<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 1997
Commission File No. 33-9640-LA
NORTHERN DANCER CORPORATION
---------------------------------------------
(Name of small business issuer in its charter)
Colorado 68-0133692
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
370-17th Street, Suite 2300, Denver, Colorado 80202
-----------------------------------------------------------
(Address of principal executive offices, including zip code)
(303) 572-5000
--------------------------
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes --- No -X-
Check if disclosure of delinquent filers pursuant 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-KSB or any amendment to
this Form 10-KSB. [X]
The Issuer's revenues for its most recent fiscal year were $14,394.
To the best of management's knowledge, no purchases or sales of the issuer's
voting stock have occurred, and no market price for such stock has been quoted,
in the past 60 days. As a result, the issuer is unable to compute the aggregate
market value of the voting stock held by non-affiliates by reference to the
price at which the stock was sold, or to the average bid and asked prices of
such stock, as of a specified date within the past 60 days.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Northern Dancer Corporation (the "Company") is a development stage
enterprise formed under the laws of the State of Colorado on January 16, 1987,
to evaluate, structure and complete a merger with, or acquisition of, prospects
consisting of private companies, partnerships or sole proprietorships. The
Company may seek to acquire a controlling interest in such entities in
contemplation of later completing an acquisition. The Company is not limited to
any operation or geographic area in seeking out opportunities. Management has
not identified any particular business or industry within which the Company will
seek an acquisition or merger. The Company has not conducted, nor have others
made available to it, market research supporting the viability of the Company's
proposed operations.
The Company sold 23,915,000 Units of no par value common stock ("Common
Stock") at $.02 per Unit, for net proceeds of $478,300 in a public offering
which closed on March 28, 1988. Each Unit consists of two shares of the
Company's no par value common stock and one Class A Common Stock Purchase
Warrant. Each Class A Warrant entitles the holder to purchase one share of
common stock and one Class B Common Stock Purchase Warrant at a price of
$.02. Each Class B Warrant entitles the holder to purchase one share of
common stock and one Class C Common Stock Purchase Warrant at a price of
$.04. Each Class C Common Stock Purchase Warrant entitles the holder to
purchase one share of common stock at a price of $.06. During the year
ended March 31, 1997, the expiration dates of the Class A, B and C warrants
were extended to December 31, 1997. The Class A, B and C Warrants are
detachable and may be separately traded. The Company has the right to call
any or all of the Warrants with 30 days' notice at a price of $.0001.
No warrants have been exercised as of March 31, 1997.
During February, 1994, the Company entered into a 90 day option agreement
with an unaffiliated company which held a five-year license agreement with the
Republic of Madagascar to search for ships that have sunk within the Malagasy
territorial waters. The Company incurred expenses of approximately $55,000
related to this project including the costs of conducting an underwater search
of the area where a particular shipwreck was believed to be located, but the
search was unsuccessful. Therefore, the Company did not exercise its option to
acquire an interest in the Madagascar license and the project was terminated.
During the fiscal year ended March 31, 1996 the Company loaned a total of
$85,000 to Dunn International, Inc. ("Dunn") in anticipation of a possible
merger with or acquisition of Dunn. Dunn was engaged in two lines of
business: (1) the sale of software packages for petrochemical plants and
refineries, and (2) providing maintenance and turnaround services for
petrochemical plants and refineries. During August 1996 the Company agreed
to convert the $85,000 of loans and $5,883 of accrued interest into 57,941
shares of Dunn's common stock which represented approximately 18% of Dunn's
outstanding common stock as of March 31, 1997.
Since the conversion of the $85,000, the Company has loaned an additional
$60,725 to Dunn ($40,725 was loaned before March 31, 1997 and $20,000 was loaned
after March 31, 1997.) These additional loans were made in an attempt to
protect the Company's investment in Dunn. The Company has never completed a
merger or acquisition with Dunn because after completing its due diligence,
management was of the opinion that a merger or acquisition would not be in
the best interests of the Company at the time. The Company reevaluates this
decision periodically.
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<PAGE>
Dunn is approximately 50% owned by a principal stockholder of the Company
and her husband who is the Chairman of the Board and CEO of Dunn. See ITEM 12
below.
The Company is presently searching for merger or acquisition candidates,
as described below.
