SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-KSB

 

(Mark One)

[**X**] Annual report under Section 13 or 15(d) of theSecurities Exchange Act of 1934 for the fiscal year ended December 31, 20010

[   ] Transition report under Section 13 or 15(d)of the Securities Exchange Act of 1934 (*No fee required*) for thetransition period from to
               Commission file number: **000-29321**
 
**Aswan Investments, Inc.**
(Name of Small Business Issuer in Its Charter)
**Nevada**
(State or Other Jurisdiction of

Incorporation or Organization)**87-0643635**
(I.R.S. Employer

Identification No.)**1403 East 900 South Salt Lake City, Utah 84105**
(Address of Principal Executive Offices) (Zip Code)
**801) 582-9609**
(Issuer's  Telephone Number, Including Area Code)

 

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class

Common Stock ($0.001 Par Value)
Name of each Exchange on Which Registered

None
 

Check whether the issuer: (1) filed all reports required tobe 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 suchreports), and (2) has been subject to such filing requirements for the past 90days.

                           Yes **T           **No
 

Check if there is no disclosure of delinquent filers inresponse to Item 405 of Regulation S-B not contained in this form, and nodisclosure will be contained, to the best of registrant's knowledge, indefinitive proxy or information statements incorporated by reference in Part IIIof this Form 10-KSB or any amendment to this Form 10-KSB [**T**].
The issuer's total revenues for the year ended December 31,20010 were $ 0.

The aggregate market value of the registrant'scommon stock, $0.001 par value (the only class of voting stock), held bynon-affiliates is not available since Aswan Investments, Inc. has no publicallytraded market for its stock.
At December 31, 20010, the number of shares outstanding ofthe registrant's Common Stock, $0.001 par value (the only class of votingstock), was 6,564,500.** 

 

TABLE OF CONTENTS

PART I**
Item 1.                        Description of Business 

Item 2.                        Description of Property 

Item 3.                        Legal Proceedings       

Item 4.                        Submission of Matters to a Vote of Security-Holders       
**PART II**
Item 5.                       Market for Common Equity and Related Stockholder Matters       

Item 6.                        Management's Discussion and Analysis or Plan ofOperation 

Item 7.                        Financial Statements 

Item 8.                        Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 
**PART III**
Item 9.                        Directors and Executive Officers       

Item 10.                       Executive Compensation 

Item 11.                       Security Ownership of Certain Beneficial Owners andManagement 

Item 12.                       Certain Relationships and Related Transactions       

 

Item 13.                       Exhibits, List and Reports on Form 8-K 

Signatures 

Index to Exhibits 

**PART I**

**ITEM 1. DESCRIPTION OF BUSINESS**
**History**
Aswan Investments, Inc. (the"Company")was formed as a Nevada corporation on December 7, 1999, to engage in any lawfulundertaking, including but not limited to, transacting mergers and acquisitions.The Company has been in the developmental stage since inception and has neverengaged in any operational activities, other than issuing shares to itsshareholders. Accordingly, the Company may be defined as a "blankcheck"or "shell"company whose sole purpose at this time is to identify and complete a merger oracquisition with a private entity.

**General**
The Company seeks to identify and complete a merger oracquisition with a private entity whose business presents an opportunity forCompany shareholders. The Company'smanagement will review and evaluate business ventures for possible mergers oracquisitions. The Company has not yet entered into any agreement, nor does ithave any commitment or understanding to enter into or become engaged in atransaction, as of the date of this filing. Further, the business objectivesdiscussed herein are extremely general and are not intended to restrict thediscretion of the Company'smanagement.

A decision to participate in a specific business opportunitywill be made based upon a Company analysis of the quality of the prospectivebusiness opportunity'smanagement and personnel, asset base, the anticipated acceptability of business'products or marketing concepts, the merit of a business plan, and numerous otherfactors which are difficult, if not impossible, to analyze using any objectivecriteria.

**Selection of a Business**
The Company anticipates that potential business opportunitieswill be referred from various sources, including its officers and directors,professional advisors, securities broker-dealers, venture capitalists, personsinvolved in the financial community, and others who may present unsolicitedproposals. The Company will not engage in any general solicitation oradvertising for a business opportunity, and will rely on the personal contactsof its officers and directors and their affiliates, as well as indirectassociations with other business and professional people. Management'sreliance on "wordof mouth"may limit the number of potential business opportunities identified. While it isnot presently anticipated that the Company will engage unaffiliated professionalfirms specializing in business acquisitions or reorganizations, such firms maybe retained if management deems it in the best interest of the Company. Finder'sfees paid to professional acquisition firms could involve one-time cashpayments, payments based on a percentage of the business opportunity'srevenues or product sales volume, payments involving issuance of securities(including those of the Company), or any combination of these or othercompensation arrangements. Consequently, the Company is unable to predict thecost of utilizing such services. As of December 31, 20010, there have been nodiscussions, agreements or understandings with any professional advisors,financial consultants, broker-dealers or venture capitalists. The Company'spresent intentions are to rely upon its president to effect those servicesnormally provided by professional advisors or financial consultants.

