SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 [No Fee Required]
For the transition period from January 1, 1994 to December
31, 1997
Commission file number 33-15596-D
Knickerbocker Capital Corporation
(Exact name of small business issuer in its charter)
Colorado 54-1059107
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(State or other jurisdiction of incorporation or
organization) I.R.S. Employer
Identification No.)
45110 Club Drive, Suite B Indian Wells, California
92210
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(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (760)
360-1042
Securities registered pursuant to Section 12(b) of the
Act: None
Securities registered pursuant to Section 12(g) of the
Act: Common Stock, no par value
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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the
past 90 days.
YES NO X
Check disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information
statements incorporated by reference in part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
State issuer's revenues for its most recent fiscal year: $-
0-
The aggregate market value of the voting stock held by non-
affiliates of the registrant was not determinable because
the common stock does not trade on any market.
The number of shares outstanding of the issuer's classes
of Common Stock as of December 31, 1997.:
Common Stock, No Par Value - 261,200,000 shares
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DOCUMENTS INCORPORATED BY REFERENCE: NONE
Item 1. Description of Business
Background
No significant business activity was conducted by the
company during the fiscal years, 1997, 1996, 1995, and 1994.
As a result, no income was realized by the company in any of
the four years and there was no cash in bank at each year
end. The primary activity of the Company will involve
seeking merger or acquisition candidates with whom it can
either merge or acquire. The Company has not selected any
company for acquisition or merger and does not intend to
limit potential acquisition candidates to any particular
field or industry, but does retain the right to limit
acquisition or merger candidates, if it so chooses, to a
particular field or industry. The Company's plans are in the
conceptual stage only.
The executive offices of the Company are located at 45110
Club Drive, Suite B, Indian Wells, California 92210. Its
telephone number is (760) 360-1042.
Plan of Operation - General
The Company's current plans are to seek, investigate
and, if such investigation warrants, acquire an
interest in one or more business opportunities
presented to it by persons or firms who or which desire to
seek the perceived advantages of a publicly held
corporation. At this time, the Company has no plan,
proposal, agreement, understanding or arrangement to
acquire or merge with any specific business or company, and
the Company has not identified any specific business or
company for investigation and evaluation. The discussion of
the proposed business under this caption and throughout this
annual report is purposefully general and is not meant to
be restrictive of the Company's unlimited discretion to
search for and enter into potential business opportunities.
The Company intends to obtain funds in one or more private
placements to finance the operation of any acquired
business. Persons purchasing securities in these placements
and other shareholders will likely not have the opportunity
to participate in the decision relating to any
acquisition. The Company's proposed business is
sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the
Company's management before they have a chance to analyze
any ultimate use to which their money may be put.
Consequently, the Company's potential success is heavily
dependent on the Company's management, which will have
virtually unlimited discretion in searching for and
entering into a business opportunity.
Management anticipates at the present time that it will
only participate in one potential business venture. This
lack of diversification should be considered a
substantial risk in investing in the Company because it will
not permit the Company to offset potential losses from one
venture against gains from another.
The Company may seek a business opportunity with a firm
which only recently commenced operations, or a developing
company in need of additional funds for expansion into new
products or markets, or seeking to develop a new product
or service, or an established business which may be
experiencing financial or operating difficulties and is in
the need for additional capital which is perceived to be
easier to raise by a public company. In some instances, a
business opportunity may involve the acquisition or merger
with a corporation which does not need substantial
additional cash but which desires to establish a public
trading market for its common stock. The Company may
purchase assets and establish wholly owned subsidiaries in
various businesses or purchase existing businesses as
subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and
extremely risky. Because of general economic conditions,
rapid technological advances being made in some industries,
and shortages of available capital, management believes
that there are numerous firms seeking the benefits of a
publicly traded corporation. Such perceived benefits of
a publicly traded corporation may include facilitating or
improving the terms on which additional equity
financing may be sought, providing liquidity for the
principals of a business, creating a means for providing
incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes) for all shareholders, and other
factors. Potentially available 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.
