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
ACT OF 1934 (Fee Required)
For the Fiscal Year Ended June 30, 2000
Commission File Number 0-25105
LITE KING CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2996988
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
240 Clarkson Avenue Brooklyn, New York 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.001
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding twelve
months and (2) has been subject to such filing requirements for the
past ninety days.
Yes / X / No / /
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 or Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
Yes /X / No / /
As of September 13, 2000, there was no aggregate market value of
the voting stock held by non-affiliates of the Registrant due to
the fact that there was no trading market in the shares of the
Registrant.
The Number of Shares Outstanding of the Registrant at September 13,
2000 was 2,484,620
10Q-1
<PAGE>
PART 1
Item 1. Description of Business
Lite King Corp. ("The Registrant") was incorporated in New
York on January 4, 1990 and is currently engaged in the manufacture
and assembly of wiring devices.
From February 1990 to March 31, 1999, the Registrant operated
as a wholly owned subsidiary of Daine Industries, Inc. ("Daine").
The Board of Directors of Daine had determined to spin-off Lite
King Corp.'s shares of common stock to its shareholders on a pro
rata basis. Daine owned all of the 2,484,620 outstanding shares of
the Registrant which were distributed in May 1999 to its
shareholders as of November 30, 1998. Shares were distributed in
May 1999 to shareholders of record on November 30, 1998.
Management of Daine and the Registrant believed the two
companies as separate entities may create additional value for the
shareholders. There is no assurance of any trading market
developing. It should be noted that even though Daine is a public
company it has not traded in the past two years. Management will
attempt to use Daine as a "shell" vehicle to acquire an operating
business.
On February 26, 1990 Daine (through the Registrant) acquired
substantially all of the assets (with the exception of the cash)
and the business of Lite King Corporation, a manufacturer and
assembler of wiring devices, cord sets and sockets. The assets
acquired had a total cost of $738,079, consisting of machinery and
equipment, inventory, accounts receivable, a non compete clause
entered into with Lite King Corporation's former president and
principal shareholder and a rent deposit. The purchase price
($663,079 in cash and a $75,000 five year note payable in quarterly
installments with interest of 12%) was arrived at by arms length
negotiations and Daine obtained the funds for the purchase from its
own internal sources. There was no material relationship between
Daine and Lite King Corporation or any of its officers or directors
prior to this transaction. The Registrant had entered into a six
month consulting agreement with Lite King Corporation's former
president and owner Mr. Jerold Kolton. For the consulting services
rendered the Registrant paid Mr. Kolton the sum of $36,000 plus
expenses of $9,000 for a total of $45,000.
The Registrant and its predecessors have been in operation for
over twenty five years and its customers are in the Christmas,
Halloween, lamp, lighting, point of purchase display and ceramic
products field. Lite King's electrical wiring devices, consists of
wiring harnesses, "pigtails", power supply cords and the sale of
bulbs. Wiring harnesses consist of wire, one or more sockets on a
line with a polarized plug and with or without a plug and a switch
(which is optional). "Pigtails" consist of a socket and wire.
Power supply cords consists of a plug, wire and a switch (which is
optional). The Registrant's customers consists of manufacturers of
lamps, chandeliers, Christmas and Halloween illuminated
decorations, novelties, point of purchase displays, signs,
religious illuminated items, illuminated ceramic products and
electrical specialties. The Registrant's "pigtails" are primarily
sold to lamp and chandelier manufacturers while wiring devices and
power supply cords are sold primarily to the Registrant's other
customers.
The Registrant obtains its raw materials from a number of
different suppliers and believes that it is not dependent upon any
source of supply. It faces competition from a number of domestic
and international wiring device manufacturers, several of whom are
considerably larger than the Registrant. Competition is believed
to be intense and while the Registrant believes it is able to
finance future growth internally, management believes that a number
of the Registrant's competitors are materially stronger financially
along with having production facilities located domestically and
overseas, taking advantage of lower rates offshore.
Lite King's facilities consist of approximately 16,000 square
feet of office and factory space with annual lease payments of
$58,000 plus tax escalations. The lease is scheduled to expire on
April 30, 2002. At June 30, 2000, there were three employees in
non manufacturing activities and one engaged in manufacturing
activities. For the year ended June 30, 2000, three customers
accounted for 56%, 11%, and 10%, respectively of total revenues.