The Company believes it has insufficient capital with which to finance cash
acquisitions of other business entities. Accordingly, the Company will be
incapable of acquiring the assets or business of other entities except in those
instances where the Company exchanges its Common Shares with those held by the
target company and/or the target Company's shareholders. Another possibility,
although less likely, is that the Company may give its Common Shares to a target
in exchange for the target's assets. Management expects that an exchange of the
Company's Common Shares in a merger or acquisition, if ever, would require the
Company to issue a substantial number of its Common Shares. Accordingly, the
percentage of Common Shares held by the Company's then-shareholders would be
reduced as a result of the increased number of Common Shares issued and
outstanding following any such merger or acquisition.
The Company expects to continue concentrating primarily on the identifica-
tion and evaluation of prospective merger or acquisition "target" entities
including private companies, partnerships or sole proprietorships. The Company
does not intend to act as a general or limited partner in connection with
partnerships it may merge with or acquire. Management has not identified any
particular area of interest within which the Company will concentrate its
efforts.
Management contemplates that the Company will continue to seek to merge
with or acquire a target company with either assets or earnings, or both, and
that preliminary evaluations undertaken by the Company will assist in
identifying possible target companies. The Company has not established a
specific level of earnings or assets below which the Company would not
consider a merger or acquisition with a target company. Moreover,
management may identify a target company which is generating losses which it
will seek to acquire or merge with the Company. The merger with or
acquisition of a target company which is generating losses or which has
negative shareholders' equity may have a material adverse affect on the
price of the Company's Common Shares. There is no assurance, if the Company
acquires a target company with assets or earnings, or both, that the price
of the Company's Common Shares will increase.
Management anticipates that it should not be necessary to raise additional
funds within the next 12 months to meet expenditures required for operations.
However, if after 12 months the Company has not generated and successfully
concluded a merger or acquisition, the Company may have to seek additional
financing in order to continue operations.
COMPETITION
The Company is and will remain an insignificant participant among the firms
which engage in mergers with and acquisitions of privately-financed entities.
There are many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical exper-
tise than the Company. In view of the Company's combined limited financial
resources and limited management availability, the Company will continue to
be at a significant competitive disadvantage compared to the Company's
competitors.
-3-
<PAGE>
EMPLOYEES
The Company currently has no employees. While all of the Company's
Officers and Directors have prior experience in the operation and management of
various businesses, none of the Company's Officers or Directors has any prior
significant experience in the valuation of businesses or in the structuring of
mergers and acquisitions.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company maintains its offices in space provided by a company in which
a principal shareholder of the Company is an officer and director. Since May
1993, the Company has not been charged rent for such office space. The
Company's address is 370-17th Street, Suite 2300, Denver, Colorado 80202 and
its telephone number is (303) 572-5000.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings, and the Company is not aware of any
threatened legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company
during the last quarter of the fiscal year ended March 31, 1997.
-4-
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) MARKET INFORMATION.
The Company's Shares and Units have been traded on the over-the-
counter market. However, since May 1989, no quotations have been reported by
the National Quotation Bureau, Inc. ("NQB"). Presently, no established public
trading market exists for the Company's securities.
(b) HOLDERS.
The number of record holders of the Company's no par value common
stock at August 31, 1997 was 147. This does not include shareholders who hold
stock in their accounts at broker/dealers.
(c) DIVIDENDS.
No dividends have been declared or paid by the Company since
inception and none is contemplated at any time in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The Company has generated no revenue other than interest income since
inception. Management anticipates the Company will earn only interest income
until following the conclusion of a merger or acquisition, if any, as contem-
plated by the Company's business plan.
The Company is currently in a liquid position, and as of March 31, 1997,
had working capital (consisting primarily of cash and cash equivalents)
totalling $90,431. The Company anticipates operational costs will be limited
until such time as significant evaluation work is undertaken regarding
prospective mergers or acquisitions.
General and administrative expenses have remained relatively consistent
between the years ended March 31, 1996 and 1997.
During fiscal 1997 and 1996, the Company advanced $40,725 and $85,000 to
Dunn. (See ITEMS 1 and 12.) The notes bear interest from 6% to 8.5%, however,
no interest income has been recorded as a result of the uncertainty of
collection. Also, due to the uncertainty of collection, all notes were written
off as uncollectible during the year the advance was made. During fiscal 1997
a $10,000 principal payment was made on these fully reserved notes and
accordingly, the Company recorded a $10,000 bad debt recovery. Additionally the
Company converted $85,000 of these notes and $5,883 of unrecorded interest
income into 57,941 shares of common stock of Dunn. No value has been
recorded for this investment in Dunn.