As is customary in the industry, the Company may pay a
finder's fee for locating an acquisition prospect. If any
such fee is paid, it will be approved by the Company's Board
of Directors. Management has adopted a policy that such a
finder's fee or real estate brokerage fee could, in certain
circumstances, be paid to any employee, officer, director
or 5% shareholder of the Company, if such person plays a
material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may
require that management or other stockholders of the
Company sell all or a portion of their shares to the
acquired company, or to the principals of the acquired
company. It is anticipated that the sales price of such
shares will be lower than the current market price or
anticipated market price of the Company's Common Stock. The
Company's funds are not expected to be used for
purposes of any stock purchase from insiders. The Company
shareholders will not be provided the opportunity to
approve or consent to such sale. The opportunity to sell all
or a portion of their shares in connection with an
acquisition may influence management's decision to enter
into a specific transaction. However, management believes
that since the anticipated sales price will be less than
market value, that the potential of a stock sale by
management will not be a material factor on their decision
to enter a specific transaction.
The above description of potential sales of management
stock is not based upon any corporate bylaw, shareholder or
board resolution, or contract or agreement. No other
payments of cash or property are expected to be received by
management in connection with any acquisition.
The Company has not formulated any policy regarding
the use of consultants or outside advisors, but does not
anticipate that it will use the services of such persons.
The Company has, and will continue to have, following the
completion of any offering, insufficient capital with which
to provide the owners of business opportunities with any
significant cash or other assets. However, management
believes the Company will offer owners of an identified
business the opportunity at a significant lower cost than
is required to conduct an initial public offering. The
owners of the business will, however, incur significant
post-merger or acquisition registration or filing costs in
the event they wish to register a portion of their shares
for subsequent sale. The Company will also incur
significant legal and accounting costs in connection
with the acquisition of a business opportunity
including the costs of preparing Forms 8-K, agreements and
related reports and documents. Nevertheless, the officers
and directors of the Company have not conducted market
research and are not aware of statistical data which would
support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The Company does not intend to make any loans to any
prospective merger or acquisition candidates or to
unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities
for possible acquisition will be referred by various
sources, including its officers and directors,
professional advisers, securities broker-dealers,
venture capitalists, members of the financial community,
and others who may present. unsolicited proposals.
The Company will seek a potential business opportunity
from all known .sources, but will rely principally on
personal contacts of its officers and .directors as well
as indirect associations between them and other business
and .professional people. It is not presently anticipated
that the Company will engage professional firms
specializing in business acquisitions or reorganizations.
The officers and directors of the Company are currently
employed in other positions and will devote only a portion
of their time to the business affairs of the Company,
until such time as an acquisition has been determined to
be favorable, at which time, they expect to spend the
necessary time to investigate and close any acquisition.
Evaluation of Opportunities
The analysis of new business opportunities will be
undertaken by or under the supervision of the officers and
directors of the Company. Management intends to concentrate
on identifying prospective business opportunities which
may be brought to its attention through present associations
with management. In analyzing prospective business
opportunities, management will consider such matters as
the available technical, financial and managerial
resources; working capital and other financial
requirements; history of operation, if any; prospects
for the future; present and expected competition; the
quality and experience of management services which may be
available and the depth of that management; the potential
for further research, development or exploration;
specific risk factors not now foreseeable but which then
may be anticipated to impact the proposed activities of
the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition
or acceptance of products, services or trades; name
identification; and other relevant factors. Officers and
directors of each Company will meet personally with
management and key personnel of the firm sponsoring
the business opportunity as part of their investigation.
To the extent possible, the Company intends to utilize
written reports and personal investigation to evaluate the
above factors. The Company will not acquire or merge with
any company for which audited financial statements cannot be
obtained.
It may be anticipated that any opportunity in which
the Company participates will present certain risks.
Many of these risks cannot be adequately identified
prior to selection of the specific opportunity, and the
Company's shareholders must, therefore, depend on the
ability of management to identify and evaluate such
risk. In the case of some of the opportunities available
to the Company, it may be anticipated that the promoters
thereof have been unable to develop a going concern or
that such business is in development stage in that it
has not generated significant revenues from its principal
business activities prior to the Company's participation.
There is a risk even after the Company's participation
in the activity and the related expenditure of the
Company's funds, that the combined enterprises will
still be unable to be a going concern or advance beyond the
development stage. Many of the opportunities may involve
new and untested products, processes, or market strategies
which may not succeed. Such risks will be assumed by
the Company and, therefore, its shareholders.
