10-K 1 ish10k1.txt 10-K AUGUST 31, 2002 Form 10-K for INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. Filed for the period ending August 31, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ANNUAL REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: August 31, 2002 INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. (Exact name of Registrant as specified in its charter) Nevada 0-12423 94-2906927 (state or other jurisdiction) (Commission File No.) (IRS Employer #) 1801 Avenue of the Stars, Suite 635, Los Angeles, CA 90067 (address or principal executive office) (Zip Code) (310) 552-0870 (Registrant's telephone number) Securities registered pursuant to section 12(g) of the Act: (Common Stock, no par value (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ___X___ No ______ The aggregate market value of the voting stock held by non-affiliates of the Registrant: Currently, the Company's stock is thinly traded. There are 2,154,000 shares held by non-affiliates. The average bid and ask price for the period covered by this Form 10-K was $.25 per share. Using this value of $.25 per share, the aggregate market value is estimated at $538,500. Number of common shares, without par value, outstanding as of August 31, 2002, was 3,786,390. 1 INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. FORM 10-K Fiscal Year ended August 31, 2002 TABLE OF CONTENTS Page No. Part I Item 1 Business Item 2 Properties Item 3 Legal Proceedings Item 4 Submission of Matters to a vote of Security Holders Part II Item 5 Market for Registrant's Common Stock and Related Stockholder Matters Item 6 Selected Financial Data Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operation Item 8 Consolidated financial Statements and Supplementary Data Item 9 Changes in and Disagreements with Accounts on Accounting and Financial Disclosure Part III Item 10 Directors and Executive Officers of the Registrant Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Management Item 13 Certain Relationships and Related Transactions Part IV Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. PART I ITEM 1: BUSINESS (General) The Company INTERNATIONAL SYNERGY HOLDING COMPANY, LTD., formerly Merit Diversified International, Inc. ("the Company") owns entertainment related assets. B. History of Operations The Company was incorporated in the State of Utah, in 1983, subsequently reincorporated in the State of Nevada. Initially, the Company published a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. From 1988 until new management was appointed in 1998, the Company made several attempts to acquire and operate various businesses. During the fiscal year ended August 31, 2000, the company acquired all outstanding shares of Allied Entertainment Group, Inc. As of September 15, 2000 the company changed its name from Merit Diversified International to Allied Artists Entertainment Group, Inc., and more recently to International Synergy Holding Company, Ltd. The Company has brought a law suit against the former owner of Allied Artists Entertainment Group, Inc., for misrepresentations as reflected in past 8k filings. ITEM 2: PROPERTIES The following assets were contributed to the company by shareholders: 1. Master Tapes: Value of $1,203,814 appraised by George L. (Sonny) Carter, Tape Librarian, MCA Records, Inc. This as a result of the prior commitment specified in the previous 8-K. 2. Films: Two motion pictures ready for production; value of $880,000 appraised by Dr. Philip Chamberlin of the Academy of Motion Picture Arts & Sciences. This as a result of the prior commitment specified in the previous 8-K. 3. 30,000 Dino Babies animation cels valued at $3,000,000. Items 3,4 and 5 were transferred into the Company as a result of the prior commitment specified in the previous 8-K for the then new controlling shareholders to transfer into the Company $5,000,000 in assets. ITEM 3: LEGAL PROCEEDINGS The Company is suing Kim Richardson for misrepresentations in his sale of Allied Artists Entertainment Group to The Company. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS Controlling shareholders voted to reverse split the stock 8-1 and change name of the Company from Allied Artists Entertainment Group, Inc. to International Synergy HOLDING COMPANY, LTD., during the year ending August 31, 2002. ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the OTC Bulletin Board. The quote below is from the "Pink sheets: and the OTC bulletin Board. These numbers represent an average. The Company's stock was thinly traded in fiscal year ended August 31, 2000. Bid High 1.00 Low .02 Ask High 1.75 Low .10 ITEM 6: SELECTED FINANCIAL DATA The following information is derived from the consolidated financial statements included elsewhere herein. All information presented below should be read in conjunction with the Consolidated Financial Statements and Notes included elsewhere in this Form 10K. For Year Ended August 31 2002 2001 2000 1999 1998 Net Sales 0 0 0 0 0 Net Income (Loss) NIL 3,053 0 0 0 Earnings (Loss) per Share NIL .001 (.007) NIL NIL Cash Dividends per Share 0 0 0 0 0 Total Assets 5,153,008 5,153,008 5,149,955 0 0 Long-term Notes Payable 0 0 0 0 0 Total Stockholders' Equity 5,153,008 5,153,008 5,149,955 0 0