As of March 31, 1997, the Company had no material commitments for capital
expenditures.
ITEM 7. FINANCIAL STATEMENTS.
The Independent Auditors' Report appears at page F-1, and the Financial
Statements and Notes to Financial Statements appear at pages F-2 through F-8
hereof.
-5-
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements between the Company and its
independent accountants on any matter of accounting principles or practices or
financial statement disclosure since the Company's inception.
-6-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The Directors and Executive Officers of the Company are as follows:
Name Age Position
- ------------------ --- ---------------------------------
Joseph E. O'Connor 56 President, Treasurer and Director
J. Daniel Bell 52 Secretary and Director
David C. Walters 51 Director
BUSINESS EXPERIENCE AND BIOGRAPHICAL INFORMATION
The following is a brief account of the education and business experience
during at least the past five years of the Directors, Executive Officers and key
employees, indicating the principal occupation and employment during that
period, and the name and principal business of the organization in which such
occupation and employment were carried out.
JOSEPH E. O'CONNOR - PRESIDENT, TREASURER AND DIRECTOR. Mr. O'Connor has
served as President, Treasurer and a Director of the Company since January 16,
1987. From 1990 to the present, he has served as owner of Princeton
Communications Group, a marketing and consulting firm specializing in assisting
public corporations and private businesses in evaluating, analyzing, structuring
and developing domestic and international telecommunications services and
networks. From 1982 to 1990, he served as President, owner, and sole employee
of Euro-Pacific Group, Inc. ("EPG"), a Corona Del Mar, California company, whose
primary business is to provide financial marketing and investment services to
corporate retirement plans and to investment advisors. From 1976 to 1983, he
served as Vice President and then President of Winrich, Kase & O'Connor, Inc.
("WKO"), Newport Beach, California, a registered investment advisor that
provided investment counsel services to corporate retirement plans, endowment
funds and individuals. During the period from 1980 to 1982, Mr. O'Connor
also served on the Board of Directors of Cavendish Guaranty Trust, Ltd.,
merchant Bankers, London, England. From 1973 to 1976, he served as the
Director of Business Development and as a portfolio manager for Provident
Investment Counsel, Pasadena, California, a registered investment advisor.
After completing active duty in the military in 1967, Mr. O'Connor was
employed as an account executive with Hayden Stone, Inc., Los Angeles,
California, a securities broker/dealer, until 1969, and as account executive
and principal shareholder with Fredrick Gregory & Co., Inc., Los Angeles,
California, a securities broker/dealer, until 1973. Mr. O'Connor received a
M.B.A. degree in Finance in 1965 and a B.S. degree in Business in 1963, both
from the University of Southern California.
J. DANIEL BELL - SECRETARY AND DIRECTOR. Mr. Bell has served as a Director
of the Company since August 16, 1996 and as Secretary of the Company since
September 18, 1996. For the last 10 years Mr. Bell has served as Chairman of
the Board and Chief Executive Officer of Industrial Services Technologies, Inc.
("IST"), a holding company built on five buyouts of middle market companies.
These five companies are Piping Engineering Co. Inc., Chem-Fab, Inc.,
International Catalyst, Inc. and IST Mechanical Corp. Mr. Bell also serves as
Chairman of the Board and Chief Executive Officer of Dunn International, Inc.
-7-
<PAGE>
DAVID C. WALTERS - DIRECTOR. Mr. Walters has been a Director of the
Company since March, 1989. He has been self-employed as a CPA since 1986. Mr.