For the fiscal year ended June 30, 1999 three customers accounted
for 62%, 15% and 6% respectively of total revenues. The loss of
any one of these customers would have a material adverse effect on
the Registrant's future operations. No other customer accounted
for 10% or more of revenues for the 2000 and 1999 fiscal years.
Management of the Registrant has recently concluded that it
will continue to experience declining profit margins in its major
core business: seasonal holiday light sets. The declining margins
are due to large disparities in labor rates experienced by the
Registrant as compared with labor rates existing in Far Eastern
markets. Prices offered by Far Eastern competitors continue to
decline and the Registrant cannot compete effectively with these
competitors.
The Registrant also operates its production operations
utilizing a union representing manufacturing employees and the
disparity between labor rates experienced in the northeastern part
of the U.S. and those experienced by competitors in Mainland China
and Mexico continues to grow. To management's knowledge, there has
been no other U.S. manufacturer (competitor) of decorative seasonal
lighting products for the past few years with several domestic
competitors acting in the role of "wholesalers" bringing in
finished product from Mexico and Mainland China. These imports of
product has resulted in continuing lower selling prices offered to
the Registrant's customers with the Registrant continuing to lower
its prices to compete.
Being the only U.S. manufacturer also placed the Registrant
under more product review by Underwriter's Laboratories Inc (U.L.)
and the Canadian Standards Association (C.S.A.) since both testing
companies had fewer U.S. competitive manufacturers to visit. The
Registrant found scrutiny of Mainland Chinese competitors to be
less than those it has experienced with more competitive, defective
and inferior products being shipped to the U.S. This has resulted
in more consumer complaints and accidents from inferior products
made offshore.
The result has been the imposition of more and more
regulations and costly changes being placed by U.L. on the
Registrant to the point that it has become unprofitable and
expensive to manufacture products in the U.S. U.L.'s changes has
also changed the components and raw materials needed by the
Registrant. Management has found that there are no domestic buyers
for much of its existing raw materials, inventory and equipment
since a good deal of production activities has moved outside the
U.S. to lower labor markets in Mexico, Dominican Republic, Mainland
China, Malaysia and other countries.
The Registrant has concluded that its best strategy for the
future would be to close down its production activities, sell off
its business assets (inventory, equipment, customer accounts, and
U.L. and C.S.A. product files) and position itself in an unrelated
business activity. Such alternative activities may take the form
of making the Registrant available as a reverse merger candidate
(public shell company) or entering the venture capital/financial
consulting field whre it can offer the president's experience (he
has completed two reverse mergers in 1998 and 1999 and has been
engaged in financial consulting activities since 1983 through an
affiliated company, Modern Technology Corp).
Management anticipates that once production and business
activities in the electrical cord field is completed and terminated
(estimated date: fourth quarter of calendar 2000) it will actively
seek out companies for either potential merger or for involvement
through providing equity capital and managerial assistance.
Management intends to focus its efforts on companies in the fields
of information technology, telecommunications and medical
instrumentation with special emphasis on internet
software/hardware, wireless communications, fiberoptics and
semiconductors.
For the year ended June 30, 2000, the Registrant continued to
manufacture some product for its customers. It has been in
discussion with a number of companies regarding their purchase of
the Registrant's inventory and equipment. However as mentioned
earlier, management has found a small number of domestic
manufacturers willing to purchase the Registrant's raw materials
and equipment. Management is currently in the process of closing
down its production facilities with a targeted closing date of
November 2000. All remaining assets and equipment are being
liquidated, with some equipment being placed with dealers for sale
on a "consignment" and auction basis.
As a subsequent event to the year ended June 30, 2000,
management has been unable to locate any company willing to buy its
inventory and equipment (including customer accounts, U.L./C.S.A.
files) as a package and the Registrant has been forced to sell off
most of its inventory and equipment individually. This has
resulted in the Registrant being forced to record a one time
writedown of most of the cost of its remaining inventory and
equipment. The Registrant has been unable to recoup most of its
cost in these assets and it has suffered a loss on their sale.
(See Management's Discussion and Analysis or Plan of Operation.)
Item 2. Description of Property
As of June 30, 2000, the Registrant owned no property. Lite
King's facilities consist of 16,000 square feet of office and
factory space pursuant to a five year lease scheduled to expire on
April 30, 2002. Annual lease payments during the first two years
ending on April 30, 1999 amounted to $58,000 plus tax escalations.
