UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1998
Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Commission File Number 0-24633
RAKO CORPORATION
(Name of small business issuer in its charter)
Idaho 91-0853320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3256 Agate Court, Boise, Idaho 83705
(Address of principal executive offices) (Zip Code)
Issuer's telephone no.: (208) 336-3036
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered pursuant to Section 12(g) of the Exchange
Act: Common
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. Yes [X] No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of the 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 the issuer's revenues for its most recent fiscal year.
$ -0-
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and ask prices of such stock as
of a specified date within 60 days. $ 0
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding as of Decmber 31, 1998
Common Stock, $.001 Par Value 1,025,030
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format. Yes No [X]
<PAGE>
RAKO CORPORATION
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . 3
Item 2. Description of Property. . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matter to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . 11
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . 11
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . 13
Item 7. Financial Statements . . . . . . . . . . . . . . . . . 17
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . 27
PART III
Item 9. Directors, Executive Officers, Promoters and
Control persons; Compliance with
Section 16(a) of the Exchange Act. . . . . . . . . . . 27
Item 10. Executive Compensation . . . . . . . . . . . . . . . . 29
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . 29
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . 30
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . 30
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 31
PART I
Item 1. Description of Business
Business Development
Rako Corporation (the "Company"), a development stage company,
was organized on October 10, 1968, under the laws of the State of
Idaho as Bell Silver Mining and Milling Corporation, having the
stated purpose of engaging in various oil and mining activities.
The Company engaged in limited oil and mining operations and, from
the time of its inception, the Company has undergone several name
changes and business changes.
On May 3, 1969, the Company changed its name to Silver Strike
Mining Co., Inc. In 1973, the Company entered into a Merger
Agreement with Best Corporation, a Montana corporation ("Best"),
whereby Best was merged with and into the Company with the Company
being the surviving corporate entity. In connection with the
merger with Best, the Company changed its name to Rako Corporation,
evidenced by the Certificate of Amendment filed with the State of
Idaho on May 17, 1973. Although the Company did perform some
mining activities, it was inactive from approximately 1986 to
April 1996.
On April 4, 1996, the Company entered into a Letter of Intent
whereby it was proposed that the Company would acquire all the
issued and outstanding shares of Spencer Entertainment, Inc., a
Nevada corporation ("Spencer"), in exchange for the issuance of
shares of the Company's common stock representing a controlling
interest in the Company. A special meeting of shareholders was
called for May 9, 1996. At that meeting, the proposal to acquire
Spencer was voted on and approved in addition to various other
proposals including the election of a new Board of Directors
consisting of nominees of Spencer, the one (1) share for three (3)
shares reverse stock split, and the change of the corporate name to
Spencer Entertainment, Inc. Following the special meeting, the
Company changed its name to Spencer Entertainment, Inc. on May 15,
1996.
At the time of the acquisition of Spencer, the Company
intended to become engaged in the film and entertainment business,
specializing in co-production and foreign distribution of high
quality films as well as obtaining video merchandising and music
rights connected with the films with which it became involved.
However, the new principals and directors of the Company were
unable to facilitate the business plan of Spencer and secure
adequate funding. Thus, on November 22, 1996, the Company
finalized a Rescission Agreement with Spencer whereby the
Acquisition Agreement was rescinded and the 3,150,000 shares of the
Company's common stock issued in connection with the Acquisition
Agreement, were returned to the Company and canceled. From May 9,
1996 to November 22, 1996, the Company did not engage in any
material business operations. In connection with the Rescission
Agreement, the Company's directors that were nominated by Spencer
were replaced by those persons who were directors of the Company
immediately prior to the Acquisition Agreement. On March 17, 1998,
the Company held a special meeting of shareholders, at which
meeting the shareholders ratified the rescission of the Acquisition
Agreement with Spencer, approved the proposal to change the
Company's name to Rako Corporation and approved the proposal to
effect the two (2) shares for one (1) share forward stock split of
the Company's issued and outstanding common stock.
Since November 1996, the Company has been active in seeking
potential operating businesses and business opportunities with the
intent to acquire or merge with such businesses. The Company is
considered a development stage company and, due to its status as a
"shell" corporation, its principal purpose is to locate and
consummate a merger or acquisition with a private entity. Because
of the Company's current status having no assets and no recent
operating history, in the event the Company does successfully
acquire or merge with an operating business opportunity, it is
likely that the Company's current shareholders will experience
substantial dilution and there will be a probable change in control
of the Company.
Under the Securities Exchange Act of 1934, as amended
("Exchange Act"), the Company is obligated to file with the
Securities and Exchange Commission (the "Commission") certain
interim and periodic reports including an annual report containing
audited financial statements. The Company intends to continue to
voluntarily file its periodic reports under the Exchange Act in the
event its obligation to file such reports is suspended under
applicable provisions of the Exchange Act.
