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 year ended December 31, 1998 Commission File No. 33-30476-D
RENEGADE VENTURE (NEV.) CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 84-1108499
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
90 Madison Street, Suite 707
Denver, Colorado 80206 (303) 355-3000
(Address of Principal's Executive Offices) (Registrant's Telephone No.
incl. area code)
Securities registered pursuant to
Section 12(b) of the Act: NONE
Securities registered pursuant to
Section 12(g) of the Act: Common stock, $.001 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes No X
Indicate by check mark if no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is 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.
Yes X No
The registrant's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the 122,875 shares of common stock of the
registrant held by non-affiliates on December 31, 1998, was not determinable.
At December 31, 1998, a total of 320,000 shares of common stock were
outstanding.
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TABLE OF CONTENTS
PART I
Item 1. Description of Business .......................................... 2
Item 2. Description of Property .......................................... 8
Item 3. Legal Proceedings ................................................ 8
Item 4. Submission of Matters to a Vote of Security Holders .............. 8
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters ............................................ 8
Item 6. Management's Discussion and Analysis or Plan of Operation......... 9
Item 7. Financial Statements ............................................. 10
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ......................... 10
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act .............. 10
Item 10. Executive Compensation ........................................... 11
Item 11. Security Ownership of Certain Beneficial Owners and Management ... 12
Item 12. Certain Relationships and Related Transactions ................... 13
PART IV
Item 13. Exhibits and Reports on Form 8-K ................................. 13
Index to Financial Statements .................................... 14
Financial Statements ............................................. F-1
PART I
Item 1. DESCRIPTION OF BUSINESS.
Background
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Renegade Venture (Nev.) Corporation, a Nevada corporation ("Company"), is
in the development stage in accordance with Financial Accounting Standards Board
Standard No. 7, and is the successor by merger to Renegade Venture Corporation,
a Colorado corporation ("Renegade Colorado"). The merger occurred effective
September 22, 1997, for the sole purpose of reincorporating the Company from the
State of Colorado to the State of Nevada. The Company has not been operational,
other than occasionally searching for a business or venture to acquire, as
described below, or had revenues other than interest income since its inception.
On May 4, 1990, the Company completed a small public offering of its securities
made pursuant to a registration statement of Form S-18, selling 5,000,000 of
7,500,000 units offered, at the price of $.02 per unit. In this offering the
Company realized net proceeds of $61,476 on gross proceeds of $100,000 raised in
the offering. Each unit sold consisted of TWO shares of common stock of the
Company, $.0001 par value, and ONE Class A Common Stock Purchase Warrant,
exercisable until December 7, 1991, at a price of $.02 to purchase one share of
common stock and one Class B Common Stock Purchase Warrant. All of the Class A
and Class B warrants expired without having been exercised.
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Forward-Looking Information
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This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of its management as well
as assumptions made by and information currently available to its management.
When used in this report, the words "anticipate", "believe", "estimate",
"expect", "intend", "plan", and similar expressions, as they relate to the
Company or its management, are intended to identify forward-looking statements.
These statements reflect management's current view of the Company with respect
to future events and are subject to certain risks and uncertainties. In
particular, should the Company fail to raise funding to originate a business, or
should any such business originated fail, or should the Company fail in the
alternative to acquire an operating company which ultimately is successful, it
is unlikely that the Company's stock will have any value or that any benefits
will flow from ownership of the Company's stock. The common stock of the Company
should be viewed at this time as a high risk investment, and no person should
invest in the Company's stock unless able to comfortably afford the loss of the
entire sum invested. The Company does not intend to update these forward-looking
statements.
Current Business
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The Company has no significant assets or liabilities and is in the
development stage. The Company intends to either raise funds to originate a
business or, alternatively, enter into a business combination with one or more
as yet unidentified privately held businesses. Management believes that the
Company will be attractive to privately held companies interested in becoming
publicly traded by means of a business combination with the Company, without
offering their own securities to the public. The Company intends to pursue
negotiations with qualified candidates.
The Company will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business. Management's discretion is, as a practical matter, unlimited in the
selection of a combination candidate. The Company's search generally will be
directed toward small to medium-sized companies. The Company has not entered
into any agreement or understanding of any kind with any person regarding a
business combination.
PRE-COMBINATION ACTIVITIES. The Company's common stock is publicly quoted
on the OTC Bulletin Board, and it has insignificant assets and liabilities. With
these characteristics, management believes that the Company will be attractive
to privately held companies interested in becoming publicly traded by means of a
business combination with the Company, without offering their own securities to
the public. The Company intends to pursue negotiations with qualified candidates
after effectiveness of this Registration Statement.
The term "business combination" (or "combination") means the result of (i)
a statutory merger or consolidation involving the Company and a privately held
business, (ii) the exchange of securities of the Company for the assets or
outstanding equity securities of a privately held business, (iii) the merger or
consolidation of a privately held business into or with a wholly owned
subsidiary of the Company formed for that purpose, (iv) the sale of securities
of the Company for cash or other value to a business entity or individual, and
similar transactions.
A combination may be structured as a merger, consolidation, exchange of the
Company's Common Stock for assets or the outstanding stock of the business
acquired, sale of Common Stock for cash, or any other form which will result in
the combined entity being a publicly held corporation. A sale of Common Stock
for cash or an exchange of Common Stock for assets or stock may be made to an
individual or a business entity. It is not likely that any proposed combination
will be subject to the approval of the Company's shareholders. Pending
negotiation and consummation of a combination, the Company anticipates that it
will have no business activities or sources of revenues and will incur no
significant expenses or liabilities other than expenses related to this
Registration Statement or to the negotiation of a combination.
The Company will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business, including service, finance, mining, manufacturing, real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other. Management's discretion is, as a practical matter,
unlimited in the selection of a combination candidate. The Company's search
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generally will be directed toward small to medium-sized companies. Management of
the Company will seek combination candidates in the United States and other
countries, as available time permits, through existing associations and by word
of mouth. The Company also may employ the services of business brokers or other
intermediaries.
