<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K-A3
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
November 8, 1998
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Date of Report
(Date of Earliest Event Reported)
MICRO-HYDRO POWER, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-21733 87-0369035
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(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
6510 South Acres
Houston, Texas 77048
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(Address of Principal Executive Offices)
(713)991-6262
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Registrant's Telephone Number
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
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(Former Name or Former Address if changed Since Last Report)
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Item 1. Changes in Control of Registrant.
the Registrant's Board of Directors determined not to effect the
reverse split outlined in the Information Statement previously filed with the
Securities and Exchange Commission on or about December 31, 1998, and mailed
to stockholders on or about January 4, 1999.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The Kingsley Coach, Inc. (formerly Micro-Hydro Power, Inc.)
Independent Auditors' Report
Balance Sheet dated December 31, 1998
Statement of Operations for the years ended
December 31, 1998 and 1997
Statements of Stockholders' Deficit for the years ended
December 31, 1998 and 1997
Statements of Cash Flows for the years ended
December 31, 1998 and 1997
Notes to Financial Statements
(b) Pro Forma Financial Information.
(c) Exhibits.
*10-KSB Annual Report for the year ended December 31, 1997
*10-QSB Quarterly Report for the quarter ended September 30, 1998.
*Information Statement dated December 21, 1998.
* Summaries of any exhibit are modified in their
entirety by this reference to each exhibit.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
MICRO-HYDRO POWER, INC.
Date: 3/3/99 By/s/Ralph Dickenson
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Ralph Dickenson
Vice President and Director
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The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Independent Auditors' Report
and
Financial Statements
December 31, 1998
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
The Kingsley Coach, Inc.
We have audited the accompanying balance sheets of The Kingsley Coach, Inc.
(formerly known as Micro-Hydro Power, Inc.) as of December 31, 1998, and the
related statements of operations, stockholders' deficit, and cash flows for
the years ended December 31, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Kingsley Coach, Inc. as
of December 31, 1998, and the results of their operations and cash flows for
the years ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that The
Kingsley Coach, Inc. will continue as a going concern. As discussed in Note 2
to the financial statements, the Company has accumulated losses from
operations, and has a net working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial
statements do not include any adjustment that might result from the outcome of
this uncertainty.
/S/Mantyla McReynolds
Mantyla McReynolds
Salt Lake City, Utah
January 15, 1999
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<TABLE>
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Balance Sheet
December 31, 1998
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 67,724
Accounts receivable 22,959
Inventory - Note 11 800,172
Total Current Assets 890,855
Property & Equipment, net - Note 8 98,682
Other Assets:
Deposits 3,650
Total Other Assets 3,650
TOTAL ASSETS $ 993,187
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 145,334
Accrued liabilities
Payable - related party/stockholder - Note 4 80,414
Payroll taxes payable 44,596
Customer deposits - Note 5 540,868
Note payable - manufacturer - Note 9 200,000
Note payable - other - Note 10 479,523
Note payable -shareholder - Note 4 537,846
Total Current Liabilities 2,050,768
Stockholders' Deficit - Note 7
Preferred stock, $.0001 par value;
authorized 5,000,000 shares; issued and
outstanding -0- shares -
Common stock, $.00001 par value;
authorized 30,000,000 shares; issued
and outstanding 10,100,010 101
Additional paid-in capital/(deficit) 191,878
Accumulated Deficit (1,249,560)
Total Stockholders' Deficit (1,057,581)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 993,187
</TABLE>
See accompanying notes to financial statements
<TABLE>
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Statements of Operations
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Revenues:
Sales $ 2,046,121 $ 585,000
Cost of Sales (1,787,792) (477,195)
Gross Margin 258,329 107,805
General and administrative expenses 757,192 297,276
Net Loss from Operations (498,863) (189,471)
Other Income/(Expense):
Rental income 29,800 -0-
Interest expense (116,628) (39,630)
Total Other Income/(Expense) (86,828) (39,630)
Net Loss Before Taxes (585,691) (229,101)
Income taxes -0- -0-
Net Loss $ (585,691) $(229,101)
Loss Per Share $ (.08) $ (.03)
Weighted Average Shares Outstanding 7,416,677 7,300,010
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Statement of Stockholders' Deficit
For the Years Ended December 31, 1998 and 1997
<CAPTION>
Addit'l Accum- Total
Shares Common Paid-In ulated Stockholders'
Issued Stock Capital Deficit Deficit
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1996 7,300,010 $ 73 $163,906 $(403,969) $ (239,990)
Net withdrawals from
LLC members (30,799) (30,799)
Net Loss for the Year
Ended December 31, 1997 (229,101) (229,101)
Balance, December 31,
1997 7,300,010 73 163,906 (663,869) (499,890)
Issued stock for
services 2,800,000 28 27,972 28,000
Issued stock in
recapitalization
Net Loss for the Year
Ended December 31, 1998 (585,691) (585,691)
Balance, December 31,
1998 10,100,010 $ 101 $ 191,878$(1,249,560) $(1,057,581)
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Provided by/(Used for) Operating
Activities
Net Loss $(585,691) $(229,101)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21,217 2,562
Issued stock for services 28,000 -0-
Decrease in accounts receivable 52,507 (75,466)
Decrease in other receivable 16,571 -0-
Increase in inventory (417,255) (261,711)
Increase in payroll liabilities 3,755 40,841
Increase (decrease)in accounts payable 142,715 (275)
Increase in accrued liabilities 22,087
Increase in customer deposits 339,368 201,500
Net Cash Provided by/(used for) Operating
Activities (376,726) (321,650)
Cash Flows Provided by/(Used for) Investing
Activities
Acquisition of property and equipment (90,568) (13,401)
Net Cash Used for Investing Activities (90,568) (13,401)
Cash Flows Provided by/(Used for) Financing
Activities
Principal increase in notes payable 508,317 154,052
Distributions to LLC members (30,799)
Investment by shareholder 15,441 59,680
Net Cash Provided by Financing Activities 523,758 182,933
Net Increase/(Decrease) in Cash 56,464 (152,118)
Beginning Cash Balance 11,260 163,378
Ending Cash Balance $ 67,724 $ 11,260
Supplemental Disclosures
Interest paid $116,628 $ 39,630
Income taxes paid -0- -0-
</TABLE>
See accompanying notes to consolidated financial statements.
