ITEM 1. BUSINESS
The Company is presently engaged in seeking out a suitable business for acquisition or merger. The Company has no formal business plan or any particular area of business in which it intends to engage. The Company will attempt to acquire a business which it believes has potential for successful development. The Company has not adopted any formal business plan or conducted any market studies with respect to any business or industry. No representation is made that management of the Company has any particular expertise in connection with the proposed activities of the Company and management may rely on independent experts or consultants in any business field in connection with their examination and investigation of a potential acquisition.
It is not expected that shareholders of the Company will be consulted with respect to any acquisition engaged in by the Company.
The Company's officers have other commitments and only such time is being devoted to the Company as is necessary to seek out a suitable opportunity. In addition, it may be necessary to employ outside help at substantial expense. Such help may not be available to the Company when and if required.
In the acquisition of any given business, it may be expected that the Company will require additional financing to expand and fund any business which it acquires. The Company may incur substantial indebtedness which will substantially change the capital structure of the Company and would most likely expose the Company's shareholders to a greater risk of loss in the event of financial difficulty. If additional funds are required, there can be no assurance given that additional financing will be available on commercially reasonable terms or otherwise.
The search is not being restricted to any specific kind of activity, business or industry or geographical location. The
Company may acquire a business in any stage of its development including its preliminary or development stage, as well as one which is already in operation. It is impossible to predict the status of any venture in which the Company may participate.
A potential venture may involve the acquisition of or merger with a company which is not seeking immediate substantial amounts of cash but one which desires to establish a public trading market for its shares. A company which seeks the Company's participation in attempting to consolidate its operations through a merger, reorganization, acquisition, or some other form of combination may desire to do so to avoid what it may deem to be adverse consequences of itself undertaking a public offering. Factors considered may include time delays, significant expense, loss of voting control and the inability or unwillingness to meet the requirements of various federal and state laws enacted for the protection of investors.
The analysis of new business ventures is being undertaken by or under the supervision of the officers, none of whom is a professional business analyst. In analyzing prospective business ventures, management will consider such matters as it deems appropriate which may include the available technical, financial and managerial resources; working capital and other financial requirements; the history of the operations, if any; prospects for the future; the nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; risk factors; the potential for growth and expansion; the potential for profit; the perceived public recognition or acceptance of products, services, trade or service marks; and name identification.
As part of the Company's investigation, its officers may meet personally with the management and other key personnel of the company considered to be acquired. They may visit and inspect facilities, obtain independent analyses or verification of certain information provided, check references of management and key personnel, and conduct other reasonable measures, to the extent of the Company's limited financial resources.
Generally, the Company will analyze all available factors in the circumstances and make a determination without reliance upon any single factor as controlling. The Company is unable to predict when, if at all, it may participate in a venture.
It is anticipated that opportunities may be sought by or presented to the Company from various sources, including its officers and directors, professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals. In certain circumstances, the Company may agree to pay a finder's fee or to
otherwise compensate persons, including officers and directors of the Company, for services rendered in bringing about a transaction. The form and amount of any such finder's fee or other compensation which may be paid for services rendered in bringing about a transaction is subject to future negotiation between the Company, the entity to be acquired and the finder.
The Company may acquire a business by conducting an acquisition, merger, consolidation or reorganization. It may be expected that any such transaction will involve the issuance of additional securities in the Company. The percentage of shares held by all shareholders of the Company prior to such transaction or reorganization, are likely to be substantially decreased by such transaction.
Depending upon the form of business combination, the transaction may be accomplished upon the sole determination of management without any vote or approval by shareholders. If a shareholder vote is required, or is deemed appropriate by management, the obtaining of such shareholder approval may result in delay and additional expense in the consummation of any proposed transaction. In addition, the transaction may give rise to certain appraisal rights to dissenting shareholders. Most likely, management will seek to structure any such transaction so as not to require shareholder approval.
In the event the Company finds an opportunity for an acquisition, of which there can be no assurance, which requires the issuance of significant additional shares, it may be anticipated that control over the Company's affairs will be transferred to others and that the present shareholders' interest in the Company will be diluted. No assurance can be given as to the experience or qualification of such persons either in the operation of the activities of the Company or in the operation of the business being acquired.