Any target acquisition or merger candidate of the Company will
become subject to the same reporting requirements as the Company
upon consummation of any merger or acquisition. Thus, in the event
the Company successfully completes the acquisition of or merger
with an operating business opportunity, that business opportunity
must provide audited financial statements for at least the two most
recent fiscal years or, in the event the business opportunity has
been in business for less than two years, audited financial
statements will be required from the period of inception. This
could limit the Company's potential target business opportunities
due to the fact that many private business opportunities either do
not have audited financial statements or are unable to produce
audited statements without undo time and expense.
The Company's principal executive offices are located at 3256
Agate Court, Boise, Idaho 83705, and its telephone number
is (208) 336-3036.
Business of Issuer
The Company has no recent operating history and no
representation is made, nor is any intended, that the Company will
be able to carry on future business activities successfully.
Further, there can be no assurance that the Company will have the
ability to acquire or merge with an operating business, business
opportunity or property that will be of material value to
the Company.
Management plans to investigate, research and, if justified,
potentially acquire or merge with one or more businesses or
business opportunities. The Company currently has no commitment or
arrangement, written or oral, to participate in any business
opportunity and management cannot predict the nature of any
potential business opportunity it may ultimately consider.
Management will have broad discretion in its search for and
negotiations with any potential business or business opportunity.
Sources of Business Opportunities
Management of the Company intends to use various resources in
the search for potential business opportunities including, but not
limited to, the Company's officers and directors, consultants,
special advisors, securities broker-dealers, venture capitalists,
members of the financial community and others who may present
management with unsolicited proposals. Because of the Company's
lack of capital, it may not be able to retain on a fee basis
professional firms specializing in business acquisitions and
reorganizations. Rather, the Company will most likely have to rely
on outside sources, not otherwise associated with the Company, that
will accept their compensation only after the Company has finalized
a successful acquisition or merger. To date, the Company has not
engaged or entered into any discussion, agreement or understanding
with a particular consultant regarding the Company's search for
business opportunities. Company management has in the past
consulted with Williams Investment Co. ("Williams"), a consulting
company located in Salt Lake City, Utah. Because there is no
agreement or understanding with Williams, the Company may use other
consultants if it so elects. However, due to its past experience,
the Company may use the consulting and advisory services of
Williams. Presently, no final decision has been made nor is
management in a position to identify any future prospective
consultants for the Company.
If the Company elects to engage an independent consultant, it
will look only to consultants that have experience in working with
small companies in search of an appropriate business opportunity.
Also, the consultant must have experience in locating viable merger
and/or acquisition candidates and have a proven track record of
finalizing such business consolidations. Further, the Company
would like to engage a consultant that will provide services for
only nominal up-front consideration and is willing to be fully
compensated only at the close of a business consolidation.
The Company does not intend to limit its search to any
specific kind of industry or business. The Company may investigate
and ultimately acquire a venture that is in its preliminary or
development stage, is already in operation, or in various stages of
its corporate existence and development. Management cannot predict
at this time the status or nature of any venture in which the
Company may participate. A potential venture might need additional
capital or merely desire to have its shares publicly traded. The
most likely scenario for a possible business arrangement would
involve the acquisition of or merger with an operating business
that does not need additional capital, but which merely desires to
establish a public trading market for its shares.
Management believes that the Company could provide a potential
public vehicle for a private entity interested in becoming a
publicly held corporation without the time and expense typically
associated with an initial public offering.
Evaluation
Once the Company has identified a particular entity as a
potential acquisition or merger candidate, management will seek to
determine whether acquisition or merger is warranted or whether
further investigation is necessary. Such determination will
generally be based on management's knowledge and experience, or
with the assistance of outside advisors and consultants evaluating
the preliminary information available to them. Management may
elect to engage outside independent consultants to perform
preliminary analysis of potential business opportunities. However,
because of the Company's lack of capital it may not have the
necessary funds for a complete and exhaustive investigation of any
particular opportunity.
In evaluating such potential business opportunities, the
Company will consider, to the extent relevant to the specific
opportunity, several factors including potential benefits to the
Company and its shareholders; working capital, financial
requirements and availability of additional financing; history of
operation, if any; nature of present and expected competition;
quality and experience of management; need for further research,
development or exploration; potential for growth and expansion;
potential for profits; and other factors deemed relevant to the
specific opportunity.
Because the Company has not located or identified any specific
business opportunity as of the date hereof, there are certain
unidentified risks that cannot be adequately expressed prior to the
identification of a specific business opportunity. There can be no
assurance following consummation of any acquisition or merger that
the business venture will develop into a going concern or, if the
business is already operating, that it will continue to operate
successfully. Many of the potential business opportunities
available to the Company may involve new and untested products,
processes or market strategies which may not ultimately prove
successful.
Form of Potential Acquisition or Merger
Presently, the Company cannot predict the manner in which it
might participate in a prospective business opportunity. Each
separate potential opportunity will be reviewed and, upon the basis
of that review, a suitable legal structure or method of
participation will be chosen. The particular manner in which the
Company participates in a specific business opportunity will depend
upon the nature of that opportunity, the respective needs and
desires of the Company and management of the opportunity, and the
relative negotiating strength of the parties involved.
