<PAGE> 1
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 33-19980-D
GEMSTAR ENTERPRISES, INC.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Nevada 87-0450450
73-251 Amber Street
Palm Desert, CA 92260
(619) 346-4812
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 Securities Exchange Act of 1934 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. (1) Yes [ X ] No [ ] (2) Yes [ X ] No [ ]
State Registrant's revenues for its most recent fiscal year. $0.00
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past
60 days: $243,172 as of November 5, 1996
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: 10,758,614 shares
of its $0.001 par value common stock as of November 5, 1996
DOCUMENTS INCORPORATED BY REFERENCE
None of the documents referred to by this Item are incorporated by reference
Transitional Small Business Disclosure Format (check one): Yes [ ]; No [X]
<PAGE>
<PAGE> 2
ITEM 1. BUSINESS
The Registrant was incorporated under the laws of the state of Nevada in
October of 1987, as North Star Petroleum, Inc. In August of 1988 the
Registrant completed a public offering of "Units" for gross proceeds of
$160,000. The business purpose for the Registrant's initial public offering,
was to raise capital to engaged in the drilling and subsequent production of
oil and gas on a joint venture basis from leasehold property which the
Registrant had acquired and which was located in Creek County, Oklahoma.
Through the exercise of warrants issued in the public offering, the Registrant
raised $320,000 in additional capital. This capital was used, in part, to
acquired additional leasehold interests in adjacent property in Creek County,
Oklahoma, on which wells were drilled and placed into production.
In May of 1990, the Registrant delivered to its existing shareholders without
cost, one warrant, designated as a Series B Warrant, for each common share
held. The unexercised warrants issued in the public offering were designated
as Series A Warrants. A shareholders' meeting was also held in May of 1990, at
which time the shareholders approved amendments to the Registrant's Articles
of Incorporation to: 1] change the corporate name to Gemstar Enterprises,
Inc.; 2] change the par value of the common stock from $0.001 per share to
$0.02 per share; and 3] authorize a class of 5,000,000 shares of preferred
stock. At the same time, the shareholders approved: 1] a reverse split of the
common stock on the basis of one $0.02 par value common share being issued for
twenty $0.001 par value common shares (1 for 20 reverse split); 2] approved
the acquisition of approximately 200 acres of real property located in
Alexander County, North Carolina; and 3] elected directors which resulted in a
change in management. All references to the Registrant's common stock in this
report have taken this reverse split into account.
During the ensuing time period, the net revenue derived from the Registrant's
oil and gas operations continued to decrease while the debt financing of its
real property located in Alexander County, North Carolina, caused the
Registrant to experience cash flow deficits. The Registrant was not able to
raise sufficient capital to pursue the development of its real property and
therefore disposed of its oil and gas operations in order to finance the debt
on its real property in North Carolina. Management responsible for the oil and
gas operations resigned shortly thereafter and remaining management continued
their efforts to finance and develop the Registrant's real property. In April
of 1993, the Registrant, no longer capable of financing the debt associated
with the real property, disposed of it and became inactive.
Since becoming inactive, the Registrant has been unable to generate any
revenue and for accounting purposes is deemed to be a development stage
company. After disposing of its assets, current management of the Registrant
replaced previous management. The Registrant is now actively seeking an
existing operating company with the intent of entering into a reorganization
and thereby revitalizing the Registrant. As a part of this effort, the
Registrant settled its debt through the issuance of shares of its common stock
and also sold shares of its common stock to four individuals (including the
Registrant's sole officer and director) in a private transaction to raise
capital. These funds are being used to pay operating costs, including the
audit of its financial statements, the purchase of certain computer software,
and for payment of fees and costs associated with being a public entity and
for legal fees associated with reviewing the Registrant's filings with the
Securities and Exchange Commission.
<PAGE> 3
Even though the Registrant is actively seeking a new business venture, it is
important that the reader recognize that no assurance can be given that the
Registrant will be successful in its efforts. Furthermore, by entering into a
plan or reorganization (if such were to occur) the current shareholders of the
Registrant could be diluted in their percentage ownership in the Registrant.