The Company has not entered into any agreement or understanding of any kind
with any person regarding a business combination. There can be no assurance that
the Company will be successful in locating a suitable combination candidate or
in concluding a business combination on terms acceptable to the Company. The
Company's Board of Directors has not established a time limitation by which it
must consummate a suitable combination; however, if the Company is unable to
consummate a suitable combination within a reasonable period, such period to be
determined at the discretion of the Company's Board of Directors, the Board of
Directors will probably recommend its liquidation and dissolution.
The Company will participate in a business combination only after the
negotiation and execution of a written agreement. Although the terms of any such
agreement cannot be predicted, such agreements generally provide for
representations and warranties by the various parties thereto, conditions of
closing, post-closing covenants and restrictions, reciprocal indemnities,
remedies upon default and other terms. As a general matter, management
anticipates that the Company will enter into a letter of intent with the
management, principals or owners of a prospective combination candidate. Such a
letter of intent will set forth the terms of the proposed acquisition but will
not bind the Company to consummate it. Execution of a letter of intent will by
no means indicate that consummation of a combination is probable. The Company
will not be bound unless and until it executes a definitive agreement concerning
the combination, as described in this paragraph, and then only if the Company
has no contractual right to terminate the agreement on specified grounds.
COMBINATION SUITABILITY STANDARDS. The Company will generally seek to avoid
companies whose business appears to be fad-oriented or otherwise incapable of
sustained long-term growth. In seeking combination candidates, management
anticipates that the most desirable combination candidates will possess the
following attributes:
1. Strong operating revenues, or in the process of launching a business
where contracts, purchase orders or other existing relationships are
expected to generate strong revenues.
2. Experienced management in place or ready to joint the management team.
Management also may consider any or all of the following factors, among
other possible factors, no one of which will be determinative:
3. If the candidate is an operating company, its financial track record.
4. The candidate's economic prospects, such as potential for significant
growth in revenues and earnings, proprietary technology and rights,
strength of marketing concept and size of potential market.
5. The candidate's capital requirements in light of its access to
expansion capital.
6. Special risks associated with the candidate and its industry or
industry segment.
7. Perceived desirability of the candidate (or its industry or industry
segment) or its product(s) to investors and investment bankers in the
public capital markets.
8. Current and potential future competition.
Prior to consummation of any combination (other than a mere sale by the
Company of controlling interest in its outstanding stock) the Company will
require that the business to be combined provide the Company at the least with
an audited balance sheet as of the most recent fiscal year end and statements of
operations, cash flows and changes in stockholders' equity for the two most
recent fiscal years, audited by certified public accountants acceptable to the
Company's management. Such financial statements must be adequate to satisfy the
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Company's reporting obligations under Section 15(d) or 13 of the Exchange Act.
Following consummation of a combination, the Company will file a current report
on Form 8-K with the Commission which discloses among other things the date and
manner of the combination, the assets and consideration involved, the identity
of the person or persons from whom the assets or other property was acquired,
changes in management and biographies of the new officers and directors,
principal shareholders following the combination, and will provide, if required,
the financial statements referenced above.
POST-COMBINATION ACTIVITIES. Following consummation of a combination, the
Company anticipates that control of the Company will change as a result of the
issuance of additional Common Stock to the shareholders of the business(es)
acquired in the combination. Once such control has been assumed, it is likely
that the new controlling shareholders will call a meeting for the purpose of
replacing the incumbent directors of the Company with candidates of their own,
and that the new directors will then replace the incumbent officers with their
own nominees. Current management will not object to such replacements when duly
made.
POTENTIAL INSIDER SALES OF STOCK. No officer, director or affiliate of the
Company currently has any intention of selling shares owned by them in the
Company to any person in connection with any business opportunity acquired by
the Company. However, no law, rule or regulation, and no bylaw or charter
provision prevents any such persons from thus actively negotiating or
consummating such a sale of their shares. Company shareholders will not be
afforded any opportunity to review or approve any buyout of shares held by an
officer, director or other affiliate, should such a buyout occur, and
shareholders generally will not be afforded a similar opportunity to sell shares
in connection with such a transaction.
USE OF CONSULTANTS. The Company has had no discussions, and has entered
into no agreements or understandings, with any consultant. The Company's
officers and directors have not in the past used any particular consultant(s) on
a regular basis and have no plan to recommend that any particular consultant(s)
be engaged by the Company on any basis. No particular criteria regarding
experience, services, term of service, or the like has been considered or
developed regarding the engagement of consultant(s). While the Company currently
has no plan to hire or engage consultant(s) and management believes that a
desirable business opportunity can be located and acquired by management, it is
possible that management will find it necessary to hire or pay consultants on
some basis in relation to an acquisition, as discussed in the following
paragraph.
ACQUISITION-RELATED COMPENSATION. It is possible that compensation in the
form of common stock, options, warrants or other securities of the Company, cash
or any combination thereof, may be paid to various persons in connection with an
acquisition by the Company. Such persons may include officers, directors and
promoters of the Company and any of their respective affiliates, finders,
consultants or other persons. Any payments of cash would be made by the business
acquired or persons affiliated or associated with it, since the Company has no
cash. It is possible that the payment of such compensation may become a factor
in any negotiations for the Company's acquisition of a business opportunity. Any
such negotiations and compensation may present conflicts of interest between the
interests of persons seeking compensation and those of the Company's
shareholders, and there is no assurance that any such conflicts will be resolved
in favor of the Company's shareholders.
Possible Origination of a Business
- ----------------------------------
The Board of Directors has left open the possibility that, instead of
seeking a business combination, the Company may instead raise funding in order
to originate an operating business, which may be in any industry or line of
business, and could involve the Company's origination of a start-up business,
purchase and development of a business already originated by third parties,
joint venture of a new or existing business, or take any other lawful form. It
is also possible that the Company may engage in one or more combinations, as
discussed above, and originate a business in addition. Potential shareholders
should consider that management has the widest possible discretion in choosing a
business direction for the Company.
