SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
FOR THE YEAR ENDED MARCH 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Commission File Number 0-7349
WEBCOR ELECTRONICS, INC.
(Name of small business issuer in its charter)
Delaware 59-345315
(state or other jurisdiction of incorporation or organization)
(IRS Employer identification No.)
1612 N. Osceola Avenue, Clearwater, Florida 33755
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (813) 443 3434
Securities Registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share.
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Issuer
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 pursuant
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of Issuer'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.
[ ]
The issuer's revenues for its most recent fiscal year were
$0.
The aggregate market value of the 2,485,863 shares of Common
Stock, $.01 par value per share, held by non-affiliates of the
Issuer, based on the closing sale price on March 27, 1998 of
$0.03 per share, was $74,576. However, since trading is sporadic
and rare, the non-affiliates holding cannot be reasonably
assessed and the audit financials reflect zero value. The number
of shares of the Common Stock, outstanding on March 31, 1998 was
3,957,348. This outstanding number is subject to a reverse split of
11.5879 to 1, approved by a Special Meeting of the Stockholders
held on March 10, 1997, which resulted in outstanding shares of
300,000 before issuance of earned, but not issued, compensation
shares. Further Ms. Fonner and Capston, in the same Special
Meeting, were approved for a compensation of additional 200,000
shares for their duties. To avoid administrative complexity
associated with effecting a reverse split and requiring the
stockholder to change certificates twice, Management has elected
to defer the issuance of stock to Capston, Ms. Fonner or her
designees along with effecting the reverse split until an
acquisition is completed
Check whether the issuer has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court.
Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable.
PART I
Item 1. Description of Business
Corporate Background Information
WEBCOR ELECTRONICS INC., (the Registrant), was incorporated on
March 3, 1971, under the laws of the State of Delaware. The
Company conducted an initial public offering of its Common Stock
in May 1982 and in connection with an application to list its
Common Stock on the AMEX system, the Company also registered its
Common Stock pursuant to Section 12(g) of the Securities Exchange
Act of 1934. The Company's Common Stock remained listed on the
AMEX system until April 09, 1987.
On February 01, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy Act (Case No. 89-10328) in
the U.S. Bankruptcy Court for the Eastern District of New York.
On October 16, 1990, the Company's case under Chapter 11 was
voluntarily converted into a case under Chapter 7 of the
Bankruptcy Act. As a result of the voluntary conversion of the
Company's bankruptcy case , all assets of the Company were
transferred to the Trustee in Bankruptcy on the conversion date
and the Company ceased all operations. Subsequently, the Trustee
in Bankruptcy effected an orderly liquidation of corporate assets
and used the proceeds to repay the Company's creditors. On
November 13,1996 the Company's case under Chapter 7 was closed by
an order of the Court and the Trustee in Bankruptcy was
discharged. As a result of the Bankruptcy, the Company has no
assets, liabilities, management or ongoing operations and has not
engaged in any business activities since February, 1990.
During the pendancy of the Bankruptcy, the management of the
Registrant neglected to file franchise tax returns with and pay
the required franchise taxes to the State of Delaware. As a
result, the Company's corporate charter was revoked by order of
the Secretary of State of the State of Delaware on March 1, 1991.
Similarly, the management of the Registrant neglected to file
with the SEC either (a) the regular reports that are required of
all companies that have securities registered under the Exchange
Act, or (b) a certification on Form 15 terminating its
registration under the Exchange Act. As a result, the Company
remained a Registrant under the Exchange Act but was seriously
delinquent in its SEC reporting obligations. According to Lumiere
Securities, the last published quotation for the Company's Common
Stock was posted by CARR SECURITIES CORP., one of the Company's
market makers, on September 26, 1997. At this time, the published
quote is $0.10 bid and $0.25 asked.
Acting in its capacity as a Stockholder of the Company, and
without first receiving any consent, approval or authorization of
any officer, director or other Stockholder of the Company,
Capston effected a renewal, revival and restoration of the
Company's certificate of incorporation pursuant to Section 312 of
the General Corporation Law of the State of Delaware. In general,
Section 312 provides that any corporation may "procure an
extension, restoration, renewal or revival of its certificate of
incorporation, together with all the rights, franchises,
privileges and immunities and subject to all of its duties, debts
and liabilities which had been secured or imposed by its original
certificate of incorporation" upon compliance with certain
procedural requirements.