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS (Continued) The information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" below includes "forward-looking statements" within the meaning of Section 27A of the Securities Act, and is subject to the safe harbor created by that section. Factors that could cause actual results to differ materially from these contained in the forward-looking statements are set forth in "Management's Discussion and Analysis of Financial condition and Results of Operations". Year Ended August 31, 2002 and 2001 The Company is a development stage company and has had no operations during the Year ending August 31, 2002. The Company is seeking to acquire or merge with operating companies. Item 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA To the Board of Directors INTERNATIONAL SYNERGY HOLDING COMPANY, LTD.: INDEPENDENT AUDITOR'S REPORT I have audited the accompanying consolidated balance sheet of INTERNATIONAL SYNERGY HOLDING COMPANY, LTD., as of August 31, 2002 and 2001 and the related statements of operations, stockholders' equity and cash flows for the years then ended. My responsibility is to express an opinion on these financial statements based on my audit. I have conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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. I believe that my audit and those of other auditors provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Synergy Holding Co, Ltd., as of August 31, 2002 and 2001, and the results of it's operations and cash flows for the years then ended, in conformity with generally-accepted accounting principles. INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. BALANCE SHEET AS OF AUGUST 31, Assets 2002 2001 Current Assets Cash $ - $ - Accounts Receivable - - Less: Allowance for Doubtful Accounts - - Inventories - Prepaid Expenses - - Total Current Assets - - Property, Plant, and Equipment Net of Accumulated Depreciation 70,000 70,000 Other Assets Investment Assets 5,083,008 5,079,955 Total Assets $ 5,153,008 $ 5,149,955 Liabilities and Stockholders Equity Current Liabilities Accounts Payable $ - $ - Total Currrent Liabilities - - Long Term Liabilities - - Total Liabilities - - Stockholders' Equity Common Stock (50,000,000 shares authorized, no par value, 5,892,782 shares issued and outstanding) (Note 1) 1,333,229 1,552,349 Additional Paid in Capital (Note 8) 3,816,726 3,597,606 Retained Earnings (Note 8) 3,053 Total Equity 5,153,008 5,149,955 Total Liabilities and Equity $ 5,153,008 $ 5,149,955

INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. INCOME STATEMENT YEAR ENDED AUGUST 31, 2002 2001 Revenues $ - $ - Less: Cost of Revenues - - Gross Margin - - Operating Expenses - - Income from Continuing Operations - - Income from Discontinued Operation - - Net Income $ - - Weighted average number of shares 6,643,934 6,643,934 Earnings/(Loss) per common share $ - 0.001

INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. STATEMENT OF CASH FLOWS YEAR ENDED AUGUST 31, 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ - $ - Adjustments to reconcile net income to net cash provided by operating activities Depreciation Expense - - (Increase) Decrease in Accounts receivables - - Inventories - - Prepaid Expenses - - Increase(Decrease) in Accounts Payables - - NET CASH PROVIDED BY OPERATING ACTIVITIES - - CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Fixed Assets - - NET CASH USED FOR INVESTING ACTIVITIES - - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of stock Repayment of debt - - Proceeds from long term debt - - NET CASH PROVIDED BY FINANCING ACTIVITIES - - Increase (Decrease) in Cash - CASH AT BEGINNING OF PERIOD - - CASH AT END OF PERIOD $ - $ -

INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. STATEMENT OF SHAREHOLDERS EQUITY YEAR ENDED AUGUST 31, Additional Common Common Paid-in Retained Shares Stock Capital Earnings Total Bal August 31, 1999 31,142,257 $1,552,349 $6,283,149 $(2,685,543) $5,149,955 Net Income - Quasi-reorganization (2,685,543) 2,685,543 Bal August 31, 2000 31,142,257 1,552,349 3,597,606 - 5,149,955 Net Income 3,053 3,053 Reaquired Shares from Allied Artists and Eye Candy Post (1,100,000) (219,120) 219,120 - 8:1 Reverse Stock Split (26,255,867) Quasi-reorganization 219,120 (219,120) Bal August 31, 2001 3,786,390 $1,333,229 $3,816,726 $ 3,053 $ 5,153,008 Bal August 31, 2002 5,786,390 $1,333,229 $3,816,726 $ 3,053 $ 5,153,008