Any funds needed to originate and develop a business would almost certainly
be raised from the sale of the Company's securities, since the Company lacks the
creditworthiness to obtain a loan. Management does not believe that the
principal shareholders, directors or executive officers of the Company would be
willing to guarantee any debt taken on, and obtaining a loan without personal
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guarantees is unlikely. Capital could possibly be raised from the sale of debt
instruments convertible into common stock upon the occurrence of certain defined
events, but no such funding has been offered. The Company has no current plans
to offer or sell its securities, but would be agreeable do so if a worthy
business opportunity presents itself and adequate funding then appears to be
available.
State Securities Law Considerations
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Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
with respect to a "covered security." The term "covered security" is defined in
Section 18 to include, among other things, transactions which are exempt from
registration under the Securities Act of 1933 pursuant to Section 4(1), which
exempts transactions by "any person not an issuer, underwriter or dealer," (that
is, secondary resales, such as market trades) provided the issuer of the
security files reports with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act and is timely in those filings. In other words, Section 18
defines a covered security to include market trades and other secondary
transactions by shareholders in outstanding securities, even if the issuer is a
"blank check" company, provided the issuer is a reporting company.
While subparagraph (c) of Section 18 as amended preserves the authority of
the states to require certain limited notice filings and to collect fees as to
certain categories of covered securities (including Section 4(1) secondary
transactions in the securities of reporting companies), a state may not
"directly or indirectly prohibit, limit, or impose conditions based on the
merits of such offering or issuer, upon the offer or sale of any (covered)
security." This provision prohibits state registration or qualification
requirements, other than requiring certain limited notice filings, of trading in
the securities of blank check companies which are SEC reporting companies. The
Company will comply with any such state limited notice filings as appropriate.
No Investment Company Act Regulation
- ------------------------------------
Prior to completing a combination, the Company will not engage in the
business of investing or reinvesting in, or owning, holding or trading in
securities, or otherwise engaging in activities which would cause it to be
classified as an "investment company" under the 1940 Act. To avoid becoming an
investment company, not more than 40% of the value of the Company's assets
(excluding government securities and cash and cash equivalents) may consist of
"investment securities," which is defined to include all securities other than
U.S. government securities and securities of majority-owned subsidiaries.
Because the Company will not own less than a majority of any assets or business
acquired, it will not be regulated as an investment company. The Company will
not pursue any combination unless it will result in the Company owning at least
a majority interest in the business acquired.
Competition
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The Company will be in direct competition with many entities in its efforts
to locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
entities will possess greater financial resources and will be able to assume
greater risks than those which the Company, with its limited capital, could
consider. Many of these competing entities will also possess significantly
greater experience and contacts than the Company's management. Moreover, the
Company also will be competing with numerous small public shell companies for
such opportunities.
Risk Factors
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At this time the shares of the Company are speculative and involve a high
degree of risk, for the reasons following. The Company is in the development
stage with no operations or revenues, thus there are no financial results upon
which anyone may base an assessment of its potential. No combination candidate
has been identified for acquisition by management, nor has any determination
been made as to any business for the Company to enter, and shareholders will
have no meaningful voice in any such determinations. There is no assurance that
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the Company will be successful in completing a combination or originating a
business, nor that the Company will be successful or that its shares will have
any value even if a combination is completed or a business originated.
The Company's officers and directors, who serve only on a part-time basis,
have had limited experience in the business activities contemplated by the
Company, yet the Company will be solely dependent on them. The Company lacks the
funds or other incentive to hire full-time experienced management. Each of the
Company's management members has other employment or business interests to which
he devotes his primary attention and will continue to do so, devoting time to
the Company only on an as-needed basis. Moreover, members of management are
involved in other companies also seeking to engage in a combination, and
conflicts of interest could arise in the event they come across a desirable
combination candidate. No assurance exists that all or any such conflicts will
be resolved in favor of the Company.
After completion of a combination, the current shareholders of the Company
may experience severe dilution of their ownership due to the issuance of shares
in the combination. Any combination effected by the Company almost certainly
will require its existing management and board members to resign, thus
shareholders have no way of knowing what persons ultimately will direct the
Company and may not have an effective voice in their selection.
Employees
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The only employees of the Company currently are its officers, none of which
provide full time services to the Company. It is not expected that the Company
will have or need additional employees except as a result of completing a
combination.
Conflicts of Interest
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Certain officers and directors of the Company are affiliated with other
companies having a similar business plan to that of the Company ("affiliated
companies") which may compete directly or indirectly with the Company for
combination candidates. The Company has not identified a specific business area,
industry or industry segment in which it will seek combination candidates. The
Company has made a determination that it will not concentrate its search for
combination candidates in any particular business, industry or industry segment,
since any such concentration is potentially limiting and confers no advantage to
the Company. Certain specific conflicts of interest may include those discussed
below.
1. The interests of any affiliated companies from time to time may be
inconsistent in some respects with the interests of the Company. The nature of
these conflicts of interest may vary. There may be circumstances in which an
affiliated company may take advantage of an opportunity that might be suitable
for the Company. Although there can be no assurance that conflicts of interest
will not arise or that resolutions of any such conflicts will be made in a
manner most favorable to the Company and its shareholders, the officers and
directors of the Company have a fiduciary responsibility to the Company and its
shareholders and, therefore, must adhere to a standard of good faith and
integrity in their dealings with and for the Company and its shareholders.
2. The officers and directors of the Company serve as officers and/or
directors of one or more affiliated companies and may serve as officers and
directors of other affiliated companies in the future. The Company's officers
and directors are required to devote only so much of their time to the Company's
affairs as they deem appropriate, in their discretion. As a result, the
Company's officers and directors may have conflicts of interest in allocating
their management time, services, and functions among the Company and any current
and future affiliated companies which they may serve, as well as any other
business ventures in which they are or may become involved.
3. The affiliated companies may compete directly or indirectly with that of
the Company for the acquisition of available, desirable combination candidates.