ITEM 2. PROPERTIES
The Registrant does not own any property and has no employees. Its principal
executive officer provides on a rent free basis office space for the
registrant.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not engaged in any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to a consent resolution dated March 25, 1996, and authorized by
Section 78.320-2 of the Nevada Revised Statues, a majority of the Registrant's
shareholders voted to amend the Registrant's Articles of Incorporation by
changing the par value of the common stock from $0.02 per share to $0.001 per
share. The number of shares eligible to vote was 6,758,614, of which consent
resolutions representing 4,915,000 shares (73% of the eligible shares) were
voted for adopting such Amendment.
The Registrant believes that by changing the par value of its common stock, a
positive step has been taken in making the Registrant an attractive target for
a reorganization. Management believes that a reorganization would allow the
Registrant to potentially increase shareholder value, however a likely
consequence of such a reorganization would be in the dilution of current
shareholder's ownership in the Registrant.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's common stock is quoted on the National Association of
Securities Dealers' OTC Bulletin Board with a symbol of "GMSE". The high and
low bid quotations provided below were derived from this electronic quotation
system and reflect inter-dealer prices, without retail markup, mark-down or
commissions and may not represent actual transactions. The low volume of
shares traded and the infrequency of such trades would indicate that the
information provided below may not be indicative of the Registrant's common
stock price if conditions were similar to those of companies where the volume
of shares traded and the frequency of those transactions had a more consistent
pattern of activity.
Quarter Ended High Bid Low Bid
- ------------- -------- -------
December, 1994 ......................... $ 1/32 $ 1/32
March, 1995 ............................ 1/32 1/32
June, 1995 ............................. 1/32 1/32
September, 1995 ........................ 1/32 1/32
December, 1995 ......................... $ 3/32 $ 1/32
March, 1996 ............................ 3/32 1/16
June, 1996 ............................. 1/16 1/16
September, 1996 ........................ 1/16 1/16
<PAGE> 4
The number of shareholders of record of the Registrant's common stock is 106
as of November 5, 1996. This number includes broker/dealers and clearing
house agents. Based on information obtained through use of a "NOBO" list
obtained within the last nine months, shares known to be held beneficially by
broker/dealers and clearing house agents for the accounts of others, totaled
an additional 73 shareholders. Thus, the Registrant estimates that its
shareholder base consists of approximately 179 shareholders.
During the fiscal years ended September 30, 1996, and 1995, the Registrant had
not declared any cash dividends on its common stock. The Registrant doesn't
anticipate declaring any cash dividends on its common stock within the
foreseeable future.
In addition to its common stock, the Registrant has outstanding two Series of
warrants, namely Series A and Series B (collectively referred to as the
"Warrant(s)"). The exercise of one Warrant provides for the purchase of one
share of the Registrant's common stock. The Series A Warrant was issued to the
initial founders of the Registrant and to the purchasers of the "Unit" which
the Registrant sold in its public offering in 1988. The Series B Warrant was
distributed without cost to the holders of record on May 11, 1990, of the
Registrant's common stock.
The common stock issuable upon exercise of the Series A Warrant was included
in the registration statement filed with the SEC in the Registrant's initial
public offering. Subsequently, 198,855 Series A Warrants were exercised. The
Registrant amended the expiration date of the Series A Warrant by conforming
its terms to those of the Series B Warrant. The commencement date for exercise
of the Warrants is that date that a registration statement relating to the
common stock issuable on exercise of the Warrants has been declared effective
by the SEC. The termination date for the Series A Warrants is 45 days after
the commencement date. The termination date for the Series B Warrants is six
months after the commencement date. The exercise price for the Series A and B
Warrants is 1.60 and $4.00 per share, respectively, and subject to adjustments
for changes in capitalization, including stock splits.