The Company will not restrict its search to any particularbusiness, industry, or geographical location. Management reserves the right toevaluate and enter into any type of business in any location. In seeking abusiness venture, the decision of management will not be controlled by anattempt to take advantage of any anticipated or perceived appeal of a specificindustry, management group, product, or industry, but will be based on thebusiness objective of seeking long-term capital appreciation. The Company mayparticipate in a newly organized business venture or in a more establishedbusiness. Participation in a new business venture entails greater risks since,in many instances, management of such a venture may not have a proven trackrecord; the eventual market for such ventures product or services will likelynot be established; and the profitability of the venture will be untested andimpossible to accurately forecast. Should the Company participate in a moreestablished venture that is experiencing financial difficulty, risks may stemfrom the Company'sinability to generate sufficient funds to manage or reverse the circumstancescausing such financial problems.

The analysis of new businesses will be undertaken by or underthe supervision of the Company'sofficers and directors. In analyzing prospective businesses, Company'smanagement will consider, to the extent applicable, the available technical,financial, and managerial resources of any given business venture. Managementwill also consider the nature of present and expected competition; potentialadvances in research and development or exploration; the potential for growthand expansion; the likelihood of sustaining a profit within given time frames;the perceived public recognition or acceptance of products, services, trade orservice marks; name identification; and other relevant factors. The Companyanticipates that the results of operations of a specific business venture maynot necessarily be indicative of the potential for future earnings, which may beimpacted by a change in marketing strategies, business expansion, modifyingproduct emphasis, changing or substantially augmenting management, and otherfactors.

The Company will analyze all relevant factors and make adetermination based on a composite of available information, without reliance onany single factor. The period within which the Company will decide toparticipate in a given business venture cannot be predicted and will depend oncertain factors, including the time involved in identifying businesses, the timerequired for the Company to complete its analysis of such businesses, the timerequired to prepare appropriate documentation to effect a merger or acquisition,and other circumstances.

**Acquisition of a Business**
The implementing of a structure that will effect any givenbusiness transaction, may cause the Company to become party to a merger,consolidation, purchase and sale of assets, purchase or sale of stock, or otherreorganization involving another corporation, joint venture, partnership orlicensee. The exact structure of the anticipated business transaction cannot yetbe determined. Notwithstanding the above, the Company does not intend toparticipate in a business through the purchase of minority stock positions. Inother words, the Company does not intend to buy non-controlling interests inother businesses. Rather, its current focus is to acquire a controlling interestin a business. Upon the completion of a transaction, it is likely that theCompany'spresent management will no longer control Company affairs. Further, a majorityor all of the Company'spresent directors may, as part of the terms of a prospective businesstransaction, resign and be replaced by new directors without a vote of theCompany's shareholders.

In connection with the Company'smerger or acquisition of a business venture, the present shareholders of theCompany, including Ruairidh Campbell as the sole officer and director, may, as anegotiated part of the transaction, sell a portion or all of the Company'scommon stock held by them at a significant premium over their originalinvestment in the Company. If the Company'scurrent shareholders sell their stock as part of a merger/acquisition, they maydecide to sell a controlling interest (i.e., over 50%) of the Company to theother entity (including such other entity'sshareholders and affiliates) that participates in the merger/acquisition. Theaffiliates of the reorganization might only buy shares from Ruairidh Campbell,or they might only buy enough shares to obtain a controlling interest in theCompany. However, there is no degree of certainty that the other entity will buyany of the Company'sshares, from Ruairidh Campbell or any other shareholder. Conversely, it ispossible the other entity may offer to buy out all or most of the shareholders'stock at prices comparable to those offered to Ruairidh Campbell. It is possiblethat the entity may pay a higher price for shares belonging to insidershareholders than for shares belonging to non-insider shareholders. Although theCompany'sinsiders have no present intention to buy shares from other insiders, it is apossibility. Management does not intend to actively negotiate for, or otherwiserequire the purchase of, all or any portion of its stock as a condition to, orin connection with, any proposed merger or acquisition. Although the Company'spresent shareholders did not acquire their shares of common stock with a viewtowards any subsequent sale in connection with a business reorganization, it isnot unusual for affiliates of the entity participating in the reorganization tonegotiate to purchase shares held by the present shareholders. This is done inorder to reduce the amount of shares held by persons no longer affiliated withthe Company, and thereby reduce the potential adverse impact on the publicmarket in the Company'scommon stock that could result from substantial sales of such shares after thebusiness reorganization. Public investors will not receive any portion of thepremium that may be paid in the foregoing circumstances. Furthermore, theCompany'sshareholders may not be afforded an opportunity to approve or consent to anyparticular stock buy-out transaction.