The Company will not restrict its search for any
specific kind of business, but may acquire a venture which
is in its preliminary or development stage, which is
already in operation, or in essentially any stage of
its corporate life. It is currently impossible to predict
the status of any business in which the Company may
become engaged, in that such business may need
additional capital, may merely desire to have its shares
publicly traded, or may seek other perceived advantages
which the Company may offer.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company 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.
On the consummation of a transaction, it is possible that
the present management and shareholders of the Company will
not be in control of the Company. In addition, a majority
or all of the Company's officers and directors may, as
part of the terms of the acquisition transaction, resign
and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions
from registration under applicable federal and state
securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may
agree to register such securities either at the time the
transaction is consummated, under certain conditions, or
at a specified time thereafter. The issuance of
substantial additional securities and their potential sale
into any trading market which may develop in the Company's
Common Stock may have a diluteve effect on such market.
While the actual terms of a transaction to which the
Company 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 shareholders of the Company
would retain less than 20% of the issued and
outstanding of the surviving entity, which could result
in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and
directors of the Company will 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
Company's limited financial resources and management
expertise.
The manner in which each company participates in an
opportunity will depend on the nature of the opportunity,
the respective needs and desires of the Company and other
parties, the management of the opportunity, and the
relative negotiating strength of the Company and such other
management.
With respect to any mergers or acquisitions, negotiations
with target company management will be expected to focus
on the percentage of the Company which target company
shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon,
among other things, the target company's assets and
liabilities, the Company's shareholders will in likelihood
hold a lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage
ownership may be subject to significant reduction in
the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected
by the Company can be expected to have a significant
dilution effect on the percentage of shares held by the
Company's then shareholders.
The Company will not have sufficient funds (unless it is
able to raise funds in a private placement) to
undertake any significant development marketing and
manufacturing of any products which may be acquired.
Accordingly, following the acquisition of any such
product, the Company will, in all likelihood, be
required to either seek debt or equity financing or
obtain funding from third parties, in exchange for which
the Company would probably be required to give up a
substantial portion of its interest in any acquired
product. There is no assurance that the Company will be
able either to obtain additional financing or interest
third parties in providing funding for the further
development, marketing and manufacturing of any products
acquired.
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 therefore 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 Company of the
related costs incurred The costs of the investigation
and analysis of a potential acquisition will be funded by
the Company's limited cash on hand or by advances from
officers.
Management believes that the Company may be able to
benefit from the use of "leverage" in the acquisition of
a business opportunity. Leveraging a transaction involves
the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price
for that business. Through a leveraged transaction, the
Company would be required to use less of its available
funds for acquiring the business opportunity and, therefore,
could commit those funds to the operations of the business
opportunity, to acquisition of other business opportunities
or to other activities. The borrowing involved in a
leveraged transaction will ordinarily be secured by the
assets of the business opportunity to be acquired. If the
business opportunity acquired is not able to generate
sufficient revenues to make payments on the debt incurred
by the Company to acquire that business opportunity, the
lender would be able to exercise the remedies provided
by law or by contract. These leveraging techniques,
while reducing the amount of funds that the Company must
commit to acquiring a business opportunity, may
correspondingly increase the risk of loss to the Company. No
assurance can be given as to the terms or the availability
of financing for any acquisition by the Company. During
periods when interest rates are relatively high, the
benefits of leveraging are not as great as during periods
of lower interest rates because the investment in
the business opportunity held on a leveraged basis will
only be profitable if it generates sufficient revenues to
cover the related debt and other costs of the financing.
Lenders from which the Company may obtain funds for
purposes of a leveraged buy-out may impose restrictions
on the future borrowing, distribution, and operating
policies of the Company. It is not possible at this time
to predict the restrictions, if any, which lenders may
impose or the impact thereof on the Company.
Competition
The Company is an insignificant participant among firms
which engage in business combinations with, or financing
of, development stage enterprises. There are many
established management and financial consulting companies
and venture capital firms which have significantly greater
financial and personnel resources, technical expertise and
experience than the Company. In view of the Company's
limited financial resources and management availability,
the Company will continue to be a significant
competitive disadvantage vis-a-vis the Company's
competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment
company" as an issuer which is or holds itself out as
being engaged primarily in the business of investing,
reinvesting or trading of securities. While the Company
does not intend to engage in such activities, the Company
could become subject to regulation under the Investment
Company Act of 1940 in the event the Company obtains or
continues to hold a minority interest in a number of
development stage enterprises. The Company could be
expected to incur significant registration and
compliance costs if required to register under the
Investment Company Act of 1940. Accordingly, management
will continue to review the Company's activities from
time to time with a view toward reducing the
likelihood the Company could be classified as an "investment
company."
