<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, 1996
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 $5,995.
To the best of management's knowledge, no purchasers 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 proprietor-
ships. 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, 1996, the
expiration dates of the Class A, B and C warrants were extended to December
31, 1996. 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, 1996.
During February, 1994, the Company entered into a 90 day option
agreement with an unaffiliated company which holds 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.
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.
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The Company expects to continue concentrating primarily on the
identification 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 connec-
tion with partnerships it may merge with or acquire. Management has not
identified any particular area of interest within which the Company will con-
centrate 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 techni-
cal expertise 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.
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. From
April 1, 1990 through May 1993, the Company paid $400 per month to such
company for rent, telephone and secretarial services. Since May 1993, the
Company has not been charged for such office space or services. The Company's
address is 370-17th Street, Suite 2300, Denver, Colorado 80202 and its
telephone number is (303) 572-5000.
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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, 1996.
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<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 October 31, 1996 was 146. 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, 1996,
had working capital consisting primarily of cash and cash equivalents of
$125,540. The Company anticipates operational costs will be limited until
such time as significant evaluation work is undertaken regarding prospective
mergers or acquisitions.
Expenses decreased from $14,326 in the year ended March 31, 1995, to
$8,012 in the year ended March 31, 1996.
During fiscal 1996, the Company advanced $85,000 to an unrelated party.
Due to the uncertainty of collection, an allowance for doubtful accounts of
the entire amount has been recorded. The note bears interest at 6%, however,
no interest income has been recorded as a result of the uncertainty of
collection.
As of March 31, 1996, the Company had no material commitments for
capital expenditures.
EFFECTS OF NEW PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Impairment of Long-Lived Assets." This new
standard is effective for years beginning after December 15, 1995 and would
change the company's method of determining impairment of long-lived assets.
Although the Company has not performed a detailed analysis of the impact of
this new standard on the Company's financial statements, the Company does not
believe that adoption of the new standard will have a material effect on the
financial statements.
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In October 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Stock-Based Compensation" (FAS 123). The new
statement is effective for fiscal years beginning after December 15, 1995.
FAS 123 encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options, and other equity instruments to
employees based on fair value. Companies that do not adopt the fair value
accounting rules must disclose the impact of adopting the new method in the
notes to the financial statements. Transactions in equity instruments with
non-employees for goods or services must be accounted for on the fair value
method. The Company currently does not intend to adopt the fair value
accounting prescribed by FAS 123, and will be subject only to the disclosure
requirements prescribed by FAS 123.
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-10
hereof.
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.
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<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 55 President, Treasurer and Director
David C. Walters 50 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.
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
Technologies, 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
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<PAGE>
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, 1996:
<TABLE>
<CAPTION>
Summary Compensation Table
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>
Joseph E. O'Connor, 1996 -0- -0- -0- -0- -0- -0- -0-
President 1995 $4,500* -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0- -0-
_____________________
* Represents consulting fees paid to Mr. O'Connor for services provided to the Company in
connection with the review of an acquisition candidate.
</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 compensation for
their services as
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<PAGE>
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.
On January 16, 1987, the Company adopted an Incentive Stock Option Plan
(the "Plan") under which options granted are intended to qualify as "incentive
stock options" under Section 422A of the Internal Revenue Code of 1954, as
amended (the "Code"). Pursuant to the Plan, options to purchase up to
10,000,000 shares of the Company's 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 cannot be less than the market value of the
Common Stock on the date of the grant (110% of the market value in the case of
options granted to an employee who owns 10% or more of the Company's
outstanding Common Stock) and no option can have a term in excess of 10 years
(5 years in the case of options granted to employees who own 10% or more of
the Company's Common Stock).
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 October 31, 1996, 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
Carylyn K. Bell 12,670,000<FN4><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)
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- ---------------
<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 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.
<FN5>
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, 1996.
</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.