The issuance of substantial additional securities in any acquisition, merger or reorganization, may have an adverse effect on any trading market in the Company's securities.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business venture, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
The Company presently intends to principally acquire only a majority interest in a business. However, management reserves the right to acquire minority investments in other concerns provided by doing so the Company will not be classified as an "investment company" under the Investment Company Act of 1940 (the "1940 Act"). Being deemed an "investment company" under the 1940 Act, without registration as such can result in civil liability and criminal penalties to controlling persons in certain instances, as well as civil liabilities and the unenforceability of contracts with regard to the Company. The Company does not intend to nor have authority to pursue any business opportunity or transaction which would render the Company an "investment company" as the term is defined in the 1940 Act.
The Company has not engaged and does not intend nor have authority to engage in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities for compensation nor as a part of regular business to issue or promulgate analyses or reports concerning securities. The Company does not intend nor have any authority to pursue any course of business which would render it an investment adviser as that term is defined in the Investment Advisers Act of 1940.
DISCUSSIONS WITH ORALABS, INC.
Commencing in the Spring of 1996, and continuing through the date of filing of this Annual Report, the Registrant was engaged in merger discussions with OraLabs, Inc. ("OraLabs"), a privately held Colorado corporation engaged in the manufacture and sale of breath freshener and lip balm products for the general consumer market. There is no assurance that a merger will actually be consummated.
As part of the proposed transaction, the Registrant intends to offer for sale (pursuant to a private transaction exempt from the registration requirements of applicable securities laws), certain restricted shares of its Common Stock in an effort to provide additional financing to the business ventures of the surviving corporation. Under the transaction being discussed, immediately prior to the closing of the offering, a subsidiary of the Registrant would merge with OraLabs. In connection therewith, the Registrant would acquire all of the outstanding capital stock of OraLabs from its shareholders and retain the name SSI Capital Corp. It is also possible at this point that the Registrant may decide to change its name to OraLabs, Inc. In return for completing a merger of OraLabs and a subsidiary of the Registrant, OraLabs' shareholders would receive shares of Common Stock in the Registrant. As a result of the acquisition, which would be treated as a reverse triangular merger into the
Registrant, OraLabs would become a wholly-owned subsidiary of the Registrant, which would remain a publicly held company.
DAILY OPERATIONS
Until an active business is commenced or acquired, the Company will have no employees or day to day operations. Management is unable to make any estimate as to the future number of employees which may be necessary, if any, to work for the Company. If an existing business is acquired, it is likely that its existing staff would be hired by the Company. At the present time it is the intention of management to meet or be in telephone contact as often as necessary to review business opportunities, evaluate potential acquisitions and otherwise operate the affairs of the Company. Management may receive reimbursement for their reasonable and necessary expenses incurred in these activities.
L.P.G. STANDARDBRED ASSOCIATES, INC.
Under the Plan, the Company was permitted to retain its 25% interest in LPG Standardbred Associates, Inc. ("LPG Inc."). LPG Inc. is the general partner of LPG Standardbred Associates, L.P., a limited partnership engaged in the racing of Standardbred horses. The Company's interest in LPG Inc. was held however subject to an agreement under which the first $225,000 realized therefrom would be paid over to Norstar Bank. The Company commenced an action against the owner of the remaining 75% of LPG Inc. to recover on behalf of LPG Inc. approximately $2,000,000. A settlement was reached in the sum of $225,000. Under the terms of the settlement, the Company disposed of its 25% interest in LPG Inc. and all proceeds were paid over to Norstar Bank. The Company has no further interest in LPG Inc.
NIAVEST, L.P.
The Company, since prior to the filing of its petition, was the General Partner of Niavest, L.P., a limited partnership ("Niavest") engaged in the breeding of Standardbred horses. The Company was also the owner of 307 Units of limited partnership interests in Niavest. Under the Plan, the Units were transferred to Norstar Bank, the Company's secured lender. The Company remained as the General Partner of Niavest and, as such, could be contingently liable for the debts of Niavest. There is no known claim with respect to any such liability. In December, 1995, Niavest was terminated and all of its assets were distributed to the limited partners. Thereafter, Niavest was formally dissolved with the filing of a Certificate of Dissolution.