Note 1. General Company Information and Summary of Significant Accounting Policies International Synergy Holding Company, Ltd., ., formerly Merit Diversified International, Inc. ("the Company") was incorporated in the State of Utah, in 1983, subsequently reincorporated in the State of Nevada. Initially, the Company published a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. From 1988 until new management was appointed in 1998, the Company made several attempts to acquire and operate various businesses. The company changed its name in 2000 to International Synergy Holding Company, Ltd. Its current focus has been in the entertainment industry. The Company is anticipating broadening its holdings through strategic acquisitions, and will move with careful determination. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles. Property and Equipment As of August 31, 2000 the Company acquired fixed assets. Previously the Company depreciated its fixed assets over their estimated useful lives on a straight line bases. Reverse Stock Split In August, 2001 there was a 8 to 1 reverse split of common stock. All share and per share amounts have been restated accordingly. Net Loss Per Share Income/Loss per share is computed based on the average number of shares outstanding during each year. Shares outstanding for the year ended August 31, 2001 have been adjusted for an 8-1 reverse stock split. Revenue Recognition The Company employs the accrual method of accounting, and therefore recognizes revenues when earned. Provision for Income Taxes The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. During the current year there was no operating activity. As a result there is no current provision for income taxes. Provision is made for deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements. The Company has a net operating loss carry forward of approximately $2,000,000 available to offset future taxable income. The last of the carry forward expires in 2009. No benefit has been recorded on the face of the balance sheet for this benefit. Note 2 - Net Income (Loss) Per Share Net income (loss) per share and common equivalent share is computed using The weighted average number of shares outstanding during each period. Note 3. Related Party Transactions There are no outstanding obligations due to or from related parties as of August 31, 2002 and 2001. Note 4. Commitments and Contingencies The Company has no commitments or contingencies as of August 31, 2002, or 2001 Note 5 - Contributed Assets Controlling interest in INTERNATIONAL SYNERGY HOLDING, INC., a Nevada Corporation, and its predecessor Merit Diversified Holding Company (the "Company"), was transferred from Jen Investment Corporation to the following entities: 1. Selective Entertainment 406,250 shares 2. United Assurance Company, Ltd. 406,250 shares 3. Apple Juice Productions 406,250 shares 4. International Synergy Corporation 406,250 shares 5. International Annuity Trust Corporation 406,250 shares 6. IAT Mortgage Bankers 406,250 shares (The above has been adjusted for 8:1 reverse stock split as of August 31, 2001) As a result of the transfer of controlling interest, the above listed companies have irrevocably transferred into the Company assets having a value $5,000,000 as follows: 1. Master Tapes: Value of $1,203,814 appraised by George L. (Sonny) Carter, Tape Librarian, MCA Records, Inc. 2. Films: Two motion pictures ready for production; value of $880,000 appraised by Dr. Philip Chamberlin of the Academy of Motion Picture Arts & Sciences. 3. 30,000 Dino Babies animation cels valued at $3,000,000 as appraised by Edward N. Okil, National Institute of Appraisers. Note 6. Going Concern The Company has incurred significant losses since its inception. Due to the nature of the music and entertainment businesses, the Company's prospects for the future are dependent on a number of variables which cannot be predicted. There is fierce competition in these industries, and the availability of future financing is unknown. Note 7. Mergers and Acquisitions The Company acquired 100% ownership of Allied Entertainment Group valued at historic cost of $2,000,000. The Company issued 500,000 shares for this business. The Company has written off this $2,000,000 figure, since Allied may not have the value originally represented to the Company. In the Company's 10-K for 2000, this transaction was accounted for as a purchase, with the results of operations of the acquired entity included in the consolidated statement of income. The presentation of the year 2000 comparatives, excludes the effect of this transaction. Note 8. Quasi-reorganization As a result of the demerging of Allied Artists Entertainment Group, it was felt that a readjustment of the company's accounts in the form of a quasi-reorganization was appropriate A quasi-reorganization is an accounting procedure which results in eliminating the accumulated defecit in retained earnings. This accounting