After reviewing the applicable files, Capston determined that
the only debt of the Company that was "secured or imposed by its
original certificate" was the obligation of the Registrant to pay
its Delaware taxes. Therefore, Capston paid all past due
franchise taxes on behalf of the Company and then filed a
Certificate of Renewal, Revival, Extension and Restoration of the
Company's Certificate of Incorporation on behalf of the Company
under the authority granted by Section 312(h). The total out-of-
pocket costs paid by Capston incurred in connection with the
restoration of the Company's charter was $450. This Certificate
was filed in the office of the Secretary of State of the State
of Delaware on March 26, 1996 and at the date of this Proxy
Statement the Company is lawfully incorporated, validly existing
and in good standing under the laws of the State of Delaware.
In February of 1997, the Registrant sent to its stockholders a
Notice of Special Meeting and Proxy Statement which described a
number of proposals relating to a plan of reorganization proposed
by Capston Network Company ("Capston"), a stockholder of the
Company. Subsequently, on March 10, 1997, a Special meeting of
the Stockholders was held and all of the proposals were approved
by a majority vote of the Stockholders. The principal proposals
approved by the stockholders were:
1. A proposal to ratify the actions of Capston in (i) effecting
a renewal, revival and restoration of the Company's
Certificate of Incorporation; (ii) adopting amended by-laws
to govern the business affairs of the Company, and (iii)
filing the reports and other documents necessary to bring the
Company current with respect to its reporting obligations
under the Securities Exchange Act of 1934;
2. A proposal to elect a person designated by Capston to serve
as the sole member of the Board of Directors until the 1998
annual Meeting of Stockholders, or until her successor is
elected and qualified;
3. A proposal to consider and vote upon proposed an Amendment to
the Company's Certificate of Incorporation that will effect a
reverse split of all issued and outstanding shares of Common
Stock in the ratio of one (1) share of new Common Stock for
each 11.5879 shares presently outstanding so that immediately
thereafter the Company will have a total of 300,000 shares
issued and outstanding;
4. A proposal to consider and vote upon a proposal to issue
200,000 shares of Common Stock to persons designated by
Capston as compensation for services rendered in connection
with the implementation of the Plan;
5. A proposal to consider and vote upon a proposal which will
give the Board of Directors authority to pay an in-kind
Finder's Fee to unrelated third party finders who introduce
the Company to a suitable acquisition prospect.
6. Consider and vote upon a proposal that will give the Board of
Directors discretionary authority to (i) change the Company's
name and (ii) issue up to 4,500,000 shares of Common Stock to
unrelated third parties, all without prior stockholder
approval, in connection with a business combination
transaction of the type contemplated by the Plan; and
7. A proposal to consider and vote upon a proposed Amendment to
the Company's Certificate of Incorporation that will increase
the authorized capital stock of the Company to 25,000,000
shares of $0.01 par value Common Stock and 5,000,000 shares
of $0.01 par value Preferred Stock.
Detailed disclosure respecting each of the amendments is set
forth in the Registrant's Proxy Statement dated January 29, 1997
which is incorporated herein by this reference.
Operations
The Company has no assets, liabilities, management or ongoing
operations and has not engaged in any business activities. In
July of 1997, the Stockholders overwhelmingly voted for the
adoption and implementation of a Plan presented by Capston and
Ms. Fonner, (sole director) whereby the Company was
restructured as a "public shell" for the purpose of effecting a
business combination transaction with a suitable privately-held
company that has both business history and operating assets.
Capston and Ms. Fonner believes the Company offers owners of
a suitable privately-held company the opportunity to acquire a
controlling ownership interest in a public company at
substantially less cost than would otherwise be required to
conduct an initial public offering. Nevertheless, neither is
aware of any empirical statistical data that would independently
confirm or quantify their beliefs concerning the perceived value
of a merger or acquisition transaction for the owners of a
suitable privately-held company. The owners of any existing
business selected for a business combination with the Company
will incur significant costs and expenses, including the costs of
preparing the required business combination agreements and
related documents, the costs of preparing a Current Report on
Form 8-K describing the business combination transaction and the
costs of preparing the documentation associated with any future
reporting under the Exchange Act and registrations under the
Securities Act.