Walters has also served as President and a Director of Man O'War, Inc., a
publicly-held company, since its inception on December 31, 1986. On October 4,
1988, Man O'War, Inc., a "blind pool" company, acquired 100% of Reduction Tech-
nologies, Inc., a Texas corporation engaged in the business of offering
chemically based waste treatment services. From November, 1985 until January,
1986, he served as President and Director of Atlantic Express, Inc., a publicly
held company formed as a "blind pool" for the purpose of acquiring and
consulting a business opportunity. In January, 1987, Atlantic Express, Inc.
completed a business combination with NTR, Inc., a New York based company
engaged in the transportation business, at which time Mr. Walters resigned as
an officer but continued to serve as a director until 1988. From August,
1982 to April, 1986, he was Controller of Star CATV Investment Corp., a
cable TV headquarters for 140 systems in Waxahachie, Texas. From 1980 to
1982, he served as Vice President and Treasurer of American/Chaparral, Inc.,
an oil and gas leasing and drilling company. He owned and operated Walters
Rentals, a company which engaged in real estate management and residential
loan origination and commercial loan brokering. He has served as Vice
President and Treasurer of Security Bankshares, Inc., a bank holding company,
from 1975 to 1976; he was Controller of First National Bank in Colorado
Springs, Colorado, from 1972 to 1974; and Auditor for Fidelity Services
Corporation, a bank holding company, from 1967 to 1972. Mr. Walters
graduated from Lamar University with a BBA degree in Accounting in 1967. He
became a Certified Public Accountant in 1984.
No family relationships exist between any of the Officers or Directors.
The Company has no audit, compensation or nominating committees.
All Directors of the Company will hold office until the next annual meeting
of the shareholders and until their successors have been elected and qualified.
The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and hold
office until their death, or until they shall resign or have been removed from
office.
The date of the next annual meeting of the Company will be determined by
the Company's Board of Directors in accordance with Colorado law.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information regarding the executive
compensation for the Company's President. No executive officer received
compensation in excess of $100,000 for the fiscal year ended March 31, 1997:
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Other All
Annual Restricted Options/ Other
Name and Principal Compen- Stock SARs LTIP Compen-
Position Year Salary Bonus sation Award(s) (Number) Payouts sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph E. O'Connor, 1997 _____ -0- -0- -0- -0- -0- -0-
President 1996 -0- -0- -0- -0- -0- -0- -0-
1995 $4,500* -0- -0- -0- -0- -0- -0-
_____________________
-8-
<PAGE>
* Represents consulting fees paid to Mr. O'Connor for services provided to the
Company in connection with the review of an acquisition candidate.
</FN>
</TABLE>
None of the Company's Officers and Directors currently receives a
salary from the Company. However, the Company has paid its President and
others for consulting services provided to the Company. The Company does
not anticipate in the near future entering into employment agreements with
any of its Officers or Directors. Although Directors do not receive compen-
sation for their services as Directors as such, Directors may be reimbursed
for expenses incurred in attending Board meetings.
No Officer of the Company receives any additional compensation for his
services as a Director.
The Company has no retirement, pension, profit-sharing or insurance or
medical reimbursement plans covering its Officers and Directors.
As of the date of this Report, no options have been granted under
this Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of September 15, 1997, the stock
ownership of each person known by the Company to be the beneficial owner of five
percent or more of the Company's Common Stock, each Director individually and
all Directors and Officers of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------------ -------------------- --------
<C> <S> <S>
Joseph E. O'Connor 9,000,000<FN1><FN6> 8.9%
2 Corporate Plaza, Suite 200
Newport Beach, CA 92660
David C. Walters 3,000,000<FN2><FN6> 3.0%
221 Gregory Drive
DeSoto, TX 75115
Ralph H. Grills, Jr. 9,500,000<FN3><FN6> 9.4%
No. 906
1888 South Jackson
Denver, CO 80210
J. Daniel Bell 12,670,000<FN4><FN6> 12.3%
2750 East Cedar Avenue
Denver, CO 80209
Carylyn K. Bell 12,670,000<FN5><FN6> 12.3%
2750 East Cedar Avenue
Denver, CO 80209
All Directors and 15,750,000<FN1><FN2> 14.9%
Officers as a Group <FN6>
(2 Persons)
-9-
<PAGE>
________________________
<FN>
<FN1>
Includes 6,000,000 shares owned directly by Mr. O'Connor and Class A Warrants to
purchase 3,000,000 shares at an exercise price of $.02 per share.
<FN2>
Includes 2,000,000 shares and Class A Warrants to purchase 1,000,000 shares at
an exercise price of $.02 per share owned of record by Walters Planning Group,
to which Mr. Walters has beneficial ownership due to his position as sole
proprietor.
<FN3>
Includes 6,500,000 shares owned directly by Mr. Grills and Class A Warrants to
purchase 3,000,000 shares at an exercise price of $.02 per share.