Such conflicts are not expected to be resolved through arm's-length negotiation,
but rather in the discretion of management members. While any such resolution
will be made with due regard to the fiduciary duty owed to the Company and its
shareholders, there can be no assurance that all potential conflicts can be
resolved in a manner most favorable to the Company as if no conflicts existed.
Members of the Company's management who also are members of management of
another affiliated company will also owe the same fiduciary duty to the
shareholders of each such affiliated company. Absent factors unique to the
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Company or an affiliated company which make it more or less desirable to a
potential combination candidate (such as age, name, capitalization, state of
domicile, etc.), management expects that in the event of a direct conflict, any
combination candidate will be presented to the Company and any applicable
affiliated companies in the order they were organized.
As a practical matter, such potential conflicts could be alleviated only if
each previously or contemporaneously formed affiliated company either is not
seeking a combination candidate, has already identified a combination candidate,
is seeking a combination candidate in a specifically identified business area,
or is seeking a combination candidate that would not otherwise meet the
Company's selection criteria. In general, the Company will be given priority
over subsequently formed affiliated companies with regard to its initial
acquisition of a combination candidate, assuming that it meets the investment
criteria of the Company. It is likely, however, that the combination criteria of
the Company and any affiliated companies are virtually identical as a practical
matter and that this will remain true. In the final analysis, the Company and
its shareholders ultimately must rely on the fiduciary responsibility owed to
them by the Company's officers and directors.
Item 2. DESCRIPTION OF PROPERTY.
The Company neither owns nor leases any real estate or other properties.
The Company's offices are located in the offices of Brasher and Company, counsel
to the Company, and are provided at no charge. This arrangement will continue
until the Company raises funding to originate a business or completes an
acquisition of an operating business, in which latter event the offices of the
Company undoubtedly will be the same as those of the acquired company.
Item 3. LEGAL PROCEEDINGS.
The Company is not involved in any threatened or pending legal proceeding.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security shareholders for the year
ended December 31, 1998, and no meeting of shareholders was held.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Market Information
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During the fiscal year ended December 31, 1998, the Common Shares were
quoted without price (name only) under symbol "RDVN" on the OTC
(over-the-counter) Electronic Bulletin Board operated by the National
Association of Securities Dealers, Inc., but few transactions have taken place,
and there is no market for the Common Shares at this time. The common shares are
quoted at a bid price of $.01, with no asked price. There is unlikely to be an
active market for the shares until a combination takes place. There is no
assurance that an active market will arise in the Common Shares in the future.
Holders
- -------
The Company had approximately 51 shareholders of record as of December 31,
1998, which number may not include shareholders whose shares are held in street
or nominee names.
Dividends
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The Company does not expect to pay a cash dividend upon its capital stock
in the foreseeable future. Payment of dividends in the future will depend on the
Company's earnings (if any) and its cash requirements at that time.
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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Background
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The Company was organized for the purpose of creating a corporate vehicle
to seek, investigate and, if such investigation warrants, acquire an interest in
business opportunities presented to it by persons or firms who or which desire
to employ the Company's funds in their business or to seek the perceived
advantages of a publicly-held corporation. The Company will not restrict its
search to any specific business, industry or geographical location, and the
Company may participate in a business venture of virtually any kind or nature.
Liquidity
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As of December 31, 1998, the Company had accumulated a deficit (net loss)
of $7,997. The Company had assets of approximately $12,900 in cash. Management
is actively seeking to make one or more acquisitions of privately held
companies, properties or interests as described above, but has not yet entered
into any understanding, agreement or arrangement with any person respecting such
an acquisition. Whether the Company ultimately becomes a going concern depends
upon its success in finding and acquiring a suitable private business and the
success of that acquired business. The Company has no long-term liabilities and
only modest short-term liabilities discussed below. Assets and cash available to
the Company from its Management and shareholders may not be sufficient for the
Company to carry out its business plan. Problems relating to capital resources
are more fully discussed in the paragraph below.
Results of Operations
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For the year ended December 31, 1998, the Company had no revenues and
incurred a net loss of $7,997 as compared to a net loss of $46,246 for the year
ended December 31, 1997. Expenses in calendar 1998 related primarily to
miscellaneous filing fees, accounting fees and legal fees. During 1997 expenses
related primarily to filing fees and accounting fees. For the year ended
December 31, 1997, the Company incurred a net loss of $46,246 as compared to a
net loss of $5,754 for the year ended December 31, 1996. Expenses for 1996
related primarily to legal and accounting fees.
Year 2000 Issues
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The Company has no operations or revenues, does no business with vendors,
suppliers or customers, and in fact has no material relationships with other
companies. The Company therefore does not anticipate that it will suffer any
material effects and does not expect to incur any losses as a result of Year
2000 issues.
Capital Resources
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The Company has no commitment for any capital expenditure and foresees
none. However, the Company will incur routine fees and expenses incident to its
reporting duties as a public company, and it will incur fees and expenses in the
event it makes or attempts to make an acquisition. As a practical matter, the
Company expects no significant operating costs other than professional fees
payable to attorneys and accountants. In regard to a proposed acquisition, the
Company intends to require the target company to deposit with the Company a
retainer which the Company can use to defray such professional fees and costs.
In this way, the Company could avoid the need to raise funds for such expenses
or becoming indebted to such professionals. Moreover, investigation of business
ventures for potential acquisition will involve some costs, including travel,
lodging, postage and long-distance telephone charges. Management hopes, once a
candidate business venture is deemed to be appealing, to likewise secure a
deposit from the business venture to defray expenses of further investigation,
such as air travel and lodging expenses. An otherwise desirable business venture
may, however, decline to post such a deposit. In this event, such expenses can
only be covered if affiliates of the Company loan or contribute the necessary
capital to the Company (which is not assured) or if the Company is otherwise
able to raise funds from third parties.
The Company has no current intention of making a public offering of its
securities but will investigate the feasibility of raising capital in one or
more private transactions, if needed. The Company cannot assess the likelihood
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of raising any such capital or of obtaining loans. No source of funding or
capital has been identified, and the Company has no credit or means to obtain a
loan.
Item 7. FINANCIAL STATEMENTS.
