10KSB: Optional form for annual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]
Published on March 28, 2003
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2002
[ ] Transition report under section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ___________________ to ______________
Commission File Number 000-25809
SICLONE INDUSTRIES, INC.
(Name of small business issuer in its charter)
DELAWARE 87-042699
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6269 JAMESTOWN COURT, SALT LAKE CITY, UTAH 84121
(Address of principal executive offices)
Issuer's telephone number, including area code 801-566-6627
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $0.001
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer's revenue for its most recent fiscal year was $-0-.
The issuer's common stock is listed on the OTC Bulletin Board under the symbol
SICI. There was no active market and no trading volume for the issuer's common
stock during fiscal 2002. Therefore the aggregate market value of voting stock
held by non-affiliates is deemed to be $-0-.
At December 31, 2002, the issuer had 23,810,000 shares of common stock, par
value $.001 outstanding.
Transitional Small Business Format: Yes [ ] No [ X ]
Documents incorporated by reference: none
(Inapplicable items have been omitted)
2
PART I
FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.
ITEM 1. DESCRIPTION OF BUSINESS.
Siclone Industries, Inc., originally incorporated in Delaware on November 1,
1985 as McKinnely Investments, Inc. The company changed its name to Accoline
Industries, Inc. on November 5, 1986 and again changed its name to Siclone
Industries, Inc. on May 24, 1988.
We have not had active business operations inception and are considered a
development stage company. In 1993, we entered into an agreement with Bradley
S. Shepherd in which Mr. Shepherd agreed to become an officer and director of
the Company and use his best efforts to organize and update our books and
records and to seek business opportunities for acquisition or participation.
Siclone intends to seek, investigate, and if warranted, acquire an interest in a
business opportunity. We will not restrict our search to any particular
industry or geographical area and may, therefore, engage in essentially any
business in any industry. Our management has unrestricted discretion in seeking
and participating in a business opportunity, subject to the availability of such
opportunities, economic conditions and other factors.
The selection of a business opportunity in which to participate is complex and
extremely risky and will be made by management in the exercise of its business
judgment. There is no assurance that we will be able to identify and acquire
any business opportunity which will ultimately prove to be beneficial to the
Company and its shareholders.
Our activities are subject to several significant risks which arise primarily as
a result of the fact that Siclone has no specific business and may acquire or
participate in a business opportunity based on the decision of management which
will, in all probability, act without the consent, vote, or approval of our
shareholders.
SOURCES OF OPPORTUNITIES
We anticipate that business opportunities may arise from various sources,
including our officers and directors, professional advisers, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals.
We will seek potential business opportunities from all known sources, but will
rely principally on the personal contacts of our officers and directors as well
as indirect associations between them and other business and professional
people. Although we do not anticipate engaging professional firms specializing
in business acquisitions or reorganizations, such firms may be retained if
management deems it in our best interests. In some instances, we may publish
notices or advertisements seeking a potential business opportunity in financial
or trade publications.
3
CRITERIA
We will not restrict our search to any particular business, industry or
geographical location. Siclone may acquire or enter into a business in any
industry and in any stage of development. This may include a business or
opportunity involving a "start up" or new company. In seeking a business
venture, management's decision will not be controlled by an attempt to take
advantage of an anticipated or perceived appeal of a specific industry,
management group, or product or industry, but will be based upon the business
objective of seeking long-term capital appreciation in the real value of the
Company.
In analyzing prospective business opportunities, management will consider such
matters as the available technical, financial and managerial resources; working
capital and other financial requirements; the history of 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 the management; the potential for further research, development or
exploration; the potential for growth and expansion; the potential for profit;
the perceived public recognition or acceptance of products, services, trade or
service marks, name identification; and other relevant factors.
Generally, management will analyze all available factors in the circumstances
and make a determination based upon a composite of available facts, without
reliance upon any single factor as controlling.
METHODS OF PARTICIPATION OF ACQUISITION
Specific business opportunities will be reviewed and, on the basis of that
review, the legal structure or method of participation deemed by management to
be suitable will be selected. Such structures and methods may include, but are
not limited to, leases, purchase and sale agreements, licenses, joint ventures,
other contractual arrangements, and may involve a reorganization, merger or
consolidation transaction. The Company may act directly or indirectly through
an interest in a partnership, corporation, or other form of organization.
PROCEDURES
As part of the ongoing investigation of business opportunities, officers and
directors may meet personally with management and key personnel of the firm
sponsoring the business opportunity, visit and inspect material facilities,
obtain independent analysis or verification of certain information provided,
check references of management and key personnel, and conduct other reasonable
measures.