Actual participation in a business venture may take the form of an
asset purchase, lease, joint venture, license, partnership, stock
purchase, reorganization, merger or consolidation. The Company may
act directly or indirectly through an interest in a partnership,
corporation, or other form of organization, however, the Company
does not intend to participate in opportunities through the
purchase of minority stock positions.
Because of the Company's current situation, having no assets
and no recent operating history, in the event the Company does
successfully acquire or merge with an operating business
opportunity, it is likely that the Company's present shareholders
will experience substantial dilution and there will be a probable
change in control of the Company. Most likely, the owners of the
business opportunity which the Company acquires or mergers with
will acquire control of the Company following such transaction.
Management has not established any guidelines as to the amount of
control it will offer to prospective business opportunities, rather
management will attempt to negotiate the best possible agreement
for the benefit of the Company's shareholders.
Management does not presently intend to borrow funds to
compensate any persons, consultants, promoters or affiliates in
relation to the consummation of a potential merger or acquisition.
However, if the Company engages outside advisors or consultants in
its search for business opportunities, it may be necessary for the
Company to attempt to raise additional funds. As of the date
hereof, the Company has not made any arrangements or definitive
agreements to use outside advisors or consultants or to raise any
capital. In the event the Company does need to raise capital, most
likely the only method available to the Company would be the
private sale of its securities. These possible private sales would
most likely have to be to persons known by the directors of the
Company or to venture capitalists that would be willing to accept
the risks associated with investing in a company with no current
operation. Because of the nature of the Company as a development
stage company, it is unlikely that it could make a public sale of
securities or be able to borrow any significant sum from either a
commercial or private lender. Management will attempt to acquire
funds on the best available terms for the Company. However, there
can be no assurance that the Company will be able to obtain
additional funding when and if needed, or that such funding, if
available, can be obtained on terms reasonable or acceptable to the
Company. Although not presently anticipated, there is a remote
possibility that the Company could sell securities to its
management or affiliates.
In the case of a future acquisition or merger, there exists a
possibility that a condition of such transaction might include the
sale of shares presently held by officers and/or directors of the
Company to parties affiliated with or designated by the potential
business opportunity. Presently, management has no plans to seek
or actively negotiate such terms. However, if this situation does
arise, management is obligated to follow the Company's Articles of
Incorporation and all applicable corporate laws in negotiating such
an arrangement. Under this scenario of a possible sale by officers
and directors, it is unlikely that similar terms and conditions
would be offered to all other shareholders of the Company or that
the shareholders would be given the opportunity to approve such a
transaction.
In the event of a successful acquisition or merger, a finder's
fee, in the form of cash or securities, may be paid to persons
instrumental in facilitating the transaction. The Company has not
established any criteria or limits for the determination of a
finder's fee, although it is likely that an appropriate fee will be
based upon negotiations by the Company and the appropriate business
opportunity and the finder. Management cannot at this time make an
estimate as to the type or amount of a potential finder's fee that
might be paid. It is unlikely that a finder's fee will be paid to
an affiliate of the Company because of the potential conflict of
interest that might result. If such a fee was paid to an
affiliate, it would have to be in such a manner so as not to
compromise an affiliate's possible fiduciary duty to the Company or
to violate the doctrine of corporate opportunity. Further, in the
unlikely event a finder's fee was to be paid to an affiliate, the
Company would have such an arrangement ratified by the shareholders
in an appropriate manner.
Presently, it is highly unlikely that the Company will acquire
or merge with a business opportunity in which the Company's
management, affiliates or promoters have an ownership interest.
Any possible related party transaction of this type would have to
be ratified by a disinterested Board of Directors and by the
shareholders. Management does not anticipate that the Company will
acquire or merge with any related entity. Further, as of the date
hereof, none of the Company's officers, directors, or affiliates or
associates have had any preliminary contact or discussions with any
specific business opportunity, nor are there any present plans,
proposals, arrangements or understandings regarding the possibility
of an acquisition or merger with any specific business opportunity.
Rights of Shareholders
It is presently anticipated by management that prior to
consummating a possible acquisition, merger, or other business
combination the Company, if required by relevant state laws and
regulations, will seek to have the transaction ratified by
shareholders in the appropriate manner. However, the Board of
Directors will have the discretion to consummate a business
combination without shareholder approval if permissible under the
laws of the State of Idaho and the laws of the state in which the
other entity resides. Regardless of whether an action is ratified
by the Board or by the shareholders, the Board will provide to its
shareholders complete disclosure documentation concerning a
potential target business opportunity including the appropriate
audited financial statements of the target. This information will
be disseminated by proxy statement in the event a shareholders'
meeting is held, or by subsequent report to the shareholders if the
action is taken by the Board.