See index to financial statements at page 14. The financial statements
begin following that index. No supplementary financial data is required.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
Identification of Current Directors and Executive Officers
- ----------------------------------------------------------
The persons who have served as directors and executive officers of the
Company since April 13, 1994, their ages and positions held in the Company, are
listed below. Each director will serve until the next annual meeting of
shareholders, or until their respective successors have been elected and duly
qualified. Directors serve one-year terms. Officers hold office at the pleasure
of the Board of Directors, absent any employment agreement, of which none
currently exist or are contemplated. There are no family relationships between
any director or executive officer.
Name Age Position
---- --- --------
Randy J. Sasaki 40 Director and Chairman of the Board,
President, Chief Executive Officer,
Chief Financial Officer
John D. Brasher Jr. 47 Director
Thomas M. Liston 44 Secretary, Treasurer, Director
Biographical Information
- ------------------------
The following is a brief account of the business experience during at least
the past five years of each person who is a director and executive officer at
the time of filing this report, 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. None of
such persons has ever devoted full time or any significant time to the Company's
business. These persons have agreed to devote only such time to the Company's
business as seems reasonable and necessary from time to time.
RANDY J. SASAKI. Mr. Sasaki currently is the owner and director of Pacific
Consulting Group, Inc., a Nevada corporation headquartered in Newport Beach,
California, which provides business consulting services. Formerly, he was
engaged as a private consultant by JDK & Associates, Inc., a public relations
firm based in Newport Beach, California since mid-1993. From January 1992 to
mid-1993, Mr. Sasaki attended Metropolitan State University in Denver, where he
was working toward a masters degree in finance. Since 1990 he has been an owner
and director of Ceiling Systems BV, a Netherlands company established to market
and sublicense patented technology and equipment associated with the renovation
of commercial buildings, and from 1989 to 1992, he served as manager of Ceiling
Systems, Inc., a corporation headquartered in Denver which developed patented
technology used in the renovation of commercial building ceilings. From 1988 to
1989, Mr. Sasaki was sales manager and a minority owner of Manhattan
Corporation, a Denver-based company engaged in the business of switching mutual
funds, primarily managing retirement plans of United Airlines pilots.
10
<PAGE>
In 1985, while working part-time at Continental Airlines as a customer service
representative, Mr. Sasaki began trading futures on the New York Futures
Exchange for his own account. He and an associate were ranked 12th in the United
States during the 1986 U.S. Trading Championship sponsored by and reported
Investor's Daily on January 6, 1986, also reported in Barron's and Stocks &
Commodities. Mr. Sasaki holds a B.S. degree in Aeronautical Engineering from
Metropolitan State College in Denver, Colorado. Mr. Sasaki is a Director and
President of Proquest Capital Corporation, a company with a business plan
similar to that of the Company.
JOHN D. BRASHER JR. Mr. Brasher is an attorney engaged since February 1988
in the practice of law in Denver, Colorado, as proprietor of Brasher & Company
and concentrates in the fields of corporate and securities law. From February
1987 to February 1988 he practiced law as a profit-sharing partner in the firm
of Pred and Miller, Denver, Colorado, concentrating in corporate and securities
law. From August 1982 until February 1987, Mr. Brasher practiced corporate and
securities law as an associate and later as a partner of Broadhurst, Brook,
Mangham and Hardy, of Lafayette, Louisiana. Mr. Brasher received a B.A. degree
in English in 1979, and in 1982 received a law degree (J.D.), both from
Louisiana State University. He is admitted to practice in the States of Colorado
and Louisiana and is a member of the bar of the United States Supreme Court. He
is also CEO and President of Cerx Entertainment Corporation, Champion Ventures,
Inc., and Cerx Venture Corporation, companies with a business plan similar to
that of the Company. Mr. Brasher is a director of Vacation Emporium
International, Inc., a company engaged in the business of selling timeshare
interests.
THOMAS M. LISTON. In November 1994, Mr. Liston and others formed Visions
Incorporated, a Denver company of which he is Vice President, which engages in
the development, manufacture and marketing of new products for the law
enforcement and securities industry. In 1992 and 1993, Mr. Liston was associated
with Business Appraisal Associates in Denver, Colorado, as a real estate
appraiser and financial consultant. In 1990 and 1992, Mr. Liston was a part-time
salesman for Ceiling Systems, Inc. in Denver and acted as an independent
financial consultant. Mr. Liston is a Colorado Registered Appraiser (Real
Estate) and, though currently inactive, holds securities licenses as a
registered representative and registered principal. From 1988 to 1990, Mr.
Liston was manager and an owner of Inter-Cap Investments, Inc., a securities
brokerage firm in Aurora, Colorado. Mr. Liston graduated in 1976 from Southwest
Missouri State University (Springfield, Missouri) with a B.S. degree in Business
Management.
Significant Employees
- ---------------------
None, other than officers of the Company listed above.
Item 10. EXECUTIVE COMPENSATION.
Cash Compensation
- -----------------
For the year ended December 31, 1998, no executive officer received cash
compensation other than perhaps reimbursement of out-of-pocket expenses incurred
on behalf of the Company. Any such amounts were nominal.
Compensation Pursuant to Plans
- ------------------------------
No compensation was paid to executive officers pursuant to any plan during
the year just ended, and the Company has no agreement or understanding, express
or implied, with any officer or director concerning employment or cash
compensation for services.
