KINGSLEY COACH, INC. 10KSB 1998
(FORMERLY MICRO-HYDRO POWER, INC.)
U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------- ---------
Commission File No. 0-21733
KINGSLEY COACH, INC. 10KSB 1998
(FORMERLY MICRO-HYDRO POWER, INC.)
(Name of Small Business Issuer in its Charter)
DELAWARE 87-0369035
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
6510 South Acres
Houston, Texas 77048
--------------------------
(Address of Principal Executive Offices)
(713)991-6262
-------------
Registrant's Telephone Number
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
------------------------------
(Former Name or Former Address if changed Since Last Report)
Securities Registered under Section 12(b) of the Exchange Act: None.
Securities Registered under Section 12(g) of the Exchange Act: One Hundredth
of One Mill ($0.00001) par value common voting stock and One Tenth of One Mil
($0.0001) par value preferred stock
Check whether the Issuer (1) 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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure
will
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. [ ]
State Issuer's revenues for its most recent fiscal year:
December 31, 1998 - $ 2,046,121 -
State the aggregate market value of the common voting stock held
by non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a specified
date
within the past 60 days:
December 31, 1998 - $31.00 There are approximately 3,100,010 shares of
common voting stock of the Registrant held by non-affiliates. During the
past five years, there has been no "public market" for shares of common
stock of the Company, so the Company has arbitrarily valued these shares on
the basis of par value(.00001) per share. The Company expects to have a
public
market for its common stock within the month of January 1999. It has
requested
a symbol change on the OTC Bulletin Board to one of the following, in this
order of preference: "KNGS," "COCH," "KOCH" or"KNGY.", and expects to have an
opening trading price between $2.00 and $3.00 per share. This is a forward-
looking projection, and there are no assurances that this will occur. There
are
no shares of the Company's preferred either issued or outstanding.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
None; Not Applicable.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common Voting Stock
December 31, 1998
10,100,010
Preferred Stock
December 31, 1998
0
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained in Item
13 of this Report.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
Business Development
- --------------------
Form and year of organization
------------------------------
For a discussion of the activities of Micro-Hydro Power, Inc., a
Delaware corporation (the "Company") and its predecessor, prior to the period
covered by this Report, see the Company's Registration Statement on Form
10-SB-A1, filed with the Securities and Exchange Commission on March 4,
1997, its Annual Report on Form 10-KSB, for the calendar year ended
December 31, 1996, filed March 31, 1997, and its annual report for the
calendar year ended December 31, 1996, filed March 31, 1998.
Bankruptcy or similar proceedings
---------------------------------
Not applicable
Material reclassification, merger, etc.
---------------------------------------
The Company was essentially dormant for ten years until an Agreement and
Plan of Reorganization was executed on December 18, 1998, between the
Company and Kingsley Coach, LLC, a Louisiana limited liability company,
following the execution of a Letter of Intent between the companies on
November
8, 1998. The result was the acquisition of the assets and liabilities of The
Kingsley Coach, LLC.
The Plan provided for the issuance of 7,000,000 pre-split shares (see
below respecting planned reverse split) of the Company's "restricted
securities" (common stock) in exchange for 100% of Kingsley Coach's assets.
Additional shares were issued as follows: (i), 300,000 pre-split
shares of common stock under an S-8 Registration Statement to certain persons,
including directors and executive officers, who have provided non-capital
raising services to the Company; (ii), 100,000 "restricted securities" for
other services rendered; and (iii), 2,400,000 "restricted securities"
(approximately 80% of which will 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).
There were 300,010 pre-Plan outstanding voting securities of the
Company, and taking into account the common stock issued as outlined above
(and excluding the 2,000,000 pre-split shares to be offered at $1 per share),
there are 10,100,010 post-reorganization pre-split outstanding shares of
the common stock. The Company has provided its stockholders with an
Information Statement concerning a one for two reverse split of the
outstanding voting securities and a name change to "The Kingsley Coach, Inc."
This would reduce the outstanding voting securities to 5,050,005 shares.
The Company has requested a symbol change on the OTC Bulletin Board
to ne of the following, in this order of preference: "KNGS," "COCH," "KOCH"
or "KNGY."
Business of Company
--------------------
Principal Products or Services and Markets
------------------------------------------
The Company is the manufacturer of customized recreational and
commercial vehicles. Unlike typical recreational vehicles, a Kingsley Coach
has a semi-truck chassis as its base. This unique feature allows for easy
service for owners who can go to any truck stop for repairs. Kingsley Coaches
retail for between $239,000 and $450,000, depending on customized features.
Kingsley Coach commenced business in 1996, with first-year sales of
$300,000. In 1997, sales were $825,000, and in 1998, sales were $ 2,046,121
Company Chairman Ralph Dickenson estimates that 1999 sales will increase
substantially.