ITEM 2.
ITEM 2. PROPERTIES
The Company maintains its business office at the office of its President, 150 Vanderbilt Motor Parkway, Suite 311, Hauppauge, New York 11788. The Company is using these offices on a rent free basis until such time as it is required to find its own space. The Company has the benefit of a receptionist and clerical help without cost to it until Management finds it necessary to move into separate space.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES AND RELATED SHAREHOLDER MATTERS
As of November 30, 1996, the Registrant had 1,749,541 shares outstanding, held of record by approximately 950 persons. There is no quoted market for the Company's shares nor, to the knowledge of the Company, has there been any for at least the past two years. There is no assurance as to when, if at all, a market will develop.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following table is a summary of the Company's financial statements appearing elsewhere in this report.
BALANCE SHEET:
INCOME STATEMENT:
(1) To the nearest whole cent.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is deemed to be a development stage company since July 15, 1991, the date of the consummation of the Plan. The Company's former business has been terminated completely and its ongoing activities consist of finding a suitable business for acquisition or merger.
During the development stage period (July 15, 1991 through November 30, 1996), the Company's revenue amounted to $63,871. Its expenses, including New York State income taxes, amounted to $122,708 resulting in a net loss of $(58,837) for such period.
LIQUIDITY AND CAPITAL RESOURCES
The Company, not having completed an acquisition or merger, believes that its working capital position is sufficient for its current needs. The significant amount of capital necessary to acquire and develop a successful business in today's economy will limit the Company's ability to locate one suitable for acquisition or merger. Any such business will likely be one having modest cash requirements, minimal activities and limited resources. It is possible that the Company will require additional financing to expand and fund any business which it acquires or establishes. If additional funds are required, there can be no assurance given that additional financing will be available on commercially reasonable terms or otherwise.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's accountants relating to accounting or financial disclosure.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The directors and executive officers of the Company are as follows:
(1) As of November 30, 1996
Prior to the filing of the petition, the directors of the Company were elected annually by the shareholders and the officers were appointed annually by the Board of Directors. The Company has held only one shareholder meeting since the filing of its petition and in accordance with the Plan, all officers and directors, with the exception of Mr. O'Donnell and Mr. Kaplan, resigned upon confirmation of the Plan. At the same time, Mr. O'Donnell and Mr. Kaplan became officers of the Company. Vacancies on the Board of Directors may be filled by the remaining directors. Although New York State law requires three directors, the vacancy has not been filled.
Edmond O'Donnell was elected President of the Company in October, 1990. He has been a director since January, 1981. Mr. O'Donnell is a self employed management consultant and is also a private investor. As of July 15, 1991, he was an officer, director and principal shareholder of Gro-Vest, Inc., a management consulting firm, and was also a registered principal and an officer, director and principal shareholder of G-V Capital Corp., a member of the National Association of Securities Dealers. His relationship with G-V Capital Corp. and Gro-Vest, Inc. terminated as of December 31, 1992.
Lawrence Kaplan was elected Secretary and Treasurer of the Company in October, 1990. He has been a director since July, 1981. Mr. Kaplan is a director of American United Global, Inc. and, since January 1987, has been an officer, director and principal stockholder of Gro-Vest Management Consultants, Inc. ("GVMCI"), a consulting firm located on Long Island, New York. GVMCI has permanently ceased all business activity. Mr. Kaplan also is a registered representative, officer, director and sole stockholder of G-V Capital Corp., a brokerage firm registered with the NASD. He also is a director of PARK Group and Andover Equities Inc., both of which are public shell companies, and of Jenna Lane, Inc., an apparel manufacturing company.
Management of the Company will devote only such time as they deem necessary to the activities of the Company.
Edmond O'Donnell is primarily responsible for the financial and record keeping affairs of the Company and is responsible for evaluating acquisitions for the Company. Both he and Lawrence Kaplan are devoting a portion of their time to looking for and investigating prospects for the Company.