During the third year the rental amounts to $60,000 plus tax
escalations and during the fourth and fifth year of the lease
ending April 30, 2002, the annual lease payment amounts to $62,000
plus tax escalations.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
The following table sets forth, for the periods indicated, the
Company's common stock as published by the National Daily Quotation
Service. Prices represent quotations between dealers without
adjustments for retail markups, markdowns or commissions, and may
not represent actual transactions.
High Bid Low Bid
Quarter ended September 30, 1998 * *
Quarter ended December 31, 1998 * *
Quarter ended March 31, 1999 * *
Quarter ended June 30, 1999 * *
Quarter ended September 30, 1999 * *
Quarter ended December 31, 1999 * *
Quarter ended March 31, 2000 * *
Quarter ended June 30, 2000 * *
*there were no pink sheet market makers for the Registrant's common
stock; no price information was available.
On September 13, 2000, there was no market for the shares of
the Registrant.
Number of shareholders of record on September 13, 2000 was
693.
Dividends - The Company has not paid any dividends since its
inception and presently anticipates that all earnings, if any, will
be retained for development and expansion of the Registrant's
business and that no dividends on the common stock will be declared
in the foreseeable future.
Item 6. Management's Discussion And Analysis or Plan of Operation
During the fourth quarter of calendar year 1999, the
Registrant made a decision to begin a process to terminate its
electrical wiring assembly business due to the intense competition
from low labor markets in China and Mexico and the resulting
decreasing profit margins (See Item 1: Description of Business for
a more detailed discussion). The Registrant completed shipments to
its decorative lighting customers during October-November 1999.
During the remainder of 1999 and the nine months of calendar year
2000, the Company continued to produce and ship product to some of
its customers as a way of utilizing its inventory.
For the year ended June 30, 2000, the Registrant generated
sales of $555,027. 78% of this figure reflects sales from July
1999-October 1999 (the first four months of the fiscal year). At
the beginning of November 1999, the Registrant terminated almost
all of its production staff and notified its decorative lighting
customers (who represent most of the Registrant's sales) that it
would no longer produce cordsets and would only offer product from
its current inventory. For the remaining eight months of the
fiscal year ended June 30, 2000, the Registrant generated
approximately $122,105 in revenues. Sales for the year ended June
30, 1999 amounted to $1,590,235 which reflects a full year's
marketing and production effort.
Despite efforts to locate a buyer for the Registrant's
customer accounts and remaining inventory and equipment, management
decided to writedown its inventory and equipment by approximately
$230,000 during the fiscal year ended June 30, 2000, taking a
charge against earnings to reflect management's estimate of net
realizable value of its inventory (writedown of inventory was
$200,000, equipment was $30,000).
For the year ended June 30, 2000, cost of goods sold amounted
to $652,607 (as compared with $1,232,575 for the year ended June
30, 1999). The Registrant purchases for the fiscal year ended June
30, 2000 amounted to only $44,434 as compared with $986,707 for the
June 30, 1999 fiscal year. This reflects nominal purchases of
merchandise to complete orders to customers. The Registrant used
existing inventory materials to process customer orders during the
current fiscal year.
Direct labor was $95,248 for the June 30, 2000 fiscal year as
compared with $213,599 for the year ended June 30, 1999. This
decrease is explained by the fact that almost all of the
Registrant's production staff was terminated in October-November
1999 (4-5 months production for the fiscal year) and only several
members of its production staff was retained for two additional
months and one member was retained for the remainder of the fiscal
year.
The ending inventory of $50,000 at June 30, 2000 reflects a
writedown of $200,000 in inventory during the last six months of
fiscal year June 2000 and the utilization of approximately $450,000
of inventory from its beginning inventory at July 1, 1999. Without
the writedown of $200,000 in inventory during the fiscal year ended
June 30, 2000, the Registrant would have generated a gross margin
of approximately $100,000. However with the $200,000 writedown,
the Registrant generated a gross loss from operations of $97,580 as
compared with a gross margin of $357,660 for the year ended June
30, 1999.
For the year ended June 30, 2000 the Registrant's general and
administrative expenses amounted to $300,487, or approximately
$115,000 less than the $415,551 generated during the year ended
June 30, 1999. This decline of $115,000 can be attributed to a
decline in officers salaries of $45,680, a decline in insurance
expense of approximately $22,000, a decline in payroll taxes of
approximately $17,000, decline in real estate expense and taxes of
approximately $15,000, a decline in advertising expense of
approximately $4,000, a decline in maintenance expense of
approximately $4,000, a decline in office expense of approximately
$3,500, a decline in travel expense of approximately $1,000 and a
decline in legal and accounting expense of approximately $2,500.