The Plan is approved by the Stockholders. The Company is
fully reactivated and ready to be used as a corporate vehicle to
seek, investigate and, if the results of such investigation
warrant, effect a business combination with a suitable privately-
held company or other business opportunity presented to it by
persons or firms that seek the perceived advantages of a publicly
held corporation. The business operations proposed in the Plan
are sometimes referred to as a "blind pool" because Stockholders
will not ordinarily have an opportunity to analyze the various
business opportunities presented to the Company, or to approve or
disapprove the terms of any business combination transaction that
may be negotiated by Capston and Ms. Fonner on behalf of the
Company. Consequently, the Company's potential success will be
heavily dependent on the efforts and abilities of Ms. Fonner,
Capston and its consultants and legal advisors, who have
virtually unlimited discretion in searching for, negotiating and
entering into a business combination transaction. Ms. Fonner and
Capston have had limited experience in the proposed business of
the Company. Although Ms. Fonner and Capston believes that the
Company will be able to enter into a business combination
transaction during 1998, there can be no assurance as to how much
time will elapse before a business combination is effected, if
ever. The Company is not restrict its search to any specific
business, industry or geographical location, and the Company may
participate in a business venture of virtually any kind or
nature.
Capston, Ms. Fonner, legal advisers and consultants
anticipate that the selection of a business opportunity for the
Company will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in
some industries, and shortages of available capital, Capston
believes that there are numerous privately-held companies seeking
the perceived benefits of a publicly traded corporation. Such
perceived benefits may include facilitating debt financing or
improving the terms on which additional equity or may be sought,
providing liquidity for the principals of the business, creating
a means for providing incentive stock options or similar benefits
to key employees, providing liquidity for all stockholders and
other factors.
Potential business opportunities may occur in many different
industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex.
Capston, Ms. Fonner, legal advisers and consultants anticipate
that the Company will be able to participate in only one business
venture. This lack of diversification should be considered a
substantial risk inherent in the Plan because it will not permit
the Company to offset potential losses from one venture against
gains from another. Moreover, due to the Company's lack of any
meaningful financial, managerial or other resources, Capston, Ms.
Fonner, legal advisers and consultants believe the Company will
not be viewed as a suitable business combination partner for
either developing companies or established business that are in
need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination
transaction, the Registrant may become a party to a merger,
consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. After the
consummation of a business combination transaction, it is likely
that the present Stockholders of the Registrant will only own a
small minority interest in the combined companies. In addition,
as part of the terms of the acquisition transaction, all of the
Registrant's officers and directors will ordinarily resign and be
replaced by new officers and directors without a vote of the
Stockholders. Capston does not intend to obtain the approval of
the Stockholders prior to consummating any acquisition other than
a statutory merger that requires a Stockholder vote. Capston and
its officers, directors and consultants do not intend to sell any
shares held by them in connection with a business acquisition
until after the completion of the acquisition occurs, and then,
only in an orderly manner.
It is anticipated that any securities issued in a business
combination transaction will be issued in reliance on exemptions
from registration under applicable Federal and state securities
laws. In some circumstances, however, as a negotiated element of
a business combination, the Registrant may agree to register such
securities either at the time the transaction is consummated or
at some specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading
market that may develop may have a depressive effect on such
market. While the actual terms of a transaction to which the
Registrant may be a party cannot be predicted, it may be expected
that the parties to the business transaction will find it
desirable to avoid the creation of a taxable event and thereby
structure the acquisition in a so called "tax free"
reorganization under Sections 368(a)(1) or 351 of the Internal
Revenue Code of 1986, as amended (the "Code") In order to obtain
tax free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting
stock of the surviving entity. In such event, the stockholders of
the Registrant would retain less than 20% of the issued and
outstanding shares of the combined companies, which could result
in significant dilution in the equity of such stockholders. The
Registrant intends to structure any business combination in such
manner as to minimize Federal and state tax consequences to the
Registrant and any target company.
