - (61,354) (5,010) Purchase of fixed assets - - - Cash used in investing activities - (61,354) (5,010) Financing activities: Net change in common stock - 18,000 - Paid-in-capital - 83,677 5,010 Cash provided by financing activities - 101,677 5,010 Net increase (decrease) in cash and cash equivalents - - - Cash and cash equivalents, beginning of period - - - Cash and cash equivalents, end of period $ - $ - $ - Significant non cash transactions Fiscal year ended August 31, 1996: Reverse stock split 20 to 1 Issuance of 13,000,000 common shares to NEAT, Inc. Fiscal year ended August 31, 1995: Rescission of Phalanx shares Fiscal year ended August 31, 1994: Purchase of Phalanx rights for 27,000,000 shares of common stock See Notes to Consolidated Financial Statements MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. General Company Information and Summary of Significant Accounting Policies The Company was organized August 23, 1983 in the State of Utah. Initially the Company published and attempted to market a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. Since 1988 the Company has made several attempts to acquire and operate various businesses. These have proven thus far to be unsuccessful. Note 2 below lists some of the attempted acquisitions and the results. The Company continues to pursue a path of merger with an operating business. The Company has incurred significant losses since its inception and as of August 31, 1996, has no source of revenue. The Company has no cash and has maintained its existence and paid ongoing expenses through the issuance of common stock. The Company has been able to continue because major shareholders have continued to invest in the Company to meet its expenses. The Company is considered a development stage Company and will remain in this status until operations begin. There can be no assurance that the Company will be able to merge with an operating company, acquire an ongoing business, or that the major shareholders will continue to pay the expenses of the Company. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles. Property and Equipment As of August 31, 1996 the Company had no fixed assets. Previously the Company depreciated its fixed assets over their useful lives on a straight line basis. Development Stage Company The Company has had no revenue or operations during the previous five years and because of this has considered itself a development stage company. It will remain in this status until such time as it initiates or merges with operations of some kind. In the early years the Company generated nominal revenue from the sale of its telephone directory. These minimal revenues have been netted with general and administrative expenses of those years. MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net Loss Per Share Loss per share is computed based on the average number of shares outstanding during each year. Revenue Recognition The Company has had no revenue during the past five years. Provision for Income Taxes The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements. The Company has a net operating loss carry forward of approximately $2,000,000 available to offset future taxable income. The last of the carry forward expires in 2009. No benefit has been recorded on the face of the balance sheet for this benefit. Note 2. Investments and Acquisitions Marketable securities at August 31, 1992 and 1991 had an original cost basis of $240,000. The stock is currently considered worthless. Investments in 1992 Original Carrying Carrying Basis Value as of Value as of August 31, August 31, 1992 1994 Western Airlines (38% equity position) $80,000 $ - $ - Publishing Companies 165,000 7,500 - Art Works 24,000 8,000 - Totals 269,000 15,500 - Investments in 1991 Art Works 21,900 21,900 - Distribution Rights 5,000 5,000 - Total Investments in 1991 $26,000 $26,000 $ - MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Investment in Western Airlines 1992 The Company acquired a 38% interest in Western Airlines for $80,000 cash paid for by a stockholder on behalf of the Company. Currently Western Airlines is in bankruptcy and is not expected to come out of bankruptcy in the near future. Purchase of Phalanx, Ltd. Rights In 1994 the Company purchased from Phalanx, Ltd., certain rights to molds and designs of exclusive jewelry. These were purchased with 27,000,000 shares of the Company's common stock. Originally valued at $270,000 this investment proved to be worthless. Major shareholders of the Company sued for return of the shares. On February 9, 1995 the Superior Court of the County of Maricopa, Arizona decided that the 27,000,000 shares were improperly given and denied those shares voting rights. On March 23, 1995 a shareholders meeting was held where those shares were rescinded and returned to the Company. Proposed Merger As part of a proposed merger the Company issued 1,250,000 shares to various parties for consulting. This merger was not successful, however the shares of stock for consulting are still outstanding. Note 3. Related Party Transactions The Company has been able to continue in existence and to remove most of its debts because some of the major shareholders have continued