The Registrant generated a net loss for the year ended June
30, 2000 of $434,227 which increased by $366,896 from a $67,331
loss for the year ended June 30, 1999. The increased loss can be
attributed to a $230,000 one time writedown (expense) in ending
inventory and equipment to reflect the Registrant's plans to
terminate its electrical wiring assembly business (see Item 1
Description of Business), and the effect of operational overhead as
reflected in general and administrative expenses and the decline in
sales from the termination of production activities during the
first half of the fiscal year ended June 30, 2000.
The Registrant has financed its activities primarily from
operating activities. For fiscal year 2000 and 1999 cash flows
from investing activities have not been material. During fiscal
years 1998, 1999 and 2000, cash flows from financing activities
have been immaterial.
As of June 30, 2000, the Registrant had total assets of
$915,479 as compared with total assets of $1,698,825 at June 30,
1999. The decline in assets of $783,346 can be attributed to a
decline in accounts receivable of $397,462, a decline in inventory
of $512,925, a decline in prepaid expenses of $16,245, a decline in
fixed assets of $63,824 offset by an increase in cash and cash
equivalents of $207,110.
As of June 30, 2000, total liabilities declined by $349,119
reflected by a $349,119 drop in current liabilities. Shareholders'
equity decreased by $434,227 which reflects the loss for the fiscal
year ended June 30, 2000. The current ratio (current assets to
current liabilities) at June 30, 2000 was approximately 36.5:1.
Management anticipates that once production and business
activities in the electrical cord field is completed and terminated
at the end of calendar yaar 2000, it will actively seek out
companies for either potential merger or for involvement through
providing equity capital and managerial assistance, although no
assurance can be given that the Registrant will be successful with
these plans in the near future (See "Description of Business" Item
1.).
Item 7. Financial Statements
a) Financial Statements and Financial Statement Schedules.
Balance Sheets - June 30, 2000 and 1999
Statement of Shareholders' Equity for the period July 1,
1998 to June 30, 2000
Statement of Operations for the years ended June 30, 2000
and 1999
Statement of Cash Flows for the years ended June 30, 2000
and 1999
Notes to the Financial Statements for the years ended
June 30, 2000 and 1999
b) Schedules
Other schedules not submitted are omitted, because the
information is included elsewhere in the financial
statements or the notes thereto, or the conditions
requiring the filing of these schedules are not
applicable.
Item 8. Changes In and Disagreements with Accountants in
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors and Executive Officers
The executive officers and directors of the Registrant are as
follows:
Arthur Seidenfeld 49 President and Director
Anne Seidenfeld 87 Treasurer,Secretary
and Director
Gerald Kaufman 59 Director
Arthur Seidenfeld, President and Director of the Registrant
since formation, was awarded a B.S. Degree in Accounting from New
York University in 1972 and an M.B.A. in Finance in 1978 from Pace
University. He has also served as President and Director of Daine
Industries and of Modern Technology Corp. since 1988.
Anne Seidenfeld, Secretary-Treasurer and Director of the
Company. She is also Treasurer, Secretary and a Director of Modern
Technology Corp. and is Treasurer, Secretary and a Director of
Daine.
Gerald Kaufman, Director, has been a practicing attorney for
over thirty years. He has served as a director of the Company,
along with being a director of Modern Technology Corp. and Daine
since November 1990.
Arthur Seidenfeld is the son of Anne Seidenfeld.
Item 10. Executive Compensation
For the year ended June 30, 2000, Arthur Seidenfeld, President
and a Director of the Company received a salary of $63,000. Anne
Seidenfeld, Treasurer and a Director of the Company, received a
salary of $11,370 for the year ended June 30, 2000.
No other option or bonus plan exists.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
a. The following table sets forth information as of June 30, 1999
with respect to all shareholders known by the Company to be
beneficial owners of more than 5% of the outstanding Common
Stock, all directors, and all directors and executive officers
as a group. Except as noted below, each shareholder has sole
voting and investment power with respect to shares owned.
Number of Common
Name and Address Shares Beneficially
of Beneficial Owner Owned Percent*
Modern Technology Corp.
