Item 1. Business.
Davin Enterprises, Inc. ("The Registrant") is a development stage company which was incorporated on April 8, 1987. The Registrant has no predecessors and has no history prior to its date of organization. The proposed business of the Company is to provide a mechanism to take advantage of business opportunities which management believes arise from time to time. It is believed that the Company's ability to take advantage of some business opportunities is enhanced by its status as a small, publicly held entity with liquid assets which could be deployed quickly to investigate, acquire an interest in and devote to business operations, product development, asset acquisition of other opportunities.
On April 21, 1988, the Registrant concluded an agreement with Target Vision, Inc. ("TVI") for the merger of TVI with the Registrant. In conjunction with the merger agreement, the Company loaned TVI $685,078.08. Subsequently, litigation ensued relating to the note which was settled on June 28, 1991. Pursuant to the agreement, on July 31, 1991, the Registrant converted $685,078 of debt into 2,883,333 shares of TVI common stock, representing approximately 9.1% of the outstanding shares of TVI, with a potential dilution to 8.7% if additional shares are issued.
For the year ended September 30, 1996, TVI generated net revenues of $8,616,999 and net income of $797,050. At September 30, 1996, TVI had total assets of $4,684,632, and stockholders' equity of $1,176,821. The figures already mentioned for the year ended September 30, 1996 and the balance sheet figures at September 30, 1996 were audited. TVI's primary product is a computer based business television that is used in a variety of environments as a communication vehicle. Its dominant application is in industry, where communicators use the product as an employee communication tool. Its system combines television with the technology of computers to allow for immediate updating and dissemination of information.
With the termination of the proposed merger, the Registrant began seeking out additional appropriate business opportunities. To date, no such opportunities have been available.
Item 2.
Item 2. Properties
As of March 31, 1997, the Registrant owned no property.
Item 3.
Item 3. Legal Proceedings
The President and Secretary-Treasurer of the Registrant have been included as defendants in a class action entitled "Barker et. al v. Power Securities Corp., et. al" in the Western District of New York which commenced in February 1989. The Registrant is not
a defendant in the above titled class action. The complaint alleges violations of the securities laws, in trading certain securities including those of the Company and its affiliated company, Daine Industries Inc., by all of the defendants. Certain officers and directors of the Company who are also officers and directors of Daine Industries Inc., deny the allegations and believe the suit to be without merit. The alleged violations refer to Section 10b and Rule 10b-5 of the Securities and Exchange Act of 1934. The Registrant has undertaken to advance any expenses necessary and incurred by the officers and directors in the litigation subject to an undertaking by such officer and director to repay the advances if it be ultimately determined that the officer or director is not entitled to be indemnified. At this date, expenses are not material. Discovery as it relates to the Registrant's officers is in its early stages and no activity has occurred for the past few years. In the event that the plaintiffs were to prevail against the officers and directors and a judgment was issued against them, this may have a material adverse effect on the Registrant's future financial condition.
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 Equity and Related Stockholders Matters.
For the year ended March 31, 1996, there was no reported bid price for the common stock of the Registrant's shares and there were no pink sheet market makers for the Registrant's common stock. As reported by Yahoo Finance, for the 52 week period ended June 23, 1997, the shares were quoted at a range of $.01 - .53125. The last traded was at June 9, 1997 at a price of $.02. The bid price on June 23, 1997 was $.01. The prices reflect the reverse stock split effective May 29, 1996.
Number of shareholders - 1220 (as of June 20, 1997).
Dividends - The Company has not paid any dividends since its inception and presently anticipates that all earnings, if any, will be retained for development and expansion of the Company's business, and that no dividends on the Common Stock will be declared in the foreseeable future.
On May 29, 1996, the Registrant declared a reverse stock split. The Registrant effected a one(1) for one hundred(100) reverse split and reduced the number of authorized shares from 250,000,000 to 50,000,000. Item 6.
Item 6. Selected Financial Data
For The Year Ended March 31, 1997 1996 1995 1994 1993 Interest Income $ 2,442 $ 4,131 $ 4,390 $ 3,806 $ 4,017 Net Profit (Loss) 193,505 (254,657) (16,623) (21,616) (29,060) Net Income (Loss) Per Share $.10 $(.13) $(.01) $(.01) $(.01) Total Assets 732,095 537,057 791,714 808,337 829,203 Long Term Debt -0- -0- -0- -0- -0-
Item 7.
Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations.
During the year ended March 31, 1997, the Registrant generated a net income of $193,505 which was principally attributed to a revaluation $235,078 of the Registrant's investment in Target Vision Inc. back to cost of $685,078. General and administrative expenses for the year ended March 31, 1997 amounted to $43,282 which was offset by interest income of $2,442. The increase in general and administrative expenses is principally due to the Registrant's reverse stock split effected in May of 1996. The Registrant also generated franchise tax expenses of $733. Included in the $43,282 of general and administrative expenses were management fees of $9,600, paid to a company in which certain officers and directors of the Registrant are majority shareholders. No salaries have been paid to the officers and directors of the Registrant since inception. Services to the Registrant such as administrative, bookkeeping and clerical are provided for through the management fee compensation arrangement. The Registrant's management has determined that considerable monetary savings can be achieved through such an arrangement as compared to hiring the additional personnel needed to perform the comparable administrative, clerical and bookkeeping services. At March 31, 1997, the Registrant had total assets of $732,095, consisting of cash $45,717, Investment - Target Vision, Inc. $685,078, and other assets of $1,300 and total liabilities of $2,283.
During the year ended March 31, 1996, the Registrant generated a loss of $254,657, which was principally attributed to a writedown in its investment in Target Vision, Inc. General and administrative expenses for the year ended March 31, 1996 amounted to $23,450 which was offset by interest income of $4,131. The Registrant also generated franchise tax expenses of $260.
During the year ended March 31, 1995, the Registrant generated a loss of $16,623, which was principally attributed to professional fees, amounting to $20,153 (primarily professional fees of $8,327). Other general and administrative expenses for the year ended March 31, 1995 amounted to $11,826 which was offset by interest income of $4,390. The Registrant also generated a franchise tax expense of $860. The Registrant has sufficient funds to pay for anticipated expenditures for fiscal year ended March 31, 1998. There are no plans at this time for material capital expenditures for the fiscal year ended March 31, 1998. Item 8.
Item 8. Financial Statements and Supplementary Data
Attached and listed in Item 14.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The executive officers and directors of the Company are as follows:
Age Term Expires
Arthur Seidenfeld 46 President and Director Next annual meeting Anne Seidenfeld 84 Secretary-Treasurer and Director Next annual meeting Gerald Kaufman 56 Director Next annual meeting
Each of the above named individuals has served the Company in the capacity indicated since its formation on April 8, 1987 with the exception of Anne Seidenfeld who became secretary of the Company during December 1989 and Gerald Kaufman who became a director during 1990.
Arthur Seidenfeld, President and Director was awarded a B.S. Degree in Accounting from New York University in 1972 and an M.B.A. in Finance in 1978 from Pace University. He is founder and President of American Israel Ventures Corporation, a private company which was registered as an advisory firm under the Investment Advisory Act of 1940 from 1972 (except for a two year period from August 1979 to January 1981 when such registration was voluntarily withdrawn as the firm did not carry on investment advisory operations) until November 1988, when its registration was voluntarily withdrawn as the firm terminated its investment advisory operations. American Israel Ventures Corp. is still in business.
He has also served as President and Director of Modern Technology Corp., a company which shares are publicly traded and a principal shareholder of the Company since 1983. Mr. Seidenfeld is also President and a Director of Daine Industries, Inc., a "blind pool' company that went public in March 1988 and in February 1990 became engaged in the manufacture and sale of wiring devices, through the acquisition of the business and assets of Lite King Corporation. Mr. Seidenfeld is also President of Lite King Corp., a wholly owned subsidiary of Daine Industries, Inc., and Coral Development Corp., a fully reporting company. Anne Seidenfeld, Secretary-Treasurer and Director, received her diploma from Washington Irving High School, New York City, in 1931. From 1972 to 1978 she was a partner in M. Seidenfeld and Son, a retail concern. From 1972 to the present she has served as Secretary and Treasurer of American Israel Ventures Crop. Mrs. Seidenfeld is the Treasurer-Secretary of Modern Technology Corp. and Daine Industries, Inc. and is secretary-treasurer of Lite King Corp. She is also Treasurer-Secretary and a Director of Coral Development Corp., a fully reporting company.