The Company intends to structure a merger or acquisition in
such manner as to minimize federal and state tax
consequences to the Company and to any target company.
Employees
The Company's only employees at the present time are its
officers and directors, who will devote as much time as the
Board of Directors determine is necessary to carry out the
affairs of the Company.
Item 2. Description of Property
The Company shares a nominal amount of office space with an
officer.
Item 3. Legal Proceedings
The company is a party to no legal proceedings, nor are
any property or shareholders subject to such.
Item 4. Submission of Matters to a Vote of
Security Holders
No matters were submitted during the transactional period
of January 1, 1994 through December 31, 1997 to a vote of
security holders, through solicitation of proxies or
otherwise.
KNICKERBOCKER CAPITAL CORPORATION
(A Development Stage Company)
Index to Financial Statements and Supplementary Data
Pages
Independent Auditors' Report
.......................................................................
F-2
Balances Sheets as of December 31, 1995 and 1994
................................. F-3
Statements of Operations for the Years Ended
December 31, 1995 and 1994
.....................................................................
F-4
Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994
.....................................................................
F-5
Statements of Stockholders' Equity for the Periods
through December 31, 1995
........................................................................
F-6
Notes to Financial Statements
......................................................................
F-7 & F-8
Schedules:
All schedules are omitted as the required information is included in the
financial statements or notes thereto, or is not present in sufficient
amounts.
The Board of Directors
Knickerbocker Capital Corporation
Indian Hills, California
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Knickerbocker Capital
Corporation (a Development Stage Company), as of December 31, 1995 and
December 31, 1994 and the related statements of operations, cash flows,
and changes in stockholders' equity for the years then ended. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for
my opinion.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
financial statements, the Company incurred a net loss of $ 352,045
since inception to December 31, 1995. The Company has no assets and
has had no operation during the two years ended December 31, 1995.
These factors indicate that the Company may be unable to continue in
existence. The financial statements do not include any adjustments
relating to the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Knickerbocker Capital Corporation as of December 31, 1995 and December
31, 1994, and the results of its operations and cash flows for each of
the years then ended in conformity with generally accepted accounting
principles.
Julius A. Otto
Monterey Park, California
February 2, 1998
KNICKERBOCKER CAPITAL CORPORATION
BALANCE SHEET
December 31,
1995 1994
ASSETS:
Total Assets $ - $ -
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities: - -
Total Liabilities: $ - $ -
Stockholders' Equity:
Common Stock, 500,000,000 shares authorized,
$ .001 par value, 261,200,000 and 186,200,000
shares issued and outstanding, respectively 261,200 186,200
Preferred stock, 50,000,000 shares
authorized, $ .01 par value, no shares
issued and outstanding - -
Additional Paid-In Capital 90,845 155,845
Accumulated Deficit (352,045) (342,045)
Total Stockholders' Deficit - -
Total Liabilities and
Stockholders' Deficit $ - $ -
The accompanying notes are an integral part of these financial
statements.
KNICKERBOCKER CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
For the Year Ended
December 31,
1995 1994
Operating Expenses:
Services rendered by
Board of Directors $ 12,000
Costs incurred in connection
with continuing operations $ 10,000
Total Operating Expense $ 10,000 $ 12,000
Net (Loss) Income from Operations ($10,000) ($12,000)
Weighted average number of
shares outstanding 186,405,480 111,405,480
Net Loss per Share $ - $ -
The accompanying notes are an integral part of these financial
statements.
KNICKERBOCKER CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
For the Year Ended
December 31,
1995 1994
Cash Flows From
Operating Activities:
Net Profit (Loss) ($10,000 ($12,000)
Adjustments to Reconcile
Net Loss to Net Cash Used
for Operations:
Common stock issued for services
rendered or costs incurred at
stated value 10,000 12,000
Net Cash Provided (Used) by
Operating Activities - -
Increase (Decrease) in Cash
Cash and Cash Equivalents,
Beginning of Period - -
Cash and Cash Equivalents,
End of Period $ - $ -
The accompanying notes are an integral part of these financial statements.