<FN4>
Includes 250,000 shares and Class A Warrants to purchase 2,250,000 shares held
directly by Mr. Bell; 7,320,000 shares and Class A Warrants to purchase
2,500,000 shares held by Carylyn Bell, the wife of Mr. Bell; and 350,000
shares held by Ms. Bell as custodian for a minor child.
<FN5>
Includes 7,320,000 shares and Class A Warrants to purchase 2,500,000 shares at
an exercise price of $.02 per share owned directly by Ms. Bell; 350,000 shares
held by Ms. Bell as custodian for a minor child; and 250,000 shares and Class A
Warrants to purchase 2,250,000 Shares at an exercise price of $.02 per share,
owned by J. Daniel Bell, Ms. Bell's husband, to which Ms. Bell may be deemed to
have beneficial ownership.
<FN6>
Each Class A Warrant entitles the holder to purchase one share of Common Stock
and one Class B Warrant at $.02. Each Class B Warrant entitles the holder to
purchase one share of Common Stock and one Class C Warrant at $.04. Each Class
C Warrant entitles the holder to purchase one share of Common Stock at $.06.
All of the Class A, Class B and Class C Common Stock purchase Warrants are
exercisable until December 31, 1997.
</FN>
</TABLE>
CHANGE IN CONTROL
There are no known agreements, the operation of which may at a subsequent
date result in a change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
It is possible that the Company's Officers and Directors will sell part of
their shares of the Company's Common Stock pursuant to the successful completion
of a potential acquisition of a business opportunity. However, this is
dependent upon arm's-length negotiations between the Company's Officers and
Directors and management of the potential merger entity. There currently is
no agreement or understanding of any kind whereby Officers and Directors of
the Company will dispose of part or all of their shares of the Common Stock
of the Company pursuant to an acquisition of a business opportunity.
During the fiscal year ended March 31, 1996 the Company loaned a total of
$85,000 to Dunn International, Inc. ("Dunn") in anticipation of a possible
merger with or acquisition of Dunn. Dunn was engaged in two lines of
business: (1) the sale of software packages for petrochemical plants and
refineries, and (2) providing maintenance and turnaround services for
petrochemical plants and refineries. During August 1996 the Company
agreed to convert the $85,000 of loans and $5,883 of accrued interest into
57,941 shares of Dunn's common stock which represented approximately 18% of
Dunn's outstanding common stock as of March 31, 1997.
-10-
<PAGE>
Since the conversion of the $85,000, the Company has loaned an additional
$60,725 to Dunn ($40,725 was loaned before March 31, 1997 and $20,000 was loaned
after March 31, 1997.) These additional loans were made in an attempt to
protect the Company's investment in Dunn. The Company has never completed a
merger or acquisition with Dunn because after completing its due diligence,
management was of the opinion that a merger or acquisition would not be in
the best interests of the Company at the time. The Company reevaluates this
decision periodically.
Dunn is approximately 50% owned by Carylyn Bell, a principal stockholder
of the Company and her husband, J. Daniel Bell, a director and Secretary of the
Company, who is the Chairman of the Board and CEO of Dunn.
The Company's Board of Directors believes that the terms of the above
transactions were on terms no less favorable to the Company than if the
transactions were with unaffiliated parties.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit
Number Description Location
- ------ ------------------------- ------------------------------------------
3 Articles of Incorporation Incorporated by reference to
and Bylaws Exhibit No. 3 to the Registrant's
Registration Statement (No. 33-9640-LA) on
Form S-18
(b) No Reports on Form 8-K were filed during the last quarter of the
period covered by this Report.
-11-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
NORTHERN DANCER CORPORATION
(A development stage company)
Page
Independent Auditor's Report F-1
Balance Sheet F-2
Statements of Operations F-3
Statement of Changes in Stockholders' Equity F-4
Statements of Cash Flows F-6
Notes to Financial Statements F-7
-12-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Northern Dancer Corporation
Denver, Colorado
We have audited the accompanying balance sheet of Northern Dancer Corporation (a
development stage company) as of March 31, 1997, and the related statements of
operations, stockholders' equity and cash flows for the years ended March 31,
1997 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northern Dancer Corpora-
tion as of March 31, 1997, and the results of its operations and its cash
flows for the years ended March 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
The financial statements of Northern Dancer Corporation for the period from
January 16, 1987 to March 31, 1990 were audited by other auditors, whose report
dated February 8, 1991, expressed an unqualified opinion on those statements.