Management will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
product, service and company history; management resumes; financial information;
available projections with related assumptions upon which they are based; an
explanation of proprietary products and services; evidence of existing patents,
trademarks or service marks or rights thereto; present and proposed forms of
compensation to management; a description of transactions between the
prospective entity and its affiliates; relevant analysis of risks and
competitive conditions; a financial plan of operation and estimated capital
requirements; and other information deemed relevant.
4
COMPETITION
We expect to encounter substantial competition in our efforts to acquire a
business opportunity. The primary competition is from other companies organized
and funded for similar purposes, small venture capital partnerships and
corporations, small business investment companies and wealthy individuals.
EMPLOYEES
We do not currently have any employees. We rely upon the efforts of our
officers and directors to conduct our business.
ITEM 2. DESCRIPTION OF PROPERTY.
We do not own or lease any property. We utilize office space in the residence
of Bradley S. Shepherd at no cost. Until we pursue a viable business
opportunity and recognize income, we will not seek independent office space.
ITEM 3. LEGAL PROCEEDINGS.
To the best of our knowledge no legal proceedings are threatened or pending
against Siclone or any of our officers or directors. Further, none of our
officers, directors or affiliates are parties against Siclone or have any
material interests in actions that are adverse to our interests.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our common stock is listed on the Over the Counter Bulletin Board under the
symbol SICI. As of December 31, 2002, we had approximately 281 shareholders
holding 23,810,000 shares of common stock. Of the issued and outstanding common
stock, 1,110,000 are free trading, the balance are restricted stock as that term
is used in Rule 144.
5
The above quotations, as provided by the National Quotation Bureau, LLC,
represent prices between dealers and do not include retail markup, markdown or
commission. In addition, these quotations do not represent actual transactions.
There has not been an active market for our stock since 1990. We have not paid
or declared any dividends since inception and do not intend to declare any such
dividends in the foreseeable future. Our ability to pay dividends is subject to
limitations imposed by Delaware law. Under Delaware law, dividends may be paid
to the extent that a corporation's assets exceed its liabilities and it is able
to pay its debts as they become due in the usual course of business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
YEARS ENDED DECEMBER 31, 2002 AND 2001
Siclone has not generated any revenues through December 31, 2002. Expenses for
the year ended December 31, 2002 were $7,862 compared to expenses of $4,959
during 2001. Expenses during both years consisted mainly of professional, legal
and accounting costs related to our public filings.
As a result of the foregoing factors, we realized a net loss of $7,862 for the
year ended December 31, 2002, compared to a net loss of $4,959 for the year
ended December 31, 2001.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2002 our total assets consisted of $209 in cash. Total
liabilities at December 31, 2002 were $23,583 consisting of $21,712 in accounts
payable and $1,871 in accrued interest. At December 31, 2001, the Company had
$347 in cash and liabilities consisting of $11,293 in accounts payable.
We anticipate that our operating expenses for the next twelve months will be
approximately $5,000. In recent years we have relied on advances from our
president to cover our operating costs. Management anticipates that we will
receive sufficient advances from our president to meet our needs through the
next 12 months. However, there are no formal agreements or understandings to
that effect.
PLAN OF OPERATION
Our management intends to actively seek business opportunities during the next
twelve months. If we identify a suitable business opportunity during the next
year our need for capital may change dramatically. Should we require additional
capital, we may seek additional advances from officers, sell common stock or
find other forms of debt financing. To date we have not pursued any business
opportunities and there can be no assurance that we will identify a business
venture suitable for acquisition in the future. In addition, we cannot assure
that we will be successful in consummating any acquisition on favorable terms or
that we will be able to profitably manage any business venture we acquire.
Our current operating plan is to continue searching for potential businesses,
products, technologies and companies for acquisition and to handle the
administrative and reporting requirements of a public company. To demonstrate
our commitment to maintaining ethical reporting and business practices, we have
recently adopted a Code of Ethics and Business Conduct that is attached as an
exhibit to this report.
ITEM 7. FINANCIAL STATEMENTS.
Our financial statements appear at the end of this report beginning with the
Index to Financial Statements on page 11.
6
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the name, age, position and office term of each
executive officer and director of the Company.
All directors serve until the next annual stockholders meeting or until their
successors are duly elected and qualified. All officers serve at the discretion
of the Board of Directors.
Set forth below is certain biographical information regarding our executive
officer and director:
BRADLEY S. SHEPHERD, DIRECTOR, PRESIDENT, SECRETARY/TREASURER. Mr. Shepherd is
the owner and manager of Shepherd's Allstar Lanes, Inc., a bowling center,
restaurant, and lounge located in West Jordan, Utah. After managing the
business for three years, Mr. Shepherd purchased the business in June of 1993.
