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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, 1998
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 $4,799.
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.
As of July 31, 1998, the Issuer had 98,330,000 shares of its common stock
outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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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 Warrants expired on December 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
$78,225 to Dunn ($40,725 was loaned during the year ended March 31, 1997, and
$37,500 was loaned during the year ended March 31, 1998). 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
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merger or acquisition would not be in the best interests of the Company at the
time.
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.
During August 1998, the Company signed a letter of intent with U.S.
Trucking, Inc. for an acquisition, however, as of the date of filing this Form
10-KSB, no definitive agreement has been executed. A shareholder meeting has
been called for September 4, 1998, for the purpose of approving a 1 for 160
reverse stock split and a name change to U.S. Trucking, Inc. contingent on the
closing of the transaction with U.S. Trucking, Inc.
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
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
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.
3
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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 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. 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, 1998.
4
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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 June 30, 1998, 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
contemplated by the Company's business plan.
The Company is currently in a liquid position, and as of March 31, 1998,
had working capital (consisting primarily of cash and cash equivalents)
totaling $42,471. 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, 1997 and 1998.
During fiscal 1998, 1997 and 1996, the Company advanced $37,500, $40,725
and $85,000, respectively, 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, during the year ended March 31, 1997, 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, 1998, 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-11
hereof.
5
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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.
On July 13, 1998, the Company engaged Schumacher & Associates, Inc. as
its independent accountants for the fiscal year ended March 31, 1998. Also on
July 13, 1998, Hein & Associates was dismissed as the Company's independent
accountants. In connection with the prior audit for the year ended March 31,
1997, and during the interim period from March 31, 1997 to July 31, 1998,
there have been no disagreements with Hein & Associates on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
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 57 President, Treasurer and Director
J. Daniel Bell 53 Secretary and Director
David C. Walters 52 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,
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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.
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 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.
7
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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, 1998:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- ------------------ ---------------
OTHER RE- ALL
ANNUAL STRICTED 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, 1998 -0- -0- -0- -0- -0- -0- -0-
President 1997 -0- -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0- -0-
</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 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 July 28, 1998, 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 6,000,000 6.1%
2 Corporate Plaza, Suite 200
Newport Beach, CA 92660
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David C. Walters 2,000,000 2.0%
221 Gregory Drive
DeSoto, TX 75115
Ralph H. Grills, Jr. 6,500,000 6.6%
No. 906
1888 South Jackson
Denver, CO 80210
J. Daniel Bell 7,920,000<FN1> 8.1%
2750 East Cedar Avenue
Denver, CO 80209
Carylyn K. Bell 7,920,000<FN2> 8.1%
2750 East Cedar Avenue
Denver, CO 80209
All Directors and 15,920,000<FN1> 16.2%
Officers as a Group
(3 Persons)
________________________
<FN>
<FN1>
Includes 250,000 shares held directly by Mr. Bell; 7,320,000 shares held by
Carylyn Bell, the wife of Mr. Bell; and 350,000 shares held by Ms. Bell as
custodian for a minor child.
<FN2>
Includes 7,320,000 shares owned directly by Ms. Bell; 350,000 shares held by
Ms. Bell as custodian for a minor child; and 250,000 shares owned by J. Daniel
Bell, Ms. Bell's husband, to which Ms. Bell may be deemed to have beneficial
ownership.
</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.
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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
$78,225 to Dunn ($40,725 was loaned during the year ended March 31, 1997 and
$37,500 was loaned during the year ended March 31, 1998). 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.
10
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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) A Report on Form 8-K was filed on July 13, 1998, reporting under
Item 4 a change in the Company's certified public accountants from Hein &
Associates to Schumacher & Associates, Inc.
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INDEX TO FINANCIAL STATEMENTS
NORTHERN DANCER CORPORATION
(A development stage company)
FINANCIAL STATEMENTS
WITH
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
MARCH 31, 1998 AND 1997
Page
Reports of Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . F-2 - F-3
Financial Statements:
Balance Sheet . . . . . . . . . . . . . . . . . F-4
Statements of Operations. . . . . . . . . . . . F-5
Statement of Changes in Stockholders' Equity. . F-6
Statements of Cash Flows. . . . . . . . . . . . F-8
Notes to Financial Statements . . . . . . . . . F-9
F-1
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Northern Dancer Corporation
Denver, CO 80202
We have audited the accompanying balance sheet of Northern Dancer Corporation
(a development stage company) as of March 31, 1998, and the related statements
of operations, stockholders' equity and cash flows for the year ended March
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements, referred to above, present fairly,
in all material respects, the financial position of Northern Dancer
Corporation (a development stage company) as of March 31, 1998, and the
results of its operations, changes in its stockholders' equity and its cash
flows for the year ended March 31, 1998, in conformity with generally accepted
accounting principles.