Gerald Kaufman, Director, has been a practicing attorney for the past thirty years. He has served as a director of the Registrant, along with being a director of Modern Technology Corp. and Daine Industries Inc. since November 1990. He has also been a director of American Mayflower Life Insurance Co. since 1973.
Arthur Seidenfeld is the son of Anne Seidenfeld.
Item 11.
Item 11. Management - Executive Compensation
The officers of the Company did not receive salaries from the Company during the year ended March 31, 1996. Modern Technology Corp., a principal shareholder received a monthly management fee of $1,666 through June 30, 1991. As of July 1, 1991, Modern Technology Corp. agreed to receive $800 per month for the services provided.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
a. The following are known to Registrant to be beneficial owners of 5% or more of the Company's common stock.
Title of Class Common Stock
Name of Beneficial Owner Amount & Percentage Nature of of Class Beneficial Ownership Arthur Seidenfeld 461 Beach 124 Street Belle Harbor, NY 540,910 27.9%
Modern Technology Corp. 461 Beach 124 Street Belle Harbor, NY 501,000 25.9%
b. The shares owned by management are as follows: Common Stock.
Arthur Seidenfeld 540,910 27.9% Anne Seidenfeld 4,000 0.2% Gerald Kaufman 30,000 1.5% Item 13.
Item 13. Certain Relationships and Related Transactions.
The Company presently utilized office space of Modern Technology Corp. Modern Technology Corp. receives a monthly management fee of $800. Arthur Seidenfeld and Anne Seidenfeld are president and secretary-treasurer respectively of Modern Technology Corp. and also own 47% and approximately 12% respectively of Modern Technology Corp. During the fiscal year ended March 31, 1997, Modern Technology Corp. has received management fees in the amount of $9,600.
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Report on Form 8-K.
a) Financial Statements and Financial Statement Schedules.
1 - Financial Statements filed with this form 10-K include:
Balance Sheet as of March 31, 1997 and 1996.
Statement of Operations for the twelve months ended March 31, 1997, 1996 and 1995.
Statement of Cash Flows for the twelve months ended March 31, 1997, 1996 and 1995.
Statement of Stockholders Equity for the Period April 8, 1987 (inception) to March 31, 1997.
Notes to Financial Statements.
Schedules:
None.
Schedules are not submitted, because the information is included elsewhere in the financial statements or the notes thereto, or the conditions requiring the filing of these schedules are not applicable.
(c) Exhibits- (1) Articles of Incorporation*. (2) By Laws*. (3) Exhibit 27 - Financial Data Schedule
*Incorporated by reference to Registration Statement #33-14521-NY.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DAVIN ENTERPRISES, INC.
BY: Arthur Seidenfeld President Dated: June 24, 1997
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and the capacities and on the date indicated.
Name Signature Title Date Arthur Seidenfeld President and Director Chief Executive and Financial Officer June 24, 1997
Anne Seidenfeld Secretary-Treasurer and Director June 24, 1997
Gerald Kaufman Director June 24, 1997
Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrant Which Have Not Registered Securities Pursuant to Section 12 of the Act:
d) No annual report or proxy material for the year ended March 31, 1997 has been sent to securities holders. If such report or proxy material is furnished to securities holders subsequent to the filing of this report, copies shall be furnished to the Commission when sent to securities holders.
DAVIN ENTERPRISES, INC.
FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
BALANCE SHEETS 2
STATEMENTS OF STOCKHOLDERS' EQUITY 3-4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders DAVIN ENTERPRISES, INC. Brooklyn, New York 11226
We have audited the accompanying balance sheets of DAVIN ENTERPRISES, INC. (A Development Stage Enterprise) as of March 31, 1997 and 1996 and the related statements of operations, stockholders' equity and cash flows for the three years ended March 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based upon our audit.
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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DAVIN ENTERPRISES, INC. as of March 31, 1997 and 1996, and the results of its operations and its cash flows for the three years ended March 31, 1997, in conformity with generally accepted accounting principles.