At the present time, a registration statement is not in effect to allow for
the exercise of the Warrants and the Registrant does not anticipate that a
registration statement with respect to the Warrants will be filed with the SEC
in the near future.
ITEM 6. Plan of Operation
Statements regarding the Registrant's expectations as to future operations and
certain other statements presented in this Form 10-KSB Report constitute
forward looking information within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Registrant believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business operations, there can be no assurance that actual
results will not differ materially from the expectations expressed herein. In
addition to matters affecting the Registrant in general, factors which could
cause expectations to differ are, but not limited to, the following: 1)
changes in federal and/or state securities laws; 2) changes in federal and/or
state income tax laws, in particular as they relate to tax free
reorganizations; 3) economic conditions, particularly as they relate to
securities markets; and 4) the Registrant's ability to continue to have
sufficient capital available to maintain its operations.
<PAGE> 5
The Registrant did not generate any revenue from operations during each of its
last two fiscal years ending September 30, 1996, and 1995, nor has the
Registrant generated any revenue from the date of its latest fiscal year end
through the time that this report is dated. During the fiscal year commencing
on October 1, 1996, the Registrant's cash flow requirements have been met from
proceeds of its limited sale of common stock.
As discussed under Item 1 of this report, the Registrant is seeking a business
opportunity and if an appropriate situation should arise, it is the
Registrant's intent to enter into a plan of reorganization with such other
entity. In many cases the entity desiring to enter into a reorganization is
also in the development stage and is seeking funding through the sale of the
Registrant's securities in order to raise capital necessary to continue its
growth and remain or become profitable. Consequently, a relatively high degree
of risk exists in that the Registrant may not emerge from its present
financial condition even if a reorganization is entered into with another
entity.
Consideration should also be given to the fact that a reorganization would
most likely result in dilution of the current shareholder's percentage
ownership in the Registrant after the completion of such a reorganization. In
order for the Registrant to acquire a new entity, the issuance of its equity
securities to the owners of the new entity, will most likely occur. The
Registrant has no other assets other than its equity securities, to consummate
such a transaction. The Registrant may also be required to sell additional
shares of its equity securities in order to meet the needs of the entity being
acquired. Because the Registrant has no assets or operations, there can be no
assurance that the Registrant will be able to locate a profitable or suitable
business to acquire or merge with.
The Registrant had no employees during each of its last two fiscal years and
it is not anticipated that any employees will be hired during the current
fiscal year. However, if the Registrant's business operations were to change
through an acquisition of a business operation, then that businesses employees
may be retained and additional employees may be hired. At the present time,
Management is providing the Registrant with a location for its principal
executive offices on a "rent free basis" and no salaries or other form of
compensation are currently being paid by the Registrant for the time and
efforts required by management to seek an entity for the purpose of entering
into a reorganization. To the extent that the utilization of management
increases, the Registrant intends to reimburse management for its out-of-pocket
costs and to compensate management for the time required to fulfill its
responsibilities to the Registrant. During 1993, the board of directors
approved resolutions authorizing the issuance of the Registrant's common stock
as consideration for amounts advanced to the Registrant by its stockholders
and may again do so in the future.
The investigation of specific business opportunities and the negotiation,
drafting and execution of relevant agreements, disclosure documents and other
instruments will require management to devote a substantial amount of time and
attention to such efforts and will require the Registrant to incur substantial
costs for payment of accountants, attorneys and others, including management.
If a decision is made not to participate in or complete the acquisition of a
specific business opportunity, the costs thus incurred may not be recoverable
in a subsequent related investigation. Further, even if agreement is reached
for the participation in a specific business opportunity by way of investment
or otherwise, the failure to consummate the particular transaction may result
in the loss to the Registrant of all related costs incurred.
<PAGE> 6
Currently, management is not able to determine the time or resources that will
be necessary to complete the participation in or acquisition of any future
business prospect. There is no assurance that the Registrant will be able to
acquire an interest in any such prospects, products or opportunities that may
exist or that any activity of the Registrant, regardless of the completion of
any participation in or the acquisition of any business prospect, will be
profitable.