Mr. Shepherd also manages and is trustee for the Roger L. Shepherd Family Trust,
which owns and leases commercial office and warehouse buildings and residential
properties in the Salt Lake City area.
OTHER REPORTING COMPANY ACTIVITIES. Bradley S. Shepherd is currently an officer
and director of Patriot Investment Corporation, a reporting company, which is
seeking to acquire a business opportunity. The possibility exists that Mr.
Shepherd could become an officer and/or director of other reporting companies in
the future, although he has no intention of doing so at the present time.
Certain conflicts of interest are inherent in the participation of our sole
officer and director as management in other reporting companies, which may be
difficult, if not impossible, to resolve in all cases in our best interests.
Failure by management to conduct Siclone's business in its best interests may
result in liability of management to our shareholders.
ITEM 10. EXECUTIVE COMPENSATION
Our officers and directors do not receive any compensation for services
rendered, have not received such compensation in the past, and are not accruing
any compensation pursuant to any agreement with Siclone. Our officers and
directors will not receive any finder's fee as a result of their efforts to
implement the business plan outlined herein. However, our officers and
directors anticipate receiving benefits as beneficial shareholders of our common
stock.
We have not adopted any retirement, pension, profit sharing, stock options,
insurance programs or other similar programs for the benefit of our employees.
7
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENT.
There are no compensatory plans or arrangements with respect to any officer,
director, manager or other executive which would in any way result in payments
to any such person because of his resignation, retirement, or other termination
of employment with Siclone or its subsidiaries, or any change in control of the
Company, or a change in the person's responsibilities following a change of
control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of December 31, 2002, the number and
percentage of the 23,810,000 shares of outstanding common stock which, according
to the information supplied to the Company, were beneficially owned by (i) each
person who is currently a director, (ii) each executive officer, (iii) all
current directors and executive officers as a group and (iv) each person who, to
our knowledge, is the beneficial owner of more than 5% of the outstanding common
stock. Except as otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Our president, Mr. Brad Shepherd allows us to use office space at his residence
at no charge to the Company.
During 2001, Mr. Shepherd advanced $5,512 to cover our operating expenses.
During 2002, Mr. Shepherd advanced $6,000 to cover our operating expenses.
Through December 31, 2002 our president has advanced a total of $21,712 to cover
our operating expenses. Interest has been imputed at 10%. Accrued interest at
December 31, 2002 was $1,871. The advances and accrued interest are payable on
demand.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 2002.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Our president, Mr. Brad Shepherd allows us to use office space at his residence
at no charge to the Company.
During 2001, Mr. Shepherd advanced $5,512 to cover our operating expenses.
During 2002, Mr. Shepherd advanced $6,000 to cover our operating expenses.
Through December 31, 2002 our president has advanced a total of $21,712 to cover
our operating expenses. Interest has been imputed at 10%. Accrued interest at
December 31, 2002 was $1,871. The advances and accrued interest are payable on
demand.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 2002.
8
ITEM 14. CONTROLS AND PROCEDURES
Within the 90-day period prior to the date of this report, we evaluated the
effectiveness and operation of our disclosure controls and procedures pursuant
to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are effective. There have
been no significant changes in internal controls or other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SICLONE INDUSTRIES, INC.
Date: March 27, 2003 /s/Bradley S. Shepherd
-------------------------
Bradley S. Shepherd
Chief Executive Officer
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: March 27, 2003 /s/Bradley S. Shepherd
-------------------------
Bradley S. Shepherd
Director
9
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bradley S. Shepherd, the Chief Executive Officer and Chief Financial Officer
of Siclone Industries, Inc. (the "Company"), certify that:
1. I have reviewed this annual report on Form 10-KSB of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
March 27, 2003 /s/Bradley S. Shepherd
Bradley S. Shepherd
Chief Executive Officer
Chief Financial Officer
10
11
INDEPENDENT AUDITORS' REPORT
- ------------------------------
Board of Directors
Siclone Industries, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Siclone Industries, Inc. (a
development stage company) as of December 31, 2002 and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 2002 and 2001 and from inception on November 1, 1985 through
December 31, 2002. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Siclone Industries, Inc. (a
development stage company) as of December 31, 2002 and the results of its
operations and its cash flows for the years ended December 31,2002 and 2001 and
from inception on November 1, 1985 through December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations and has no
operating capital which together raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
HJ & Associates, LLC
- -------------------------
Salt Lake City, Utah
March 20, 2003
12
The accompanying notes are an integral part of these financial statements
13
The accompanying notes are an integral part of these financial statements
14
The accompanying notes are an integral part of these financial statements
15
The accompanying notes are an integral part of these financial statements
16
The accompanying notes are an integral part of these financial statements
17
The accompanying notes are an integral part of these financial statements
18
The accompanying notes are an integral part of these financial statements
19
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2002 and 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company was incorporated in the State of Delaware on November 1, 1985
under the name McKinnely Investments, Inc. In November 1986, the Company
changed its name to Acculine Industries, Incorporated and in May 1988 to
Siclone Industries, Inc.