GREENBERG & COMPANY, LLC
Springfield, New Jersey June 17, 1997
Page 1 of 9 DAVIN ENTERPRISES, INC. (A Developement Stage Enterprise) BALANCE SHEETS
March 31, 1997 1996
A S S E T S
CURRENT ASSETS Cash and Cash Equivalents $ 45,717 $ 80,757
OTHER ASSETS Deferred Acquisition Fees (Note 4) -0- 5,000 Organization Costs 1,300 1,300 Investment - Target Vision, Inc. - (Note 3) 685,078 450,000 686,378 456,300
TOTAL ASSETS $ 732,095 $ 537,057
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES Accrued Taxes and Expenses $ 2,283 $ 750
Contingencies (Note 7)
STOCKHOLDERS' EQUITY Common Stock (Par Value $.0001) 50,000,000 Shares Authorized 1,937,452 Shares Issued and Outstanding 194 194 Paid-In Capital In Excess Of Par Value 1,072,526 1,072,526 (Deficit) Accumulated During Development Stage (342,908) (536,413) 729,812 536,307
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 732,095 $ 537,057
The accompanying notes are an integral part of these financial statements.
Page 2 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY For The Period April 8, 1987 (Inception) to March 31, 1997
# of $.0001 Paid In Deficit Total Shares Par Value Capital Accumulated Stock- During Holders' Development Equity Stage Initial Investment in Capital Stock 1,600,000 $160 $ 426,220 $426,380
Warrants Exercised 222,550 22 475,078 475,100
Offering Costs (68,705) (68,705)
Loss for the Period April 8, 1987 (Inception) to March 31, 1988 $ (13,113) (13,113)
BALANCES - APRIL 1, 1988 1,822,550 182 832,593 (13,113) 819,662
Warrants Exercised 114,902 12 239,933 239,945
Loss for the Year Ended March 31, 1989 (60,555) (60,555)
BALANCES - MARCH 31, 1989 1,937,452 194 1,072,526 (73,668) 999,052
Loss for the Year Ended March 31, 1990 (73,354) (73,354)
BALANCES - MARCH 31, 1990 1,937,452 194 1,072,526 (147,022) 925,698
Loss for the Year Ended March 31, 1991 (35,500) (35,500)
BALANCES - MARCH 31, 1991 1,937,452 194 1,072,526 (182,522) 890,198
Loss for the Year Ended March 31, 1992 (31,935) (31,935)
BALANCES - MARCH 31, 1992 1,937,452 194 1,072,526 (214,457) 858,263
The accompanying notes are an integral part of these financial statements.
Page 3 of 9
DAVIN ENTERPRISES, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY For The Period April 8, 1987 (Inception) to March 31, 1997 (Continued)
# of $.0001 Paid In Deficit Total Shares Par Value Capital Accumulated Stock- During Holders' Development Equity Stage
BALANCES - MARCH 31, 1992 1,937,452 $194 $1,072,526 $(214,457) $858,263
Loss for the Year Ended March 31, 1993 (29,060) (29,060)
BALANCES - MARCH 31, 1993 1,937,452 194 1,072,526 (243,517) 829,203
Loss for the Year Ended March 31, 1994 (21,616) (21,616)
BALANCES - MARCH 31, 1994 1,937,452 194 1,072,526 (265,133) 807,587
Loss for the Year Ended March 31, 1995 (16,623) (16,623)
BALANCES - MARCH 31, 1995 1,937,452 194 1,072,526 (281,756) 790,964
Loss for the Year Ended March 31, 1996 (254,657) (254,657)
BALANCES - MARCH 31, 1996 1,937,452 194 1,072,526 (536,413) 536,307
Net Income for the Year Ended March 31, 1997 193,505 193,505
BALANCES - MARCH 31, 1997 1,937,452 $194 $1,072,526 $(342,908) $729,812
The accompanying notes are an integral part of these financial statements.