EMPLOYEE STOCK COMPENSATION PLAN. The Company has adopted the 1997 Employee
Stock Compensation Plan for employees, officers, directors of the Company and
advisors to the Company (the "ESC Plan"). The Company has reserved a maximum of
1,000,000 Common Shares, after giving effect of the 1-for-100 reverse split, to
be issued upon the grant of awards under the ESC Plan. Employees will recognize
11
<PAGE>
taxable income upon the grant of Common Stock equal to the fair market value of
the Common Stock on the date of the grant and the Company will recognize a
compensating deduction at such time. The ESC Plan will be administered by the
Board of Directors. No Common Stock has been awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN. The Company has adopted the 1997
Compensatory Stock Option Plan for officers, employees, directors and advisors
(the "CSO Plan"). The Company has reserved a maximum of 2,000,000 Common Shares
to be issued upon the exercise of options granted under the CSO Plan. The CSO
Plan will not qualify as an "incentive stock option" plan under Section 422A of
the Internal Revenue Code of 1986, as amended. Options will be granted under the
CSO Plan at exercise prices to be determined by the Board of Directors or other
CSO Plan administrator. With respect to options granted pursuant to the CSO
Plan, optionees will not recognize taxable income upon the grant of options
granted at or in excess of fair market value. The Company will be entitled to a
compensating deduction (which it must expense) in an amount equal to any taxable
income realized by an optionee as a result of exercising the option. The CSO
Plan will be administered by the Board of Directors or a committee of directors.
No options have been granted under the CSO Plan.
Other Compensation.
- -------------------
None.
Compensation of Directors.
- --------------------------
None.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 31, 1998, the stock
ownership of each officer and director of the Company, of all officers and
directors of the Company as a group, and of each person known by the Company to
be a beneficial owner of 5% or more of its Common Stock, $.001 par value per
share. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as such
shares. No person listed below has any option, warrant or other right to acquire
additional securities of the Company, except as noted.
Amount
Name and Address of Common Stock Owned Percent of Common
of Beneficial Owner Beneficially Stock Outstanding
------------------- ------------ ----- -----------
*Randy J. Sasaki .......................... 12,500 3.9%
2439 West Coast Highway, Suite 202
Newport Beach, California 92663
*John D. Brasher Jr. ...................... 25,000 7.8%
90 Madison Street
Suite 707
Denver, Colorado 80206
*Thomas Liston ............................ -0- -0-
2604 South Xanadu Way
Aurora, Colorado 80014
*All directors and executive
executive officers (3 persons) ...... 37,500 11.7%
12
<PAGE>
Changes in Control
- ------------------
Management of the Company does not currently anticipate any change of
control in the management of the Company unless and until a combination is
completed.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There were no transactions, or series of transactions, for the year ended
December 31, 1998, nor are there any currently proposed transactions, or series
of transactions, to which the Company is a party, in which the amount exceeds
$60,000, and in which to the knowledge of the Company any director, executive
officer, nominee, five percent or greater shareholder, or any member of the
immediate family of any of the foregoing persons, have or will have any direct
or indirect material interest.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits are filed with this report, except
those indicated as having previously been filed with the Securities and Exchange
Commission and are incorporated by reference to another report, registration
statement or form. As to any shareholder of record requesting a copy of this
report, the Company will furnish any exhibit indicated in the list below as
filed with report upon payment to the Company of its expenses in furnishing the
information.
3.1 Articles of Incorporation of Renegade Venture
Corporation, incorporated by reference to Exhibit
3.1 to registration statement on Form S-18, file
No. 33-30476 dated August 11, 1989)................................. 1
3.2 Bylaws of Renegade Venture Corporation,
incorporated by reference to Exhibit 3.2 to
registration statement on form S-18, file No.
33-30476 dated August 11, 1989)..................................... 1
3.5 Amendment to Articles of Incorporation of Renegade
Venture Corporation, incorporated by reference
from Exhibit 3.5 to Form 8-K dated August 16,
1996)............................................................... 1
3.6 Articles and Certificate of Merger dated September
18, 1997, between Renegade Venture Corporation and
Renegade Venture (Nev.) Corporation, a Nevada
corporation, with Merger Agreement attached
thereto as Exhibit A, incorporated by reference to
Exhibit 2.1 to Form 8-K dated October 2,
1997)............................................................... 1
3.7 Certificate of Incorporation of Renegade Venture
(Nev.) Corporation, incorporated by reference to
Exhibit 3.1 to Form 8-K dated October 2, 1997)...................... 1
3.8 Bylaws of Renegade Venture (Nev.) Corporation,
incorporated by reference to Exhibit 3.2 to Form
8-K dated October 2, 1997).......................................... 1
4.1 Specimen common stock certificate, incorporated by
reference to Exhibit 4.1 to registration statement
of Form S-18, file No. 33-30476 dated August 11,
1989)............................................................... 1
10.1 1997 Compensatory Stock Option Plan, incorporated
by reference to Exhibit 10.1 to Form 8-K dated
October 2, 1997).................................................... 1
10.2 1997 Employee Stock Compensation Plan,
incorporated by reference to Exhibit 10.2 to Form
8-K dated October 2, 1997).......................................... 1
13
<PAGE>
1 - Incorporated by reference to another registration statement,
report or document.
2 - Includes Exhibits filed as part of this Report.
(b) Reports on Form 8-K. NONE
(c) Financial statements and supplementary data.
Index to Financial Statements
-----------------------------
Independent Auditor's Report ............................................... F-1
Balance Sheet as of December 31, 1998 ...................................... F-2
Statements of Operations for years ended
December 31, 1998 and 1997 and from Inception
(February 13, 1989) through December 31, 1998 ............................. F-3
Statement of Changes in Stockholders' Equity
from Inception (February 13, 1989) through
December 31, 1998 ......................................................... F-4
Statement of Cash Flows for years ended
December 31, 1998 and 1997 and from Inception
(February 13, 1989) through December 31, 1998 ............................ F-5
Summary of Significant Accounting Policies ................................. F-6
Notes to Financial Statements .............................................. F-6
SIGNATURES
In accordance with section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report on Form 10-KSB to be signed on its
behalf by the undersigned, thereto duly authorized individual.
Date: March 18, 1999
RENEGADE VENTURE (NEV.) CORPORATION
By: /s/ Randy J. Sasaki
------------------------------------
Randy J. Sasaki, CEO, CFO, President
14
<PAGE>
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Randy J. Sasaki CEO, CFO, President, Director March 18, 1999
- -----------------------
Randy J. Sasaki
Secretary, Director
- -----------------------
Thomas Liston
/s/ John D. Brasher Jr. Director March 18, 1999
- -----------------------
John D. Brasher Jr.
