Dwight, you asked me today for some proof that Lents is unstoppable in
his effort to keep his scamming alive. Well, here's some proof...
TWeeTI gives FSG back to Lents with a bye bye present that you will
recall was 5 million bucks or close to it. Then look what Lents and
Kelman did with FSG...
>>>>>>
FSGI CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
FSGI Corporation (the Company) was incorporated under the laws of the State of Florida on May 15, 1997. On May 15,
1997, the Company acquired all of the outstanding stock of Financial Standards Group, Inc. ("FSG"). FSG is primarily
engaged to provide accounting services to assist credit unions and their supervisory committees in performing comprehensive
internal and regulatory compliance audits in satisfaction of their statutory requirements. The Company also provides various
other auditing, accounting and managerial advisory services to the credit union industry but does not perform audits of financial
statements. FSG was a subsidiary of TWTI, Inc., a public company who subsequent to the acquisition date, went into Chapter
11.
In connection with the acquisition, the Company entered into a $50,000 note payable. The negative goodwill resulting from this
acquisition is being amortized on the straight-line method over 60 months. The total cost of the acquisition was $50,000 and the
transaction is accounted for as a purchase. The excess of the fair value of the net assets of FSG exceeded the cost by $31,600
(negative goodwill).
Principles of Consolidation
The consolidated financial statements include the accounts of FSGI Corporation and its wholly-owned subsidiary, FSG. All
intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers all short-term, highly liquid investments with
a maturity of one year or less to be cash equivalents. As of September 30, 1997, the Company had no cash equivalents.
Income Taxes
The Company uses Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS 109, the deferred tax liability is determined based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these
differences reverse.
Revenue Recognition
Revenue is recognized as earned as services are performed.
Recent Pronouncements
In February 1997, the FASB issued Statement No. 129, "Disclosure of Information About Capital Structure" ("FAS 129'').
Since the Company has only one class of shares, which is adequately disclosed on the face of the balance sheet, the adoption
of FAS 129 will have no impact on the Company's financial statements.
In September 1997, the FASB issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income" ("FAS 130"). FAS 130 is effective for financial statements of periods beginning subsequent to December 15, 1997,
but early adoption is permitted. The Company presents adequately all components of comprehensive income in the statement of
shareholders' equity.
Amortization of Negative Goodwill
The excess of the fair value of net assets of companies acquired over the purchase price of those companies at dates of
acquisition is being amortized into income on the straight-line method over 60 months. The current amortization of the excess of
fair value of net assets of companies acquired over cost is $2,370 for the period May 15, 1997 (Date of Inception) to
September 30, 1997.
Financial Instruments and Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash and temporary
investments and accounts receivable. The Company invests its excess cash in bank accounts with major financial institutions and
the carrying value approximates market value. The Company has not experienced any significant losses in such accounts. The
Company believes it is not exposed to any significant credit risk or either cash and cash equivalents or accounts receivable.
Use of Estimates
The preparation of the consolidated 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 consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 - GOING CONCERN CONSIDERATION
Since inception, the Company has incurred losses and as of September 30, 1997, has an accumulated deficit of $134,857 and
a working capital deficiency of $55,617.
The Company's plans to achieve profitable operations through cost cutting and revenue raising, should result in a significant
decrease in operating losses.
There can be no assurance that such cost cutting and revenue raising programs will. be effective all of which are necessary to
meet the Company's obligations over the next year.
NOTE 3 - ACQUISITION
On May 15, 1997, the Company acquired all of the assets and liabilities of Financial Standrads Group, Inc. This transaction
has been accounted for as a purchase.
The following are the net assets acquired:
Current assets primarily cash, accounts receivable, prepaid expenses and
deposits.
$ 162,441
Accounts payable and other liabilities.
-80,841
Excess of fair value of assets of Company acquired over cost.
-31,600
50,000
NOTE 4 - LONG-TERM DEBT
At September 30, 1997 long-term debt consisted of the following:
Promissary Note Payable, Interest Payable at a rate of 1% above prime
will accrue, starting May 15, 1998. Interest shall be paid semi-annually
in arrears during the term commencing November 15, 1998. The
principle and any unpaid interest shall be due on May 15, 2002.
$ 50,000
Less Current Maturities
-
50,000
At September 30, 1997 , principle payments required during the next five years and thereafter are as follows:
For the Year Ended September 30,
Amount
1998
$ -
1999
-
2000
-
2001
-
2002
50,000
50,000
Note 5 - COMMITMENTS
The Company leases office locations and vehicles under leases classified as operating leases.
Total lease expense for the period ended September 30,1997 was $5,696.
Generally, the lease agreements for the office locations require fixed rental payments. In addition, certain lease agreements
provide for renewal options and rental esclations at specific intervals.
At September 30, 1997 minimum annual rental commitments under non-cancelable operating leases are as follows:
Fiscal years ending Septmeber 30,
1998
$ 17,203
1999
10,137
2000
8,285
2001
8,285
2002
2,072
45,982
NOTE 6 - FINANCIAL INSTRUMENTS
The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between
willing parties. The carrying amounts of cash, accounts receivable, other assets, accounts payable and accrued expenses
approximate fair value because of the short maturity of those instruments. The fair value of long term debt - note payable
approximates the carrying value due to the nature of the interest rate by a function of the prime rate at any given time.
NOTE 7 - INCOME TAXES
At September 30, 1997, the Company has net operating loss carry forwards of approximately $135,000 that will expire in the
year 2012. Such net operating losses are available to offset future taxable income, if any. As the utilization of such operating
losses for tax purposes is not assured, the deferred tax asset has been fully reserved through the recording of a 100% valuation
allowance. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an
annual limitation on the use of the net operating lass carry forward.
The deferred tax asset due to the net operating loss carry forward for the period from May 15, 1997 (date of inception) to
September 30, 1997 amounted to $48,600 and has been fully reserved through the recording of the 100% valuation reserve.
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to be continued... |