Page 4 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Enterprise) STATEMENTS OF OPERATIONS
For The Years Ended March 31, 1997 1996 1995
Income $ -0- $ -0- $ -0-
General and Administrative Expenses Management Fees 9,600 9,600 9,600 Professional Fees 23,163 11,532 8,327 Investor Relations and Research 5,962 1,722 1,867 Miscellaneous Expenses 4,557 596 359
(43,282) (23,450) (20,153)
Other Income Interest Income 2,442 4,131 4,390
(Loss) Before Franchise Taxes and Extraordinary Item (40,840) (19,319) (15,763)
Franchise Taxes (Note 6) 733 260 860
(Loss) Before Extraordinary Item (41,573) (19,579) (16,623)
Extraordinary Item Unrealized (Loss) Appreciation of Investment (Note 3) 235,078 (235,078) -0-
Net Income (Loss) $ 193,505 $(254,657) $ (16,623)
Net Income (Loss) Per Share $0.10 $(.13) $(.01)
Weighted Average Number of Shares 1,937,452 1,937,452 1,937,452
Cumulative Amounts From Inception Income $ -0- Expenses (409,525) Interest Income 92,032 (Loss) Before Franchise Taxes and Extraordinary Item (317,493) Franchise Taxes (25,415) (Loss) Before Extraordinary Item (342,908) Extraordinary Item -0- (Loss) $(342,908)
The accompanying notes are an integral part of these financial statements.
Page 5 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
For The Years Ended Cumulative March 31, Amounts From 1997 1996 1995 Inception
Cash Flows From Operating Activities:
Net Income (Loss) $ 193,505 $(254,657) $(16,623) $ (342,908) (Increase) Decrease in Other Assets 5,000 -0- -0- (1,300) Increase (Decrease) in Accrued Expenses and Taxes 1,533 -0- -0- 2,283
Net Cash Provided By (Used In) Operating Activities 200,038 (254,657) (16,623) (341,925)
Funds Provided By (Used In) Investing Activities: Investment-Target Vision Inc. -0- -0- -0- (685,078) Net Funds Provided By (Used In) Investing Activities -0- -0- -0- (685,078)
Funds Provided By (Used In) Financing Activities: Proceeds From Issuance of Common Stock and Warrants, Net of Offering Costs of $68,705 -0- -0- -0- 1,072,720 Write (Up) Down of Investment (235,078) 235,078 -0- -0- Net Funds Provided By (Used In) Financing Activities (235,078) 235,078 -0- 1,072,720
Net Increase (Decrease) In Cash (35,040) (19,579) (16,623) 45,717
Cash and Cash Equivalents - Beginning of Period 80,757 100,336 116,959 -0-
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 45,717 $ 80,757 $100,336 $ 45,717
Supplemental Cash Flow Disclosure: Income Taxes Paid $ -0- $ 260 $ 860 $ 24,682 Interest Paid -0- -0- -0- -0-
Disclosure of Accounting Policy:
Cash equivalents consist of highly liquid, short-term investments with maturities of 90 days or less.
The accompanying notes are an integral part of these financial statements.
Page 6 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Enterprise) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
Note 1: ORGANIZATION AND NATURE OF OPERATIONS
Davin Enterprises, Inc. (Davin) was organized under the laws of Delaware on April 8, 1987 to function initially as an inactive publicly held corporation pursuing a combination with a privately held business engaged in any area of business.
Davin is located in New York. Davin is considered a Development Stage Enterprise as it has not begun any commercial operation. Davin's principal assets are cash and an investment in a private company.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL INFORMATION
Davin Enterprises, Inc. was organized under the laws of Delaware on April 8, 1987 to function initially as an inactive publicly held corporation pursuing a combination with a privately held business engaged in any area of business.
Costs associated with its proposed initial public offering have been charged directly to paid in capital in excess of par value.
CASH
Cash equivalents consist of highly liquid, short-term investments with maturities of 90 days or less.
INCOME TAXES
During 1993, the Company adopted Statement of Financial Accounting Standards No. 109(SFAS 109), Accounting for Income Taxes. SFAS 109 requires an asset and liability approach to measuring deferred income taxes. Previous standards required an income statement approach. The cumulative effect of this change in the method of accounting for income taxes was not material.
PREPARATION OF FINANCIAL STATEMENTS
Preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the use of management's estimates, primarily related to the fair values of investments. Accordingly, actual results could differ from those estimates.