In the event sales of shares by present shareholders of theCompany, including officers and directors, are a negotiated part of a futuremerger or acquisition, a conflict of interest may arise since directors will benegotiating for the merger or acquisition on behalf of the Company and for thesale of their shares for their own respective accounts. Where a businessopportunity is well suited for merger or acquisition by the Company, butaffiliates of the prospective business opportunity impose a condition thatmanagement sell their shares at a price which is unacceptable to them,management may not sacrifice their financial interest for the Company tocomplete the transaction. Where the business opportunity is not well suited, butthe price offered management for their shares is high, management may beinclined to effect the acquisition in order to realize a substantial gain ontheir shares in the Company. Management has not adopted any policy for resolvingthe foregoing potential conflicts, should they arise, and does not intend toobtain an independent appraisal to determine whether any price that may beoffered for their shares is fair. Shareholders must rely, instead, on theobligation of management to fulfill its fiduciary duty under state law to act inthe best interests of the Company and its shareholders.

Although the terms of any registration rights and the number ofsecurities, if any, which may be registered cannot be determined at this time,it may be expected that any registration of securities by the Company wouldentail substantial expense to the Company.

The issuance of substantial additional securities, and theirpotential sale, into any trading market which may develop in the Company'ssecurities may have a depressive effect on such market.

While the actual terms of a transaction to which the Company maybe a party cannot be determined at this time, it may be expected that theparties to any business transaction will find it desirable to structure themerger or acquisition as a so-called "tax-free"event under sections 351 or 368(a) of the Internal Revenue Code of 1986 (the"Code").In order to obtain tax-free treatment under section 351 of the Code, it would benecessary for the owners of the acquired business to own 80% or more of thevoting stock of the surviving entity. In such event, the shareholders of theCompany would retain less than 20% of the issued and outstanding shares of thesurviving entity. Section 368(a)(1) of the Code provides for tax-free treatmentof certain business reorganizations between corporate entities where onecorporation is merged with or acquires the securities or assets of anothercorporation. Generally, the Company expects to be the acquiring corporation insuch a business reorganization, and the tax-free status of the transaction willnot depend on the issuance of any specific amount of the Company'svoting securities under Section 368. The acquiring corporation will issuesecurities in such an amount that the shareholders of the acquired corporationwill hold 50% or more of the voting stock of the surviving entity. Consequently,there is a substantial possibility that the shareholders of the Companyimmediately prior to the transaction would retain less than 50% of the issuedand outstanding shares of the surviving entity. Therefore, regardless of theform of the business acquisition, it may be anticipated that stockholdersimmediately prior to the transaction will experience a significant reduction intheir percentage of ownership in the Company.

Notwithstanding the fact that the Company is technically themerging or acquiring entity in the foregoing circumstances, generally acceptedaccounting principles will ordinarily require that such transaction be accountedfor as if the Company had been acquired by the other entity owning the businessand, therefore, will not permit a write-up in the carrying value of the assetsof the other company.

The manner in which the Company participates in a business willdepend on the nature of the business, the respective needs and desires of theCompany and other parties, the management of the business, and the relativenegotiating strength of the Company and such other management.

The Company will participate in a business only after thenegotiation and execution of appropriate written agreements. Although the termsof such agreements cannot be determined at this time, generally, such agreementswill: require specific representations and warranties by all of the partiesthereto; specify certain events of default; detail the terms of closing and theconditions which must be satisfied by each of the parties prior to such closing;outline the manner of bearing costs if the transaction is not closed; set forthremedies on default; and include miscellaneous other terms.

**Operation of Business After Acquisition**
The Company'soperation following its merger or acquisition of a business will be dependent onthe nature of the business and the interest acquired. The Company is unable todetermine at this time whether the Company will be in control of the business orwhether present management will be in control of the Company following theacquisition. It may be expected that the business will present various risks,which cannot be predicted at the present time.

**Government Regulation**
It is impossible to anticipate government regulations, if any,to which the Company may be subject until it has acquired an interest in abusiness. The use of assets to conduct a business which the Company may acquirecould subject it to environmental, public health and safety, land use, trade, orother governmental regulations and state or local taxation. In selecting abusiness in which to acquire an interest, management will endeavor to ascertain,to the extent of the limited resources of the Company, the effects of suchgovernment regulation on the prospective business of the Company. In certaincircumstances, however, such as the acquisition of an interest in a new orstart-up business activity, it may not be possible to predict with any degree ofaccuracy the impact of government regulation. The inability to ascertain theeffect of government regulation on a prospective business activity will make theacquisition of an interest in such business a higher risk.
**Competition**
The Company will be involved in intense competition with otherbusiness entities, many of which will have a competitive edge over the Companyby virtue of their stronger financial resources and prior experience inbusiness. There is no assurance that the Company will be successful in obtainingsuitable business opportunities.

