KINGSLEY COACH, INC. THIRD QUARTER 10QSB
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB/A1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] 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.
(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)
64 Old Route 522
Middleburg, PA 17842
(Address of Principal Executive Offices)
Issuer's Telephone Number: (570)837-7114
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 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.
(1) Yes X No (2) Yes X No
---- ---- ---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
None; not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of
shares outstanding of each of the Registrant's classes of common stock,
as of the latest practicable date:
September 30, 1999
Common Voting Stock
14,401,010
September 30, 1999
Preferred Stock
-0-
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management and
commence on the following page, together with related Notes. In the opinion
of management, the Financial Statements fairly present the financial
condition of the Registrant.
<TABLE>
KINGSLEY COACH, INC.
(FORMERLY Micro-Hydro Power, Inc.)
BALANCE SHEET
September 30, 1999 and December 31, 1998
(Unaudited)
<CAPTION>
ASSETS
9/30/99 12/31/98
<S> <C> <C>
Current Assets:
Cash $ 183,846 $ 67,724
Accounts Receivable 99,567 22,959
Inventory 888,213 800,172
--------- -------
Total Current Assets 1,171,626 890,855
Property & Equipment, net 98,682 98,682
Other Assets:
Deposits 3,650 3,650
Prepaid Expenses 5,000 0
Technology 15,000 0
------ -----
Total Other Assets 23,650 3,650
TOTAL ASSETS $1,293,958 $ 993,187
========= =======
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 243,292 $ 145,334
Accrued Liabilities 22,187 22,187
Payable - Related Party 44,520 80,414
Payroll Taxes Payable 44,065 44,596
Customer Deposits 841,956 540,868
Note Payable - Manufacturers 335,000 200,000
Note Payable - Other 452,546 479,523
Note Payable - Shareholder 537,846 537,846
Deferred Credits 52,367 0
--------- ---------
Total Current Liabilities 2,573,779 2,050,768
Stockholders' Deficit
Preferred stock, $.00001 par value;
authorized 5,000,000 shares; issued
and outstanding -0- shares 0 0
Common stock, $.00001 par value;
authorized 30,000,000 shares;
issued and outstanding 14,401,010
at 9/30/99, 10,100,010 at 12/31/98 144 101
Additional Paid-in Capital 289,360 191,878
Accumulated Deficit (1,249,560) (1,249,560)
Current Year Deficit ( 319,765) -
--------- ---------
Total Stockholders' Deficit (1,279,821) (1,057,581)
TOTAL LIABILITIES
AND STOCKHOLDERS' DEFICIT $1,293,958 $993,187
========= =======
</TABLE>
See accompanying notes to financial statements.
<TABLE>
KINGSLEY COACH, INC.
(Formerly Micro-Hydro Power, Inc.)
STATEMENTS OF OPERATIONS
For the Three and Nine Month Periods Ended September 30, 1999 and 1998
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
------------------- ------------------
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
REVENUE
Sales $1,276,480 $ 0 $1,856,270 $ 0
Cost of Sales ( 820,820) 0 (1,317,047) 0
--------- ------- --------- -------
Gross Margin 455,660 0 539,223 0
General and
Administrative Expenses 219,630 0 780,786 0
--------- ------- --------- -------
Net Loss from Operations 236,030 0 (241,563) 0
Other Income/Expense
Interest Expense (24,983) 0 (78,202) 0
--------- ------- --------- -------
Total Other Income/Expense (24,983) 0 (78,202) 0
Net Income (Loss) Before Taxes 211,047 0 (319,765) 0
Income Taxes 0 0 0 0
-------- ------- --------- -------
Net Loss $ 211,047 $ 0 $(319,765) $ 0
======== ======= ========= =======
Loss Per Share $ .01 $ 0 $ (.02) $ 0
======== ======= ========= =======
Weighted Average
Shares Outstanding 14,401,010 300,010 14,401,010 300,010
========== ======= ========== =======
</TABLE>
See accompanying notes to the financial statements.
<TABLE>
KINGSLEY COACH, INC.
(Formerly Micro-Hydro Power, Inc.)