Note 3: INVESTMENT - TARGET VISION, INC., AT LOWER OF COST OR FAIR VALUE
On April 21, 1988, the Company concluded an agreement with Target Vision, Inc. ("TVI") for their merger, which agreement was subsequently terminated.
Page 7 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Enterprise) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 (Continued)
As part of the merger agreement, the Company had agreed to lend TVI up to $800,000 from the proceeds of Class "A" and Class "B" warrants exercised. The Company advanced $685,078 to TVI. Subsequently, litigation ensued relating to the note with TVI, which was settled on June 28, 1991.
Pursuant to the Company's receipt of 2,883,333 shares of TVI common stock, representing approximately 9.1% of the outstanding stock, the action was discontinued. The implementation of the settlement agreement took place on July 31, 1991. Therefore, the loan receivable was reclassified to an investment in common stock. The cost of this investment is $685,078, which was the carrying amount of the loan.
EXTRAORDINARY ITEM
In the first quarter of fiscal year 1996 a sale of TVI stock occurred. The sale was by an unrelated shareholder and resulted in a complete liquidation of that stockholders interest. The current financial statements reflect a $235,078 extraordinary write up of the Company's investment to reflect management's estimate of fair value, as there currently is no market for TVI stock. The fair value was estimated based primarily on the financial condition and operating results of TVI and not the single liquidation of a minority shareholder's interest. Audited financial information of TVI for the year ended September 30, 1996 follows:
Total Assets $4,684,632 Stockholders' Equity 1,176,821 Revenues 8,616,999 Net Income 797,050
Note 4: DEFERRED ACQUISITION COSTS
The Company retained a business brokerage firm ("BBF") to locate business opportunities. A good faith non refundable deposit was placed with the broker. The Company ceased using the services of BBF, the good faith deposit was forfeited and was charged to operations.
Note 5: RELATED PARTY TRANSACTIONS
The Company entered into an oral agreement with Modern Technology Corp., a principal shareholder, to provide services and the partial use of its office to the Company for the sum of $800 per month since July 1, 1991. Arthur Seidenfeld, president of the Company, is also president of Modern Technology Corp.
Page 8 of 9 DAVIN ENTERPRISES, INC. (A Development Stage Enterprise) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 (Continued)
Note 6: FRANCHISE TAX
Franchise taxes represent payment of New York State and New York City taxes. No federal income tax was due as the Company has generated a loss since inception. The Company has available approximately $320,000 of Net Operating Loss (NOL) carryforwards which can be used to offset future income. These NOL's expire between the years 2003 and 2010. The tax benefit relating to these NOL's has been fully reserved in the valuation allowance account since the Company has never had taxable income and the realization of these benefits is highly uncertain.
Note 7: CONTINGENCIES
Certain officers and directors of the company have been included as defendants in a class action entitled "Barker et al v. Power Securities Corp., et al" in the Western District of New York, which action alleges violations of the securities laws, in trading certain securities including those of the company and its affiliated company, Daine Industries Inc., by all of the defendants. Certain officers and directors of the company, who are also officers and directors of Daine Industries Inc., deny the allegations and believe the suit to be without merit. The alleged violations refer to Section 10b and Rule 10b-5 of the Securities and Exchange Act of 1934.
Note 8: POSTRETIREMENT EMPLOYEE BENEFITS
The company does not have a policy to cover employees for any health care or other welfare benefits that are incurred after employment (postretirement). Therefore, no provision is required under FAS'S 106 or 112.
Note 9: STOCK SPLIT
On May 29, 1996 the company declared a reverse stock split. The company effected a one (1) for one hundred (100) reverse split and reduced the number of authorized shares from 250,000,000 to 50,000,000. All share and per share amounts presented in these financial statements have been adjusted to reflect this reverse stock split on a retroactive basis.
Page 9 of 9
Our examination was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The information contained in the following Schedules is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Securities and Exchange Commission. Such information has been subjected to the auditing procedures applied in the examination of the basic financial statements and, in our opinion, is fairly stated in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
GREENBERG & COMPANY, LLC
Springfield, New Jersey June 17, 1997