**Employees**

The Company is a development stage company and currently has noemployees. Our executive officer will devote only such time to the affairs ofthe Company as he deems appropriate, which is estimated to be approximately five(5) hours per month. Management of the Company expects to use consultants,attorneys, and accountants as necessary, and does not anticipate a need toengage any full-time employees as long as business needs are being identifiedand evaluated. The need for employees and their availability will be addressedin connection with a decision concerning whether or not to acquire orparticipate in a specific business venture.

**ITEM 2. DESCRIPTION OF PROPERTY**

The Company currently maintains its offices at 1403 East 900South, Salt Lake City, Utah 84105. The office space is owned by RuairidhCampbell, our sole officer, director, and a substantial shareholder of theCompany. The Company pays no rent for the use of this address. The Company doesnot believe that it will need to maintain an office at any time in theforeseeable future in order to carry out the plan of operation described herein.

**ITEM 3. LEGAL PROCEEDINGS**

The Company is currently not a party to any legal proceedings.

 

No matter was submitted during to fiscal year covered by thisreport to a vote of security holders, therefore rendering this iteminapplicable.

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY        HOLDERS**

No matter was submitted during to fiscal year covered by this report to avote of security holders, therefore rendering this item inapplicable.

 
**PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED        STOCKHOLDER MATTERS**
The Company currently has no public trading market. The Companymay file a Form 15c-(2)(11) in an effort to obtain a quote on the NASDover-the-counter bulletin board to create a public market. Management believesthat the creation of a public trading market for the Company'ssecurities would make the Company a more attractive acquisition or mergercandidate. However, there is no guarantee that the Company will obtain a quoteon the NASD over-the-counter bulletin board, or that a public market for theCompany'ssecurities will develop, or, if such a market does develop, that it willcontinue, even if a quote on the NASD over the counter bulletin board isobtained.

**Record Holders**
As of December 31, 20010, there were eighty one (81)shareholders of record holding a total of 6,564,500 shares of common stock. Theholders of the common stock are entitled to one vote for each share held ofrecord on all matters submitted to a vote of stockholders. Holders of the commonstock have no preemptive rights and no right to convert their common stock intoany other securities. There are no redemption or sinking fund provisionsapplicable to the common stock.
**Dividends**
The Company has not declared any dividends since inception anddoes not anticipate paying any dividends in the foreseeable future. The paymentof dividends is within the discretion of the Board of Directors and will dependon the Company'searnings, capital requirements, financial condition, and other relevant factors.There are no restrictions that currently limit the Company'sability to pay dividends on its common stock other than those generally imposedby applicable state law.
** 

ITEM 6. MANAGEMENT'S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Plan of Operations**
The Company'splan of operation for the coming year, as discussed above, is to identify andacquire a favorable business opportunity. The Company does not plan to limit itsoptions to any particular industry, but will evaluate each opportunity on itsmerits. Management is hopeful that being a reporting company increases thenumber of prospective business ventures that may be available to the Company.Management believes that the Company has sufficient resources to meet theanticipated needs of the Company'soperations through at least the calendar year ending December 31, 20021. TheCompany anticipates that its major shareholders will contribute sufficient fundsto satisfy the cash needs of the Company through calendar year ending December31, 20021. However, there can be no assurances to that effect, as the Companyhas no revenues and the Company'sneed for capital may change dramatically if it acquires an interest in abusiness opportunity during that period. Further, the Company has no plans toraise additional capital through private placements or public registration ofits securities until a merger or acquisition candidate is identified. Uponconsummation of a merger, the Company may decide to file the necessary andappropriate registration statements to register the affiliates'shares. In addition, the promoters or affiliates of blank check companies, aswell as their transferees, are deemed to be "underwriters"of the securities issued both before and after any business combination.

The Company projects that its operating requirements will notexceed $5,000 over the next twelve months. If no acquisition candidate is foundfor the Company during this time, Ruairidh Campbell plans to loan the Companysufficient funds to cover these costs over the next twelve months. RuairidhCampbell will provide his expertise in preparing the necessary documentation tokeep the Company current with its reporting requirements with the Securities& Exchange Commission and those costs will accrue on the Company'sbalance sheet. In the event that a merger or acquisition occurs over the nexttwelve months, the target company will be responsible for paying these costsback to the major shareholders, or the major shareholders may waive these costsdepending on the nature of the acquisition or merger transaction.

 

**ITEM 7. FINANCIAL STATEMENTS**

The Company'saudited financial statements for the periods ended December 31, 2001,0 and20001999 are attached hereto as F-1 through F-6.
****
 

 

 

 

 

ASWAN INVESTMENTS, INC.