<TABLE>
KNICKERBOCKER CAPITAL CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended December 31
<CAPTION>
Additional
Paid-In Accumulated
Shares Common Stock Capital Deficit Totals
<S> <C> <C> <C> <C> <C>
Balance
12/31/93...............111,200,000 $ 111,200 $218,845 ($ 330,045) $ -
Shares
issued December 31,
1994 for services
ofBoard of Directors... 75,000,000 $ 75,000 ($63,000) $ 12,000
Net (loss).............. ($ 12,000) ($12,000)
Balance
12/31/94.............. 186,200,000 $ 186,200 $155,845 ($ 342,045) $ -
Shares
issued December 31, 1995
for costs incurred by a
related corporation... 75,000,000 $ 75,000 ($65,000) $ 10,000
Net (loss)............ ($ 10,000) ($10,000)
Balance
12/31/95............. 261,200,000 $ 286,200 $ 90,845 ($ 352,045) $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
KNICKERBOCKER CAPITAL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND DECEMBER 31, 1994
NOTE 1 - ORGANIZATION:
Knickerbocker Capital Corporation, (the "Company") commenced operations with
certain nominal operations on November 6, 1986 upon establishing a bank
account and subsequently incorporating in the State of Colorado on February
24, 1987 for the purpose of acquiring an interest in unspecified business
opportunities through merger of acquisitions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Public Stock Offering:
On April 7, 1988 the Company completed a public stock offering and raised
$300,000. Stock offering costs were $38,430 and were offset against the
proceeds.
Reverse acquisition and Subsequent Business Discontinuance:
On June 10, 1988, Knickerbocker Capital Corporation entered into and agreement
to acquire a concrete formula and rights to produce and sell the product from
Promotional Video Productions, Inc. (PVP), a Nevada corporation. PVP had been
incorporated April 27, 1987 to acquire the aforementioned product and rights.
As a result of the agreement, the Company issued common stock for 100% of the
common stock of PVP. The transaction has been treated as a reverse
acquisition in that PVP acquired the net assets of the Company. The Company
issued 29,775,000 shares in connection with the reverse acquisition by PVP,
the cost of acquisition and issuance of shares were offset against the
precapitalization equity and resulted in a discount to the common stock. The
concrete business was not a profitable business and was discontinued in 1990.
Fixed Assets:
Fixed assets were depreciated on a straight line basis commencing in the month
the asset was purchased and placed in service. The fixed assets were sold at
a loss in 1989 and the resulting charge was to operations and is included in
accumulated deficit.
NOTE 3 - STOCKHOLDERS' DEFICIT AND REORGANIZATION:
Of the 500,000,000 shares of $.001 par value common stock authorized,
261,200,000 and 186,200,000 shares are issued and outstanding at December 31,
1995 and 1994, respectively. On April 24, 1987, 1,300,000 shares were issued
to the founders of the Company for $15,000 cash. On April 7, 1988, the
Company completed a public stock offering of 3,000,000 shares for $300,000.
Offering costs of $38,430 were offset against the proceeds. On June 10, 1988,
the Company issued 29,775,000 shares in connection with the reverse
acquisition by Promotional Video Productions, Inc. In addition, 5,000,000
shares were issued to the developer of the formula.
As this was the equivalent of a recapitalization of PVP, the cost of
acquisition and issuance of shares were offset against the precapitalization
equity and resulted in a discount to the common stock.
KNICKERBOCKER CAPITAL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND DECEMBER 31, 1994
NOTE 3 - STOCKHOLDERS' DEFICIT AND REORGANIZATION (continued):
On April 30, 1993 after the reorganization of the Company, 77,000,000 shares
valued at $7,700 were issued by the board of directors for services rendered.
On September 18, 1993, 5,000,000 previously issued shares were rescinded due
to contract non-compliance. Effective December 31, 1994 the Board of
Directors authorized the issue of 75,000,000 shares for services rendered by
the Board. The stated value of such services was $12,000. Effective December
31, 1995 the Board of Directors authorized the issue of 75,000,000 shares to
a related company for certain costs incurred by the corporations. The stated
value was $10,000. The offsetting charge for the discounted value of the
shares was charged to addititonal paid-in capital.