We have audited the combination in the accompanying statements of operations,
stockholders' equity and cash flows of the period from January 16, 1987
(inception) to March 31, 1990 into the period from January 16, 1987 to March 31,
1997. In our opinion, such financial statements have been properly combined.
/s/ Hein + Associates llp
Hein + Associates llp
Denver, Colorado
July 15, 1997
F-1
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
BALANCE SHEET
MARCH 31, 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 97,080
Other current assets 777
Total current assets 97,857
Note Receivable and Investment
in Related Party, net of
$30,725 allowance for
doubtful accounts and $85,000
valuation allowance -
Office Equipment, net of $656
accumulated depreciation 978
Total Assets $ 98,835
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities -
Accounts payable $ 7,426
Stockholders' Equity:
Preferred stock, no par value;
10,000,000 shares authorized,
none issued or outstanding -
Common stock, no par value;
1,500,000,000 shares authorized;
98,330,000 shares issued and
outstanding 398,409
Deficit accumulated during the
development stage (307,000)
Total stockholders' equity 91,409
Total Liabilities and Stockholders' Equity $ 98,835
See accompanying notes to these financial statements.
F-2
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENTS OF OPERATIONS
Cumulative
from
January
For the Years 16, 1987
Ended March 31, (Inception)
----------------------- to March
1997 1996 31, 1997
---------- ---------- ---------
REVENUE:
Interest income $ 4,394 $ 5,995 $ 112,896
Interest income, related party - - 28,566
Bad debt recovery, related party 10,000 - 10,000
14,394 5,995 151,462
EXPENSES:
General and administrative 9,106 8,012 229,677
Consulting and administrative,
related parties - - 91,100
Bad debt expense, related party 40,725 85,000 137,685
49,831 93,012 458,462
NET LOSS $ (35,437) $ (87,017) $(307,000)
NET LOSS PER COMMON SHARE $ * $ *
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 98,330,000 98,330,000
____________________
* Less than $.001 per share.
See accompanying notes to these financial statements.
F-3
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 16, 1987 (INCEPTION)
TO MARCH 31, 1997
Deficit
Accumulated
Common Stock During the
--------------------- Development
Shares Amount Stage Total
---------- -------- ----------- --------
BALANCE, January 16, 1987 - $ - $ - $ -
(inception)
Issuance of common stock
for cash:
At $.0001 per share 20,500,000 2,050 - 2,050
At $.0002 per share 3,750,000 750 - 750
At $.00025 per share 20,250,000 5,063 - 5,063
Net loss - - (5,495) (5,495)
BALANCES, March 31, 1987 44,500,000 7,863 (5,495) 2,368
Issuance of common stock
for cash at $.00025
per share 6,000,000 1,500 - 1,500
Net proceeds from the sale
of common stock for cash
received under public
offering of units at
$.02 per unit 47,830,000 389,046 - 389,046
Net loss - - (23,314) (23,314)
BALANCES, March 31, 1988 98,330,000 398,409 (28,809) 369,600
Net loss - - (28,079) (28,079)
BALANCES, March 31, 1989 98,330,000 398,409 (56,888) 341,521
Net loss - - (23,603) (23,603)
BALANCES, March 31, 1990 98,330,000 398,409 (80,491) 317,918
Net income - - 13,954 13,954
BALANCES, March 31, 1991 98,330,000 398,409 (66,537) 331,872
Net loss - - (5,742) (5,742)
BALANCES, March 31, 1992 98,330,000 398,409 (72,279) 326,130
Net loss - - (13,775) (13,775)
(Continued)
F-4
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 16, 1987 (INCEPTION)
TO MARCH 31, 1997 (Continued)
Deficit
Accumulated
Common Stock During the
--------------------- Development
Shares Amount Stage Total
---------- -------- ----------- --------
BALANCES, March 31, 1993 98,330,000 398,409 (86,054) 312,355
Net loss - - (189,975) (189,975)
BALANCES, March 31, 1994 98,330,000 398,409 (276,029) 122,380
Net income - - 91,483 91,483
BALANCES, March 31, 1995 98,330,000 398,409 (184,546) 213,863
Net loss - - (87,017) (87,017)
BALANCES, March 31, 1996 98,330,000 398,409 (271,563) 126,846
Net loss - - (35,437) (35,437)
BALANCES, March 31, 1997 98,330,000 $398,409 $(307,000) $ 91,409
See accompanying notes to these financial statements.