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Notes to Financial Statements
December 31, 1998
Note 1 Organization and Summary of Significant Accounting Policies
(a) Organization
Micro-Hydro Power, Inc. [MHP] incorporated under the laws of the
State of Utah in 1980. MHP was dissolved November, 1988 and reinstated by
Court Order on or about October 20, 1996. In December, 1997, MHP changed its
domicile from the State of Utah to the State of Delaware by merging with and
into its wholly-owned subsidiary, Micro-Hydro Power, Inc., a Delaware
corporation.
MHP was originally organized primarily for research, development,
manufacture, sale, distribution, operation, and maintenance of micro-
hydro power units; which consist of water-powered electrical generating
machines. MHP was essentially dormant for ten years until an Agreement and
Plan of Reorganization was executed on December 18, 1998, between MHP and The
Kingsley Coach, LLC, a Louisiana limited liability company [Kingsley].
Kingsley is a manufacturer of luxury motor homes known as The Kingsley Coach.
The result was the acquisition of the assets and liabilities of The Kingsley
Coach, LLC, accounted for herein as a purchase. The accompanying financial
statements represent the combined entity for all periods presented.
(b) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the Statement],
"Accounting for Income Taxes." The Statement requires an asset and liability
approach for financial accounting and reporting for income taxes, and the
recognition of deferred tax assets and liabilities for the temporary
differences between the financial reporting bases and tax bases of the
Company's assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. The cumulative effect of this
change in accounting for income taxes as of December 31, 1997 is $0 due to the
valuation allowance established as described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted average number of
shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash on deposit in banks to be cash. The Company has $67,724 cash at December
31, 1998.
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(f) Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
using the straight-line and modified accelerated cost recovery(income tax)
basis over the useful lives of the related assets. Expenditures for
maintenance and repairs are charged to expense as incurred.
(g) Inventory
Inventory consists of parts, work-in-process, and finished units.
Inventory is valued at the lower of cost or market using the first-in
first-out (FIFO) costing method.
Note 2 CAPITAL DEFICIENCY
The Company has accumulated losses through December 31, 1998
amounting to $1,249,560, and has a net working capital deficiency of
$1,159,913 at December 31, 1998. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
Management plans include additional issuances of shares of common
stock for working capital. The Company has issued shares of common stock for
services of a consulting firm, said shares to be held in escrow, pending
the sale of an additional 2,000,000 restricted common shares at $1 per share.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Note 3 INCOME TAXES
The Company adopted Statement No. 109 as of April 1, 1993. Prior
years' financial statements have not been restated to apply the provisions of
Statement No. 109. No provision has been made in the financial statements for
income taxes because the Company has accumulated substantial losses from
operations.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at December 31, 1998 have no
impact on the financial position of the Company. A valuation allowance is
provided when it is more likely than not that some portion of the deferred tax
asset will not be realized. Because of the lack of taxable earnings history,
the Company has established a valuation allowance for all future deductible
temporary differences.
Principally all operations through December 31, 1998 were
attributable to a limited liability corporation which is taxed to its members.
Thus, tax returns for those periods presented in this report have been or
will be filed accordingly.
Note 4 RELATED PARTY TRANSACTIONS/STOCKHOLDER LOANS
A related party, which shares common ownership with Kingsley, has
advanced $69,667 to the Company for operating expenses. A stockholder has
paid expenses on behalf of the Company of approximately $773 during 1998 and
$9,974 during 1997. The Company has recorded a liability for these expenses
to the stockholder and related party for $80,414 at December 31, 1998. This
unsecured liability bears no interest and is due on demand.