Since November, 1989, the Company has rented office space and received
office support services from a company of which Ms. Carylyn K. Bell, a
principal shareholder of the Company and responsible for certain management
activities for the Company, is also an officer and a director. The Company
has paid approximately $400 per month for the period from April 1, 1990
through May 31, 1993. Since May 1993, the Company has not been charged for
such office space or services.
During the year ended March 31, 1993, the Company paid Joseph E.
O'Connor, the Company's President, $4,000 for consulting fees for his services
in connection with the review of an acquisition candidate.
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During the year ended March 31, 1993, the Company paid Carylyn K. Bell,
a principal shareholder of the Company, and J. Daniel Bell, her husband, an
aggregate of $4,000 for their services in connection with the review of an
acquisition candidate. The Company also paid $2,000 to Mark King, the brother
of Carylyn Bell, for consulting services in connection with such review.
During the year ended March 31, 1995, the Company paid a total of $5,400
in consulting fees, of which $4,500 was paid to Joseph E. O'Connor. During
the year ended March 31, 1994, the Company paid a total of $10,700 in
consulting fees to the following seven persons: Joseph O'Connor, David
Walters, Chris Watson, Carylyn Bell, Dan Bell, Maury Bell, and Mark King.
Management has adopted a policy that the Company will not seek an
acquisition or merger with any entity in which the Company's Officers or
Directors serve as Officers, Directors or partners, or in which they or their
family members own or hold greater than a 10% ownership interest.
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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.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
NORTHERN DANCER CORPORATION
(A development stage company)
Page
Independent Auditor's Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statements of Cash Flows F-7
Notes to Financial Statements F-8
F-1
<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, 1996, and the related statements
of operations, stockholders' equity and cash flows for the years ended March
31, 1996 and 1995. 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 Corporation
as of March 31, 1996, and the results of its operations and its cash flows for
the years ended March 31, 1996 and 1995, 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, 1996. In our opinion, such financial statements have been properly
combined.
/s/ HEIN & ASSOCIATES LLP
Hein & Associates LLP
Certified Public Accountants
Denver, Colorado
May 14, 1996
F-2
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
BALANCE SHEET
March 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 126,892
Other current assets 777
Total current assets 127,669
Note receivable, net of $85,000 allowance
for doubtful accounts -
Office equipment, net of $328 accumulated
depreciation 1,306
TOTAL ASSETS $ 128,975
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES-
Accounts payable $ 2,129
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; 98,330,00
shares issued and outstanding 398,409
Deficit accumulated during the
development stage (271,563)
Total stockholders' equity 126,846
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 128,975
See accompanying notes to these financial statements.
F-3
<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
1996 1995 31, 1996
---------- ---------- ---------
REVENUE:
Interest income $ 5,995 $ 10,707 $ 108,502
Interest income, related party - - 28,566
Bad debt recovery - 95,102 -
5,995 105,809 137,068
EXPENSES:
General and administrative 8,012 8,926 220,571
Consulting and administrative,
related parties - 5,400 91,100
Bad debt 85,000 - 96,960
93,012 14,326 408,631
NET INCOME (LOSS) $ (87,017) $ 91,483 $(271,563)
NET EARNINGS (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-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, 1996
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-5
<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, 1996 (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
See accompanying notes to these financial statements.
F-6
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENTS OF CASH FLOWS
Cumulative
From
January 16,
1987
Ended March 31, (Inception)
------------------- to March 31,
1996 1995 1996
--------- ------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(87,017) $91,483 $(271,563)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation expense 328 - 328
Bad debt expense (recovery) 85,000 (95,102) 96,960
Changes in operating assets and
liabilities:
(Increase) decrease in:
Accrued interest receivable - 10,102 (10,251)
Other current assets - - (777)
Increase in -
Accounts payable (2,383) (5,938) 2,129
Net cash provided by (used in)
operating activities (4,072) 545 (183,174)
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable,
related party - - (236,150)
Issuance of notes receivable, other (85,000) - (210,000)
Proceeds from collection of notes
receivable, related parties - - 234,441
Proceeds from collections of notes
receivable - 125,000 125,000
Purchase of office equipment - (1,634) (1,634)
Net cash provided by (used in)
investing activities (85,000) 123,366 (88,343)
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 (89,072) 123,911 126,892
CASH AND CASH EQUIVALENTS, beginning 215,964 92,053 -
CASH AND CASH EQUIVALENTS, ending $126,892 $215,964 $126,892
See accompanying notes to these financial statements.