(A Development Stage Company)

 

FINANCIAL STATEMENTS

 

December 31, 20010 and 20001999

 

 

 

ASWAN INVESTMENTS, INC.

(A Development Stage Company)

 

INDEX

 

        IndependentAuditor'sReport 

        Balance Sheets 

        Statements of Operations 

        Statements ofStockholders' (Deficit) Equity 

        Statements of Cash Flows 

        Notes to Financial Statements

 
** 

 **
INDEPENDENT AUDITORS'REPORT

 

To the Stockholders'and

Board of Directors of

Aswan Investments, Inc.

We have audited the accompanying balance sheets of AswanInvestments, Inc. (a development stage company), as of December 31, 2001 and20000 and the related statements of operations, stockholders'(deficit) equity, and cash flows for the years then ended and the cumulativeamounts since inception. These financial statements are the responsibility ofthe Company's management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

We conducted our audits in accordance with auditing standardsgenerally accepted in the United States of America. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to abovepresent fairly, in all material respects, the financial position of AswanInvestments, Inc. (a development stage company), as of December 31, 2001 and2000 and the results of its operations and its cash flows for the years thenended and the cumulative amounts since inception, in conformity with accountingprinciples generally accepted in the United States of America.

The accompanying financial statements have been preparedassuming that the Company will continue as a going concern. As discussed in Note2 to the financial statements, the Company'srevenue generating activities are not in place and the Company has incurred aloss. These conditions raise substantial doubt about its ability to continue asa going concern. Management's plansregarding those matters also are described in Note 2. The financial statementsdo not include any adjustments that might result from the outcome of thisuncertainty.

 

JONES, SIMKINS LLP

Logan, Utah

February 1, 2002

January 26, 2001
** 

 **ASWAN        INVESTMENTS, INC.(A        Development Stage Company)BALANCE        SHEETS
Assets
2001
2000----------------------------
Current Assets
Cash and cash equivalents
$
65
$
571----------------------------
Total Current Assets
$
65
$
571
=========
=========
Liabilities and Stockholders' (Deficit) Equity
Current Liabilities
Accounts Payable
$
3,089
$
2,730
Related party payable
2,500
2,500----------------------------
Total Current Liabilities
5,589
5,230----------------------------
Stockholders' (deficit) equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized,no shares issued and outstanding

 

-
 

-
Common stock, $.001 par value, 45,000,000 shares authorized,        6,562,500 and 6,042,500 shares issued and outstanding, respectively
6,565
6,045
Additional paid-in capital
2,817
337
Deficit accumulated during the development stage
(14,906)
(11,041)----------------------------
Total stockholders' (deficit) equity
(5,524)
(4,659)----------------------------
Total liabilities and stockholders' (deficit) equity
$
65
$
571
=========
=========**See notes to the financial statements**
 

ASWAN        INVESTMENTS, INC.(A        Development Stage Company)STATEMENT        OF OPERATIONS Years        Ended December 31, 2001 and 2000Cumulative 20012000Amounts-------------------------------------------------------------------------------Revenue$000General and        Administrative Costs3,86510,13114,906-------------------------------------------------------------------------------            Loss before income taxes(3,865)(10,131)(14,906)Provision for income        taxes000-------------------------------------------------------------------------------Net Loss$(3,865)(10,131)(14,906)==========================================================Loss per common        share- basic and diluted00======================================Weighted average        common shares- basic and diluted6,499,0005,894,000======================================** 

 

See notes to the financial statements

 **
ASWAN INVESTMENTS,      INC.
(A Developmental      Stage Company)
STATEMENTS OF      STOCKHOLDERS' (DEFICIT) EQUITY
December 7, 1999 (      Date of Inception) to December 31, 2001
Deficit

Accumulated
Preferred  Stock
Common  Stock
Additional
During the---------------------------------------- ------------------------------------------------Paid-in
Development
Shares
Amount
Shares
Amount
Capital
Stage
Total--------------------------------------------------------------------------------------------------------------------------
Balance at December 7, 1999 (date      of inception)
0
0
0
0
0
0
0
Issuance of common stock for:
Cash
0
0
572,500
573
337
0
910
Stock subscription receivable
0
0
465,000
465
0
0
465
Net loss
0
0
0
0
0
(910)
(910)-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999
0
0
1,037,500
1,038
337
(910)
465
Issuance of common stock for      services
0
0
5,007,000
5,007
0
0
5,007
Net loss
0
0
0
0
0
(10,131)
(10,131)-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000
0

0
6,044,500
6,045
337
(11,041)
(4,659)
Issuance of common stock for cash
0
0
520,000
520
2,480
0
3,000
Net loss
0
0
0
0
0
(3,865)
(3,865)-------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001
0
0
6,564,500
6,565
2,817
(14,906)**(5,524)** 