The financial statements of Norther Dancer Corporation (a development stage
company) for the period from January 16, 1987 to March 31, 1997 were audited
by other auditors, whose reports expressed unqualified opinions on those
statements. We have audited the combination of these prior statements into
the period from January 16, 1987 to March 31, 1998. In our opinion, such
financial statements have been properly combined.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
July 21, 1998
F-2
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Northern Dancer Corporation
Denver, CO 80202
We have audited the accompanying statements of operations, stockholders'
equity and cash flows of Northern Dancer Corporation (a development stage
company) for the year ended March 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements, referred to above, present fairly,
in all material respects, the results of operations, changes in its
stockholders' equity and its cash flows of Northern Dancer Corporation (a
development stage company) for the year ended March 31, 1997 in conformity
with generally accepted accounting principles.
Hein + Associates llp
Denver, Colorado
July 15, 1997
F-3
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NORTHERN DANCER CORPORATION
(A development stage company)
BALANCE SHEET
MARCH 31, 1998
ASSETS
Current Assets:
Cash $ 46,872
---------
Total Current Assets 46,872
Office equipment, net of accumulated
depreciation of $983 652
---------
TOTAL ASSETS $ 47,524
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities -
Accounts payable $ 4,401
---------
Total Current Liabilities 4,401
---------
TOTAL LIABILITIES 4,401
=========
Commitments and Contingencies (Notes 4 and 5)
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 (355,286)
---------
TOTAL STOCKHOLDERS' EQUITY 43,123
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 47,524
=========
The accompanying notes are an integral part of the financial statements.
F-4
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NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENTS OF OPERATIONS
Cumulative
from
January
For the Years 16, 1987
Ended March 31, (Inception)
----------------------- to March
1998 1997 31, 1998
---------- ---------- ----------
REVENUE:
Interest income $ 4,799 $ 4,394 $ 117,695
Interest income, related party - - 28,566
Bad debt recovery, related party - 10,000 10,000
---------- ---------- ----------
4,799 14,394 156,261
---------- ---------- ----------
EXPENSES:
General and administrative 13,085 9,106 242,762
Consulting and administrative,
related parties 2,500 - 93,600
Bad debt expense, related party 37,500 40,831 175,185
---------- ---------- ----------
53,085 49,937 511,547
---------- ---------- ----------
NET LOSS $ (48,286) $ (35,437) $ (355,286)
========== ========== ==========
NET LOSS PER COMMON SHARE $ nil $ nil $ nil
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 98,330,000 98,330,000 98,330,000
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FROM JANUARY 16, 1987 (INCEPTION) THROUGH MARCH 31, 1998
Deficit
Accumulated
Common Stock During the
--------------------- Development
Shares Amount Stage Total
---------- -------- ----------- --------
Balance at January 16, 1987
(Inception) - $ - $ - $ -
Common stock issued 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 for the period
ended March 31, 1997 - - (5,495) (5,495)
---------- -------- ---------- --------
Balance at March 31, 1987 44,500,000 7,863 (5,495) 2,368
Common stock issued 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 for the year
ended March 31, 1998 - - (23,314) (23,314)
---------- -------- ---------- --------
Balance at March 31, 1988 98,330,000 398,409 (28,809) 369,600
Net loss for the year
ended March 31, 1989 - - (28,079) (28,079)
---------- -------- ---------- --------
Balance at March 31, 1989 98,330,000 398,409 (56,888) 341,521
Net loss for the year
ended March 31, 1990 - - (23,603) (23,603)
---------- -------- ---------- --------
Balance at March 31, 1990 98,330,000 398,409 (80,491) 317,918
Net income for the year
ended March 31, 1991 - - 13,954 13,954
---------- -------- ---------- --------
Balance at March 31, 1991 98,330,000 398,409 (66,537) 331,872
F-6
<PAGE>
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FROM JANUARY 16, 1987 (INCEPTION) THROUGH MARCH 31, 1998
(CONTINUED)
Deficit
Accumulated
Common Stock During the
--------------------- Development
Shares Amount Stage Total
---------- -------- ----------- --------
Net loss for the year
ended March 31, 1992 - - (5,742) (5,742)
---------- -------- ---------- --------
Balance at March 31, 1992 98,330,000 398,409 (72,279) 326,130
Net loss for the year
ended March 31, 1993 - - (13,775) (13,775)
---------- -------- ---------- --------
Balance at March 31, 1993 98,330,000 398,409 (86,054) 312,355
Net loss for the year
ended March 31, 1994 - - (189,975) (189,975)
---------- -------- ---------- --------
Balance at March 31, 1994 98,330,000 398,409 (276,029) 122,380
Net income for the year
ended March 31, 1995 - - 91,483 91,483
---------- -------- ---------- --------
Balance at March 31, 1995 98,330,000 398,409 (184,546) 213,863
Net loss for the year]
ended March 31, 1996 - - (87,017) (87,017)
---------- -------- ---------- --------
Balance at March 31, 1996 98,330,000 398,409 (271,563) 126,846
Net loss for the year
ended March 31, 1997 - - (35,437) (35,437)
---------- -------- ---------- --------
Balance at March 31, 1997 98,330,000 398,409 (307,000) 91,409
Net loss for the year
ended March 31, 1998 - - (48,286) (48,286)
---------- -------- ---------- --------
Balance at March 31, 1998 98,330,000 $398,409 $ (355,286) $ 43,123
========== ======== ========== ========
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
<PAGE>
NORTHERN DANCER CORPORATION
(A development stage company)
STATEMENTS OF CASH FLOWS
Cumulative
From
January 16,
1987
Ended March 31, (Inception)
--------------------- to March 31,
1998 1997 1998
--------- --------- -----------