In certain circumstances, the Company may agree to pay a finder's fee to one or more of its officers and directors or their affiliates or associates, for services rendered in bringing about an acquisition or merger.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
No present officer or director of the Company has received remuneration from the Company since the time of the filing of the petition and it is not anticipated that remuneration will be paid in the foreseeable future.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of November 30, 1996 the number of shares owned of record or beneficially by the company's officers and directors and its shareholders owning at least 5% of the Company's issued and outstanding shares and by all officers and directors as a group and the percentage of the total outstanding shares represented by such shares as of such date.
(1) Includes 41,862 shares owned by O.K. Associates, a partnership consisting of Mr. O'Donnell and Mr. Kaplan.
There are no stock option, bonus, profit-sharing or similar plans presently in effect or contemplated by the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Opinion of independent certified public accountants.
Balance sheets as at November 30, 1996 and 1995.
Statements of Stockholders' Equity for the period July 15, 1991 (inception of development stage) through November 30, 1996.
Statements of Income for the Fiscal Years Ended November 30, 1996, 1995 and 1994, and for the period July 15, 1991 (inception of development stage) through November 30, 1996.
Notes to financial statements.
2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXHIBITS
27.1 Financial Data Schedule
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.
February 25, 1997 SSI CAPITAL CORP.
By:/s/Edmond O'Donnell --------------------------- Edmond O'Donnell, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
[SCOTT & GUILFOYLE LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders SSI Capital Corp.
We have audited the accompanying balance sheets of SSI Capital Corp. (a development stage company) as of November 30, 1996 and 1995 and the related statements of income (loss), stockholders' equity and cash flows for the years ended November 30, 1996, 1995 and 1994 and from July 15, 1991 (inception) to November 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our 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 balance sheet presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the balance sheets referred to above present fairly, in all material respects, the financial position of SSI Capital Corp. (a development stage company) as of November 30, 1996 and 1995, and the results of its operations and its cash flows for the years ended November 30, 1996, 1995 and 1994 and from July 15, 1991 (inception) to November 30, 1996 in conformity with generally accepted accounting principles.
/S/SCOTT & GUILFOYLE
Lake Success, New York February 5, 1997 SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS NOVEMBER 30 ASSETS
See accompanying notes to financial statements. SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY
See accompanying notes to financial statements. SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF OPERATIONS
See accompanying notes to financial statements. SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CASH FLOWS
See accompanying notes to financial statements SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENT NOVEMBER 30, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company filed an amended Certificate of Incorporation on June 16, 1994 whereby they changed the name of the corporation from Saratoga Standardbreds, Inc. to SSI Capital Corp. In addition, the issued and outstanding common shares were reverse split on a one for ten basis. All information in these financial statements have been adjusted to reflect this amendment.
The Company was incorporated in the State of New York on January 30, 1981. On December 5, 1988, the Company filed a Voluntary Petition for Reorganization under Chapter 11 of the Bankruptcy Code. At the time of the filing of its petition, the Debtor was engaged in the business of serving the Standardbred horse industry. The Plan of Reorganization was confirmed by the United States Bankruptcy Court, Northern District of New York on October 9, 1990. Although the Plan of Reorganization was confirmed on October 9, 1990 by the Bankruptcy Court, the Company has deemed the plan consummated on July 14, 1991 with the conveyance of its primary asset of real estate to Norstar Bank on such date pursuant to the plan. As a condition to the confirmation of the Plan, the Company effected a concurrent private placement of 8,372,318 common shares, $.001 par value, for gross proceeds of $100,000 which are not subject to any claims of creditors under the plan.
USE OF 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 and disclosures. Actual results could differ from those estimates and assumptions.
INCOME TAXES
No provision has been made in the accompanying financial statements for income taxes payable because of the Company's operating loss. At November 30, 1996 the Company has approximately $44,000 of net operation loss carryforwards for financial reporting and income tax purposes that expire through the year 2007.
BUSINESS ACTIVITY
The Company is presently engaged in seeking out a suitable business for acquisition or merger. The Company has no formal business plan or any particular area of business which it intends to engage. The Company will attempt to acquire a business which it believes has potential for successful development. SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENT NOVEMBER 30, 1996
RELATED PARTY TRANSACTIONS
The Company maintains its business office at the office of its President, 150 Vanderbilt Motor Parkway, Suite 311, Hauppauge, NY 11788. The Company is using these offices on a rent free basis until such time as it is required to find its own space. The Company has the benefit of a receptionist and clerical help without cost to it until management finds it necessary to move into separate space.