Competition
Because the Company has not identified any potential
acquisition or merger candidate, it is unable to evaluate the type
and extent of its likely competition. The Company is aware that
there are several other public companies with only nominal assets
that are also searching for operating businesses and other business
opportunities as potential acquisition or merger candidates. The
Company will be in direct competition with these other public
companies in its search for business opportunities and, due to the
Company's lack of funds, it may be difficult to successfully
compete with these other companies.
Employees
As of the date hereof, the Company does not have any employees
and has no plans for retaining employees until such time as the
Company's business warrants the expense, or until the Company
successfully acquires or merges with an operating business. The
Company may find it necessary to periodically hire part-time
clerical help on an as-needed basis.
Facilities
The Company is currently using as its principal place of
business the personal residence of its President located in Boise,
Idaho. Although the Company has no written agreement and pays no
rent for the use of this facility, it is contemplated that at such
future time as the Company acquires or merges with an operating
business, the Company will secure commercial office space from
which it will conduct its business. The Company has no current
plans to secure such commercial office space.
Industry Segments
No information is presented regarding industry segments. The
Company is presently a development stage company seeking a
potential acquisition of or merger with a yet to be identified
business opportunity. Reference is made to the statements of
income included herein in response to Item 7 of this Form 10-KSB
for a report of the Company's operating history for the past two
fiscal years.
Item 2. Description of Property
The Company is currently using as its principal place of
business the personal residence of its President located in Boise,
Idaho. Although the Company has no written agreement and pays no
rent for the use of this facility, it is contemplated that at such
future time as the Company acquires or merges with an operating
business, the Company will secure commercial office space from
which it will conduct its business. However, until such time as
the Company completes an acquisition or merger, the type of
business in which the Company will be engaged and the type of
office and other facilities that will be required is unknown. The
Company has no current plans to secure such commercial office
space.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal
proceedings and no such action by, or to the best of its knowledge,
against the Company has been threatened.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
Securities Holders during the fourth quarter of the Company's
fiscal year ending December 31, 1998.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company has made an application to have its Common Stock
traded in the over-the-counter market and quotations are published
on the OTC Bulletin Board. Its application has not been finalized
and no trading symbol has been assigned to the Company.
Inclusion on the OTC Bulletin Board permits price quotations
for the Company's shares to be published by such service. The
Company is not aware of any established trading market for its
common stock nor is there any record of any reported trades in the
public market in recent years. Although the Company anticipates
that its application to the OTC Bulletin Board will ultimately be
completed, the Company does not expect its shares to be traded
actively in the public market until such time as a merger or
acquisition can be consummated. Also, secondary trading of the
Company's shares may be subject to certain state imposed
restrictions regarding shares of shell companies. Except for the
application to the OTC Bulletin Board, there are no plans,
proposals, arrangements or understandings with any person
concerning the development of a trading market in any of the
Company's securities. The Company's common stock last traded in a
public market as Silver Strike Mining Co., Inc. during the 1970s.
Because no current trading market has been established for the
Company's securities, no trading history is presented herein.
As of December 31, 1998 the Company had issued and outstanding
1,025,030 shares of Common Stock and there were approximately 93
shareholders of record, which figure does not take into account
those shareholders whose certificates are held in the name of
broker-dealers.
The ability of an individual shareholder to trade their shares
in a particular state may be subject to various rules and
regulations of that state. A number of states require that an
issuer's securities be registered in their state or appropriately
exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to
register its securities in any particular state. Further, most
likely the Company's shares will be subject to the provisions of
Section 15(g) and Rule 15g-9 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), commonly referred to as the
"penny stock" rule. Section 15(g) sets forth certain requirements
for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the
Exchange Act.
The Commission generally defines penny stock to be any equity
security that has a market price less than $5.00 per share, subject
to certain exceptions. Rule 3a51-1 provides that any equity
security is considered to be a penny stock unless that security is:
registered and traded on a national securities exchange meeting
specified criteria set by the Commission; authorized for quotation
on The NASDAQ Stock Market; issued by a registered investment
company; excluded from the definition on the basis of price (at
least $5.00 per share) or the issuer's net tangible assets; or
exempted from the definition by the Commission. If the Company's
shares are deemed to be a penny stock, trading in the shares will
be subject to additional sales practice requirements on broker-
dealers who sell penny stocks to persons other than established
customers and accredited investors, generally persons with assets
in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must
make a special suitability determination for the purchase of such
securities and must have received the purchaser's written consent
to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the first transaction, of a risk
disclosure document relating to the penny stock market. A broker-
dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, and current
quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information for the penny stocks held
in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in the Company's
Common Stock and may affect the ability of shareholders to sell
their shares.