Cash Flows from Operating Activities:
Net loss $(48,286) $(35,437) $(355,286)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation 328 328 984
Increase (decrease) in accounts
payable (3,025) 5,297 4,401
Bad debt expense 37,500 30,725 154,932
Other 775 - -
-------- -------- ---------
Net Cash (Used in) Operating
Activities (12,708) 913 (194,969)
-------- -------- ---------
Cash Flows from Investing Activities:
Issuance of notes receivable,
related party (37,500) (40,725) (399,375)
Issuance of notes receivable, other - - (125,000)
Proceeds from collection of notes
receivable, related party - - 234,441
Proceeds from collections of notes
receivable, other - 10,000 135,000
Purchase of office equipment - - (1,634)
-------- -------- ---------
Net Cash (Used in) Investing
Activities (37,500) (30,725) (156,568)
-------- -------- ---------
Cash Flows from Financing Activities:
Issuance of common stock and warrants,
net of offering costs - - 398,409
-------- -------- ---------
Net Cash Provided by Financing
Activities - - 398,409
-------- -------- ---------
Increase (Decrease) in Cash (50,208) (29,812) 46,872
Cash, Beginning of Year 97,080 126,892 -
-------- -------- ---------
Cash, End of Year $ 46,872 $ 97,080 $ 46,872
======== ======== =========
Interest Paid $ - $ - $ -
======== ======== =========
Income Taxes Paid $ - $ - $ -
======== ======== =========
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
<PAGE>
NORTHERN DANCER CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 and 1987
(1) Summary of Accounting Policies
This summary of significant accounting policies of Northern Dancer
Corporation (a development stage company) (Company) is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management who is responsible
for their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
(a) Organization and Principles of Consolidation
The Company was incorporated under the laws of Colorado on January
16, 1987. The Company is an inactive entity other than it is looking for a
business combination candidate.
The Company has selected the last day of March as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Net Loss Per Common Share
The net loss per common share is determined using the weighted-
average number of shares issued and outstanding the period.
(d) Office Equipment
Depreciation is provided on a straight-line basis over the estimated
useful life of the office equipment.
(e) 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 if assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
F-9
<PAGE>
<PAGE>
(f) Impairment of Long-Lived Assets
During the year ended March 31, 1997, the Company adopted Financial
Accounting Standards Board Statement No. 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 carrying 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 financial statements.
(g) Stock-Based Compensation
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.
(2) Income Taxes
As of March 31, 1998, there are no current or deferred income taxes
payable. As of March 31, 1998, the Company has total deferred tax assets of
approximately $106,000 principally due to operating loss carryovers and the
valuation allowance on related party investments. However, because of the
uncertainty of potential realization of these tax assets, the Company has
provided a valuation allowance for the entire $106,000. Thus, no tax assets
have been recorded in the financial statements as of March 31, 1998.
The Company has available at March 31, 1998, unused operating loss
carryovers of approximately $355,000 which may be applied against future
taxable income, expiring in various years through 2012. Change of control of
the Company could reduce or eliminate the ability to utilize the net operation
loss carryover.
(3) Related Party Transactions
During the years ended March 31, 1998 and 1997, the Company advanced
$37,500 and $40,725, respectively, 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 advances were
made. During the year ended March 31, 1997 a $10,000 principle payment was
made on the previously written 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, 1998. No value has been recorded for
this investment in the entity.
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.
F-10
<PAGE>
<PAGE>
(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, at which time they expired.
The Class A, B, and C warrants were detachable and separately tradeable. The
Company had the right to call any or all of the warrants with 30-days notice
at a price of $.0001. No warrants were exercised.
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.
(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, 1998, 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 $ 50,000
Net operating loss carryforward 80,000
Less valuation allowance (130,000)
--------
Net deferred tax asset $ -
========
The Company has a net operating loss carryforward for federal tax
reporting purposes of approximately $138,000. The tax net operating loss
carryforward expires in 2003 through 2012.
F-11
<PAGE>
<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: September 2, 1998 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 2, 1998
Joseph E. O'Connor (Principal Financial and
Accounting Officer) and
Director
/s/ J. Daniel Bell Director September 2, 1998
J. Daniel Bell
/s/ David C. Walters Director September 2, 1998
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-4 and F-5 of the
Company's Form 10-KSB for the fiscal year ended March 31, 1998, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 46,872
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,872
<PP&E> 652
<DEPRECIATION> 0
<TOTAL-ASSETS> 47,524
<CURRENT-LIABILITIES> 4,401
<BONDS> 0
0
0
<COMMON> 398,409
<OTHER-SE> (355,286)
<TOTAL-LIABILITY-AND-EQUITY> 47,524
<SALES> 0
<TOTAL-REVENUES> 4,799
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 53,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,286)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
