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 FOR THE FISCAL YEAR ENDED JUNE 30, 2002. Commission File Number 0-33067 DIGICORP (Name of small business issuer as specified in its charter) Utah 87-0398271 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1206 West South Jordan Parkway, Unit B South Jordan, Utah 84095-4551 (Address of principal executive offices) (801) 566-3000 (Issuer's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock (Par Value $.001 Per Share) Indicate by check mark whether the issuer (1) has 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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. X There presently is no trading market for the common stock of the Issuer. The issuer's revenues for its most recent fiscal year were $0 since the Company is deemed a development stage company. As of August 31, 2002, the issuer had 9,042,857 shares of its $0.001 par value common stock issued and outstanding. Transitional Small Business Issuer Disclosure Format Yes ____ No X PART I ITEM 1. BUSINESS. DigiCorp (the "Company"), was incorporated on July 19, 1983 under the laws of the State of Utah for the purpose of developing and marketing computer software programs. From 1983 to 1995, the Company's sales and investments had been attributable to the sale of computer software and investments related to oil, gas and mining. On June 30, 1995, the Company became a development stage enterprise as defined in SFAS No. 7 (See Notes to Company's financials) when it sold its investments and changed its business plan. Since June 30, 1995, the Company has been in the developmental stage and has had no operations other than issuing shares for financing the preparation of financial statements and for preparing filings for the Securities and Exchange Commission. The Company's business plan is to attempt to locate and negotiate with another company for the purpose of a business combination of the two companies. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the company combining with DigiCorp will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that the Company will be successful in locating or negotiating with another company in a business combination. The Company has been formed to provide a method for a foreign or domestic private company to become a reporting ("public") company qualified to trade on a secondary market in the United States. Bankruptcy, receivership or similar proceedings Neither the Company nor any of its predecessors has been subject to any bankruptcy, receivership or similar proceeding. Benefits Achieved by Combining With Another Company There are certain perceived benefits to being a reporting company with a class of publicly-traded securities. Some of these benefits are the ability to use registered securities to make acquisitions of assets or businesses, increased visibility in the financial community, the facilitation of borrowing from financial institutions, improved trading efficiency of a company's stock, shareholder liquidity, greater ease in raising additional capital, market valuation of stock options for compensating key employees and enhancement of the corporate image. Business Entities That May Be Interested in a Business Combination with DigiCorp A business entity, if any, which may be interested in a business combination with DigiCorp may include the following: 1. A company that desires to go public for the purpose of having its securities used for the acquisition of assets or other businesses; 2. A company that is unable to find an underwriter for its securities or is unable to find an underwriter to sell its securities on terms acceptable to the company; 3. A company that desires to become public with less dilution of its common stock than would occur upon an underwriting; 4. A company, that believes it can obtain investment capital on more favorable terms after it has become public; 5. A foreign company that may desire to enter the equity markets of the United States; 6. A special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan; 7. A company that desires to become public in less time than would be required for a registration statement. 8. A company that may desire any other benefits associated with being a company with publicly trading securities. A business combination will normally involve the transfer to the company that is being combined with the majority of the issued and outstanding common stock of DigiCorp, and the substitution by the combining company of its own management and board of directors. No assurances can be given that the Company will be able to enter into a business combination, or as to the terms of a business combination, or as to the nature of the company that will be combining with DigiCorp. The Company elected to file its Form 10-SB registration statement last year on a voluntary basis in order to become a reporting company under the Securities Exchange Act of 1934. RISK FACTORS The Company's business is subject to numerous risk factors, including the following: Minimal Operating History and Very Few Assets. The Company has not been operating for several years and has no significant assets. The Company will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. As a result the Company will be operating at a loss until at least a business combination with another company can be completed. There is no assurance that the Company can identify another company for a business combination nor that the business combination can be completed. Speculative Nature of the Company's Business. The success of the Company's proposed plan of operation will depend to a great extent on the operations, financial condition and management of the target company to be combined with. While management will prefer business combinations with entities having established operating histories, there can be no assurance that the Company will be successful in locating candidates meeting such criteria. In the event the Company completes a business combination, of which there can be no assurance, the success of the Company's operations will be dependent upon management of the target company and numerous other factors beyond the Company's control. Competition for Business Combinations. The Company is and will continue to be an insignificant participant in the business of seeking mergers with and acquisitions of business entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies which may be merger or acquisition target candidates for the Company. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than the Company and, consequently, the Company will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, the Company will also compete with numerous other small public companies in seeking merger or acquisition candidates. Impracticability of a Thorough Investigation. The Company's limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target company. The decision to enter into a business combination, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys or similar information which, if the Company had more funds available to it, would be desirable. The Company will however, require audited financial statements from a company it intends to combine with. No Agreement for Business Combination or Other Transaction. The Company has no arrangement, agreement or understanding with respect to engaging in a merger, joint venture or acquisition of, a private or public entity. There can be no assurance the Company will be successful in identifying and evaluating suitable business opportunities or in concluding a business combination. Management has not identified any particular industry or specific business within an industry for evaluation by the Company. There is no assurance the Company will be able to negotiate a business combination on terms favorable to the Company. No Standards for Business Combination. The Company has not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which it will require a target business opportunity to have achieved. Accordingly, the Company may enter into a business combination with another business having no significant operating history. In addition, the target company may have had no history of earnings, have limited assets a negative net worth or other characteristics that are associated with development stage companies. Continued Management Control, Limited Time Availability. While seeking a business combination, none of the management will be devoting their full time to such an enterprise. None of the officers have entered into a written employment agreement with the Company and none is expected to do so in the foreseeable future. The Company does not have key man life insurance on any of its officers or directors. Notwithstanding the combined limited experience and time commitment of management, loss of the services of any of the management team would adversely affect the opportunity of a business combination for the Company. See "Directors, and Executive Officers". Conflicts of Interest - General. Officers and directors of the Company may participate in business ventures which could be deemed to compete directly with the Company. Additional conflicts of interest and non-arms length transactions may also arise in the event the officers or directors are involved in the management of any firm with which the Company transacts business. Management does not plan to seek a merger with, or acquisition of, any entity in which management serves as officers, directors or partners, or in which they or their family members own or hold any direct or indirect ownership interest. Affiliation With Other Development Stage Companies. Officers and Directors of the Company may be affiliated with other development stage companies such as DigiCorp. In the event that management identifies a candidate for a business combination, and the candidate expresses no preference for a particular company, management may make a business combination with another development stage company that it is associated with. As a result, there can be no assurance that there will be sufficient business opportunities to consummate a business combination for DigiCorp. Reporting Requirements May Delay or Preclude Acquisition. Sections 13 and 15(d) of the Securities Exchange Act of 1934 require reporting companies to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company. Acquisition prospects that do not have or are unable to obtain the required audited statements may be inappropriate for acquisition so long as the reporting requirements of the Securities Exchange Act of 1934 are applicable. Lack of Diversification. The Company's proposed operations, even if successful, will in all likelihood result in the Company engaging in a business combination with another company. Consequently, the Company's activities may be limited to those business opportunities engaged in by the target company. The Company's inability to diversify its activities into a number of areas may subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the operations. International Business Risk. If the Company enters into a business combination with a foreign company, the Company will be subject to risks inherent in business operations outside of the United States. Such risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings and capital investment, resource self-sufficiency and balance of payments positions, and in other respects. Probable Change in Control and Management. A business combination involving the issuance of the Company's common stock will, in all likelihood, result in shareholders of a private company obtaining a controlling interest in the Company. Any such business combination may require management of the Company to sell or transfer all or a portion of the Company's common stock held by them, or resign as members of the Board of Directors of the Company. The resulting change in control of the Company could result in removal of one or all the present officers and directors of the Company and a corresponding reduction in or elimination of their participation in the future affairs of the Company. Dilution of Present Shareholders After Business Combination. The Company's plan for a business combination would be with another private company that would most likely result in the private company's shareholders owning a majority interest of the outstanding shares of the combined company. As a result the percentage ownership of the present shareholders in DigiCorp would be substantially diluted if the Company is successful in completing a business combination. Taxation. Federal and state tax consequences will, in all likelihood, be major considerations in any business combination undertaken by the Company. Currently, such transactions may be structured so as to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. The Company intends to structure any business combination so as to minimize the federal and state tax consequences to both the Company and the target entity; however, there can be no assurance that such business combination will meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes which may have an adverse effect on both parties to the transaction. PRINCIPAL PRODUCTS AND SERVICES The primary activities by the Company are to seek out and investigate the acquisition of any viable business opportunity by purchase and exchange for securities of the Company for ownership in the target company resulting in a business combination. Distribution Methods of the Products or Services. Management will seek out and investigate business opportunities through every reasonably available fashion, including personal contacts, professionals, securities broker-dealers, venture capital personnel, members of the financial community and others who may present unsolicited proposals; the Company may also advertise its availability as a vehicle to bring a company to the public market through a "reverse" reorganization or merger. The Company presently does not have any company as a target for a business combination nor does the Company presently have any products or services. COMPETITIVE BUSINESS CONDITIONS Competitors include thousands of other publicly-held companies whose business operations have proven unsuccessful, and whose only viable business opportunity is that of providing a publicly-held vehicle through which a private entity may have access to the public capital markets. There is no reasonable way to predict the competitive position of the Company or any other entity under the circumstances; however, the Company, will be at a competitive disadvantage in competing with companies that have recently completed an initial public offering, have significant cash resources and have recent operating histories when compared with the complete lack of any substantive operations by the Company for the past several years. Sources and Availability of Raw Materials and Names of Principal Suppliers. Since the Company does not have any products or services it does not presently require any raw materials and therefore, has no dependence on any one supplier or customers to purchase products. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts. The Company does not have any patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. In addition, the Company is not presently involved in any research or development. Need for any Governmental Approval of Principal Products or Services. The Company currently produces no products or services, therefore, it is not presently subject to any governmental regulation in this regard. However, in the event that the Company engages in a merger or acquisition transaction with an entity that engages in such activities, it will become subject to all governmental approval requirements to which the merged or acquired entity is subject. Effect of Existing or Probable Governmental Regulations on Business. The integrated disclosure system for small business issuers adopted by the Securities and Exchange Commission in Release No. 34-30968 and effective as of August 13, 1992, substantially modified the information and financial requirements of a "Small Business Issuer," defined to be an issuer that has revenues of less than $25 million; is a U.S. or Canadian issuer; is not an investment company; and if a majority-owned subsidiary, the parent is also a small business issuer; provided, however, an entity is not a small business issuer if it has a public float (the aggregate market value of the issuer's outstanding securities held by non-affiliates) of $25 million or more. The Securities and Exchange Commission, state securities commissions and the North American Securities Administrators Association, Inc. ("NASAA") have expressed an interest in adopting policies that will streamline the registration process and make it easier for a small business issuer to have access to the public capital markets. Cost and Effects of Compliance with Environmental Laws. Presently environmental laws are not applicable to the Company, however, environmental laws, rules and regulations may have an adverse effect on any business venture viewed by the Company as an attractive acquisition, reorganization or merger candidate, and these factors may further limit the number of potential candidates available to the Company for acquisition, reorganization or merger. Number of Employees. The Company presently has no full-time employees, however, management will devote whatever time they deem necessary to evaluate different business opportunities for a business combination. Management of the Company also expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating companies for a business combination. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in a specific business combination. ITEM 2. DESCRIPTION OF PROPERTY. The executive and business office of the Company consists of office space located at 1206 W. South Jordan Parkway, Unit B, South Jordan, Utah 84095. The office space is owned by Gregg B. Colton, Don J. Colton and John O. Anderson and is leased to Pioneer Oil and Gas. Currently, the Company is not charged for using the office space. The Company believes this office space is adequate to serve its needs until such time as a business combination occurs. The Company also expects to be able to utilize this office space until such time as a business combination is consummated. The Company has no other property that it uses or owns. ITEM 3. LEGAL PROCEEDINGS. The Company is not a party to any legal proceedings, nor is the Company aware of any disputes that may result in legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS During the fourth quarter of the fiscal year covered by this report, no matters were submitted to a vote of security holders. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED MATTERS There is presently no current market for the Company's securities and the Company does not intend to undertake any efforts at the present time to cause a market to develop. However, the Company could pursue such efforts in the future if having a market would assist in its business plan. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Plan of Operation The Company is presently a development stage company conducting virtually no business operation, other than its efforts to effect a business combination with a target business which the Company considers to have significant growth potential. Currently, the Company does not engage in any operation or receive any cash flow. The Company will carry out its plan of business as discussed above. See "Description of Business". The Company cannot predict to what extent its liquidity and capital resources will be diminished prior to the consummation of a business combination or whether its capital will be further depleted by the operating losses (if any) of the target business combining with the Company. During its fiscal year ending June 30, 2002, the Company expended $2,808 primarily in accounting fees for preparing financial statements and review of its quarterly and annual filings with the SEC. The Company believes that it presently has sufficient cash to cover the professional fees other expenses that the Company expects to incur within the next 12 months. However, in the event that a business combination does not occur during the next 12 months the Company may need to raise additional capital to meet its needs to continue to pursue a business combination or that it may cease operations. No commitments of any kind to provide additional funds have been made by management, other present shareholders or any other third person. There are no agreements or understandings of any kind with respect to any future loans from officers or directors of the Company on behalf of the Company. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses. In the event the Company elects to raise additional capital prior to the effectuation of a business combination, it expects to do so through the private placement of restricted securities rather than through a public offering. The Company does not currently contemplate making a Regulation S offering. Since the Company's cash reserves are minimal, officers and director's of the Company are compensated by the Company by issuances of stock in lieu of cash. See "Executive Compensation". Presently, there are no arrangements or anticipated arrangements to pay any type of additional compensation to any officer or director in the near future. Regardless of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash. See "Certain Relationships and Transactions". Results of Operations. The Company has had no material operations for the last two fiscal years. Losses were (2,808) and ($5,110) respectively, for the fiscal years ended June 30, 2002, and 2001. Losses in the current 2002 fiscal year were attributable primarily for payments made to the auditors for preparing financial statements and reviewing filings with the SEC. 2001 losses resulted from the issuances of shares of common stock to officers of the Company for services rendered in providing the legal and other work necessary to file this registration statement. These services included the preparation of this Form 10-SB and arranging for the preparation and auditing of the financial statements. Liquidity. The Company had no liquidity during the fiscal year ended June 30, 2002. The liquidity of the Company for the year ended June 30, 2001, was from the contribution of capital made by Vernal Western Drilling. See "Certain Relationships and Related Transactions". The Company does not contemplate raising capital over the next twelve months by issuance of any debt or additional equity securities. The Company has no loan agreements with any officer or director. ITEM 7. FINANCIAL STATEMENTS DIGICORP (A Development Stage Company) FINANCIAL STATEMENTS June 30, 2002 and 2001