See notes to the financial statements**
 
** 

 **

ASWAN INVESTMENTS,      INC.
(A Development      Stage Company)
STATEMENTS OF CASH      FLOWS
Years Ended      December 31, 2001 and 2000**Cumulative
2001
2000
Amounts
Cash flows from operating      activities:
---------------
  ------------------  ------------------
Net loss
$
(3,865)
(10,131)
(14,906)
Adjustments to reconcile net loss      to net cash used in operating activities
Stock compensation expense
0
5,007
5,007
Increase in accounts payable
359
2,730
3,089
---------------
  ------------------  ------------------
Net cash used in operating      activities
(3,506)
(2,394)
(6,810)
Cash flows from investing      activities
0
0
0
---------------
  ------------------  ------------------
Cash flows from financing      activities:
Increase in related party payable
0
2,500
2,500
Decrease in stock subscription      receivable
0
465
465
Issuance of common stock
3,000
0
3,910
---------------
  ------------------  ------------------
Net cash provided by financing      activities
3,000
2,965
6,875
---------------
  ------------------  ------------------
Net increase in cash
(506)
571
65
Cash, beginning of period
571
0
0
---------------
  ------------------  ------------------
Cash, end of period
$
65
571
65=========================================** **
See notes to the financial statements

 

ASWANINVESTMENTS, INC. 

(A Development StageCompany) 

Notes to the FinancialStatements 

For the Year EndedDecember 31, 2001

 

Note 1- Organization and Summary ofSignificant Accounting Policies

Organization

The Company was organized under thelaws of the State of Nevada on December 7, 1999 (date of inception). The Companyproposes to seek business ventures that will allow for long-term growth.Further, the Company is considered a development stage company as defined inSFAS No. 7 and has not, thus far, commenced planned principal operations.

For purposes of the statement of cashflows, the Company considers all highly liquid investments with a maturity ofthree months or less to be cash equivalents.

Deferred income taxesare provided in amounts sufficient to give effect to temporary differencesbetween financial and tax reporting, principally related to net operating losscarryforwards.

The computation ofbasic earnings per common share is based on the weighted average number ofshares outstanding during the period.

The computation ofdiluted earnings per common share is based on the weighted average number ofshares outstanding during the period plus the common stock equivalents whichwould arise from the exercise of stock options and warrants outstanding usingthe treasury stock method and the average market price per share during theperiod. Common stock equivalents are not included in the diluted earnings pershare calculation when their effect is antidilutive. The Company does not haveany stock options or warrants outstanding at December 31, 2001 and 2000.

Concentration ofCredit Risk

The Company maintainsits cash in bank deposit accounts, which, at times, may exceed federally insuredlimits. The Company has not experienced any losses in such accounts and believesit is not exposed to any significant credit risk on cash and cash equivalents.

Use of Estimates in thePreparation of Financial Statements

The preparation of financial statementsin conformity with generally accepted accounting principles requires managementto make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates.

Note 2 - Going Concern

As of December 31, 2001, the Company'srevenue generating activities are not in place, and the Company has incurred aloss for the year then ended. These factors raise substantial doubt about theCompany's ability to continue as a going concern.

Management intends to seek additionalfunding through business ventures. There can be no assurance that such fundswill be available to the Company, or available on terms acceptable to theCompany.

Note 3- Income Taxes

The difference between income taxes atstatutory rates and the amount presented in the financial statements is a resultof the following:
Year        EndedDecember        31,Cumulative 20012000Amounts-------------------------------------------------------Income tax benefit        at statutory rate-2,0002,000Change in        Valuation allowance-(2,000) (2,000) ---====================================
Deferred tax assets are as follows atDecember 31:
20012000----------------------------------Operating loss      carryforwards2,0002,000Valuation allowance(2,000) (2,000) --=======================
The Company has net operating losscarryforwards of approximately $15,000, which begin to expire in the year 2019.The amount of net operating loss carryforwards that can be used in any one yearwill be limited by significant changes in the ownership of the Company and bythe applicable tax laws which are in effect at the time such carryforwards canbe utilized.

Note 4- Supplemental Cash FlowInformation

The Company paid interest in the amountof $48 and $5 for the years ended December 31, 2001 and 2000, respectively.

No amounts have been paid for incometaxes since inception.

Note 5- Fair Value of FinancialInstruments

The Company's financial instrumentsconsist of cash and payables. The carrying amount of cash and payablesapproximates fair value because of the short-term nature of these items.

Note 6- Stock Plan

The Company has adopted a benefit plan(the Plan). Under the Plan, the Company may issue shares of the Company'scommon stock or grant options to acquire the Company's common stock from timeto time to employees, directors, officers, consultants or advisors of theCompany on the terms and conditions set forth in the Plan. In addition, at thediscretion of the Board of Directors, stock may from time to time be grantedunder this Plan to other individuals, including consultants or advisors, whocontribute to the success of the Company but are not employees of the Company.