Liquidity and Capital Resources
As of September 30, 1996, the Registrant had cash assets of $5,899 and no
liabilities. The Registrant has, since September 30, 1996, incurred additional
legal, accounting and other costs to bring its financial and corporate
reporting obligations current. Management has not received any compensation
for its efforts to bring the Registrant's financial and corporate reporting
obligations current. It is anticipated that the Registrant will incur more
cost including legal and accounting fees, in the location, evaluation and
completion of a reorganization, should such occur. As additional time
commitments are being given to the Registrant by management or costs
associated therewith are incurred and paid by management, the Registrant may
reimburse such costs through the issuance of its equity securities or enter
into promissory notes, for such services and costs incurred.
Results of Operations
The Registrant has not engaged in any business operations, other than as
previously disclosed herein, and no revenue was generated by the Registrant
during the year ended September 30, 1996. Furthermore, it is not anticipated
that any revenue will be generated until a business reorganization with an
operating entity has occurred.
ITEM 7. FINANCIAL STATEMENTS
Commencing on the following page, the Registrant has presented its financial
statements as of September 30, 1996, and for the years ended September 30,
1996 and 1995. Included as a part of these financial statements is the opinion
of the Registrant's independent certified public accountants.
<PAGE>
<PAGE> 7
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
Gemstar Enterprises, Inc.
We have audited the accompanying balance sheet of Gemstar Enterprises, Inc. (a
development stage company) as of September 30, 1996 and the related statements
of operations, stockholders' equity, and cash flows for the years ended
September 30, 1996 and 1995 and for the period from April 10, 1993 (date of
inception as a development stage company) through September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 Gemstar Enterprises, Inc. as
of September 30, 1996, and the results of its operations and its cash flows
for the years ended September 30, 1996 and 1995 and from April 10, 1993
through September 30, 1996, in conformity with generally accepted accounting
principles.
HANSEN, BARNETT & MAXWELL
/S/ Hansen, Barnett & Maxwell
Salt Lake City, Utah
November 8, 1996
<PAGE>
<PAGE> 8
Gemstar Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
September 30, 1996
ASSETS
Current Assets:
Cash in bank $ 5,899
Pre-paid expenses 250
Refundable deposits 250
-----------
Total Current Assets 6,399
-----------
TOTAL ASSETS $ 6,399
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ -0-
-----------
Stockholders' Equity:
Preferred Stock, none outstanding -0-
Common Stock, 10,758,614 shares outstanding 10,759
Additional paid-in capital 914,285
Deficit accumulated prior to the development stage <905,548>
Deficit accumulated during the development stage <13,097>
-----------
Total Stockholders' Equity $ 6,399
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,399
===========
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From the Date
of Inception
as a Development
Stage Company
(April 10, 1993)
For the Years Ended Through
September 30, September 30,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Revenue $ -0- $ -0- $ -0-
-------- -------- ---------
Expenses:
Office Supplies 133 -0- 133
Filing Fees 510 300 1,477
Cost of public entity 1,423 315 2,003
Travel 286 -0- 299
Taxes, non-income -0- -0- 127
Professional fees 3,313 -0- 3,313
Impairment of assets 5,333 -0- 5,333
Amortization -0- -0- 412
-------- -------- ---------
Total Expenses 10,998 615 13,097
-------- -------- ---------
NET LOSS $<10,998> $ <615> $ <13,097>
======== ======== =========
NET LOSS PER SHARE $ 0.00 $ 0.00 $ 0.00
======== ======== =========
Number of common shares used
in per share computation 10,758,614 10,758,614 10,758,614
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit Deficit
Accum. Accum. Total