Recent Sales of Unregistered Securities
On May 9, 1996, the Company issued a total of 3,150,000 shares
of its authorized, but previously unissued common stock to the
shareholders and designees of Spencer Entertainment, Inc, in
connection with the acquisition of Spencer. This issuance was not
registered with the Commission because it was believed to be exempt
form the registration requirements of the Act under Section 4(2) of
the Act. Upon the rescission of the acquisition, all 3,150,000
shares were returned to the Company and canceled. No other shares
of the Company's common stock have been issued during the preceding
three fiscal years.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future. The Company currently intends to retain and reinvest future
earnings to finance its operations.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with
the consolidated financial statements and notes thereto appearing
elsewhere in this Form 10-KSB.
The Company is considered a development stage company with no
assets or capital and with no significant operations or income
since approximately 1986. The costs and expenses associated with
the preparation and filing of the Company's registration statement
in 1998 were paid for by a shareholder of the Company. It is
anticipated that the Company will require only nominal capital to
maintain the corporate viability of the Company and necessary funds
will most likely be provided by the Company's officers and
directors in the immediate future. However, unless the Company is
able to facilitate an acquisition of or merger with an operating
business or is able to obtain significant outside financing, there
is substantial doubt about its ability to continue as a going
concern.
In the opinion of management, inflation has not and will not
have a material effect on the operations of the Company until such
time as the Company successfully completes an acquisition
or merger. At that time, management will evaluate the possible
effects of inflation on the Company related to it business and
operations following a successful acquisition or merger.
Plan of Operation
During the next 12 months, the Company will actively seek out
and investigate possible business opportunities with the intent to
acquire or merge with one or more business ventures. In its search
for business opportunities, management will follow the procedures
outlined in Item 1 above. Because the Company lacks funds, it may
be necessary for the officers and directors to either advance funds
to the Company or to accrue expenses until such time as a
successful business consolidation can be made. Management intends
to hold expenses to a minimum and to obtain services on a
contingency basis when possible. Further, the Company's directors
will defer any compensation until such time as an acquisition or
merger can be accomplished and will strive to have the business
opportunity provide their remuneration. However, if the Company
engages outside advisors or consultants in its search for business
opportunities, it may be necessary for the Company to attempt to
raise additional funds. As of the date hereof, the Company has not
made any arrangements or definitive agreements to use outside
advisors or consultants or to raise any capital. In the event the
Company does need to raise capital, most likely the only method
available to the Company would be the private sale of its
securities. Because of the nature of the Company as a development
stage company, it is unlikely that it could make a public sale of
securities or be able to borrow any significant sum from either a
commercial or private lender. There can be no assurance that the
Company will be able to obtain additional funding when and if
needed, or that such funding, if available, can be obtained on
terms acceptable to the Company.
The Company does not intend to use any employees, with the
possible exception of part-time clerical assistance on an as-needed
basis. Outside advisors or consultants will be used only if they
can be obtained for minimal cost or on a deferred payment basis.
Management is confident that it will be able to operate in this
manner and to continue its search for business opportunities during
the next twelve months.
Net Operating Loss
The Company has accumulated approximately $4,000 of net
operating loss carryforwards as of December 31, 1998, which may be
offset against taxable income and income taxes in future years.
The use of these losses to reduce future income taxes will depend
on the generation of sufficient taxable income prior to the
expiration of the net operating loss carryforwards. The
carry-forwards expire in the year 2013. In the event of certain
changes in control of the Company, there will be an annual
limitation on the amount of net operating loss carryforwards which
can be used. No tax benefit has been reported in the financial
statements for the year ended December 31, 1998 or the nine month
period ended September 30, 1998 because there is a 50% or greater
chance that the carryforward will not be used. Accordingly, the
potential tax benefit of the loss carryforward is offset by a
valuation allowance of the same amount.
Year 2000
Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the
applicable year. In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system
failures.
Because the Company currently does not have any operations
except for its search for viable business opportunities, it does
not own or use any computer equipment. The Company does not
anticipate doing a full assessment of the potential Year 2000 issue
until it has made an acquisition of or merged with an operating
entity. The Company does not believe that the cost of addressing
the issue will have a material adverse impact on its financial
position. Further, the Company believes that no third parties with
whom it may have a material relationships will be materially
affected by the Year 2000 issues.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The Company wishes to advise readers that
actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: the ability of the Company to
search for appropriate business opportunities and subsequently
acquire or merge with such entity, to meet its cash and working
capital needs, the ability of the Company to maintain its existence
as a viable entity, and other risks detailed in the Company's
periodic report filings with the Securities and Exchange
Commission.
Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard ("SFAS") No. 128,
"Earnings Per Share" and Statement of Financial Accounting
Standards No. 129 "Disclosures of Information About an Entity's
Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance
with Accounting Principles Board Opinion No. 15, "Earnings Per
Share." SFAS No. 128 provides for the calculation of "Basic" and
"Dilutive" earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects
the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted earnings per share.
SFAS No. 129 establishes standards for disclosing information about
an entity's capital structure. SFAS No. 128 and SFAS No. 129 are
effective for financial statements issued for periods ending after
December 15, 1997. Their implementation is not expected to have a
material effect on the financial statements.