As part of the Registrant's investigation of potential
business opportunities, Capston and its officers, directors and
consultants will ordinarily meet personally with management and
key personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check reference of management and key personnel, and
take other reasonable investigative measures, to the extent of
the Registrant's limited resources and Capston's limited
expertise. The manner in which the Registrant participates in an
opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Registrant and other parties
and the relative negotiating strength of the Registrant and such
other management.
With respect to any business combination negotiations,
Capston will ordinarily focus on the percentage of the Registrant
which target company stockholders would acquire in exchange for
their ownership interest in the target company. Depending upon,
among other things, the target company's assets and liabilities,
the Registrant's stockholders will in all likelihood only own a
small minority interest in the combined companies upon completion
of the business combination transaction. Any business combination
effected by the Registrant can be expected to have a significant
dilutive effect on the percentage of shares held by the
Registrant's current Stockholders.
Upon completion of a business combination transaction, there
can be no assurance that the combined companies will have
sufficient funds to undertake any significant development,
marketing and manufacturing activities. Accordingly, the combined
companies may be required to either seek additional debt or
equity financing or obtain funding from third parties, in
exchange for which the combined companies might be required to
issue a substantial equity position. There is no assurance that
the combined companies will be able to obtain additional
financing on terms acceptable to the combined companies.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of
relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business
opportunity the costs incurred in the related investigation would
not be recoverable. Furthermore, even if an agreement is reached
for the participation in a specific business opportunity, the
failure to consummate that transaction may result in the loss of
the Registrant of the related costs incurred.
Item 2. Description of Property
As a result of its 1989 Bankruptcy, the Company has no
assets, liabilities, or ongoing operations. The Company had no
operations during the year ended March 31, 1998 and no material
assets or liabilities as of March 31, 1998.
Item 3. Legal Proceedings
Not Applicable
Item 4. Submission of matters to a vote of Security Holders
Not Applicable
PART II
Item 5. Market for Registrant's Common Equity
There has been no active trading in the Issuer's common stock
for over five years. The Issuer does have six (6) market makers.
It does not, however, have any active trading. The highest bid
was $.02 with the highest ask being $.07. The Company's trading
symbol is WBET and trades on the OTC.
Item 6. Management Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
For the past nine months, the Company has been actively
seeking an acquisition of assets, property or business that may
benefit the Company and its stockholders. While these efforts
have not resulted in a suitable business combination transaction,
the Company's experience during this period confirms that demand
for well structured public shells is strong. Over the last eight
months, the Company has evaluated a number of potential
acquisition candidates. In each case, however, the Company has
rejected as unsuitable because of several reasons. The most
predominant ones were capital structure, lack of audited
statements and inadequate working capital. In some cases, the
Company was rejected for unknown reasons. However, Capston
continues to seek for a qualified candidate.
Financial Condition
As a result of its 1989 Bankruptcy, the Company has no
assets, liabilities, or ongoing operations and has not engaged in
any business activities since February, 1990. The Company had no
operations during the year ended March 31, 1998 and no material
assets or liabilities as of March 31, 1998. Stockholder approved
the Plan whereby the Company will be restructured as a "public
shell" for the purpose of effecting a business combination
transaction with a suitable privately-held company that has both
business history and operating assets, although there can be no
assurance that management will be successful in its efforts to
negotiate such a transaction.
Plan of Operation.
The Company has not engaged in any material operations or had
any revenues from operations since its bankruptcy. The Company's
plan of operation for the next twelve months is to continue to
seek the acquisition of assets, property or business that may
benefit the Company and its stockholders. Because the Company has
no resources, management anticipates that to achieve any such
acquisition, the Company will be required to issue shares of its
common stock as the sole consideration for such acquisition.
During the next twelve months, the Company's only foreseeable
cash requirements will relate to maintaining the Company in good
standing or the payment of expenses associated with reviewing or
investigating any potential business venture, which are
anticipated to be advanced by Capston as loans to the Company.