As of December 31, 2001 and 2000, nostock options had been issued under this plan.

Note 7 - Related Party Transactions

At December 31, 2001 and 2000, theCompany has a related party payable of $2,500 due to an officer of the Company.The payable is unsecured, non-interest bearing and due on demand.

Note 8- Recent AccountingPronouncements

In July 2001, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 141,Business Combinations and No. 142, Goodwill and Other Intangible Assets. Thestatements eliminate the pooling-of-interests method of accounting for businesscombinations and require that goodwill and certain intangible assets not beamortized. Instead, these assets will be reviewed for impairment annually withany related losses recognized in earnings when incurred. The adoption of thesestatements is not expected to have a material effect on the Company'sfinancial position or results of operations.

In June 2001, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement Obligations (SFAS 143). This Statement requiresthat the fair value of a liability for an asset retirement obligation berecognized in the period in which it is incurred if a reasonable estimate offair value can be made. The associated asset retirement costs are capitalized aspart of the carrying amount of the long-lived asset. Management does not expectthe adoption of SFAS 143 to have a significant impact on the financial positionor results of operations of the Company.

 

 

**ITEM 8. CHANGES IN AND        DISAGREEMENTS WITH ACCOUNTANTS**

On November 6, 2000, Aswan Investments,Inc. terminated its relationship with Tanner + Co. ("Tanner"), theprincipal accountant previously engaged to audit the Company's financialstatements. Effective November 9, 2000, the Company retained Jones, Simkins LLP("Jones") as the principal accountants to replace Tanner. The Company'sBoard of Directors approved the change of accountants from Tanner to Jones.

The audit report of Tanner on theCompany's financial statements for the fiscal year ending December 31, 1999did not contain any adverse opinion or disclaimer of opinion, nor were theyqualified or modified as to uncertainty, audit scope, or accounting principles,except such reports were modified to include an explanatory paragraph for agoing concern uncertainty.

**PART III**

**ITEM 9. DIRECTORS, EXECUTIVE        OFFICERS, PROMOTERS, AND CONTROL PERSONS**

The following individual constitutesall of the Company's executive officers and directors as of March 8, 2002.

Name                        Age                            Position

Ruairidh Campbell    39                            President,secretary, treasurer and director

No other persons are expected to makeany significant contributions to the Company who are not executive officers ordirectors of the Company.

All executive officers are elected bythe Board and hold office until the next annual meeting of stockholders anduntil their successors are elected and qualify.
***Ruairidh W. Campbell,*39,* graduated from the University of Texas at Austin with a Bachelor of Artsin History and then from the University of Utah College of Law with a JurisDoctorate with an emphasis in corporate law, including securities and taxation.He has been an officer and director of several public companies that include:NovaMed, Inc., a manufacturer of medical devices (president and director from1995 to present), Canadian Metals Explorations Ltd., a Canadian mineral resourcedevelopment company (president and director 1995 to 2001), and Allied ResourcesInc., a Canadian based oil and gas development company (president and director1998 to present). Mr. Campbell is also the president the sole director of threefully reporting shell companies. Mr. Campbell began his term as the Company'spresident and director on December 10, 1999.

**ITEM 10. EXECUTIVE COMPENSATION**

No cash compensation was paid to any ofthe Company's executive officers during the fiscal year ended December 31,1999 The Company, as of December 31, 2001, has issued Ruairidh Campbell a totalof 2,500,000 shares for his services to the Company valued at $2,500. TheCompany, as of December 31, 2001, had issued Richard Surber a total of 2,500,000shares for his services to the Company valued at $2,500. Mr. Surber resigned asan officer and director of the Company on April 16, 2001. There is currently nopolicy in place that prevents the Company from compensating Ruairidh Campbell orany future officer, director or affiliate, in the form of the Company's sharesof common stock or other non-cash compensation. The Company has no current plansto compensate any of the aforementioned entities in this manner in theforeseeable future. However, the Company may agree to register the sharespursuant to an appropriate registration statement on or after the Companyeffects a merger or acquisition.

The Company has no agreement orunderstanding, express or implied, with any officer, director, or principalstockholder, or their affiliates or associates, regarding employment with theCompany or compensation for services. The Company has no plan, agreement, orunderstanding, express or implied, with any officer, director, or principalstockholder, or their affiliates or associates, regarding the issuance to suchpersons of any shares of the Company's authorized and unissued common stock.There is no understanding between the Company and any of its presentstockholders regarding the sale of a portion or all of the common stockcurrently held by them in connection with any future participation by theCompany in a business. There are no other plans, understandings, or arrangementswhereby any of the Company's officers, directors, or principal stockholders,or any of their affiliates or associates, would receive funds, stock, or otherassets in connection with the Company's participation in a business. Noadvances have been made or contemplated by the Company to any of its officers,directors, or principal stockholders, or any of their affiliates or associates.