Edmond O'Donnell was elected President of the Company in October, 1990. He has been a director since January, 1981. Mr. O'Donnell is a self employed management consultant and is also a private investor.
Lawrence Kaplan was elected Secretary and Treasurer of the Company in October, 1990. He has been a director since July, 1981. He is also a registered representative, officer, director and principal shareholder of G-V Capital Corp., a brokerage firm registered with the NASD. Mr. Kaplan is a director of American United Global, Inc., a distributor of JI Case construction equipment in the Pacific Northwest and a manufacturer of specialty and commodity O-rings. He is also an officer and director of Park Group and Andover Equities Inc.; both of which are public shell companies, and of Jenna Lane, Inc., an apparel manufacturing company.
Management of the Company will devote only such time as they deem necessary to the activities of the Company.
Edmond O'Donnell is primarily responsible for the financial and recordkeeping affairs of the Company and is responsible for evaluating acquisitions for the Company. Both he and Lawrence Kaplan are devoting a portion of their time to looking for and investigating prospects for the Company.
Of the 8,172,318 common shares issued on July 15, 1991 in the private placement, fifty percent (50%) were purchased by Edmond O'Donnell and Lawrence Kaplan.
NOTE 2: INVESTMENTS
The Company, since prior to the filing of its petition, was the General Partner of Niavest, L.P., a limited partnership engaged in the breeding of Standardbred Horses. The Company was also the owner of 307 Units of Limited Partnership interests in Niavest. Under the Plan, the Units were transferred to Norstar Bank, the Company's secured lender. The Company remained as the general partner of Niavest and, as such, could be contingently liable for the debts of the Limited Partnership. There is no known claim with respect to any such liability. Following the close of the Company's fiscal year ending November 30, 1995, Niavest was terminated and all of its assets were distributed to the limited partners. Thereafter, Niavest was formally dissolved with the filing of a Certificate of Dissolution. SSI CAPITAL CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENT NOVEMBER 30, 1996
NOTE 3: COMMON STOCK
As authorized in the Plan of Reorganization, the Certificate of Incorporation was amended to change the authorized common shares from 8,500,000 shares to 100,000,000 shares. The par value of the common shares was changed from $.01 to $.001. The par value of the preferred stock was changed from $.10 to $.01. Pursuant to the Plan, the Company issued 1,000,043 new common shares to the general unsecured creditors and 200,025 new common shares to the subordinated creditors effective July 15, 1991. At the same time the private placement of 8,172,318 new common shares were issued for proceeds of $100,000. On December 4, 1993 the Company issued 500,000 shares to Norstar Bank to be held for investment purposes only, pursuant to an agreement entered into as part of the bankruptcy proceedings. On June 16, 1995 the Company filed an amended Certificate of Incorporation whereby the issued and outstanding common shares were reverse split on a one for ten basis. The information in these financial statements have been adjusted to reflect this amendment.
NOTE 4: MERGER DISCUSSIONS
The Company is in the midst of merger talks with OraLabs, Inc. a privately held corporation engaged in the business of licensing for manufacture, selling and distributing breath freshener products for the general consumer market.
As part of the proposed transaction, the Company intends to offer for sale certain shares of its Common Stock in an effort to provide additional financing to the business ventures of the surviving corporation. Under the transaction being discussed, immediately prior to the closing of the offering, a subsidiary of the Company would merge with OraLabs. In connection therewith, the Company would acquire all of the outstanding capital stock of OraLabs from its shareholders and retain the name SSI Capital Corp. In return for merging OraLabs into a subsidiary of the Company, OraLabs' shareholders would receive shares of Common Stock in the Company. As a result of the acquisition, which would be treated as a reverse triangular merger into the Company, OraLabs would become a wholly-owned subsidiary of the Company, which would remain a publicly held company. EXHIBIT INDEX
27.1 Financial Data Schedule