Because the Company has not identified any such venture as of the
date of this Statement, it is impossible to predict the amount of
any such loans. However, any loans from Capston will be on terms
no less favorable to the Company than would be available from a
commercial lender in an arm's length transaction. As of the date
of this Annual Report on Form 10-K, the Company has not found any
acquisition to date.
Management anticipates that Capston, will advance minor
administrative expenses up to approximately $50,000. In the event
that additional funding is required in order to keep the Company
in good standing and/or to review or investigate any potential
merger or acquisition candidate, the Company may attempt to raise
such funding through a private placement of its common stock to
accredited investors.
At the present time, management has no plans to offer or sell
any securities of the Company. However, at such time as the
Company may decide to engage in such activities, management may
use any legal means of conducting such offer or sale, including
registration with the appropriate federal and state regulatory
agencies and any registration exemptions that may be available to
the Company under applicable federal and state laws.
Because the Company is not currently making any offering of
its securities, and does not anticipate making any such offering
in the foreseeable future, management does not believe that Rule
419 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, concerning offerings by
blank check companies, will have any effect on the Company or any
activities in which it may engage in the foreseeable future.
Item 7. Financial Statements.
For the information called for by this Item, see the
Financial Statements attached.
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
The Registrant's financial statements for the years ended
March 31, 1988 were audited by the firm of Mann Judd Landau,
Certified Public Accountants. As a result of the bankruptcy, as
discussed elsewhere herein, the Registrant did not prepare
audited financial statements from 1989 - 1996. In connection
with the revival and restoration of the Company's certificate of
incorporation, the firm of Want & Ender, Certified Public
Accountants was retained to audit the Registrant's balance sheet
for the year ended 1996, and to serve as the Registrant's auditor
in the future. During the fiscal years ended 1989, and the
subsequent interim period preceding the appointment of Mann Judd
Landau, CPA, there were no reportable disagreements between the
Registrant and the firm of Mann Judd Landau, Certified Public
Accountants, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
Want & Ender audited the Registrant's financial statements for
the year ended March 31, 1997 and 1998.
.
PART III
Item 9. Directors and Executive Officers of the Registrant
Ms. Sally Fonner, age 48, the president and sole stockholder
of Capston, performs the duties of President, Secretary,
Treasurer and Sole Director of the Registrant. Ms. Fonner term of
office is anticipated be no more than two years or until
permanent management can be located, whichever should occur first
in time. Ms. Fonner's sole purpose is to seek out qualified new
operations and management. Ms. Fonner shall seek re-election at
the annual meeting in 1998 if a business combination has not been
completed.
Item 10. Executive Compensation.
Ms. Fonner is the sole officer and director of the Registrant
and has received no monetary compensation for services performed
during her tenure. Further, no future monetary compensation
agreement between Ms. Fonner and the Registrant is contemplated.
Notwithstanding the foregoing, the Ms. Fonner was approved by the
stockholders in a Special Meeting, to have compensation of
200,000 shares of stock, not subject to the reverse split
approved by stockholders in the same meeting. To avoid
administrative complexity associated with effecting a reverse
split and requiring the stockholder to change certificates twice,
Management has elected to defer the issuance of stock to Capston,
Ms. Fonner or her designees until an acquisition is completed.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table presents certain information regarding
the beneficial ownership of the Company's equity securities at
February 28, 1998 by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each of the Company's directors and officers, and
(iii) all directors and officers as a group.
Number of SharesPercent of
Name Beneficially Owned (1) Class
Victor Reichenstein 985,507 27.00%
79 Express Street
Plainview, NY
11802
Capston Network Company 5,000 0.0014%
1612 N. Osceola Avenue
Clearwater, Fl
33755
All directors and
officers as a group. 5,000 0.0014%
The above information, with the exception of Capston Network
Company, is taken from the last filed 10-Q dated January 31,
1989. The transfer agent nor Capston has no information which
would indicate this information is still not the best available.
Capston believes that of these individuals has sole investment
and voting power with regard to the securities listed opposite
the name.
(1) Unless otherwise indicated, each person or group has sole
voting and investment power with respect to all listed
shares.
