Item 1. - BUSINESS
The Company was incorporated in Minnesota in February, 1959. There were several name changes, and in April, 1988 the name was changed to the present name.
The Company was engaged in the business of assisting new prospects in setting up their own retail clothing and shoe stores. Services included store fixtures and beginning inventory, management training and consulting, assistance with the selection of accessories and grand opening.
The Company acted as a holding company for High Country Fashions, Inc., and, on April 29, 1997, abandoned its investment in High Country Fashions, Inc. and approved a transfer of High Country Fashions, Inc. to Continental Casuals, Ltd., a company owned by the Company's President and majority stockholder. The Company recorded a gain on this abandonment and resulting debt cancellation of $1,600,000 because the liabilities of High Country Fashions, Inc. exceeded its assets.
The transaction left the Company with no assets and no business.
Item 2.
Item 2. - PROPERTY
None
Item 3.
Item 3. - LEGAL PROCEEDINGS
The Company's subsidiary, High Country Fashions, Inc. filed a petition in the Bankruptcy Court on January 7, 1998.
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 STOCKHOLDER MATTERS
The Company's common stock is traded on the Minneapolis local over the counter market. There were no trades in fiscal 1998.
There are 381 shareholders of record.
The Company has never paid a dividend, cash or otherwise.
Item 6.
Item 6. - SELECTED FINANCIAL DATA
Fiscal Years Ended April 30, ---------------------------- 1999 1998 ---- ----
Income Statement Data - --------------------- Net Sales $ -- $ -- Net Income (loss) $(1,040) $(1,732) Per Share Data - -------------- Net Income (loss) $ -- $ --
As of April 30, --------------- 1999 1998 ---- ----
Balance Sheet Data - ------------------ Total Assets $ -- $ -- Total Liabilities $ 35,791 $ 34,751 Stockholders' Equity (Deficit) $(35,791) $(34,751)
Item 7.
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company acted as a holding company for High Country Fashions, Inc., and, on April 29, 1997, abandoned its investment in High Country Fashions, Inc. and approved a transfer of High Country Fashions, Inc. to Continental Casuals, Ltd., a company owned by the Company's President and majority stockholder. The Company recorded a gain on this abandonment and resulting debt cancellation of $1,600,000 because the liabilities of High Country Fashions, Inc. exceeded its assets.
The transaction left the Company with no assets and no business.
Item 8.
Item 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are attached following Item 14.
Item 9.
Item 9. - DISAGREEMENTS 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, with a brief description, are as follows:
Name Age Position - ---- --- --------
Alan Burke 34 President, Director
Michael P. Johnson 37 Secretary, Director
Alan Burke, he is self employed, and for more than the past 5 years has been a financial consultant to foreign companies seeking financial opportunities in the United States.
Michael P. Johnson, has the President and owner of MP Johnson Construction, Inc. since 1988.
The directors of the Company are elected annually by the shareholders for a term of one year or until their successors are elected and qualified. The officers serve at the pleasure of the Board of Directors.
Item 11.
Item 11. - EXECUTIVE COMPENSATION.
There was no executive compensation in 1998 and 1999.
Item 12.
Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
There are presently 5,425,920 shares of the Company's common shares outstanding. The following table sets forth the information as to the ownership of each person who, as of the date of this Offering Circular, owns of record, or is known by the Company to own beneficially, more than five per cent of the Company's common stock, and the officers and directors of the Company.
Shares of Percent of Ownership Name Common Stock - --------------------------------------------------------------------------
Stephen C. Loughlin 3,000,000 55%
Directors and Officers None as a group
Item 13.
Item 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company acted as a holding company for High Country Fashions, Inc., and, on April 29, 1997, abandoned its investment in High Country Fashions, Inc. and approved a transfer of High Country Fashions, Inc. to Continental Casuals, Ltd., a company owned by the Company's President and majority stockholder. The Company recorded a gain on this abandonment and resulting debt cancellation of $1,600,000 because the liabilities of High Country Fashions, Inc. exceeded its assets.
PART IV
Item 14.
Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Attached are the Financial Statements and Independent Auditor's Report on Examination of Financial Statements for the years ended April 30, 1999, April 30, 1998 and April 30, 1997.
(b) Attached are the following Financial Statement Schedules and Auditors Report on Schedules,
None
All schedules are omitted because they are not required or not applicable or the information is shown in the financial statements or notes thereto.
(c) No report was filed on Form 8-K.
(d) There are no exhibits.
HIGH COUNTRY VENTURES, INC.
FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
Page ----
Independent Auditors' Report..................................................1
Financial Statements:
Balance Sheets.......................................................2
Statements of Operations.............................................3
Statements of Stockholders' Equity (Deficit).........................4
Statements of Cash Flows.............................................5
Notes to Financial Statements........................................6
CALLAHAN, JOHNSTON & ASSOCIATES, LLC CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors High Country Ventures, Inc. Minneapolis, Minnesota
We have audited the accompanying balance sheets of High Country Ventures, Inc. as of April 30, 1999 and 1998, and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of High Country Ventures, Inc. as of April 30, 1999 and 1998, and the results of operations, stockholders' equity (deficit) and cash flows for the years then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has no viable operations or significant assets and is dependent upon shareholders to provide sufficient working capital to maintain the integrity of the corporate entity. These circumstances create substantial doubt the Company's ability to continue as a going concern and are discussed in Note 2. The financial statements do not contain any adjustments that might result from the outcome of these uncertainties.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC Minneapolis, Minnesota July 14, 2000
- --------------------------------------------------------------------------------
7850 METRO PARKWAY, SUITE 207, MINNEAPOLIS, MN 55425 TELEPHONE: (952)858-7207 FAX: (952)858-7202 E-MAIL: callahan_johnston@msn.com
HIGH COUNTRY VENTURES, INC.