The FASB has also issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes
standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income is
defined to include all changes in equity except those resulting
from investments by owners and distributors to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required
to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that
displays with the same prominence as other financial statements.
SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting for
Segments of a Business Enterprise." SFAS No. 131 establishes
standards on the way that public companies report financial
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It
also establishes standards for disclosure regarding products and
services, geographic areas and major customers. SFAS No. 131
defines operating segments as components of a company about which
separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance.
SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. Management believes
that the implementation of the new standards will not have a
material effect on the Company's financial statements.
The FASB has also issued SFAS No 132. "Employers' Disclosures
about Pensions and other Postretirement Benefits," which
standardizes the disclosure requirements for pensions and other
Postretirement benefits and requires additional information on
changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis. SFAS No. 132 is effective
for years beginning after December 15, 1997 and requires
comparative information for earlier years to be restated, unless
such information is not readily available. Management believes the
adoption of this statement will have no material impact on the
Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial statements.
Item 7. Financial Statements
The Company's financial statements as of and for the fiscal
years ended December 31, 1998 and 1997 have all been examined to
the extent indicated in their report by Jones, Jensen and Company,
independent certified accountants, and have been prepared in
accordance with generally accepted accounted principles and
pursuant to Regulation S-B as promulgated by the Securities and
Exchange Commission. The aforementioned financial statements are
included herein in response to Item 7 of this Form 10-KSB.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Rako Corporation
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Rako Corporation
(a development stage company) as of December 31, 1998 and the related
statements of operations, stockholders' equity and cash flows for the
years ended December 31, 1998 and 1997, and from inception on October
9, 1968 through December 31, 1998. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide 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 Rako
Corporation as of December 31, 1998 and the results of its operations
and its cash flows for the years ended December 31, 1998 and 1997,
and from inception on October 9, 1968 through December 31, 1998 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company is a
development stage company with no significant operating revenues
to date, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
March 11, 1999
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Cash $ -
Total Current Assets -
TOTAL ASSETS $ -
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -
Total Current Liabilities -
STOCKHOLDERS' EQUITY
Common stock at $0.001 par value; authorized
50,000,000 common shares and 20,000,000
preferred shares; 1,025,030 common shares
issued and outstanding 1,025
Additional paid-in capital 93,646
Deficit accumulated during the development stage (94,671)
Total Stockholders' Equity -
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ -
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Statements of Operations
From
Inception on
October 9,
For the Years Ended 1968 Through
December 31, December 31,
1998 1997 1998
REVENUE $ - $ - $ -
EXPENSES 1,574 - 94,671
NET LOSS FROM
OPERATIONS $ (1,574) $ - $ (94,671)
BASIC LOSS PER SHARE $ (0.00) $ 0.00
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on October 9, 1968 Through December 31, 1998
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Inception on October 9, 1968 - $ - $ - $ -
Common stock issued for mining
claims recorded at predecessor
cost of $0.00 per share 400,000 400 (400) -
Common stock issued for services
at $0.15 per share 400,000 400 59,600 -
Common stock issued for cash
at $0.45 per share 14,734 15 6,615 -
Costs associated with stock offering - - (994) -
Common stock issued for mining
claims recorded at predecessor
cost of $0.075 per share 333,334 333 24,667 -
Net loss for the period from inception
on October 9, 1968 through
December 31, 1995 - - - (90,636)
Balance, December 31, 1995 1,148,068 1,148 89,488 (90,636)
Cancellation of common stock (123,024) (123) 123 -
Fractional shares adjustment (14) - - -
Capital contributed for payment of
expenses - - 2,461 -
Net loss for the year ended
December 31, 1996 - - - (2,461)
Balance, December 31, 1996 1,025,030 1,025 92,072 (93,097)
Net loss for the year ended
December 31, 1997 - - - -
Balance, December 31, 1997 1,025,030 1,025 92,072 (93,097)
Capital contributed for payment of
expenses - - 1,574 -
Net loss for the year ended
December 31, 1998 - - - (1,574)
Balance, December 31, 1998 1,025,030 $ 1,025 $ 93,646 $ (94,671)
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
October 9,
For the Years Ended 1968 Through
December 31, December 31,
1998 1997 1998
CASH FLOWS FROM
OPERATING ACTIVITIES
Income (loss) from operations $ (1,574) $ - $ (94,671)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Stock issued for services - - 60,000
Increase (decrease) in accounts
payable - - 25,000
Net Cash Used by Operating
Activities (1,574) - (9,671)
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock for cash - - 5,636
Expenses paid on Company's behalf 1,574 - 4,035
Net Cash Provided by
Financing Activities 1,574 - 9,671
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ - $ -
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception on
October 9,
For the Years Ended 1968 Through
December 31, December 31,
1998 1997 1998
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
SUPPLEMENTAL SCHEDULE OF
NON-CASH FINANCING ACTIVITIES
Stock issued for services $ - $ - $ 60,000
Stock issued for mining claims $ - $ - $ 25,000
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On October 9, 1968, Bell Silver Mining and Milling Corporation
was incorporated under the Laws of Idaho with the purpose of
developing mining claims. On the date of incorporation,
10,000,000 shares of $0.10 par value common stock were authorized.