The Company knows of no arrangements that will result in a
change in control at a date after this Annual Report on Form 10-
KSB, however, the Issuer's proposed Proxy Statement will provide
for significant stock compensation to certain individuals
selected by Capston in the event that the plan of reorganization
described therein is approved by the Stockholders.
Item 12. Certain Relationships and Related Transactions
No officer, director or family member of an officer or
director has engaged in any material transaction with the issuer
since the beginning of the Issuer's most recent fiscal year.
Item 13. Exhibits and Reports on form 8-K.
Financial statements filed with this report:
Independent Auditor's report for March 31, 1997 and March 31,
1998.
Balance Sheet of March 31, 1997 and March 31, 1998.
Statements of Income for March 31, 1997 and March 31, 1998.
Shareholders Equity for March 31, 1997 and March 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
WEBCOR ELECTRONICS, INC.
Date: _______________ By____________________
Sally Fonner,
Director
President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934 this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on the date
indicated.
Date : ______________ By_____________________
Sally Fonner,
Director
President
and Chief Financial Officer
WANT &: ENDER, CPA, P.C.
CERT/F/ED PUBLIC ACCOUNTANTS 37 East 28th Street, 8th Floor
New York, NY 10016
MARTIN UNDER, CPA Telephone (212) 684-2414
STANLEY Z. WANT, CPA, CFP Fax (212) 684-5433
Independent Auditor's Report
To the Shareholders and Board of Directors
WEBCOR ELECTRONICS, INC.
We have audited the accompanying consolidated balance sheet of
WEBCOR ELECTRONICS, INC. (A Dormant State Company) at March 31,
1998 and March 31, 1997 and the related consolidated statements
of operations, shareholders' equity/(deficit), and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We have conducted our audit in accordance with generally accepted
auditing standards. These 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 also 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 our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of WEBCOR ELECTRONICS, INC. (A Dormant State Company) at
March 31, 1998 and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
/s/
Martin Ender
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
June 14, 1998
WEBCOR ELECTRONICS, INC.
( A Dormant State Company)
Consolidated Balance Sheets
March 31, 1998 and 1997
1998 1997
ASSETS
Organization Cost 0 0
_______ _______
Total Assets 0 0
_______ _______
LIABILITIES AND STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
Common Stock, par value $.01 per share;
20,000,000 shares authorized;
3,476,670 shares issued and outstanding 0 0
Additional Paid in Capital 32,882 17, 815
Retained Earnings (17,815) 0
Net Profit/(Loss) (15, 067) (17, 815)
Total Stockholders' Equity 0 0
Total Liabilities and
Stockholders' Equity 0 0
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC.
(A Dormant State Company)
Consolidated Statements of Operations
For the Year Ended March 31, 1998 and 1997
1998 1997
Revenues $ 0 $ 0
Expenses
Administrative Expenses (15,067) 0
Net Income/Loss for the year $(15,067) $ (17, 815)
See accompanying notes to financial statements
!
WEBCOR ELECTRONICS, INC.
(A Dormant State Company)
Consolidated Statement of Changes in Shareholders'
Equity/(Deficit)
For the years ended March 31, 1998 and 1997
1998 1997
Common Stock
(3,957,384SHARES ISSUED & OUTSTANDING) $ 0 $ 0
Additional Paid in Capital 32,882 17, 815
Retained Earnings (17,815) 0
Balance March, 31 0 0
Net Income/(Loss) for the year (15,067) (17,815)
Balance April 0 0
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC.
Statement of Cash Flows
For the Period Ended March 31, 1998
Current Year Prior Year
12-31-97 12-31-96
Cash Flows from Operating Activities
Net Income $(15,067) $ (17,815)
Net Cash Provided (Used)
By Operating Activities $(15,067) (17,815)
Cash Flows from Financing Activities
Proceeds from Capston-Paid in
Capital $ 15,067 $ 17,815
Net Cash Provided (Used)
By Financing Activities 15,067 17,815
Net Increase (Decrease) in Cash 0 0
Cash at Beginning of Period 0 0
Cash at End of Period $ 0 $ 0
WEBCOR ELECTRONICS, INC.