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
<CAPTION>
Add'l Accum- Total
Shares Common Paid-in ulated Stockholders'
Issued Stock Capital Deficit Deficit
<S> <C> <C> <C> <C> <C>
Balance, December
31, 1998 10,100,010 $ 101 $191,878 $(1,249,560) $(1,057,581)
Common stock issued
for services
rendered 1,301,000 13 32,512 32,525
Net Loss for the
Period Ended
March 31, 1999 (272,060) (272,060)
Common stock issued
for technology 1,000,000 10 14,990 15,000
Common stock issued
for DRK contract 2,000,000 20 49,980 50,000
Net Loss for the
Period Ended
June 30, 1999 (258,752) (258,752)
Net Income for the
Period Ended
September 30, 1999 211,047 211,047
Balance, September--------- ---- ------- ---------- ---------
30, 1999 14,401,010 $ 144 $289,360 $(1,569,325) $(1,279,821)
========== ==== ======= ========== =========
</TABLE>
See accompanying notes to the financial statements.
<TABLE>
KINGSLEY COACH, INC.
(Formerly Micro-Hydro Power, Inc.)
STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30, 1999 and 1998
(Unaudited)
<CAPTION>
Nine Months Nine Months
Ended Ended
9/30/99 9/30/98
<S> <C> <C>
Cash Flows Provided By/Used For
Operating Activities
Net Loss $ (319,765) $ (1,007)
Adjustments to reconcile
net loss to net cash provided by/
used in operating activities:
Increase in inventory (88,041) 0
Increase in accounts receivable (76,608) 0
Increase in prepaid expenses ( 5,000) 0
Decrease in payroll liabilities ( 531) 0
Increase in accounts payable 97,958 0
Increase in customer deposits 301,088 0
Increase in deferred credits 52,367 0
Services rendered for stock 82,525 0
------- -----
Net Cash Provided By/Used
for Operating Activities 43,993 0
Cash Flows Provided By/Used for
Financing Activities
Principal increase in notes payable 72,129 0
Investment by shareholder 0 1,007
------- -----
Net Cash Provided By Financing
Activities 72,129 1,007
------- -----
Net Increase in Cash 116,122 0
Beginning Cash Balance 67,724 0
------- -----
Ending Cash Balance 183,846 0
======= =====
Supplemental Disclosure
Interest paid 78,202 0
Income taxes paid 0 0
</TABLE>
NOTES TO FINANCIAL STATEMENTS: Interim financial statements reflect
all adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the periods. The December 31, 1998
balance sheet has been derived from the audited financial statements. These
interim financial statements conform with the requirements for interim
financial statements and consequently do not include all the disclosures
normally required by generally accepted accounting principles.
Item 2. Management Discussion and Analysis or Plan of Operation for the
Period Ended September 30, 1999, including material events as applicable
We accumulated losses through December 31, 1998 amounting to
$(1,249,560) and had a net working capital deficiency of $(1,057,581) at
December 31, 1998. We accumulated losses through September 30, 1999
amounting to $(319,765) and had a net working capital deficiency of
$(1,279,821) at September 30, 1999.
We continued to maintain significant gross profit margins on individual
units. We posted the following operating profits for each month in the
quarter: $156,284 (July); $2,429 (August); $52,334 (September). Following the
end of the quarter, monthly profits have continued, with October, 1999
demonstrating a $69,611 profit. We anticipate continued monthly profits in
November, and project small losses in December, 1999 and January, 2000 due to
seasonal fluctuations and loss of production days available. We project
continuous monthly Profits beginning in February, 2000, as we have a backlog
of orders and regular and continued sales interest.
During the quarter, our production and sales were negatively impacted by
a significant event involving our principal vendor, Thor America, Inc., a
subsidiary of Thor Industries, Inc., which supplies the shell box units, which
are then converted by us to a finished Kingsley Coach product. Thor
experienced labor problems with its workforce due to a collective bargaining
agreement, which resulted in a work stoppage for six weeks during August and
September. This impacted our ability to produce finished product. Thor secured
a multi-year agreement with its employees, which will assure their continued
performance for the foreseeable future. Our employees are not subject to a
collective bargaining agreement.
Management can satisfy cash requirements through the end of
the year from cash flow from operations without needing to raise additional
funds. However, we are actively seeking additional capital in order
to increase inventory, production, and to decrease delivery time of our
product to our customers. Funding would also be used to expand our
manufacturing facilities in order to decrease our reliance on Thor Industries,
Inc., an RV manufacturer, which is currently responsible for approximately 50%
of the construction of each of the coaches manufactured by us. Ultimately,
this would markedly decrease our production costs per unit, and it
is expected that the costs of expansion would be fully recouped within two
years. However, we are actively seeking to raise between $2,000,000 and
$5,000,000 in convertible notes/debentures, in order to increase inventory,
production, and to decrease delivery time of our product to our customers. We
have approved a two-to-one reverse stock split that will take effect in
November 1999 in order to make an investment in the Company more attractive.