F-5
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENTS OF CASH FLOWS
Cumulative
From
January 16,
1987
Ended March 31, (Inception)
------------------- to March 31,
1997 1996 1997
--------- ------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(35,437) $(87,017) $(307,000)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation expense 328 328 656
Bad debt expense (recovery) 30,725 85,000 127,685
Changes in operating assets and
liabilities:
(Increase) decrease in:
Accrued interest receivable - - (10,251)
Other current assets - - (777)
Increase (decrease) in -
Accounts payable 5,297 (2,383) 7,426
Net cash provided by (used in)
operating activities 913 (4,072) (182,261)
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable,
related party (40,725) (85,000) (361,875)
Issuance of notes receivable, other - - (125,000)
Proceeds from collection of notes
receivable, related parties - - 234,441
Proceeds from collections of notes
receivable 10,000 - 135,000
Purchase of office equipment - - (1,634)
Net cash (used in)
investing activities (30,725) (85,000) (119,068)
CASH FLOWS FROM FINANCING ACTIVITY-
Issuance of common stock and warrants
for cash, net of offering costs - - 398,409
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (29,812) (89,072) 97,080
CASH AND CASH EQUIVALENTS, beginning 126,892 215,964 -
CASH AND CASH EQUIVALENTS, ending $ 97,080 $126,892 $ 97,080
See accompanying notes to these financial statements.
F-6
<PAGE>
NORTHERN DANCER CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Nature of Operations:
Northern Dancer Corporation (a development stage company) (the Company) was
incorporated under the laws of the State of Colorado on January 16, 1987. The
Company's activities to date have been limited to organizational efforts and
obtaining additional financing.
The Company was formed to evaluate, structure and complete a merger with, or
acquisition of, prospects consisting of private companies, partnerships or sole
proprietorships. The Company may seek to acquire a controlling interest in such
entities in contemplation of later completing an acquisition. The Company is
not limited to any geographic area in seeking out opportunities, nor has a
specific earning or asset level requirement been established. Management has
not identified any particular business, industry or area of interest within
which the Company will seek an acquisition or merger. However, the Company
does not intend to act as a general or limited partner in connection with
partnerships it may attempt to merge with or acquire. The Company has not
conducted, nor have others made available to it, market research supporting
the viability of the Company's proposed operations.
Although a number of companies have been evaluated for possible mergers or
acquisitions, the Company has not entered into any agreements concerning a
potential merger or acquisition.
2. Significant Accounting Principles:
Net Loss per Common Share - The net loss per share of common stock is determined
using the weighted-average number of shares issued and outstanding during the
period. Common stock warrants were not included in the computation because they
are antidilutive.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments with an original maturity
of three months or less to be cash equivalents.
Property and Equipment - Depreciation and amortization is provided on the
straight-line method over the estimated useful lives (5 years). The cost of
normal maintenance and repairs is charged to operating expenses as incurred.
Income Taxes - The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statements and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Use of Estimates - The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
the Company's management to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
F-7
<PAGE>
Impairment of Long-Lived Assets - During the year ended March 31, 1997, the
Company adopted Financial Accounting Standards Board Statement 121 (FAS 121).
In the event that facts and circumstances indicate that the cost of assets or
other assets may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted
cash flows associated with the asset would be compared to the asset's carry-
ing amount to determine if a write-down to market value or discounted cash
flow value is required. Adoption of FAS 121 had no effect on the March 31,
1997 financial statements.
Stock-Based Compensation - During the year ended March 31, 1997, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 (SFAS 123), Accounting for Stock-Based Compensation. The
Company has not issued any stock options, grants or other forms of stock
compensation and therefore the adoption of SFAS did not have any impact on the
Company's financial statements.