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements.
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
The accompanying notes are an integral part of these financial statements.
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF CASH FLOWS Increase (Decrease) In Cash
The accompanying notes are an integral part of these financial statements.
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company was incorporated on February 11, 1959, under the laws of the State of Minnesota. On April 13, 1988, the Company changed its name to High Country Ventures, Inc.
High Country Ventures, Inc. formerly acted as a holding company for its wholly-owned subsidiary, High Country Fashions, Inc. (HCF). On April 29, 1997 the Company abandoned its investment in HCF and approved the transfer of HCF to Continental Casuals, LTD, a Company owned by High Country Ventures, Inc.'s then President and then majority stockholder. The Company recorded a gain on this abandonment and resulting debt cancellation of $1,600,000 because the liabilities of HCF exceeded its assets.
The Company currently has no operations.
Risks, Estimates and Uncertainties
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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.
(Continued)
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Income
SFAS No. 130 establishes standards for the reporting and disclosure of comprehensive income and its components which will be presented in association with our Company's financial statements. Comprehensive income is defined as the change in a business enterprise's equity during a period arising from transactions, events or circumstances relating to nonowner sources, such as foreign currency translation adjustments and unrealized gains or losses on available-for-sale securities. It includes all changes in equity during a period except those resulting from investments by or distributions to owners. For the fiscal years ended April 30, 1999, 1998, and 1997, net income and comprehensive income were equivalent.
Earnings Per Share
The Company implemented FASB 128: Earnings Per Share. FASB 128 replaces the presentation of primary EPS with basic EPS. Basic EPS excludes dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the year. Diluted EPS reflects the potential dilution from stock options and warrants and is computed using the treasury stock method. Under the treasury stock method stock options are assumed to have been exercised at the beginning of the period if the exercise price exceeds the average market price during the period. The computation of diluted EPS does not assume conversion or exercise of securities that would have an antidilutive effect on earnings per share.
There are not outstanding stock options or warrants.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which requires the use of the "liability method" of accounting for income taxes.
(Continued)
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
NOTE 2 - CONTINUED EXISTENCE
The Company is fully dependent upon the support of certain stockholder(s) for the maintenance of its corporate status and to provide all working capital support for the Company. These stockholder(s) intend to continue to fund necessary expenses to sustain the Company. The Company is presently seeking a merger candidate and feels it will be successful in finding such a candidate.
Failure of the Company to find a merger candidate and achieve profitable operations or the failure of its stockholder(s) to fund necessary expenses of the Company could result in the Company being unable to continue as a going concern.
NOTE 3 - DISPUTED LIABILITIES
On April 29, 1997, at the time of the abandonment of High Country Fashions, Inc. (HCF) and its subsequent transfer to Continental Casuals, LTD, the Company became inactive (see Note 1). On January 7, 1998, HCF voluntarily filed a petition under Chapter 7 of the U.S. Bankruptcy Code. On July 24, 1999, the trustee for HCF's bankruptcy filed a no-asset report with the Court indicating HCF had no property available for distribution from the bankruptcy estate. On October 5, 1999, HCF's bankruptcy case was closed and all of its obligations discharged.
Although none of HCF's creditors pursued collection from the Company, in fiscal year 2000 the Company settled certain of these liabilities through payments of cash totaling $30,000 and the transfer of 100,000 of the Company's common stock owned by one of the Company's largest stockholders. Through July 14, 2000 no other creditors of HCF have contacted the Company.
NOTE 4 - INCOME TAXES
The abandonment of High Country Fashions, Inc. on April 29, 1997, resulted in debt cancellation income of $1,600,000. The Company excluded this debt cancellation from income under the insolvency exclusion allowed for under the Internal Revenue Code. Under audit the Internal Revenue Service could question the Company's use of the insolvency exclusion. The Company feels that use of the insolvency exclusion is appropriate in that the Company was insolvent, liabilities exceeded assets, immediately before and also after the debt cancellation.
(Continued)
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999, 1998 AND 1997 (UNAUDITED)
NOTE 4 - INCOME TAXES (Continued)
As a result of its exclusion of the debt cancellation income, the Company was required to reduce its tax attributes at that date. That reduced the Company's net operating loss carryforwards to zero at that date. The Company's subsequent net operating loss carryforwards are fully allowed for due to questions regarding the Company's ability to utilize these losses before they expire.
Deferred tax asset relating to net operating loss carryforwards $ 700 Valuation allowance (700) ---------
Net deferred tax asset $ -- =========
At April 30, 1999, the Company has carryforwards as follows:
Federal State --------- ---------
2013 $ 1,700 $ 1,700 2014 1,000 1,000 --------- ---------
$ 2,700 $ 2,700 ========= =========
NOTE 5 - SUBSEQUENT EVENT
Equity Infusion
On July 12, 2000, a large stockholder of the Company infused $25,000 into the Company to help settle a disputed payable (see Note 3). No additional shares were issued as part of this equity infusion.
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.
Dated September 29, 2000
HIGH COUNTRY VENTURES, INC.
by /S/ Michael P. Johnson ------------------------------------- Michael P. Johnson