P.O. Box 0007
Belle Harbor, New York 11694 720,000 29.0%
Arthur Seidenfeld**
P.O. Box 0007
Belle Harbor, New York 11694 360,000 14.5%
Anne Seidenfeld**
P.O. Box 0007
Belle Harbor, New York 11694 200,000 8.0%
American Israel Ventures Corp.**
P.O. Box 0007
Belle Harbor, New York 11694 150,000 6.0%
Gerald Kaufman
33 Walt Whitman road
Huntington Station, New York 11746 30,000 1.2%
All 3 officers and directors
as a group 590,000 23.7%
*Based upon 2,484,620 shares outstanding which assumes a
distribution of one share of the Registrant for each 100 shares of
Daine.
** Arthur Seidenfeld and Anne Seidenfeld are President and
Secretary, Treasurer respectively of Modern Technology Corp. and
also own 48% and 12% respectively of the common stock of Modern
Technology Corp.
Arthur Seidenfeld owns 70% of the outstanding shares of American
Israel Ventures Corp. (AIV) and Anne Seidenfeld owns 25% of the
outstanding shares of AIV. Arthur Seidenfeld and Anne Seidenfeld
are President and Treasurer-Secretary respectively of American
Israel Ventures Corp.
Item 13. Certain Relationships and Related Transactions.
None
Supplemental information to be furnished with reports filed
pursuant to Section 15(d) of the Securities Act of 1934 by
Registrant which have not registered securities pursuant to Section
12 of the Securities Act of 1934:
a) No annual report or proxy material has been sent to
security holders. When such report or proxy materials are
furnished to securities holders subsequent to the filing of this
report, copies shall be furnished to the Commission when sent to
securities holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
LITE KING CORP.
BY Arthur Seidenfeld
President
Dated: September 13, 2000
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the date
indicted.
Name Title Date
Arthur Seidenfeld President and Director
Principal Executive
Officer and Principal
Financial Officer Sept. 13, 2000
Anne Seidenfeld Treasurer, Secretary
and Director Sept. 13, 2000
Gerald Kaufman Director Sept. 13, 2000
LITE KING CORP.
FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS - ASSETS 2
BALANCE SHEETS
- LIABILITIES AND SHAREHOLDERS' EQUITY 3
STATEMENTS OF SHAREHOLDERS' EQUITY 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
LITE KING CORP.
Brooklyn, NY
We have audited the accompanying balance sheets of LITE KING CORP.
as of June 30, 2000 and 1999 and the related statements of
operations, statements of shareholders' equity and cash flows for
each of the two years in the period ended June 30, 2000. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based upon our audit.
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 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 LITE
KING CORP. as of June 30, 2000 and 1999, and the results of its
operations and its cash flows for each of the two years in the
period ended June 30, 2000, in conformity with generally accepted
accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
July 26, 2000
Page 1 of 10
LITE KING CORP.
BALANCE SHEETS
A S S E T S
June 30,
2000 1999
CURRENT ASSETS
Cash and Cash Equivalents $ 811,573 $ 604,463
Accounts Receivable 12,716 410,178
Inventory 50,000 562,925
Prepaid Expenses 5,090 21,335
Total Current Assets 879,379 1,598,901
FIXED ASSETS
Machinery and Equipment 364,011 363,113
Leasehold Improvements 9,787 9,787
Less: Accumulated Depreciation
and Amortization (343,798) (279,076)
30,000 93,824
OTHER ASSETS
Deposits 6,100 6,100
TOTAL ASSETS $ 915,479 $1,698,825
See accompanying summary of accounting policies and notes to the
financial statements.
Page 2 of 10
LITE KING CORP.
BALANCE SHEETS
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
June 30,
2000 1999
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 24,058 $ 373,177
Total Current Liabilities 24,058 373,177
OTHER LIABILITIES
Deferred Income Tax Liability 2,276 2,276
TOTAL LIABILITIES 26,334 375,453
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock ($.001 Par Value
50,000,000 shares authorized,
2,484,620 shares issued and
outstanding 5,400 5,400
Paid-In Capital 1,139,880 1,139,880
Retained Earnings (deficit) (256,135) 178,092
TOTAL SHAREHOLDERS' EQUITY 889,145 1,323,372
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 915,479 $1,698,825
See accompanying summary of accounting policies and notes to the
financial statements.
Page 3 of 10
LITE KING CORP.