3. Related Party Transactions:
During fiscal 1997 and 1996, the Company advanced $40,725 and $85,000 to an
entity and its subsidiaries that are approximately 50% owned by a stockholder of
the Company and her husband, who is a director/officer of the Company. The
notes bear interest from 6% to 8.5%, however, no interest income has been
recorded as a result of the uncertainty of collection. Also, due to the
uncertainty of collection, all notes were written off as uncollectible during
the year the advance was made. During fiscal 1997 a $10,000 principal
payment was made on these fully reserved notes and accordingly, the Company
recorded a $10,000 bad debt recovery. Additionally the Company converted
$85,000 of these notes and $5,883 of unrecorded interest income into 57,941
shares of common stock of the entity, which represents approximately 18% of
the entity's outstanding common stock as of March 31, 1997. No value has
been recorded for this investment in the entity. Subsequent to March 31,
1997, the Company advanced an additional $20,000 to this related entity and
one of its subsidiaries. The notes bear interest at 8.5%.
The Company has retained a stock transfer agent of which a major stockholder is
also a stockholder of the Company. Fees paid to the stock transfer agent were
not significant.
4. Stockholders' Equity:
On March 28, 1988, the Company completed a public offering for the sale of
23,915,000 units at a price of $.02 per unit, or gross proceeds of $478,300.
Each unit consists of two shares of the Company's no par value common stock
and one Class A Common Stock Purchase Warrant. Each Class A Warrant entitles
the holder to purchase one share of common stock and one Class B Common Stock
Purchase Warrant at a price of $.02. Each Class B Warrant entitles the
holder to purchase one share of common stock and one Class C Common Stock
Purchase Warrant at a price of $.04. Each Class C Common Stock Purchase
Warrant entitles the holder to purchase one share of common stock at a price
of $.06. During the year ended March 31, 1996, expiration dates of the Class
A, B, and C warrants were extended to December 31, 1997. The Class A, B and
C Warrants are detachable and may be separately traded. The Company has the
right to call any or all of the Warrants with 30-days notice at a price of
$.0001. No warrants have been exercised as of March 31, 1997.
The Company has the authority to issue 10,000,000 shares of preferred stock,
which may be issued in one or more series with the terms to be determined by the
Company's Board of Directors.
F-8
<PAGE>
5. Incentive Stock Option Plan:
During fiscal 1987, the Company adopted an Incentive Stock Option Plan (the
Plan) under which options to purchase up to 10,000,000 shares of the
Company's no par value common stock may be granted to employees of the
Company. The Plan is administered by the Board of Directors, which is
empowered to determine the terms and conditions of each option, subject to
the limitation that the exercise price may not be less than the market value
of the common stock on the date of the grant or 110% of market value in the
case of options granted to an employee who owns 10% or more of the Company's
outstanding common stock. In addition, no option can have a term in excess
of ten years, or five years in the case of options granted to employees who
own 10% or more of the Company's common stock. As of March 31, 1997, no
options have been granted under the Plan.
6. Income Taxes:
The components of deferred tax assets in the balance sheet, which are fully
eliminated by a valuation allowance, are as follows:
Investment valuation and doubtful
receivable allowance $ 43,000
Net operating loss carryforward 70,300
Less valuation allowance (113,300)
Net deferred tax asset $ -0-
The Company has a net operating loss carryforward for federal tax reporting
purposes of approximately $188,000. The tax net operating loss carryforward
expires in 2003 through 2011.
F-9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.
NORTHERN DANCER CORPORATION
Dated: October 15, 1997 By/s/ Joseph E. O'Connor
Joseph E. O'Connor, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------- ------------------------ ------------------
/s/ Joseph E. O'Connor President and Treasurer September 15, 1997
Joseph E. O'Connor (Principal Financial and
Accounting Officer) and
Director
/s/ J. Daniel Bell Director September 15, 1997
J. Daniel Bell
/s/ David C. Walters Director September 15, 1997
David C. Walters
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and statements of operations found on pages F-3 and F-4 of the Company's
Form 10-KSB for the fiscal year ended March 31, 1997, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 97,080
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 97,857
<PP&E> 978
<DEPRECIATION> 0
<TOTAL-ASSETS> 98,835
<CURRENT-LIABILITIES> 7,426
<BONDS> 0
0
0
<COMMON> 398,409
<OTHER-SE> (307,000)
<TOTAL-LIABILITY-AND-EQUITY> 98,835
<SALES> 0
<TOTAL-REVENUES> 14,394
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 49,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,437)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