The Company was incorporated for the purpose of providing a vehicle, which
could be used to raise capital and seek business opportunities.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a calendar year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Basic Loss Per Share
The computations of basic loss per share of common stock are based on the
weighted average number of shares outstanding during the period.
20
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2002 and 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Provision for Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax assets are recognized
for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December
31, 2002 and 2001:
The income tax provision differs from the amount of income tax determined
by applying the U.S. federal income tax rate to pretax income from
continuing operations for the years ended December 31, 2002 and 2001 due to
the following:
At December 31, 2002, the Company had net operating loss carryforwards of
approximately $110,000 that may be offset against future taxable income
from the year 2002 through 2022. No tax benefit has been reported in the
December 31, 2002 financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986,
net operating loss carryforwards for Federal income tax reporting purposes
are subject to annual limitations. Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.
21
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2002 and 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
g. Newly Issued Accounting Pronouncements
In April 2002, the FASB issued Statement No. 145 "Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and
Technical Corrections" (SFAS 145). SFAS 145 will require gains and losses
on extinguishments of debt to be classified as income or loss from
continuing operations rather than as extraordinary items as previously
required under Statement of Financial Accounting Standards No. 4 (SFAS 4).
Extraordinary treatment will be required for certain extinguishments as
provided in APB Opinion No. 30. SFAS 145 also amends Statement of Financial
Accounting Standards No. 13 to require certain modifications to capital
leases be treated as a sale-leaseback and modifies the accounting for
sub-leases when the original lessee remains a secondary obligor (or
guarantor). SFAS 145 is effective for financial statements issued after May
15, 2002, and with respect to the impact of the reporting requirements of
changes made to SFAS 4 for fiscal years beginning after May 15, 2002. The
adoption of the applicable provisions of SFAS 145 did not have an effect on
our financial statements.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 nullifies Emerging
Issues Task Force Issue No. 94-3 "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 applies to
costs associated with an exit activity that does not involve an entity
newly acquired in a business combination or with a disposal activity
covered by SFAS 144. SFAS 146 is effective for exit or disposal activities
that are initiated after December 31, 2002, with earlier application
encouraged. We are currently reviewing SFAS 146 and intend to implement it
no later than January 1, 2003.
22
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2002 and 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Newly Issued Accounting Pronouncements (Continued)
In October 2002, the FASB issued Statement No. 147 "Acquisitions of Certain
Financial Institutions - an amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9" (SFAS 147). SFAS 147 removes acquisitions of
financial institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be accounted for in
accordance with FASB Statements No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. Thus, the requirement in
paragraph 5 of Statement 72 to recognize (and subsequently amortize) any
excess of the fair value of liabilities assumed over the fair value of
tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset no longer applies to acquisitions within the scope of this
Statement. In addition, this Statement amends FASB Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, to include
in its scope long-term customer-relationship intangible assets of financial
institutions such as depositor- and borrower-relationship intangible assets
and credit cardholder intangible assets. Consequently, those intangible
assets are subject to the same undiscounted cash flow recoverability test
and impairment loss recognition and measurement provisions that Statement
144 requires for other long-lived assets that are held and used. SFAS 147
is effective October 1, 2002. The adoption of the applicable provisions of
SFAS 147 did not have an effect on our financial statements.
NOTE 2 - RELATED PARTY TRANSACTIONS
During 1993, the Company's president purchased 1,000,000 shares of common
stock for $1,000. During 1995, the Company's president purchased an
additional 11,000,000 shares of common stock for $11,000.
During 1999, the Company's president loaned $5,000 to cover operating
expenses. During 2000, the Company's president loaned $5,200 to cover
operating expenses. During 2001, the Company's president loaned $5,512 to
cover operating expenses. During 2002, the Company's president loaned
$6,000 to cover operating expenses. Interest has been imputed at 10%. The
Company has accrued $1,871 of interest for the year ended December 31,
2002. The amounts are due on demand.
During the years ended December 31, 2002 and 2001 various services were
contributed to the Company by its President. The aggregate value of these
contributed services was determined to be immaterial to the financial
statements.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company has
little cash and has experienced losses from inception. Without realization
of additional adequate financing, it would be unlikely for the Company to
pursue and realize its objectives. The Company intends to seek a merger
with an existing operating company. In the interim, an officer of the
Company has committed to meeting its operating expenses.
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