On March 3, 1969, Bell Silver Mining and Milling Corporation
changed its name to Silver Strike Mining Co. Inc. The number
of shares of common stock authorized was changed from
10,000,000 shares of $0.10 par value common stock to 5,000,000
shares of $0.10 par value common stock.
On May 17, 1973, Silver Strike Mining and Milling Co. Inc,
changed its name to Rako Corporation.
On March 25, 1996, the Articles of Incorporation were
amended to change the par value of the common stock to $0.005
and the number of authorized shares to 100,000,000.
On May 15, 1996, the Articles of Incorporation were amended to
change the par value of the common stock to $0.001 and the
number of authorized shares to 50,000,000 common and 20,000,000
preferred.
The Company has elected a calendar year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting.
b. Provision for Taxes
No provision for income taxes has been made due to the inactive
status of the Company. The Company has net operating loss
carryovers of approximately $4,000 which expire in 2013.
The potential tax benefit of the loss carryovers has been offset
in full by a valuation allowance.
c. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
d. Estimates
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.
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Basic Loss Per Common Share
Basic loss per common share has been calculated based on the
weighted average number of shares of common stock outstanding
during the period.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. The Company
has not established revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The Company
is seeking a merger with an existing, operating Company.
Currently management has committed to covering all operating
and other costs until a merger is completed.
NOTE 4 - STOCK TRANSACTIONS
On October 10, 1968, the Board of Directors issued 400,000
shares of common stock for mining claims received from the
founder of the Company. The claims were recorded at
predecessor cost of $-0-.
On October 10, 1968, the Board of Directors issued 400,000
shares of common stock for services rendered during the
organization of the Company.
On October 28, 1969, the Board of Directors initiated a
public offering in which 14,734 shares of common stock
were sold at a gross price of $0.45 per share.
On September 13, 1984, the Board of Directors issued 333,334
shares of common stock for mining claims which were recorded
at predecessor cost of $0.075 per share.
On April 10, 1996, the Company canceled 123,024 shares of common stock.
On May 15, 1996, the shareholders effected a 1-for-3 reverse
stock split of all the issued and outstanding common stock.
On March 17, 1998, the shareholders effected a 2-for-1 forward
stock split of all the issued and outstanding common stock.
The accompanying financial statements reflect the stock splits
on a retroactive basis.
<PAGE>
RAKO CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 5 - FAILED ACQUISITION
On May 9, 1996, the shareholders voted to acquire all of the
issued and outstanding shares of Spencer Entertainment, Inc.,
a Nevada Corporation, in exchange for the Company's authorized,
but previously unissued common stock. On June 11, 1996,
the Company issued 6,300,000 shares as part of the terms of
this agreement, however, on November 22, 1996, the Company
completed a recission agreement regarding the plan of
reorganization and acquisition agreement between the Company
and Spencer Entertainment, Inc. and canceled the 6,300,000
shares that were issued. The recission has been reflected
in the financial statements on a retroactive basis.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act
The executive officers and directors of the Company are as
follows:
Name Age Position
Kenneth D. Montee 56 President, Chief Executive
Officer and Director
Ray Montee 54 Secretary / Treasurer and
Director
___________________________
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. The Company has not compensated its directors for
service on the Board of Directors or any committee thereof, but
directors are entitled to be reimbursed for expenses incurred for
attendance at meetings of the Board of Directors and any committee
of the Board of Directors. However, due to the Company's lack of
funds, the directors will defer their expenses and any compensation
until such time as the Company can consummate a successful
acquisition or merger. As of the date hereof, no director has
accrued any expenses or compensation. Officers are appointed
annually by the Board of Directors and each executive officer
serves at the discretion of the Board of Directors. The Company
does not have any standing committees. Presently, none of the
Company's directors are directors of any other "shell" or "blank
check" companies or other corporations that are actively pursuing
acquisitions or mergers, and management has not been involved with
previous blank check offerings. Current management of the Company
has no present intent, nor is it likely that they will become
involved with promoting other shell or blank check companies in the
foreseeable future.
No director, officer, affiliate or promoter of the Company
has, within the past five years, filed any bankruptcy petition,
been convicted in or been the subject of any pending criminal
proceedings, or is any such person the subject or any order,
judgment, or decree involving the violation of any state or federal
securities laws.
All of the Company's present directors have other full-time
employment and will routinely devote only such time to the Company
necessary to maintain its viability. It is estimated that each
director will devote less than ten hours per month to the Company's
activities. The directors will, when the situation requires,
review potential business opportunities or actively participate in
negotiations for a potential merger or acquisition on an as-needed-
basis.