Distribution methods of the products or services
-------------------------------------------------
The Company markets directly to the public. There are several
independent sales representatives and there are also several dealers in
designated parts of the United States at this time. The Company is presently
planning to expand its dealer and representative network.
Status of any publicly announced new product or service
-------------------------------------------------------
The Company recently announced the presentation of the "Camelot"
series units, which are focused on a standardized production for units to be
sold to the Recreational vehicle marketplace and not specialized applications.
The Company anticipates that the introduction of this new model will increase
sales.
Competitive business conditions and the small business issuer's
competitive position in the industry and methods of competition
---------------------------------------------------------------
The Company considers its products to be unique at this time. Certain
"high end" motorhomes and bus conversion units are considered by some persons
to be similar, but the Company is the only known manufacturer to build coaches
on an existing truck.
The Company's management considers competitive pressures to be
insignificant.
Sources and availability of raw materials and the names of principal
suppliers
--------------------------------------------------------------------
The Company utilizes a wide range of materials and supplies that are
provided through the automotive and recreational vehicle industry suppliers.
The main supplier of material to the Company is Thor America, Inc. ("Thor") of
Middleburg, Pennsylvania. Thor is the second largest manufacturer of
recreational vehicles in the U.S. The Company has signed an agreement with
Thor whereby it will provide the Company with shared production space in
exchange for exclusive production of the Camelot Series units for a three year
period. The Company will commence the operating of its new facility in
Middleburg in January 1999.
Dependence on one or a few major customers
------------------------------------------
The Company does not have any dependence on one or a few of any major
customers.
Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration
-----------------------------------------------------------------
None.
Need for any government approval of principal products or services
-----------------------------------------------------------------
None; not applicable.
Effect of existing or probable governmental regulations on the business
-----------------------------------------------------------------------
None; not applicable
Amount spent during the last two fiscal years on research and development
activities
-------------------------------------------------------------------------
1997: $375,000.00
1998: $600,000.00
Costs and effects of compliance with environmental laws
-------------------------------------------------------
Insignificant.
Number of total employees and number of full time employees
-----------------------------------------------------------
Six total employees
Six full-time employees
Item 2. Description of Property
- ---------------------------------
Location, condition, limitations on ownership of principal plants and
property.
---------------------------------------------------------------------
The Company operates from a 6000 sq. ft. rented building at 6510 South
Acres, Houston, Texas, with 20,000 sq. ft. of land area. This was the main
facility and corporate headquarters at December 31, 1998. The Company intends
to move its operations to its Middleburg facility in January 1999, as set
forth
above. That facility would include 2500 square feet of office space, storage
and working space on a 8,000 square foot land area, with parking for trucks
and
vehicles at 64 Old Route 522, Middleburg, PA. The Company also intends to use
production and work space at sections of the Thor America plant located at 37
Old Route 522, Middleburg, PA.
The Company also has facilities that it rents at 14010 Sunfish Lake Blvd.,
Anoka, Minnesota, which includes approximately 10,000 square feet of space on
1.2 acres of land, utilized for offices, engineering, design, assembly and
repair.
Mining Operations
-------------------
None; not applicable
Real Estate Activities
-------------------
None; not applicable
Item 3. Legal Proceedings
- -------------------------
The Company is involved in various claims and legal actions which are
routine an incidental to the business, and which ariso in the ordinary course
of business. In the opinion of management, the disposition of these
proceedings will not have a material adverse effect on the Company's business
or its financial position. The Company's counsel for these actions is Bradley
Rhorer, Dallas, Texas, 225-383-9703.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
- ----------------------------------------------------------------
There is currently no public market for the Company's stock. The Company
expects to have a public market for its common stock within the month of
January 1999. It has requested a symbol change on the OTC Bulletin Board to
one of the following, in this order of preference: "KNGS," "COCH," "KOCH"
or"KNGY.", and expects to have an opening trading price between $2.00 and
$3.00
per share. This is a forward-looking projection, and there are no assurances
that this will occur.
There are currently 384 shareholders of the common stock of the Company.
There are no shares of the Company's preferred either issued or outstanding.
The Company has not declared any cash dividends, and due to capital
deficiency and negative net worth, none are expected to be declared in the
near
future.
Item 6. Management Discussion and Analysis or Plan of Operation
- ----------------------------------------------------------------
Plan of Operation for Companies with No Revenues
-----------------------------------------------
Not applicable
Management Discussion and Analysis of Operation for the Year Ended
December 31, 1997
------------------------------------------------------------------
In 1997, the Company had no business operations, and had had no business
operations since approximately November 1988. To the extent that the Company
intended to continue to seek the acquisition of assets, property or
business that may benefit the Company and its stockholders, the
Company
was essentially a "blank check" company. Because the Company had virtually
no assets, conducted no business and had no employees, management
anticipated that any such acquisition would require the Company to issue
shares of its common stock as the sole consideration for the acquisition.