There is no policy that preventsmanagement from adopting a plan or agreement in the future that would providefor cash or stock based compensation for services rendered to the Company.

Upon the merger or acquisition of abusiness, it is possible that current management will resign and be replaced bypersons associated with the business acquired, particularly if the Companyparticipates in a business by effecting a stock exchange, merger, orconsolidation as discussed under the "BUSINESS" heading above. In theevent that any member of current management remains after effecting a businessacquisition, that member's time commitment and compensation will likely beadjusted based on the nature and location of such business and the servicesrequired, which cannot be foreseen.

**SUMMARY COMPENSATIONTABLE**

 
**Annual Compensation**Long Term    Compensation
 
**Awards**Payouts**Name and Principal    Position** 

 

 ****Year** 

 ****Salary

($)** 

 ****Bonus

($)** ****Other AnnualCompensation

($)**Restricted Stock Award(s)

($)**Securities

Underlying Options

SARs

(#)** 

 ****LTIP payouts

($)**All Other    Compensation

($)
Ruairidh Campbell,

President/CEO and Director
2001

2000

1999
0

0

0
-

-

-
-

-

-
 

2,500,000

-
-

-

-
-

-

-
-

-

-
Richard D. Surber

former Secretary, Treasurer and    Director
2001

2000

1999
0

0

0
-

-

-
-

-

-
 

2,500,000

-
-

-

-
-

-

-
-

-

-
 

Compensation ofDirectors

Currently there are noplans to compensate the director of the Company for his services.

 

**ITEM 11.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

The following table setsforth, as of December 31, 2001 the number and percentage of outstanding sharesof common stock which, according to the information supplied to the Company,were beneficially owned by (i) each current director of the Company, (ii) eachcurrent executive officer of the Company, (iii) all current directors andexecutive officers of the Company as a group, and (iv) each person who, to theknowledge of the Company, is the beneficial owner of more than 5% of the Company'soutstanding common stock. Except as otherwise indicated, the persons named inthe table below have sole voting and dispositive power with respect to allshares beneficially owned, subject to community property laws (whereapplicable).

 
**Title of Class**Name And Address      of Beneficial Owner**Amount And Nature      of Beneficial Ownership**Percent of Class
Common Stock
Ruairidh Campbell,      president

3310 Werner Avenue

Austin, Texas      78722
3,000,000
45.7%
Common Stock
Richard Surber

268 West 400      South, Suite 300

Salt Lake City,      Utah 84101
3,520,000*
53.6%
Common Stock
Kelly's Coffee      Group, Inc.

268 West 400      South, Suite 300

Salt Lake City,      Utah 84101
520,000
7.9%
Common Stock
All Executive      Officers and Directors as a Group
3,000,000
45.7%
 
***Note: Richard Surber isthe sole officer and director of Kelly's Coffee Group, Inc. Therefore, he owns3,000,000 shares directly and 520,000 shares indirectly by nature of hisrelationship to Kelly's Coffee.**
 

**ITEM 12. CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS**

On December 10, 1999 theCompany issued 1,000,000 shares of common stock to Ruairidh Campbell (500,000)and Richard Surber (500,000), at the time officers and directors of the Company,at par value of $0.001, for a total of $1,000.

On January 12, 2000, theCompany issued 5,000,000 shares of common stock to Ruairidh Campbell (2,500,000)and Richard Surber (2,500,000) valued at par ($0.001) in exchange for servicesrendered.

 

**ITEM 13. EXHIBITS ANDREPORTS ON FORM 8-K**

(a) Exhibits    Exhibits required to be attached by Item 601 of Regulation S-B are listed in    the Index to Exhibits on page 10 of this Form 10-KSB, and are incorporated    herein by this reference.

(b) Reports on Form    8-K. No reports on Form 8-K were filed during the period covered by this    Form 10-KSB.

 

 

 

**SIGNATURES**

In accordance withSection 12 of the Securities Exchange Act of 1934, the registrant caused thisregistration statement to be signed on its behalf by the undersigned, thereuntoduly authorized, this 7th day of March 2002

Aswan Investments, Inc.

/s/ RuairidhCampbell                 

Name: Ruairidh Campbell

Title: President/CEO and Director

 

 

 

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**INDEX TO EXHIBITS**

 
Exhib. No.  Page No.  Description3(i) * Articles of Incorporation of Aswan                Investments, Inc., a Nevada corporation, filed with the State of                Nevada on December 10, 1999.3(ii)* By-laws of the Company adopted on December 7,        1999.4 * Employee Benefit Plan adopted on December                14 , 1999.
*    Incorporated by reference from Form 10-SB/A-2 filed June27, 2000.

 

 

 

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