STATEMENTS OF SHAREHOLDERS' EQUITY
For The Period July 1, 1998 to June 30, 2000
Total
Number $.001 Retained Share-
of Par Paid-In Earnings holders'
Shares Value Capital (deficit) Equity
BALANCES AT
JULY 1, 1998 2,484,620 $5,400 $1,139,880 $ 245,423 $1,390,703
Net Income
(Loss) for the
Year Ended
June 30, 1999 (67,331) (67,331)
BALANCES AT
JUNE 30, 1999 2,484,620 5,400 1,139,880 178,092 1,323,372
Net Income
(Loss) for the
Year Ended
June 30, 2000 (434,227) (434,227)
BALANCES AT
JUNE 30, 2000 2,484,620 $5,400 $1,139,880 $(256,135) $ 889,145
See accompanying summary of accounting policies and notes to the financial
statements.
Page 4 of 10
LITE KING CORP.
STATEMENTS OF OPERATIONS
For The Years Ended
June 30,
2000 1999
REVENUES
Sales - Net $ 555,027 $1,590,235
COST OF GOODS SOLD
Beginning Inventory 562,925 595,194
Purchase and Freight 44,434 986,707
Direct Labor 95,248 213,599
702,607 1,795,500
Less: Inventory - End of Period 50,000 562,925
652,607 1,232,575
GROSS MARGIN (Loss) (97,580) 357,660
Interest Income 28,637 21,246
General and Administrative
Expenses (300,487) (415,551)
Depreciation and Amortization Expense (64,722) (35,861)
INCOME (LOSS) BEFORE INCOME TAXES (434,152) (72,506)
Income Tax Expense (Benefit) 75 (5,175)
NET INCOME (LOSS) $(434,227) $ (67,331)
Earnings (Loss) Per Share $(.17) $(.03)
Weighted Average Number of Shares
of Common Stock Outstanding 2,484,620 2,484,620
See accompanying summary of accounting policies and notes to the financial
statements.
Page 5 of 10
LITE KING CORP.
STATEMENTS OF CASH FLOWS
For The Years Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(434,227) $(67,331)
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization
Expense 64,722 35,861
Change in Assets and Liabilities:
Decrease (Increase) in Accounts
Receivable 397,462 (17,391)
Decrease (Increase) in Inventory 512,925 32,269
Decrease (Increase) in Prepaid
Expenses 16,245 (7,987)
Decrease (Increase) in Deferred
Taxes - Current -0- 284
Increase (Decrease) in Accounts
Payable and Accrued Expenses (349,119) 49,353
Increase (Decrease) in Deferred
Income Tax Liability -0- (6,147)
Net Cash Provided By (Used In)
Operating Activities 208,008 18,911
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (898) -0-
Net Cash Provided By (Used In)
Investing Activities (898) -0-
Net Increase (Decrease) in Cash and
Cash Equivalents 207,110 18,911
Cash and Cash Equivalents at
Beginning of Period 604,463 585,552
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 811,573 $604,463
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest $ -0- $ -0-
Income Taxes $ 556 $ 1,282
See accompanying summary of accounting policies and notes to the financial
statements.
Page 6 of 10
LITE KING CORP.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Lite King Corp. (LKC) is a New York corporation. LKC's
principal business is the manufacture and assembly of
electrical wiring devices, cord sets and sockets. LKC's
customers consist of manufacturers of lamps, chandeliers,
Christmas and Halloween illuminated decorations, novelties,
point of purchase displays, signs, and other electrical
specialties. The customers are located throughout North
America. See Note 6 (Subsequent Event).
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less. The carrying
amount reported in the accompanying balance sheets approximates
fair value.
ACCOUNTS RECEIVABLE
Accounts receivable are judged as to collectibility by
management and an allowance for bad debts is established as
necessary. As of each balance sheet date, no reserve was
considered necessary.
INVENTORY
Inventories are stated at the lower of cost or market for June
30, 1999 and prior years. Cost is determined by the first-in,
first-out method.
Inventories consist of:
6/30/00 6/30/99
Raw Materials $50,000 $506,633
Work-in-Process -0- 56,292
Finished Goods -0- -0-
$50,000 $562,925
During the year ended June 30, 2000 the Company wrote down its
inventory to its estimated net realizable value of $50,000 and
recorded a charge of $200,000 in Cost of Goods Sold.
Management has decided to pursue other business ventures and
has decided to liquidate its inventory at a substantial
discount from cost in an effort to expedite the sale of the
remaining inventory.
ADVERTISING
Advertising costs are expensed as incurred.