(A Dormant State Company)
March 31, 1998
Note 1. HISTORY OF THE COMPANY
WEBCOR ELECTRONICS INC., (A Dormant State Company), was
incorporated on December 3, 1971, under the laws of the State of
Delaware. The Company conducted an initial public offering of
its Common Stock in May 1982 and in connection with an
application to list its Common Stock on the AMEX system, the
Company also registered its Common Stock pursuant to Section
12(g) of the Securities Exchange Act of 1934. The Company's
Common Stock remained listed on the AMEX system until April 09,
1987.
On February 01, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy Act (Case No. 89-10328) in
the U.S. Bankruptcy Court for the Eastern District of New York.
On October 16, 1990, the Company's case under Chapter 11 was
voluntarily converted into a case under Chapter 7 of the
Bankruptcy Act. As a result of the voluntary conversion of the
Company's bankruptcy case , all assets of the Company were
transferred to the Trustee in Bankruptcy on the conversion date
and the Company ceased all operations. Subsequently, the Trustee
in Bankruptcy effected an orderly liquidation of corporate assets
and used the proceeds to repay the Company's creditors. On
November 13,1996 the Company's case under Chapter 7 was closed by
an order of the Court and the Trustee in Bankruptcy was
discharged. As a result of the Bankruptcy, the Company has no
assets, liabilities, management or ongoing operations and has not
engaged in any business activities since February, 1990.
Note 2. RESTORATION OF CORPORATE STATUS
On December 26, 1996, acting in its capacity as the holder of
5000 shares (0.0014%) of the Company's common stock, and without
first receiving the consent, approval or authorization of any
other person associated with the Company, Capston Network Company
effected a renewal, revival and restoration of the Company's
certificate of incorporation pursuant to Section 312 of the
General Corporation Law of Delaware. Thereafter, Capston filed a
10-K for the years ending March 31, 1989-1996, and a Proxy
Statement seeking approval and ratification of its actions, along
with authorization to seek a suitable business combination
transaction. This proxy statement was ultimately distributed to
the Company's stockholders and the proposals therein were
approved by the holders of a majority of the Company's issued and
outstanding shares.
Under the terms of the original Proxy Statement, Capston was
authorized to seek a suitable business combination transaction on
behalf of the Company and to submit the terms of any proposed
business combination transaction to the Company's stockholders
for their approval. Capston did not receive and was not entitled
to receive any equity interest in the Company as a result of it's
actions prior to the date of the Proxy Statement. Moreover,
Capston was not entitled to reimbursement for any expenses
incurred by it on behalf of the Company except to the extent that
the terms of a business combination transaction provided for the
reimbursement of such expenses. However, because Sally Fonner is
both the President of WEBCOR ELECTRONICS INC. and Capston, prior
Staff Accounting Bulletins require under generally accepted
accounting principles the treatment of debiting the expenses with
corresponding credit to paid-in capital. Future expenses of
Capston or others will be treated this way. These expenses are
actual cash expenditures and do not reflect any costs associated
with the operation of Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep
WEBCOR ELECTRONICS, INC. current with its reporting requirements,
keeping the Corporation in good standing, any required proxy
solicitation or acquisition efforts. These amounts should not
exceed $50,000 in out-of-pockets costs. In addition, as
approved, and as a result of a suitable acquisition, additional
fees paid for by issuance of equity position would be for: (i)
Capston of 200,000 shares, (ii)up to 4,500,000 shares for an
acquisition(s) and (iii) up to 5% of the acquisition for a
finder's fee .
Note 4. DELAYED ISSUANCE
As a result of a special meeting voting which is reported on the
1997 10-K, the stockholders approved a reverse split and a
compensation package for Capston and the Director which results
in the common shareholders having a total of 300,000 shares
among themselves and Capston and Ms. Fonner having 200,000 shares
, for a total of 500,000 outstanding. In addition, the
stockholders approved an increase of authorized common shares
from 20,000,000 to 25,000,0000 and preferred from 1,000,000 to
5,000,000. Due to adminstrative complexities, it is management's
decision to delay both the issuance of their compensation shares
and the reverse split until a business combination is realized.
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