With respect to preferred stock of the 50,000,000 shares of $.01 par value
Preferred Stock authorized, no shares are issued and outstanding as of
December 31, 1995 or December 31, 1994.
NOTE 4 - RELATED PARTY TRANSACTIONS:
Certain officers, directors and a corporation controlled by the Board of
Directors were issued shares of common stock for services rendered and costs
incurred during each of the years in the two years ended December 31, 1995
(see Note 3).
NOTE 5 - GOING CONCERN AND INCIDENTAL COSTS:
The Company has had no significant business activity since 1990. The Company
has incurred significant losses since inception. The Company has a
significant accumulated deficit and no assets. These factors indicate that
the Company may be unable to continue in existence. The financial statements
do not include any adjustments relating to the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue
in existence.
Incidental costs to maintain the legal registration of the Company in the
State of Colorado and with the Securities Exchange Commission have been paid
or assumed by the current officers and directors.
KNICKERBOCKER CAPITAL CORPORATION
(A Development Stage Company)
Index to Financial Statements and Supplementary Data
Pages
Independent Auditors' Report
.......................................................................
F-2
Balances Sheets as of December 31, 1997 and 1996
................................. F-3
Statements of Operations for the Years Ended
December 31, 1997 and 1996
.....................................................................
F-4
Statements of Cash Flows for the Years Ended
December 31, 1997 and 1996
.....................................................................
F-5
Statements of Stockholders' Equity for the Periods
through December 31, 1995
........................................................................
F-6
Notes to Financial Statements
......................................................................
F-7
Schedules:
All schedules are omitted as the required information is included in the
financial statements or notes thereto, or is not present in sufficient
amounts.
The Board of Directors
Knickerbocker Capital Corporation
Indian Hills, California
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of Knickerbocker Capital
Corporation ( a Development Stage Company), as of December 31, 1997 and
December 31, 1996 and the related statements of operations, cash flows,
and changes in stockholders' equity for the years then ended. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for
my opinion.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
financial statements, the Company incurred a net loss of $352,045 since
inception to December 31, 1997. The Company has no assets and has had
no operation during the two years ended December 31, 1997. These
factors indicate that the Company may be unable to continue in
existence. The financial statements do not include any adjustments
relating to the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Knickerbocker Capital Corporation as of December 31, 1997 and December
31, 1996, and the results of its operations and cash flows for each of
the years then ended in conformity with generally accepted accounting
principles.
Julius A. Otto
Monterey Park, California
February 2, 1998
KNICKERBOCKER CAPITAL CORPORATION
BALANCE SHEETS
December 31,
1997 1996
ASSETS:
Total Assets $ - $ -
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities: - -
Total Liabilities: $ - $ -
Stockholders' Equity:
Common Stock, 500,000,000 shares
authorized, $ .001 par value,
261,200,000 shares issued and
outstanding 261,200 261,200
Preferred stock, 50,000,000 shares
authorized, $ .01 par value, no shares
issued and outstanding - -
Additional Paid-In Capital 90,845 90,845
Accumulated Deficit (352,045) (352,045)
Total Stockholders' Deficit - -
Total Liabilities and
Stockholders' Deficit $ - $ -
The accompanying notes are an integral part of these financial
statements.
KNICKERBOCKER CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
For the Year Ended
December 31,
1997 1996
Operating Expenses:
Total Operating Expense $ - $ -
Net (Loss) Income from Operations $ - $ -
Weighted average number of
shares outstanding 261,200,000 261,200,000
Net Loss per Share $ - $ -
The accompanying notes are an integral part of these financial
statements.
KNICKERBOCKER CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
For the Years Ended
December 31,
1997 1996
Cash Flows From
Operating Activities: $ - $ -
Net Profit (Loss) - -
Adjustments to Reconcile
Net Loss to Net Cash Used
for Operations:
Net Cash Provide (Used) by
Operating Activities - -
Increase (Decrease) in Cash
Cash and Cash Equivalents,
Beginning of Period - -
Cash and Cash Equivalents,
End of Period $ - $ -
The accompanying notes are an integral part of these financial
statements.