To pay for the original development and formation of The Kingsley
Coach, LLC, and to fund ongoing operating expenses a shareholder/officer has
advanced funds to Company as evidenced by executed notes summarized as
follows.
Rate of
Description Principal Terms Interest
For original development 175,000 Due on demand -0-
Operating advances 199,537 Due on demand 11%
Additional operating
advances 163,309 Due on demand -0-
Total 537,846
Note 5 CUSTOMER DEPOSITS
When a customer signs a contract to have the Company manufacture a
Kingsley Coach, a deposit or down payment is required of the customer. The
amount of deposit varies based on the terms of the contract. The Company
treats these deposits as unearned revenue until the Coach is delivered to the
customer. At December 31, 1998, deposits had been collected on nine Coaches
in various stages of completion.
Note 6 PREFERRED STOCK
The Certificate of Incorporation of Micro-Hydro Power, Inc., a
Delaware corporation, authorizes the issuance of 5,000,000 shares of $.0001
par value preferred stock. The Board of Directors may issue the shares in
series and may designate the powers, preferences and rights of such shares by
resolution, without the vote of stockholders. No shares are issued and
outstanding as of December 31, 1998.
Note 7 PLAN OF REORGANIZATION/ISSUANCE OF STOCK
As referenced in Note 1 the Agreement and Plan of Reorganization set
forth that Micro-Hydro Power would issue 7,000,000 shares to equity interest
holders of Kingsley. At the time of said issuance, Micro-Hydro Power had
300,010 shares outstanding and issued additional shares as follows: (1)
300,000 pre-split shares of common stock to individuals including directors
and executive officers who have provided non-capital raising services to the
Company, pursuant to Form S-8 filed on or about December 18, 1998 with the
Securities and Exchange Commission; (2) 100,000 "restricted securities" for
other services rendered; and (3), 2,400,000 "restricted securities"
(approximately 80% of which to be held in escrow subject to funding of the
reorganized Company through the sale of an additional 2,000,000 pre-split
shares of "restricted securities" in consideration of $2,000,000).
NOTE 8 PROPERTY AND EQUIPMENT
The major classes of assets as of the balance sheet date are as
follows:
<TABLE>
Accumulated Net
Asset Class Cost Depreciation Book Method/Life
<S> <C> <C> <C> <C>
Furniture $ 1,329 $ (190) $ 1,139 MACRS/7
Electronic Equipment 4,840 (968) 3,872 MACRS/5
Tools 91,537 (20,592) 70,945 MACRS/5
Leasehold Improvements 25,361 (2,635) 22,726 SL/31.5
Total $ 123,067 $(24,385) $ 98,682
Depreciation expense was $21,217, in 1998, and $2,562 in 1997.
NOTE 9 PLANT LEASE/SUBSEQUENT EVENT/NOTE PAYABLE
In January, 1999, the Company relocated its production facility to
Middleburg, Pennsylvania, to a plant that is shared by a subcontractor who
participates in the production of Kingsley Coaches. The Company entered into
an agreement for a period of three years with annual rent charges of $1 plus a
prorated share of common expenses such as taxes and insurance. Prior to
relocation, the Company leased a facility in Houston, Texas, on a
month-to-month basis. Total rent paid for the periods ended December 31, 1998
and 1997 were $30,167 and $12,736.
In connection with the plant lease, the Company accepted a loan for
$200,000, from the subcontractor and granted them exclusive recreational
vehicle manufacturing rights for the agreement period (effective September 10,
1998). Repayment of the loan is based on a $5,000 per body charge to be
billed as units are built for Kingsley. In the event that the loan is not
repaid through the per-body charge, it is payable on demand. The loan is
non-interest bearing.
Note 10 NOTE PAYABLE/RENTAL INCOME
A relative of an officer of the Company has purchased several
Kingsley Coaches. In 1998, he sold two back to the Company in exchange for a
note. The note is dated May 1, 1998, has no maturity date and bears no
interest. The original amount of the note is $502,000. The Company repaid
approximately $22,477 during 1998. The two Kingsley Coaches are still owned
by the Company as of December 31, 1998, and through the date of this report.
One coach is being rented to an individual on a month-to-month basis while his
custom coach is being manufactured. Total rents received during 1998 were
$29,800. The other Kingsley Coach is on display as a demo unit for the
Company until it is sold.
Note 11 INVENTORY
As of December 31, 1998, inventory consists of parts,
work-in-process, and finished units. Most parts are purchased and charged to
the job. However, other items are purchased in bulk and can be used on all
Kingsleys. As of December 31, 1998, cost approximates market value and no
adjustment has been recorded. Work-in-process inventory consists of several
Kingsley Coaches at various stages of production. Total inventory as of
December 31, 1998 is as follows:
Parts inventory $ 34,156
Work-in-process 264,016
Finished Units/Demos 502,000
$800,172
Note 12 LEGAL CONTINGENCIES
The Company is involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management and legal
counsel, the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position.
A contingent liability has been accrued for $10,000 in a case
alleging breach of contract. In this case, management intends to vigorously
contest.
</TABLE>