procedure is limited to a reclassification of accumulated defecit as a reduction of paid-in capital. The Company believes the quasi-reorganization is appropriate because of the installation of new executive officers, the above mentioned demerging of Allied Artists Entertainment Group, and the formulation of a revised operating plan. As a result thereof, it would be able to devote its resources to its continuing operations. Because asset have been stated at approximate fair values, the quasi-reorganization had no effect on recorded assets. Note 9. Subsequent Events On September 28, 2001 (subsequent to the balance sheet date), 175,000 shares of common stock and 100,000 warrants were registered with the Securities and Exchange Commission on For S-8. The shares and warrants issued were for compensation to certain independent consultants. Balance of Page Left Blank Intentionally INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. ITEM 8 Financial Statements Index to Consolidated Financial Statements _______________________________________________________________ _______________________________________________________________ 2002, 2001, and 2000 Consolidated Financial Statements: Report of Independent Certified Public Accountants Balance Sheets as of August 31, 2002 and 2001 Statements of Operations for the Years Ended August 31, 2002, and 2001 Statements of Stockholders' Equity for the Years Ended August 31, 2002, 2001 and 2000 Statement of Cash Flows for the Years Ended August 31, 2002, and 2001 Summary of Accounting Policies and Notes to Consolidated Financial Statements Schedules -- II Valuation and Qualifying Accounts SCHEDULE 11 - VALUATION AND QUALIFYING ACCOUNTS NONE. ITEM 9: CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES The Company has continued to retain Andrew M. Smith, C.P.A. as auditor and no disagreements with accounts were at issue. ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The officers and directors of the Company were the following: Name Title Hiroko Sagawa Secretary/Treasurer Kenta Rooks President John P. Farquhar Director H.H. Brookings Director Mr. John P. Farquhar, a director, is a research scientist, inventor and investor. Mr. Farquhar is a graduate of Harvard College; received his B.S. in mathematics at California Institute of Technology with an M.S. in Chemistry. He represented his family in major land reversion cases involving the Pacific Electric Railway, City of Santa Monica, Country of Los Angeles, State of California. Mr. Farquhar Contributed information and historical photographs and various documents to the Santa Monica Historical Society, the Heritage Square Museum and Miramar Hotel, which were family homes, and the Huntington Library in San Marino, California. He invented and obtained a patent for correcting extra-axial aberrations of both refractive and reflective lenses. Mr. Farquhar developed several other inventions on which he is still working; one of them is a system for eliminating pollutants form the exhaust of combustion engine systems, including internal combustion engines (such as in motor vehicles) and from factory smokestacks. During the last few years, he has been working with Robert Rooks in putting together Synergy Group of companies. ITEM 11: EXECUTIVE COMPENSATION No officer or director receives compensation for services rendered except that the directors are authorized to receive 100 shares of R-144 Company stock for each directors meeting that they attend. No such stock has been issued. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of August 31, 2001, the following were beneficial owners of more than five percent of the Company's common stock. Stock Name and Address Ownership Common Selective Entertainment 406,250 1801 Avenue of the Stars #640 Los Angeles, CA 90067 I A T Mortgage Bankers 406,250 1801 Avenue of the Stars #640 Los Angeles, CA 90067 International Annuity Trust Corporation 406,250 6348 De Roja Woodland Hills, CA 91364 Apple Juice Productions 406,250 6348 De Roja Woodland Hills, CA 91364 International Synergy Corporation 406,250 1054 Thomas Street, South East Grand Rapids, MI United Assurance Company, Ltd. 406,250 1142 King Street Chrisiansted, St.Croix, U.S.V.I. Total as a Group: 2,437,500 The table below sets forth those directors and officers who own shares of Company stock. None ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS No director or officer, directly or indirectly, is indebted to the Company in any amount as of the close of the fiscal year August 31, 2002. ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS a. Audited Financial Statements. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INTERNATIONAL SYNERGY HOLDING COMPANY, LTD. (Registrant) ____________/s/_____________________________ Hiroko Sagawa, Secretary Dated: December 27, 2002

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