"Fresh-Start Accounting: As required under the provisions of S.O.P. 90-7 “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (SOP 90-7), the Company is required to apply “fresh-start reporting” after emerging from Chapter 11 and after all material conditions precedent to the bankruptcy plan becoming binding are resolved. Although the Company’s reorganization plan was confirmed on April 13, 2006, certain significant aspects of the Plan (see items 1., 2., 3., and 4. in Note A) were not completed until September 2006. Accordingly, the Company will apply “fresh-start reporting” effective October 1, 2006."
"NOTE E – PREFERRED STOCK
All of the rights of the preferred stockholders were terminated as a result of the plan of reorganization approved by the Bankruptcy court effective March 31, 2006. See Note A.
The Company has authorized 2,000,000 shares of preferred stock of which no shares are outstanding at September 30, 2006. Please refer to the Company’s Form 10-KSB as of December 31, 2005 for a full description of these placements. The preferred stock previously outstanding was cancelled effective September 8, 2006, as part of the Company’s Plan of Reorganization."
What does NOTE "A" say? In pertinent part:
NOTE "A"
4.
All current outstanding common and preferred shares, and all outstanding stock options, will be cancelled. This cancellation was completed September 8, 2006.
JJ
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