KNICKERBOCKER CAPITAL CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended December 31
Additional
Paid-In Accumulated
Shares Common Stock Capital Deficit Totals
Balance
12/31/95 261,200,000 $ 261,200 $ 90,845 $(352,045) $ -
Balance
12/31/96 261,200,000 $ 261,200 $ 90,845 $(352,045) $ -
Balance
12/31/97 261,200,000 $ 261,200 $ 90,845 $(352,045) $ -
The accompanying notes are an integral part of these financial statements.
KNICKERBOCKER CAPITAL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND DECEMBER 31, 1996
NOTE 1 - ORGANIZATION:
Knickerbocker Capital Corporation, (the "Company") commenced operations with
certain nominal operations on November 6, 1986 upon establishing a bank
account and subsequently incorporating in the State of Colorado on February
24, 1987 for the purpose of acquiring an interest in unspecified business
opportunities through merger or acquisitions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Public Stock Offering:
On April 7, 1988 the Company completed a public stock offering and raised
$300,000. Stock offering costs were $38,430 and were offset against the
proceeds.
Reverse acquisition and Subsequent Business Discontinuance:
On June 10, 1988, Knickerbocker Capital Corporation entered into and agreement
to acquire a concrete formula and rights to produce and sell the product from
Promotional Video Productions, Inc. (PVP), a Nevada corporation. PVP had been
incorporated April 27, 1987 to acquire the aforementioned product and rights.
As a result of the agreement, the Company issued common stock for 100% of the
common stock of PVP. The transaction has been treated as a reverse
acquisition in that PVP acquired the net assets of the Company. The Company
issued 29,775,000 shares in connection with the reverse acquisition by PVP,
the cost of acquisition and issuance of shares were offset against the
precapitalization equity and resulted in a discount to the common stock. The
concrete business was not a profitable business and was discontinued in 1990.
There have been no significant operations since that date.
Fixed Assets:
Fixed assets were depreciated on a straight line basis commencing in the month
the asset was purchased and placed in service. The fixed assets were sold at
a loss in 1989, and the resulting charge was to operations and is included in
accumulated deficit.
NOTE 3 - GOING CONCERN AND INCIDENTAL COSTS:
The Company has had no significant business activity. The Company incurred
significant losses from operations until 1990 and certain other incidental
costs and expenses in 1995 and 1994. The Company has a significant
accumulated deficit and no assets. These factors indicate that the Company
may be unable to continue in existence. The financial statements do not
include any adjustments relating to the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue
in existence.
Incidental costs to maintain the legal registration of the Company in the
State of Colorado and with the Securities Exchange Commission have been paid
or assumed by the current officers and directors.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
The Company's Common Stock has not traded on any market for several years.
(b) Holders
As of December 31, 1997, there were approximately 120 holders of Company
Common Stock.
(c) Dividends
The Company has not paid any dividends on its common stock. The Company
currently intends to retain any earnings for use in its business, and
therefore does not anticipate paying cash dividends in the foreseeable
future.
Item 6.Management's Discussions and Analysis or Plan of
Operations
See Item 1.
Item 7. Financial Statements and Supplementary Data
Financial Statements
The following financial statements are included herein:
Independent Auditors' Report Balance Sheet at December 31, 1997 and 1997
Statement of Operations for the years ended December 31, 1997, 1996, 1995 and
1994. Statement of Stockholders' Equity (Deficit) Statement of Cash
Flows for the years ended December 31, 1997, 1996, 1995 and 1994
and the Notes to Financial Statements
Item 8.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Registrant, on January 6, 1998 engaged Julius Otto, Certified Public
Accountant as its new independent accountant.
PART III
Item 9.Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The members of the Board of Directors of the Company serve until the next
annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of
Directors. Information as to the directors and executive officers of the
Company is set forth below.
Name Age Position
Dempsey K. Mork 55 President, Chief Financial
Officer and Director
Randall Baker 53
Vice President, Secretary and Director
Robert Filiatreaux 66
Vice President and Direct
Dempsey K. Mork, age 55, has been President and a Director since November 8,
1994. He has been Secretary/Treasurer of Development Bancorp, Ltd. since
December 1992 and President and Director of Gaensel Gold Mines, Inc. since
February 1996. He is president of Magellan Capital Corporation, a merger and
acquisition firm.
Randall A. Baker. Mr. Baker is 53 years old. He attended the University of
Minnesota. After a tour in the United States Navy and a navigation teaching
stint in San Francisco, he began his investment career with the Pacific Coast
Stock Exchange followed by employment with a number of major brokerage houses.