In 1997, the Company had no business operations other than seeking the
acquisition of assets, property or business that could benefit the Company and
its stockholders. On June 12, 1997, the Company, Services, Inc., a Utah
corporation ("Jenson Services"), and Apollo, executed a non-binding
letter of intent providing for the merger of a newly-formed wholly-owned
subsidiary of Apollo with and into the Company (the "Letter of Intent").
As of December 31, 1997, the parties had not executed any
definitive, binding Plan of Reorganization incorporating the terms of the
Letter of Intent, and there was no assurance that such a Plan would ever be
executed or that, if executed, such a transaction would be completed.
Management Discussion and Analysis or Plan of Operation for the Year Ended
December 31, 1998, including material events as applicable
--------------------------------------------------------------------------
The Company was essentially dormant for ten years until an Agreement and
Plan of Reorganization was executed on December 18, 1998, between the
Company and Kingsley Coach, LLC, a Louisiana limited liability company,
following the execution of a Letter of Intent between the companies on
November
8, 1998. The result was the acquisition of the assets and liabilities of The
Kingsley Coach, LLC.
The Company accumulated losses through December 31, 1998 amounting to
$1,249,560.00 and has a net working capital deficiency of $1,159,913 at
December 31, 1998.
Management plans include additional issuance 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 $1.00 per share to investors
pursuant to Rule 506 of the Securities Act of 1933, or any other available
exemption from registration..
Management expects sales to increase in 1999 and to reflect the benefits
of its newly formed strategic alliance with Thor America, whereby the Company
will benefit from the economies of scale and reduction of certain costs.
Management recognizes that a location in Pennsylvania, across from the
supplier of the Kingsley coach body, and use of adjacent facilities, will have
beneficial impact on cost margins and product quality. Management also
recognizes that its planned increased efforts and participation in trade shows
and general marketing will assist the Company in achieving stability.
Management recognizes that is product is considered a luxury item, and
that
as the economy has enjoyed remarkable growth for some time, that the growth
cycle may end, detrimentally affecting consumer interest in luxury items.
However, management has not seen a decrease in interest or in sales, and
expects, as more babyboomers begin consider retirement, that sales will
continue to increase for the foreseeable future, even if the economy
experiences a downturn.
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.
The Kingsley Coach, Inc.
(Formerly Micro-Hydro Power, Inc.)
Independent Auditors' Report
and
Financial Statements
December 31, 1998
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
<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.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None; Not Applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- ------------------------------------------------------------------
Identification of Directors and Executive Officers
--------------------------------------------------
The following table sets forth, in alphabetical order, the names and
the nature of all positions and offices held by all directors and executive
officers of the Company for the Company year ending December 31, 1998, and
the period or periods during which each such director or executive officer
served in his or her respective positions.
Management
Names Title or Position
Age
Ralph Dickenson CEO, Chairman and President 59
Verdo Lancaster Vice President and Director 59
Richard Duston Sec/Tres and Director 49
Russell Ratliff Non-voting director 39
Catherine Rimes Director 37
James Whitehead Director 56
The terms of each of the above is for one year, commencing December 18, 1998.
Officer/Director Resumes:
Ralph Dickenson. Mr. Dickenson is the Chairman, CEO, President and co-founder
of the Kinglsey Coach line of vehicles. With over 30 years in the
transportation industry, Mr. Dickenson has been involved in the transit bus,
charter bus, school bus industry as well as transit bus re-manufacturing,
sales and service of all types of buses and trucks.
Verdo Lancaster. Mr. Lancaster is Vice President of Finance and sales and a
director. Mr. Lancaster has many years of experience in the mobile home
industry and has owned recreational vehicles over the last 30 years.
Richard Duston. Mr. Duston currently works for Waters Truck & Tractor Co.,
Inc. as a comptroller. Waters Truck & Tractor is the 2nd largest Navistar
dealer in the southeast U.S. and is a 60 year old family-owned company. BS
Degree from Mississippi State University in accounting in 1975. MPA Degree
from Mississippi State University in 1976 and a Graduate Degree from the
School of Banking of the South in 1985.
Russell Ratliff. Mr. Ratliff is President of Southeast Financial Consulting,
Inc., a Tennessee corporation engaged in providing business and financial
consulting services to a variety of private sector clients. Mr. Ratliff
received his B.A. in business from Shorter University in North Little Rock,
Arkansas, in 1983 and in 1982, he received a Bachelor of Science Degree in
Geology from Tennessee Technological University.
Catherine Rimes. Ms. Rimes is the daughter of Ralph Dickenson and basically
grew up in the transportation industry working with and learning from her
father. She can up through the ranks working as a bus cleaner and general
office assistant to eventually being put in charge of special projects and
ultimately asked to serve as the President of several divisions. Her
responsibilities include customer relations, contract negotiations, lease
fleet management, personnel, marketing and advertising.