to cover the administrative expenses and to pay outstanding debts. There is no guarantee that these shareholders will continue to fund the Company. There are no outstanding obligations due to or from related parties as of August 31, 1996. Balance of Page Left Blank Intentionally MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4. Notes Payable 8/31/96 8/31/95 8/31/94 Hanson - - $10,354 10% annual interest, $150 monthly payment secured by 533,670 shares of Merit common stock, also secured by personal guarantee of Alfred Cassidy Wurtz - - 33,000 10% annual interest, secured by 162,000 shares of Merit common stock, also secured by personal guarantee of Alfred Cassidy Eureka Federal Savings - - 5,010 amount based on a suit filed 10/1/86 in California, settled in 9/93 for $5,010 Jackson, Private Note - - 18,000 Total - - 66,364 Note 5. Commitments and Contingencies The Company has no commitments or contingencies as of August 31, 1996 except for its outstanding debt as noted on the balance sheet. Note 6. Going Concern The Company has incurred significant losses since its inception and as of the August 31, 1996 had no source of revenue. The Company also had no cash and has paid for all of its ongoing expenses with the issuance of its common stock. The Company has been able to continue because the major stockholders have been willing to continually invest in the Company to cover expenses. The Company is to be considered a development stage company and will remain in this status until operations have been established. No guarantee can be made that the Company will be able to merge with an operational company MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS or that the major stockholders will continue to pay the expenses of the Company. As of August 31, 1995 and 1996, the Company had no assets. Due to the nature of the Company's activities, the Company's prospects for the future are dependent on a number of variables which cannot be predicted. Generally, after identifying a potential business opportunity, the Company could incur significant costs in evaluating the desirability of an acquisition or other form of business combination. Should the Company determine to proceed with the business combination, the transaction costs could be significant. Thereafter, results of operation would likely be materially affected by the business acquired or merge with the Company. Note 7. Subsequent Events The Company is currently seeking additional funding through debt and equity financing. The Company is also seeking a suitable merger candidate. No guarantees can be made that the Company will be successful in its attempts to obtain funding or acquire or start an operational business. In February 1997 major stockholders contributed $8,000 to pay old payable. (Balance of Page Left Blank Intentionally) MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental Stage Company) SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS NONE Balance of Page Left Blank Intentionally ITEM 9: CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The officers and directors of the Company were the following: Name Age Title Mike Neri 47 President/Sec./Treasurer/Director Mike Neri is a mechanical engineer who speaks four languages. Currently he is Vice President of N.E.A.T. Inc.. ITEM 11: EXECUTIVE COMPENSATION No officer or director receives compensation for services rendered except that the directors are authorized to receive 100 shares of R-144 Company stock for each directors meeting that they attend. No such stock has been issued. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of August 31, 1996 the following were beneficial owners of more than five percent of the Company's common stock. Stock Name and Address Ownership % Common Alfred H. Cassidy 1,016,893 6 25 Poncetta Dr. #307 Daley City, CA 94015 Common N.E.A.T. Inc. 13,000,000 80 850 South Boulder Hwy. Suite 300 Henderson, NV 89015 Common New World Equities 1,250,000 8 Total as a Group 15,266,893 94 The table below sets forth those directors and officers who own shares of Company stock. Common Mike Neri 1,000,000 5 25320 Bellanca Way Torrance, CA 90505 ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS No director of officer, directly or indirectly, is indebted to the Company in an amount in excess of $60,000 as of the close of the fiscal year August 31, 1996. ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS a. Audited financial statements. b. Reverse split amendment. Balance of Page Left Blank Intentionally SIGNATURES The signature below is that of Mr. Michael. Neri. Mr. Neri did not become involved with the Company until April 1996. Mr. Neri disclaims any knowledge or liability for any transaction prior to this time. Mr. Neri signs below as a current officer and director. The actual officers and directors were not available to sign. 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. Merit Diversified International, Inc. (registrant) _____________/S/_____________________ Michael Neri, Chief Accountant Dated: April 10, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Signature Title Date _____________/S/_________ Michael Neri Chief Accountant -----END PRIVACY-ENHANCED MESSAGE-----