He then was employed for twenty years as Executive Vice President with Wm.
Mason & Company, an Investment Counseling firm in Los Angeles. Mr Baker
designed and implemented all data systems, was responsible for trading,
personnel and was the client/broker liaison. Mr Baker is currently employed
as the Vice President for Magellan Capital Corporation, a merger and
acquisition firm.
Robert Filiatreaux. Mr. Filiatreaux is 66 years of age and has been engaged
in international business for the past 27 years. He attended school in
Wisconsin where he received his degree from the University of Wisconsin.
During the Korean Conflict Mr Filiatreaux served a three year tour of duty
in the US Air Force The majority of international business experience came
from the airline industry where Mr. Filiatreaux worked for many years in
various executive capacities in sales and marketing. Mr Filiatreuax has
worked and traveled to over 55 countries and is currently an associate in the
merger and acquisition firm of Magellan Capital Corporation of Indian Wells,
California.
Conflicts of Interests
Certain conflicts of interest now exist and will continue to exist between
the Company and its officers and directors due to the fact that each has other
business interests to which he devotes his primary attention.
The Company has not established other policies or procedures for the
resolution of current or potential conflicts of interests between the
Company, its officers and directors or affiliated entities. There can be
no assurance that management will resolve all conflicts of interest in favor
of the Company, and failure by management to conduct the Company's
business in the Company's best interest may result in liability to the
management. The officers and directors are accountable to the Company as
fiduciaries, which means that they are required to exercise good faith and
integrity in handling the Company's affairs. Officers and directors will be
required to disclose to each company the liability of each potential
acquisition. Shareholders who believe that the Company has been harmed by
failure of an officer or director to appropriately resolve any conflict
of interest may, subject to applicable rules of civil procedure, be able
to bring a class action or derivative suit to enforce their rights and the
Company's rights. Although officers and directors believe that future
shareholders are implying consent to management's informal method of
allocating opportunities, there can be no assurance that such belief will
be supported by the Colorado, California, or any other court having
jurisdiction..
The Company has no arrangement, understanding or intention to enter into any
transaction for participating in any business opportunity with any
officer, director, or principal shareholder or with any firm or
business organization with which such persons are affiliated, whether by
reason of ownership, position as an officer or director, or otherwise.
Item 10. Executive Compensation
No compensation is paid or anticipated to be paid by the Company until
an acquisition is made.
On acquisition of a business opportunity, current management may resign
and be replaced by persons associated with the business opportunity
acquired, particularly if the Company participates in a business opportunity
by effecting a reorganization, merger or consolidation. If any member of
management remains after effecting a business opportunity acquisition,
that member's time commitment will likely be adjusted based on the nature and
method of the acquisition and location of the business , which cannot be
predicted. Compensation of management will be determined by the new board of
directors, and shareholders of the Company will not have the opportunity to
vote on or approve such compensation.
Item 11.Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial
ownership of Company Common Stock by those persons beneficially holding
more than 5% of the Company capital stock, by the Company's directors and
executive officers, and by all of the Company's directors and executive
officers as a group, based on 261,200,000 shares outstanding. The addresses
of each other and directors is in care of the Company. All persons have sole
investment and voting power unless otherwise noted.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C>
<C>
Dempsey K. Mork(1) 100,000,000 38.28%
Randy Baker(1) 25,000,000 0 .095%
Robert Filiatreaux(1) 25,000,000 0.095%
All officers and directors
as a group (3 persons) 150,000,000 57.42%
</TABLE>
(1) The address of this person is c/o of the Company.
Item 12. Certain Relationships and Related Transactions
Not Applicable.
PART IV
Item 13. Exhibits
Exhibit No. Document Description
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(1)
3.2 Bylaws(1)
10.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: August 6, 1998
By: /s/ Dempsey K. Mork
Dempsey K. Mork
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on August 6 1998.
By: /s/ Dempsey K. Mork
President, Chief Financial Officer and Director
Dempsey K. Mork(chief executive, financial and accounting officer)
By: /s/ Randall Baker Secretary and Director
Randall Baker
By: /s/ Robert Filiatreaux Vice President and Director
Robert Filiatreaux
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Dec-31-1997
<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> 261,200
<OTHER-SE> ($261,200)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