15
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
CONTENTS
--------
Auditor's Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Changes in Stockholders'
Equity (Deficit) F-4
Statement of Cash Flows F-5
Notes to the Financial Statements F-6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors
Renegade Venture (Nev.) Corporation
Denver, Colorado
I have audited the accompanying balance sheet of Renegade Venture (Nev.)
Corporation, formerly Renegade Venture Corporation (a development stage company)
as of December 31, 1998, and the related statements of operations, changes in
stockholders' equity (deficit) and cash flows for each of the years ended
December 31, 1998 and 1997, and the related cumulative amounts for the period
from inception (February 13, 1989) to December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit 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.
I believe that my audit of the financial statements provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly the
financial position of Renegade Venture (Nev.) Corporation as of December 31,
1998 and the results of its operations, changes in stockholders' equity
(deficit) and cash flows for each of the years ended December 31, 1998 and 1997,
and the related cumulative amounts for the period from inception (February 13,
1989) to December 31, 1998 in conformity with generally accepted accounting
principles.
Brian J. Wilcomb, CPA, P.C. February 2, 1999
Louisville, Colorado
F-1
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
------
CURRENT ASSETS:
Cash held by trustee $ 12,900
--------
TOTAL ASSETS $ 12,900
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 41,073
STOCKHOLDER'S EQUITY:
Common stock (note 3), .001 par value,
50,000,000 shares authorized,
320,000 shares issued and
outstanding 320
Additional paid-in capital 62,805
Preferred stock, (note 3), .011 par
value, 5,000,000 shares authorized,
no shares issued or outstanding --
Deficit accumulated during
development stage (91,298)
--------
Stockholders' Equity (28,173)
--------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 12,900
========
The accompanying notes are an integral part of this financial statement.
F-2
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF OPERATIONS
Period From
Inception
(February 13,
Year Ended 1989) to
December 31, December 31,
1998 1997 1998
---- ---- ------------
REVENUE $ 0 $ 0 $ 0
--------- --------- ---------
EXPENSES:
Legal and accounting 6,720 38,408 67,918
Stock transfer and
promotion 958 6,571 24,710
Office and postage 319 1,267 4,964
Amortization -- -- 1,760
--------- --------- ---------
Total expenses 7,997 46,246 99,352
--------- --------- ---------
Loss from operations (7,997) (46,246) (99,352)
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income -- -- 8,054
--------- --------- ---------
NET LOSS INCURRED DURING
DEVELOPMENT STAGE ($ 7,997) ($ 46,246) ($ 91,298)
========= ========= =========
NET LOSS PER SHARE (a) ($ 0.02) ($ 0.14) ($ 0.30)
========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 320,000 320,000 299,570
========= ========= =========
DIVIDENDS DECLARED PER SHARE -- -- --
========= ========= =========
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
PERIOD FROM INCEPTION
(FEBRUARY 13, 1989)
TO DECEMBER 31, 1998
Deficit
Accumulated
Common stock During
No. of Shs Paid-in Development
(000's) Dollars Capital Stage Total
------- ------- ------- ----- -----
Issuance of common
stock, net of
issuance costs 32,000 $ 3,200 $ 59,925 $ 63,125
Reverse stock-split
August 9, 1996 - 0
Cancel outstanding
shares (32,000)
Issue replacement
shares 320
Eliminate par value
August 9, 1996 59,925 (59,925) 0
Loss for the period
from inception
(February 13, 1989)
to December 31, 1996 ($37,055) (37,055)
-------- -------- -------- -------- --------
Balance -
December 31, 1996 320 63,125 0 (37,055) 26,070
Reinstatement of par
value upon redomicil-
iation to Nevada (62,805) 62,805
Loss for the period
ended December
31, 1997 (46,246) (46,246)
-------- -------- -------- -------- --------
Balance -
December 31, 1997 320 320 62,805 (83,301) (20,176)
Loss for the period
ended December
31, 1998 (7,997) (7,997)
-------- -------- -------- -------- --------
Balance -
December 31, 1998 320 $ 320 $ 62,805 ($91,298) ($28,173)
======== ======== ======== ======== ========
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
Year Ended Period From Inception
December 31, (February 13, 1989)
1998 1997 to December 31, 1998
---- ---- --------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss ($ 7,997) ($46,246) ($91,298)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization -- -- 1,760
Increase (decrease) in
accounts payable 3,269 36,346 41,073
-------- -------- --------
Net cash used by operating
activities (4,728) (9,900) (48,465)
-------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from issuance of
common stock 63,125
-------- -------- --------
Net cash provided by
financing activities 0 0 63,125
-------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES
Organization costs incurred 0 0 (1,760)
-------- -------- --------
Net cash used by
investing activities 0 0 (1,760)
-------- -------- --------
NET INCREASE (DECREASE)
IN CASH (4,728) (9,900) 12,900
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 17,628 27,528 0
-------- -------- --------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 12,900 $ 17,628 $ 12,900
======== ======== ========
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE>
RENEGADE VENTURE (NEV.) CORPORATION
(a development stage company)
Notes To Financial Statements
December 31, 1998
1. Summary of Significant Accounting Policies
- ---------------------------------------------
Renegade Venture (Nev.) Corporation, formerly Renegade Venture Corporation, (the
"Company") was incorporated on February 13, 1989. The Company was formed as a
Blank Check Company to obtain funding from a public offering in order to provide
a vehicle to acquire or engage in business opportunities that management
believes have potential for profitability. Through December 31, 1998 the Company
had been seeking a viable prospective opportunity and had not engaged in any
other activities.
During 1997, the Company was redomiciled as a Nevada corporation through a
merger with a newly formed Nevada corporation, Renegade Venture (Nev.)
Corporation, a wholly-owned subsidiary of Renegade Venture Corporation.
The financial statements of the Company have been prepared on the accrual basis.
Following is a summary of significant accounting policies.
Development stage - The Company is in the development stage, as defined in the
Statement of Financial Accounting Standards No. 7, as revenues have not yet been
generated from planned operations.