Currently, there is no arrangement, agreement or understanding
between the Company's management and non-management shareholders
under which non-management shareholders may directly or indirectly
participate in or influence the management of the Company's
affairs. Present management openly accepts and appreciates any
input or suggestions from the Company's shareholders. However, the
Board of Directors is elected by the shareholders and the
shareholders have the ultimate say in who represents them on the
Board of Directors. There are no agreements or understandings for
any officer or director of the Company to resign at the request of
another person and none of the current offers or directors of the
Company are acting on behalf of, or will act at the direction of
any other person.
The business experience of each of the persons listed above
during the past five years is as follows:
Kenneth D. Montee, age 56, is a graduate of Boise State
University with a degree in Finance. Mr. Montee has been active in
real estate and investments since 1972, owing his own real estate
company and working for two years from 1980 to 1982 as a commodity
broker with Dean Witter. In 1986, Mr. Montee acquired a
controlling interest in Rako Corporation. From 1993 to the
present, Mr. Montee has been a developer of real estate through
various partnerships and corporations which he formed. He is also
an active investor in securities and commodities. Mr. Montee is
the brother of Ray Montee, Secretary / Treasurer and a director of
the Company.
Ray Montee, age 54, was for 23 years and until he retired from
the business in December 1997, the President and a director of
Ray's R.V.'s Inc., a recreational vehicle parts, service and sales
company located in Coeur D'Alene, Idaho. Mr. Montee has also been
since 1993, President and a director of Affordable Home Center,
Inc., a manufactured home sales company. He is currently active as
General Manager of Affordable's nine locations throughout Idaho,
Washington and Montana. Mr. Montee attended North Idaho College
from 1962 to 1964 taking general courses and vocational courses in
body and fender repair. Mr. Montee is the brother of Kenneth D.
Montee, President and a director of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Each of the Company's officers and directors is required to
file a Form 5, Annual Statement of Changes in Beneficial Ownership,
on or before the 45th day after the end of the fiscal year. These
reports have not filed on a timely basis and will be submitted to
the Securities and Exchange Commission.
Item 10. Executive Compensation
The Company has not had a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors. The Company has not paid any salaries or other
compensation to its officers, directors or employees for the years
ended December 31, 1997 and 1996, or for the nine month period
ended September 30, 1998. Further, the Company has not entered
into an employment agreement with any of its officers, directors or
any other persons and no such agreements are anticipated in the
immediate future. It is intended that the Company's directors will
defer any compensation until such time as an acquisition or merger
can be accomplished and will strive to have the business
opportunity provide their remuneration. As of the date hereof, no
person has accrued any compensation.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information, to the best of the
Company's knowledge, as of December 31, 1998, with respect to each
person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, each director and all directors and
officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
Kenneth D. Montee* 363,334 35.4%
3256 Agate Court
Boise, ID 83850
Al Scarth 363,334 35.4%
421 Sherman
Coeur D'Alene, ID 83814
Edward Cowle 92,694 9.0%
102 East 87th Street
New York, NY 10128
All directors and officers 363,334 35.4%
a group (2 persons)
* Director and/or executive officer
Note: Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting power over the shares indicated above.
(1) Based upon 1,025,030 shares of common stock outstanding
on December 31, 1998.
Item 12. Certain Relationships and Related Transactions
During the past two fiscal years, there have been no
transactions between the Company and any officer, director, nominee
for election as director, or any shareholder owning greater than
five percent (5%) of the Company's outstanding shares, nor any
member of the above referenced individuals' immediate family
The Company's officers and directors are subject to the
doctrine of corporate opportunities only insofar as it applies to
business opportunities in which the Company has indicated an
interest, either through its proposed business plan or by way of an
express statement of interest contained in the Company's minutes.
If directors are presented with business opportunities that may
conflict with business interests identified by the Company, such
opportunities must be promptly disclosed to the Board of Directors
and made available to the Company. In the event the Board shall
reject an opportunity so presented and only in that event, any of
the Company's officers and directors may avail themselves of such
an opportunity. Every effort will be made to resolve any conflicts
that may arise in favor of the Company. There can be no assurance,
however, that these efforts will be successful.
PART V
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
* Articles of Incorporation filed as Exhibit to
Form 10-SB.
* By-Laws filed as Exhibit to Form 10-SB.
27 Financial Data Schedule
- - - - -
* Exhibits so marked have heretofore been filed with the
Securities and Exchange Commission as part of the filing
indicated and are incorporated herein by reference.
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Rako Corporation
BY: /S/ Kenneth D. Montee
Kenneth D. Montee
President, Chief Executive
Officer and Director
Dated: April 14, 1999
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature Title Date
C.E.O., C.F.O. April 14, 1999
/S/ Kenneth D. Montee President and Director
Kenneth D. Montee
Secretary/Treasurer April 14, 1999
/S/ Ray Montee and Director
Ray Montee (Principal Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE RAKO CORPORATION FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,025
<OTHER-SE> 93,646
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,574
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,574)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,574)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,574)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