We are pursuing product research and development on more high-end
and exotic materials for installation on the interior of our coaches, which
we expect will create higher per-unit sales and produce greater profit
margins.
We are considering upgrading our paint and graphic design facility, which
would provide more space and would allow for more computer-based design and
application of our graphics and paints, which we expect would create higher
per-unit sales and produce greater profit margins.
We recognize that our 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,
we have experienced a steady increase in interest and sales, and expect, as
more babyboomers begin considering retirement, that sales will continue to
increase for the foreseeable future, even if the economy experiences a
downturn.
The Year 2000, or Y2K problem concerns potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. We rely minimally on computers or computer
applications and software, and believe that our manual systems can serve as
adequate backup should a Y2K issue develop. We have reviewed and tested our
computer systems and applications and believe that they are Y2K compliant. We
can give no assurance that third parties with whom we do business or intend to
do business will ensure Year 2000 compliance in a timely manner or that, if
they do not, their computer systems will not have an adverse effect on us.
However, we do not believe that Year 2000 compliance issues of such third
parties will result in a material adverse effect on our financial condition or
results of operations. We have only one vendor, Thor America, Inc., a
subsidiary of Thor Industries, Inc., upon which we rely upon substantially for
our operations. Thor disclosed in its 10Q for the quarter ended April 30,
1999, that its computer systems are 76% Y2K compliant, and that it intends to
have all systems compliant by July 31, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On August 16, 1999, we were served with a lawsuit entitled Russell
A. Ratliff and Southeast Financial Consulting, Inc., Plaintiffs, vs. The
Kingsley Coach, Inc., The Kingsley Coach, L.L.C., D.R.K., Inc., Verdo J.
Lancaster, Richard Dutson and Ralph Dickenson, Defendants. The Complaint was
filed on August 2, 1999 in the Chancery Court for Roane County, State of
Tennessee.
In the Complaint, the Plaintiffs allege that they located investors and
investment opportunities for the Company, but that the Defendants did not
cooperate in finalizing these investments, and as a result Plaintiffs were
injured in that they would have received 2,170,000 shares of common stock of
the Company in exchange for the investments, pursuant to an agreement between
the Plaintiffs and the Company. Plaintiffs are seeking, in the alternative,
an equitable award of $500,000.
We and all of the Defendants have denied and continue to deny each and
every allegation of the Complaint, are vigorously defending the lawsuit, have
counterclaimed against the Plaintiff, and believe it is wholly without merit
and is being brought for the sole purpose of improperly forcing us, through a
nuisance suit, to settle the suit through an issuance of shares to Plaintiffs.
In reference to other pending litigation, please see March 31, 1999 10-QSB/A1
for detailed information on: Neil Rand d/b/a Corporate Imaging v. Kingsley
Coach, Inc., et al.
Item 2.Changes in Securities.
We have approved a 2-to-1 reverse split of all of our outstanding shares of
common stock, which will take effect in mid-November, 1999.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of matters to a Vote of Security Holders.
None; not applicable
Item 5. Other Information.
None; not applicable
Item 6. Exhibits and Reports on Form 8-K.
Exhibit Number Description
- --------------- -----------
EX-27 Financial Date Schedule.
SIGNATURES
Pursuant to the requirements 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: 12/17/99 By /S/Ralph Dickenson
---------------------
Ralph Dickenson, Chairman and President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 183,846
<SECURITIES> 0
<RECEIVABLES> 99,567
<ALLOWANCES> 0
<INVENTORY> 888,213
<CURRENT-ASSETS> 1,171,626
<PP&E> 98,682
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,293,958
<CURRENT-LIABILITIES> 2,572,779
<BONDS> 0
0
0
<COMMON> 144
<OTHER-SE> (1,279,965)
<TOTAL-LIABILITY-AND-EQUITY> 1,293,958
<SALES> 1,856,270
<TOTAL-REVENUES> 1,856,270
<CGS> 1,317,047
<TOTAL-COSTS> 780,786
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,202
<INCOME-PRETAX> (319,765)
<INCOME-TAX> 0
<INCOME-CONTINUING> (319,765)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (319,765)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