F-7
<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 note 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.
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
2. SIGNIFICANT ACCOUNTING PRINCIPLES:
NET INCOME (LOSS) PER COMMON SHARE - The net income (loss) per share of
common stock is determined using the weight-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.
F-8
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
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.
EFFECTS OF NEW PRONOUNCEMENTS - In March 1995, the Financial Accounting
Standards Board issued a new statement titled "Accounting for Impairment of
Long-Lived Assets." This new standard is effective for years beginning after
December 15, 1995 and would change the company's method of determining
impairment of long-lived assets. Although the Company has not performed a
detailed analysis of the impact of this new standard on the Company's
financial statements, the Company does not believe that adoption of the new
standard will have a material effect on the financial statements.
In October 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Stock-Based Compensation" (FAS 123). The new
statement is effective for fiscal years beginning after December 15, 1995.
FAS 123 encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options, and other equity instruments to
employees based on fair value. Companies that do not adopt the fair value
accounting rules must disclose the impact of adopting the new method in the
notes to the financial statements. Transactions in equity instruments with
non-employees for goods or services must be accounted for on the fair value
method. The Company currently does not intend to adopt the fair value
accounting prescribed by FAS 123, and will be subject only to the disclosure
requirements prescribed by FAS 123.
3. RELATED PARTY TRANSACTIONS:
The Company receives office space, telephone, secretarial and business
consulting services from a related company in which a stockholder of the
company is an officer/director and from certain other officers/directors
and/or stockholders of the Company. Amounts paid for these services totaled
approximately $-0-, $6,000, and $92,000 for 1996, 1995, and for the cumulative
period from January 16, 1987 (inception) to March 31, 1996, respectively.
4. NOTES RECEIVABLE AND INTEREST:
During fiscal 1994, the Company advanced $125,000 to an unrelated party. Due
to uncertainty of collection, an allowance for doubtful accounts was recorded
in fiscal 1994. The Company was able to fully recover the note receivable and
accrued interest during fiscal 1995.
During fiscal 1996, the Company advanced $85,000 to an unrelated party. Due
to the uncertainty of collection, an allowance for doubtful accounts of the
entire amount has been recorded. The note bears interest at 6%, however, no
interest income has been recorded as a result of the uncertainty of
collection.
F-9
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
5. 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, 1996. 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, 1996.
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.
6. 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, 1996, no options have been
granted under the Plan.
7. INCOME TAXES:
The components of deferred tax assets (liabilities) in the balance sheet,
which are fully eliminated by a valuation allowance, are as follows:
Allowance for doubtful receivable $ 32,000
Net operating loss carryforward 68,000
Less valuation allowance (100,000)
Net deferred tax asset $ -
The Company has a net operating loss carryforward for federal tax reporting
purposes of approximately $182,000. The tax net operating loss carryforward
expires in 2003 through 2010.
F-10
<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: November 5, 1996 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 November 5, 1996
Joseph E. O'Connor (Principal Financial and
Accounting Officer) and
Director
/s/ David C. Walters Director November 5, 1996
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, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 126,892
<SECURITIES> 0
<RECEIVABLES> 85,000
<ALLOWANCES> 85,000
<INVENTORY> 0
<CURRENT-ASSETS> 127,669
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 128,975
<CURRENT-LIABILITIES> 2,129
<BONDS> 0
0
0
<COMMON> 398,409
<OTHER-SE> (271,563)
<TOTAL-LIABILITY-AND-EQUITY> 128,975
<SALES> 0
<TOTAL-REVENUES> 5,995
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 93,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (87,017)
<EPS-PRIMARY> .001
<EPS-DILUTED> 0
</TABLE>