Prior to the During the Due Stockholders'
Common Stock Paid-in Development Development From Equity
Shares Amount Capital Stage Stage Officer <Deficit>
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at inception
of Development Stage,
April 10, 1993 1,698,864 $ 1,699 $812,150 $<905,548> $ -0- $ -0- $<91,699>
Common stock valued
at $.02 per share
for assumption of
liabilities, amounts
due shareholder and
receivable from
officer
August 16, 1993 5,000,000 5,000 95,000 -0- -0- <7,783> 92,217
Expenses paid by
officer, 1994 -0- -0- -0- -0- -0- 966 966
Net Loss from the
start of the
Development Stage
through
September 30, 1994 -0- -0- -0- -0- <1,484> -0- <1,484>
--------- ------- -------- -------- -------- ------- --------
Balance,
September 30, 1994 6,698,864 6,699 907,150 <905,548> <1,484> <6,817> -0-
Common stock issued
for cash at $.02 per
share
October 15, 1994 59,750 60 1,135 -0- -0- -0- -0-
Loan to officer -0- -0- -0- -0- -0- <1,195> <1,195>
Expenses paid by
officer -0- -0- -0- -0- -0- 615 615
Collection of loan
from officer,
September 30, 1995 -0- -0- -0- -0- -0- 7,397 7,397
Net Loss for the
year ended
September 30, 1995 -0- -0- -0- -0- <615> -0- <615>
--------- ------- -------- -------- -------- ------- --------
Balance,
September 30, 1995 6,758,614 6,759 908,285 <905,548> <2,099> -0- 7,397
Common stock issued
for cash at $.0025
per share,
August 26,1996 4,000,000 4,000 6,000 -0- -0- -0- 10,000
Net Loss for the
year ended
September 30, 1996 -0- -0- -0- -0- <10,998> -0- <10,998>
--------- ------- -------- -------- -------- ------- --------
Balance,
September 30, 1996 10,758,614 $10,759 $914,285 $<905,548> $<13,097> $ -0- $ 6,399
========== ======= ======== ========= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 11
Gemstar Enterprises, Inc.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
From the Date
of Inception
as a Development
Stage Company
(April 10, 1993)
For the Years Ended Through
September 30, September 30,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Cash Flows from
Operating Activities:
Net Loss from Operations $<10,998> $ <615> $ <13,097>
Amortization -0- -0- 412
Expenses paid by officer -0- 615 1,581
Increase in pre-paid expenses
and refundable deposits <500> -0- <500>
Decrease in accounts payable -0- -0- <622>
-------- -------- ---------
Net Cash Used In
Operating Activities <11,498> -0- <12,226>
-------- -------- ---------
Cash Flows from
Financing Activities:
Proceeds from sale of
common stock 10,000 1,195 11,195
Advances from officer -0- 603 603
Collection of receivable
from officer -0- 7,397 7,397
Advances to officer <603> <1,195> <1,798>
-------- -------- ---------
Net Cash Provided by
Financing Activities 9,397 8,000 17,397
-------- -------- ---------
Net Increase <Decrease> In Cash <2,101> 8,000 5,171
Cash at beginning of period 8,000 -0- 728
-------- -------- ---------
Cash at end of period $ 5,899 $ 8,000 $ 5,899
======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 12
GEMSTAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Corporate History
Gemstar Enterprises, Inc. (the "Company") was incorporated in the state of
Nevada in 1987 as North Star Petroleum, Inc. and its name was changed to
Gemstar Enterprises, Inc. in May 1990. The Company commenced its business
operations in 1988, being a working interest owner in several producing oil
and gas properties which the Company disposed of in June 1991. In 1990, the
Company acquired real property with the intent of mining such property;
however, only preliminary activities were undertaken before this property was
sold in April 1993. The results of disposing of both its oil and gas
operations and its real property resulting in a net loss of $208,820, which
amount is a part of the $905,548 deficit accumulated prior to the Company
being considered a development stage enterprise for accounting purposes. Since
the disposition of its real property in April 1993, the Company has not
engaged in any business operations and its activities have been confined to
raising capital for the purpose of seeking to acquire an existing operating
business.