James Whitehead. Mr. Whitehead is a director. Mr. Whitehead is currently CEO
of Whitehead Brothers, a nationwide freight trucking company with fifty trucks
and 62 employees. He is also co-owner of Lake City Logistics in Eufaula,
Alabama.
Significant employees
---------------------
None
Family relationships
--------------------
Catherine Rimes is he daughter of Ralph Dickenson
Officer/Director bankruptcies, criminal convictions orders or violations
re: securities, business or banking laws
------------------------------------------------------------------------
None
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Not applicable
Item 10. Executive Compensation
- --------------------------------
No compensation was paid to any officer or director. It is expected that
compensation for Ralph Dickenson, CEO, will commence soon. The Company will
reimburse Mr. Dickenson for standard living expenses while the Company
transfers to Pennsylvania.
It is expected that the board of directors of the Company will approve the
annual issuance of 50,000 shares of restricted common stock of the Company to
each director for services rendered.
No other information is applicable to the Company under Item 10 of this
disclosure.
Item 11. Security Ownership of Certain Beneficial Owners and Management
- -------------------------------------------------------------------------
The following table sets forth the shareholdings of those persons who
own more than five percent of the Company's common stock as of the date
hereof:
</TABLE>
<TABLE>
<CAPTION>
Number and Percentage*
of Shares Beneficially Owned
----------------------------
Name and Address # of Shares % of Class
- ---------------- -------------------- ---------
<S> <C> <C>
Ralph Dickenson 0 0%
14010 Sunfish Lake Blvd
Anoka, MN 55303
Verdo Lancaster 3,062,500 30.3%
33236 Walker N. Rd
Walker, LA 70785
Richard Duston 875,000 8.66%
904 College St.
Columbus, MS 39701
DRK, Inc.*
14010 Sunfish Lake Blvd 3,062,500 30.3%
Anoka, MN 55303
*owned by Catherine Rimes (50%) and George Carlson (50%)
</TABLE>
Arrangements that may result in loss of control of Company
-------------------------------------------------------------------------
None; not applicable
Item 12. Certain Relationships and Related Transactions.
- -------------------------------------------------------
With directors or executive officers
------------------------------------------
Directors were not issued any shares and were not involved in any
material
transactions with the Company, other than the Company's agreement to pay for
Ralph Dickenson's costs to relocate to Pennsylvania. It is expected that the
Company will issue 50,000 restricted shares of common stock to each director
in
early 1999.
Southeast Financial Consulting Services, Inc., a company owned and
controlled by Russel Ratliff, was issued 2,000,000 shares of common stock of
the Company (in escrow) contingent on the generation of capital funds for the
Company.
With nominees
--------------
None
With security holders named in response to Item 11
-----------------------------------------------------
Verdo Lancaster is a holder of notes in the amount of $575,000 due to him
from the Company
With immediate family members
-----------------------------
Wilbur Rimes, husband of Catherine Rimes, is owed $502,000 by the Company
Transactions with promoters
----------------------------------------------
To be completed
Item 13. Exhibits and Reports on Form 8-K.
- ------------------------------------------
Index of Exhibits
--------------------------
Plan of Reorganization dated December 18, 1998
Articles of Incorporation and Bylaws
Financial Statements
Reports on Form 8-K
-------------------
An 8-K was filed on 11/8/98 regarding the letter of intent between the
parties and a press release to that effect.
An 8-K/A was filed on 12/21/98 amending the filing regarding the letter of
intent between the parties and a press release to that effect.
An 8-K/A2 was filed on 1/12/99, disclosing the Agreement and Plan of
Reorganization signed between the parties on 12/18/98, and a meeting of the
shareholders set for January 4, 1999 to change the name of the Company to
Kingsley Coach, Inc., and to effect a 2-to-1 reverse split of the common stock
of the Company.
An 8-K/A3 was filed on 3/3/99, disclosing the auditor's report for the
Company for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Exhibits*
- --------
<S> <C>
Where Incorporated
in this Report
--------------
Exhibit Number Description
- -------------- -----------
Financial Date Schedule.
</TABLE>
* Summaries of all exhibits contained within this Report are modified
in their entirety by reference to these Exhibits.
** These documents and related exhibits have been previously filed with
the Securities and Exchange Commission and are incorporated herein
by
reference.
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, thereunto duly authorized.
KINGSLEY COACH, INC.
Date: By/S/4-15-99 By/S/Ralph Dickenson
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:
KINGSLEY COACH, INC.
Date: By/S/4-15-99 By/S/Ralph Dickenson
President and Director
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 67724
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<INCOME-PRETAX> (585691)
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<NET-INCOME> (585691)
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