The Company intends to continue its efforts to find a suitable merger candidate
in accordance with its original operating plan.
Cash and cash equivalents - Cash held by trustee, certificates of deposit and
checking accounts are considered cash and cash equivalents for purposes of the
statement of cash flows.
Organization costs - Certain costs incurred to set up the Company were
capitalized and amortized over five years.
These costs are fully amortized.
Income taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109 ("FASB No. 109"). Temporary differences
are differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements that will result in taxable or
deductible amounts in future years. The Company's temporary difference consists
of net operating loss carryforwards.
2. Related Party Transactions
- -----------------------------
Through April 9, 1994 the Company maintained its office at the office of the
former president of the Company. No rent was ever paid by the Company to this
former president. Bookkeeping and office management duties were performed by the
spouse of the former president of the Company. Fees of $90 to $125 per month
were paid from 1991 through March, 1994 for these services.
F-6
<PAGE>
2. Related Party Transactions (cont.)
- -------------------------------------
Since 1994, it has maintained its office at the office of the Company's legal
counsel, who is also a director of the Company. No rent is charged to the
company for the use of this office space. During 1998 and 1997, this director
charged the Company $2,950 and $35,500, respectively, for legal services
performed during the year. All of these fees are unpaid and included in accounts
payable the accompanying financial statements. The remaining balance in accounts
payable for 1998 and 1997 includes expenses incurred by this director on behalf
of the Company. This director does not intend to be paid for these fees and
expenses from the Company's current operating capital.
3. Common Stock Transactions
- ----------------------------
During 1989, the Company completed a public offering. The Company sold 5,000,000
units consisting of 2 shares of $.0001 par value common stock and one Class A
common stock purchase warrant at $.02 per unit. The Class A warrants entitled
the holder to purchase one share of common stock at $.02 per share, and receive
one Class B warrant which entitled the holder to purchase one share of common
stock at $.04 per share. In addition, the underwriter was issued warrants which
entitled them to purchase 500,000 of the public offering units discussed above
with an exercise price of $.024 per unit for a flat fee of $50. A total of
$100,050 was raised in this initial public offering, less $37,425 in offering
costs.
Prior to the initial public offering, 22,000,000 common shares were issued to
the founder and other insiders for their efforts in setting up the Company.
During 1989, an additional 7,500,000 Class A warrants were issued to
non-affiliated individuals for $500.
All warrants discussed above, including the Class A and B and Underwriter
warrants, have since expired unexercised.
No additional shares have been issued since this initial public offering
described above.
On April 9, 1994, the majority shareholder and founder of the Company sold 90%
of his interest to an unaffiliated group. At that time, the former officers and
directors resigned and control of the company shifted to the new majority
shareholders.
Effective August 9, 1996 the Company's articles of incorporation were amended,
making several changes affecting common stock. A reverse-stock split was
approved, whereby 100 shares of the original common stock were replaced with one
share of common stock. This action reduced the number of outstanding common
shares from 3,200,000 to 320,000. The par value of the common stock was changed
from $.0001 to no par value. What has been reported as "Additional paid-in
capital" which totalled $59,925 has been reclassified as common stock on the
accompanying balance sheet.
F-7
<PAGE>
3. Common Stock Transactions (cont.)
- ------------------------------------
The number of authorized common shares was increased from 32,000,000 to
50,000,000. Finally, the number of authorized preferred shares was changed to
5,000,000 and the original par value of $.10 was changed to no par value. No
preferred shares have ever been issued by the Company.
As part of the 1997 redomiciliation to Nevada (see below), statutory par value
of $.001 for both common and preferred stock was established.
During 1996, the Company's shareholders approved the 1994 Compensatory Stock
Option Plan. The plan provides for options to purchase up to 2,000,000 shares of
common stock, after the reverse-stock split discussed above. The options give
the right to purchase common stock at "fair market value" as determined by the
Board of Directors at the date of issuance for a period of up to five years.
During 1996, the Company's shareholders also approved the 1994 Employee Stock
Compensation Plan. This plan allows for up to 1,000,000 shares of common stock,
after the reverse- stock split discussed above, to be issued to key employees,
officers, directors and certain other persons affiliated with the Company as
compensation.
As part of the 1997 redomiciliation to Nevada (see below), the 1994 plans
described above were adopted and renamed the 1997 Compensatory Stock Option Plan
and the 1997 Employee
Stock Compensation Plan.
As of December 31, 1998, no stock options under the 1997 Compensatory Stock
Option plan, nor have any common shares of stock under the Employee Stock
Compensatory Plan been issued.
During 1997, the company redomiciled to the state of Nevada by merging with a
newly formed Nevada corporation, Renegade Venture (Nev.) Corporation. Each share
of Renegade Venture Corporation was converted into one fully paid,
non-assessable share of the new corporation.
4. Income Taxes
- ---------------
Effective January 1, 1993, the Company adopted FASB No. 109, "Accounting For
Income Taxes". Under the provisions of FASB No. 109, the Company elected not to
restate prior years and determined that the cumulative effect of this accounting
change was immaterial. Additionally, adopting this change did not have a
material effect on the operating results for the year ended December 31, 1993.
The difference between the tax basis of assets and liabilities gives rise to a
net deferred tax asset of approximately $18,000 consisting of the tax effects of
net operating loss carryforwards. As of December 31, 1998, a valuation allowance
equal to the net deferred tax asset recognized has been recorded, as it was
determined that the deferred tax asset may never be realized.
At December 31, 1998, the Company has a net operating loss carryforward of
approximately $90,000 which expires between the years ended December 31, 2005
and 2014.
F-8
<PAGE>
5. 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 revenues and expenses during the reporting periods.
Actual amounts could differ from those estimates.
F-9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-KSB
FOR THE PERIOD ENDED DEC. 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 12,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,900
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,900
<CURRENT-LIABILITIES> 41,073
<BONDS> 0
0
0
<COMMON> 320
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,900
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,997
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,997)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (7,997)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