During the Company's last fiscal year, ending September 1996, by a majority
vote of the Company's stockholders, an amendment to the Company's articles of
incorporation was approved which changed the par value of the Company's common
stock from $0.02 per share to $0.001 per share. The Statement of Stockholders'
Equity has been retroactively restated for the effects of this change for all
periods presented.
Use of Estimates
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, liabilities and equity at the date
of the financial statements and the amounts of expenses reported during the
periods presented. Actual results could differ from those estimates.
Loss per Common Share
The loss per common share has been computed using the number of common shares
outstanding as of the Company's fiscal year ended September 1996. Inasmuch as
the Company is a development stage enterprise, using the number of common
shares outstanding as of September 1996, rather than the weighted average
number of common shares outstanding during each of the periods presented,
provides a more conservative approach to the loss per share computation.
NOTE 2 - STOCKHOLDERS' EQUITY
The Company has 551,145 Series "A" warrants outstanding which entitle the
holders thereof to purchase 551,145 shares of the Company's common stock at
$1.60 per share. The Company also has 548,864 Series "B" warrants outstanding
which entitle the holders thereof to purchase 548,864 shares of the Company's
common stock at $4.00 per share. In order for the holders of the warrants to
exercise these rights to acquire shares of the Company's common stock, the
<PAGE> 13 GEMSTAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - STOCKHOLDERS' EQUITY (continued)
Company must file a "registration statement" with the Securities and Exchange
Commission and have such registration statement declared effective.
Additionally, the Company must comply with the security laws of the state in
which the holder of the warrants resides, prior to the holder being able to
exercise the right to acquire the Company's common stock through the exercise
of these warrants.
The expiration date of both the Series "A" and the Series "B" warrants is
computed based on the effective date of the previously mentioned registration
statement. Thus, these warrants do not expire and remain outstanding until the
Company files a registration statement which is declared "effective" or if the
Company elects to exercises its right to redeem both Series of warrants, it
may do so after giving 30 days written notice of its intent, at price of $0.02
per warrant. At the present time, management of the Company has indicated that
it does not have any intention of filing a registration statement or of
redeeming its outstanding warrants.
The Company's articles of incorporation authorize the issuance of 5,000,000
shares of preferred stock. The Board of Directors have the authority to
designate dividend, liquidation, voting and any other rights which may be
given to the holders of the preferred stock. At the present time, management
of the Company has indicated that it does not have any intention of issuing
any of the Company's preferred stock.
In August of 1996, the Company sold to four individuals, including the
Company's sole officer and director, 4,000,000 shares of its $.001 par value
common stock at $0.0025 per share, receiving $10,000 in cash.
NOTE 3 - RELATED PARTY TRANSACTIONS
Prior to the end of the Company's fiscal year ended September 1996, the
Company paid-off a $603 payable to a Company officer. This payable came about
as a resulted of a $8,000 payment which this officer made to the Company as a
repayment of amounts previously advanced to such officer by the Company.
In August of 1996, the Company's sole officer and director purchased 1,500,000
shares of the Company's common stock at a price of $0.0025, for total
consideration of $3,750. These shares are restricted as to their resale and
require that they be registered with the Securities and Exchange Commission or
that an exemption from registration exists, prior to them being sold by this
individual.
NOTE 4 - APPLICATION OF NEW ACCOUNTING PRINCIPLE
The Financial Accounting Standards Board issued Statement Number 121
(Impairment of Long Lived Assets and of Long Lived Assets to be Disposed Of)
which requires that long-lived assets be reviewed for impairment. In
performing the review, the entity must estimate the future cash flows expected
to result from the use of the asset being reviewed. The Company acquired
<PAGE> 14
GEMSTAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 - APPLICATION OF NEW ACCOUNTING PRINCIPLE (continued)
computer software ("Software") for the purpose of assisting management in
filing reports electronically with the Securities and Exchange Commission.
Even though management believes that the usefulness of the Software is for a
period greater than one year, the Software does not generate any cash flow for
the Company, in that the Company does not conduct any business operations.