Advertising expense for the years ended June 30, 2000 and 1999
was $475 and $4,089, respectively.
Page 7 of 10
LITE KING CORP.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
(Continued)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentration of credit risk are accounts receivable. During
the years ended June 30, 2000 and 1999, three customers
accounted for approximately 56%, 11%, 10% and 62%, 15%, 6%,
respectively, of total revenues. The Company performs ongoing
credit evaluations of its customers but generally does not
require collateral to support customer receivables. The loss
of any one of these customers could have a material adverse
effect on the financial condition of the company.
PROPERTY AND EQUIPMENT
Renewals and betterments are capitalized; maintenance and
repairs are expensed as incurred.
Depreciation is calculated using the straight line method over
the asset's estimated useful life, which generally
approximates 10 years.
In accordance with SPAS 121, during the year ended June 30,
2000 the Company wrote down its equipment by approximately
$30,000. This write down was included in depreciation in
2000. Estimated salvage values were used and are based on
estimated net proceeds upon the sale of certain assets.
REVENUE RECOGNITION POLICY
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped
to customers.
ESTIMATES IN 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 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.
INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." SFAS 109 has as its basic
objective the recognition of current and deferred income tax
assets and liabilities based upon all events that have been
recognized in the financial statements as measured by the
provisions of the enacted tax laws.
Page 8 of 10
LITE KING CORP.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
(Continued)
Valuation allowances are established when necessary to reduce
deferred tax assets to the estimated amount to be realized.
Income tax expense represents the tax payable for the current
period and the change during the period in the deferred tax
assets and liabilities.
CAPITAL STOCK
In October 1998, the Company increased its authorized common
shares from 200 to 50,000,000, changed the par value from none
to $.001 per share, and declared a stock split of 24,846.2 to
one. All related share and per share amounts have been
retroactively restated for these changes.
SPINOFF
In April of 1999, Daine Industries Inc. (the former 100% owner
of Lite King Corp.) distributed all 2,484,620 issued and
outstanding shares of Lite King Corp. to the shareholders of
Daine Industries Inc. on a pro rata basis. Daine did not
recognize any gain or loss on the distribution and also relies
on Internal Revenue Code section 355 to treat the distribution
as a nontaxable stock dividend to Daine's shareholders.
NOTE 3: COMMITMENTS AND CONTINGENCIES
The company is currently in a lease for office and factory
space requiring minimum annual base rental payments for the
fiscal periods shown as follows:
2001 $ 62,000
2002 51,667
Total $113,667
In addition to annual base rental payments, the company must
pay an annual escalation for real estate taxes.
Rental expense under this lease for the years ended June 30,
2000 and 1999 was $67,000 and $59,000, respectively.
NOTE 4: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state income
tax rates.
Income tax expense is principally due to state and local income
taxes based upon capital. Deferred tax liabilities relate to
depreciation timing differences and operating loss carrybacks.
During the year ended June 30, 2000 the Company incurred a tax
net operating loss of approximately $400,000 which is allowed
to be carried forward for 20 years.
Page 9 of 10
LITE KING CORP.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
(Continued)
June 30,
2000 1999
Current tax expense (benefit):
Income tax at statutory rates $ 75 $ 972
Deferred tax expense (benefit):
Depreciation -0- (6,147)
Operating loss carryback -0- -0-
-0- (6,147)
Total Tax Expense (Benefit) $ 75 $(5,175)
The tax effect of significant temporary differences, which
comprise the deferred tax assets and liabilities are as
follows:
June 30,
2000 1999
Deferred tax asset:
Operating loss carryback $228,658 $28,658
Valuation allowance
Net deferred tax asset (228,658) (28,658)
$ -0- $ -0-
Deferred tax liability:
Depreciation $ 2,276 $ 2,276
The Company has fully reserved the June 30, 2000 deferred tax
asset due to substantial losses and a lack of current operating
profitability for the foreseeable future.
NOTE 5: POSTRETIREMENT EMPLOYEE BENEFITS
The company does not have a policy to cover employees for any
health care or other welfare benefits that are incurred after
employment (postretirement). Therefore, no provision is
required under SFAS's 106 or 112.
NOTE 6: SUBSEQUENT EVENT
Management has decided to pursue other business ventures and
has decided to terminate the electrical wiring assembly
business. Therefore, management has written down its inventory
and fixed assets to their estimated net realizable value at
June 30, 2000.
Page 10 of 10