Consequently, the Company has charged to expense the total cost associated
with this purchase. The amount of the impairment charged to expense was
$5,333.
NOTE 5 - DEFERRED INCOME TAXES
Income tax accruals are based on taxable losses incurred each period. The
deferred income taxes resulted from the potential future benefit of operating
loss carry forwards. A valuation allowance has been provided to reduce the
deferred tax asset to zero because realization of this operating loss carry
forward is not likely. The availability of operating loss carry forwards to
offset future taxable income may be substantially limited due to tax
limitations relating to changes in ownership. Accordingly, there was no
current or deferred benefit from the losses from operations. At September 30,
1996, the Company had $102,174 of operating loss carry forwards that expire in
2007 through 2011 if not used.
The components of the net deferred tax asset at September 30, 1996 are as
follows:
Operating loss carry forwards $ 15,326
Less: Valuation allowance $<15,326>
Net Deferred Tax Asset $ -0-
<PAGE>
<PAGE> 15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Director of Registrant
Denny W. Nestripke, age: 49, serves the Registrant as its only director and
in the additional capacities of President (CEO), Secretary and Treasurer
(CFO). Mr. Nestripke is also a director of Municipal Systems, Inc., a
currently inactive public company. Mr. Nestripke has not been subject to any
legal proceedings during the past five years and he, nor any business in which
he is or was involved, has filed a petition for bankruptcy.
The term of directorship is determined by the Registrant's by-laws and is for
the period of one year and longer, if no other individual is qualified and
elected to serve in the capacity of a director. The positions of president,
secretary and treasurer are held for a period of time at the discretion of the
Registrant's board of directors. Mr. Nestripke has held the positions referred
to above from April 10, 1993, to the present time. Prior to April 10, 1993,
Mr. Nestripke served as president, treasurer and director of the Registrant
from the Registrant's inception, in October of 1987 through December of 1991,
or shortly after the Registrant disposed of its oil and gas properties.
Mr. Nestripke is licensed as a certified public accountant in California and
Utah. Since November, 1995, in addition to pursuing his business obligations
related to the Registrant, Mr. Nestripke has assisted in the reorganization of
another business entity and has maintained his own investment portfolio. From
September, 1992, through November, 1995, Mr. Nestripke served as Controller
and Chief Accounting Officer of Magnum Petroleum, Inc., an oil and gas concern
listed on the American Stock Exchange. Prior to September, 1992, and for a
period of approximately 13 years, Mr. Nestripke was the sole proprietor of a
certified public accountant firm, with emphasis on auditing and the
preparation of financial statements for small capitalized corporations seeking
financing through a public offering. His services related to the financial
information contained in a registration statement filed with the Securities
and Exchange Commission and the subsequent periodic reporting pursuant to the
Exchange Act of 1934.
ITEM 10. EXECUTIVE COMPENSATION
As set forth in the compensation table which follows, the Registrant has not
paid any compensation, either in cash or otherwise, to its only officer and
director or any other individual or entity for the last three completed fiscal
years. Furthermore, no compensation has been paid and it is not expected that
any compensation will be paid to Mr. Nestripke during the Registrant's fiscal
year ending September 30, 1997.
<PAGE> 16
Summary Compensation Table
- --------------------------
<TABLE>
<CAPTION> Long Term Compensation
----------------------
Awards
Other Restricted Payouts
Name and Annual Compensation Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Denny W. Nestripke 1996 $-0- -0- -0- -0- -0- -0- -0-
CEO and CFO 1995 -0- -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners:
The table below lists those individuals or entities known to the Registrant to
be the beneficial owners of five percent [5%] or more of the Registrant's
common stock.
Amount and
Name and Address Nature of
of the Beneficial Percent
Title of Class Beneficial Owner Owner of Class
- -------------- ---------------- ----------- --------
Common Stock Denny W. Nestripke 3,890,750 35.4 %
P. O. Box 3854
Palm Desert, CA
Common Stock Suzanna Call 900,000 8.4 %
304 West 770 North
Kaysville, UT
Common Stock Wendy Harper 800,000 7.4 %
87 North 2080 South
St. George, UT
Common Stock Shanna Atkinson 800,000 7.4 %
1218 North 250 West
American Fork, UT
Security Ownership of Management:
Amount and
Name and Address Nature of
of the Beneficial Percent
Title of Class Beneficial Owner Owner of Class
- -------------- ---------------- ---------- --------
Common Stock Denny W. Nestripke 3,890,750 35.4 %
P. O. Box 3854
Palm Desert, CA
The Registrant does not have any options, warrants (except for those Warrants
discussed under Item 5. of this report), rights or other conversion privileges
outstanding. Thus, the number of shares stated in the above tables include all
shares which any of these individuals own or have a right to acquire within
sixty days of this report. None of the above named individuals hold any shares
pursuant to a voting trust or similar agreement.
<PAGE> 17
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August of 1996, the Registrant sold 4,000,000 shares of its common stock to
four individuals at a price of $0.0025 per share. One of the individuals
participating in this purchase was Mr. Nestripke, an officer and director of
the Registrant, who purchased 1,500,000 shares for $3,750.00 in cash
consideration. This transaction, as it relates to Mr. Nestripke, was not
undertaken on an independent basis and could not be considered an arms-length
transaction. These shares have not been registered and Mr. Nestripke, as well
as the other purchasers, did not received any rights which would allow them to
compel the Registrant to register these shares. Thus, the resale of these
shares is subject to a current registration statement being in effect in
regards to such shares or that an exemption from registration, such as Rule
144 promulgated under of the Securities Act of 1933, as amended, be available
to the purchasers.
Mr. Nestripke is the Registrant's only director and officer and is the owner
of 35.4 % of the Registrant's issued and outstanding voting securities.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the last quarter of the period
being covered by this report.
The following page contains an Index of Exhibits as called for by this Item of
the Registrant's Form 10-KSB Report.
Index of Exhibits:
Number 3: Initial Articles of Incorporation and By-laws
Incorporated by reference to the Registrant's registration statement on Form
S-18, File No. 33-19980-D
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Registrant's Form 10-KSB, for the year ended
September 30, 1989
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Registrant's Form 10-QSB, for the quarter
ended December 31, 1995
Number 3: Amended Articles of Incorporation
Incorporated by reference to the Registrant's Form 10-KSB, for the year ended
September 30, 1995
Number 4: Warrant Agent Agreement
Incorporated by reference to the Registrant's registration statement on Form
S-18, File No. 33-19980-D
Number 4: First Amendment to Warrant Agent Agreement
Incorporated by reference to the Registrant's Form 10-QSB, for the quarter
ended December 31, 1995
<PAGE> 18
Number 4: Second Amendment to Warrant Agent Agreement
Incorporated by reference to the Registrant's Form 10-KSB, for the year ended
September 30, 1995
Number 11: Computation of Loss per Share
Refer to footnote 1 of the financial statements contained in this Form 10-KSB
Report
Number 22: Consent resolution adopted by shareholders to amend the Articles of
Incorporation
Incorporated by reference to the Registrant's Form 10-KSB, for the year ended
September 30, 1995
Number 27: Financial Data Schedule
Included in this Report as Exhibit 27
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act; the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
GEMSTAR ENTERPRISES, INC.
By: /S/Denny W. Nestripke
Denny W. Nestripke
Chief Executive Officer and
Chief Financial Officer
Date: November 19, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
GEMSTAR ENTERPRISES, INC.
By: /S/Denny W. Nestripke
Denny W. Nestripke
Director
Date: November 19, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000829323
<NAME> GEMSTAR ENTERPRISES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,899
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,399
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,399
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 925,044
<OTHER-SE> (918,645)
<TOTAL-LIABILITY-AND-EQUITY> 6,399
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 10,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,998)
<EPS-PRIMARY> (0.00)
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