SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 No. 33-55254-23
STAR DOLPHIN, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 87-0438634
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
12 East 44th Street,
New York, New York 10017
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code : (212) 328-1660
Securities registered pursuant to Section 12(b) of the Act : NONE
Securities registered pursuant to Section 12(g) of the Act : NONE
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 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. [ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not 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-K
or any amendment to this Form 10-K. [ X ]
As of January 1998, there is no aggregate market value of the voting stock held
by non-affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of January, 1998
$.001 PAR VALUE CLASS A COMMON STOCK 2,000,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART I
ITEM 1. Business.
The Company was incorporated under the laws of Utah on April 16, 1986
and subsequently reorganized under the laws of Nevada on December 30, 1993. The
Company's reorganization plan was formulated for the purpose of changing the
state of domicile and provided that the Company form a new corporation in Nevada
which acquired all of the contractual obligations, shareholder rights and
identity of the Utah corporation, and then the Utah corporation was dissolved.
The Company is in the developmental stage, and its operations to date have been
limited. The Company is in the process of investigating potential business
ventures which, in the opinion of the new management, will provide a source of
eventual profit to the Company. Such involvement may take many forms, including
the acquisition of an existing business or the acquisition of assets to
establish subsidiary businesses. The Company's management does expect to remain
involved as management of an acquired business.
On December 19, 1997, Phillip Wong Wah Lik purchased 465,800 of the
outstanding shares of the Company from Capital General Corporation, Yeaman
Enterprises, Inc. and Krista Nielson who were deemed control persons. The
transaction was a result of arms-length negotiations and there was no prior
relationship between the parties.
In addition, Phillip Wong Wah Lik earlier had purchased 1,000,000
shares of common stock directly from the Company. Mr. Phillip Wong Wah Lik now
owns and controls 73% of the Company's outstanding shares.
Further, previous directors resigned and new directors and officers
were elected.
As an unfunded venture, the Company will be extremely limited in its
attempts to locate potential business situations for investigation. However, the
Company's major shareholder has undertaken to make loans to the Company in
amounts sufficient to enable it to satisfy its reporting and other obligations
as a public company, and to commence, on a limited basis, the process of
investigating possible merger and acquisition candidates, and believes that the
Company's status as a publicly-held corporation will enhance its ability to
locate such potential business ventures.
No assurance can be given as to when the Company may locate suitable
business opportunities, and such opportunities may be difficult to locate;
however, the Company intends to actively search for potential business ventures
in 1998.
Management anticipates that, due to its lack of funds and the limited
amount of its resources, the Company may be restricted to participation in only
one potential business venture. This lack of diversification should be
considered a substantial risk, because it will not permit the Company to offset
potential losses from one venture against gains from another.
The Company will not restrict its search to any particular business,
industry, or geographical location, and reserves the right to evaluate and to
enter into any type of business opportunity, in any stage of its development
(including the " start up " stage), in any location. In seeking a business
venture, Management will not be influenced primarily by an attempt to take
advantage of the anticipated or
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perceived appeal of a specific industry, management group, product, or industry,
but rather will be motivated by the Company's business objective of seeking long
term capital appreciation in their real value. In addition, the Exchange Act
reporting requirements require the filing of the Form 8-K, disclosing any
businesses acquired, and requires certified financial statements of such
companies. These reporting requirements may substantially limit the businesses
which may be available for possible acquisition candidates.
The analysis of business opportunities will be undertaken by or under
the supervision of the Company's management. Among the factors which management
will consider in analyzing potential business opportunities are the available
technical, financial and managerial resources; working capital and financial
requirements; the history of operation, if any, of future prospects; the nature
of present and anticipated competition; potential for further research,
development, or exploration; growth and expansion potential; profit potential;
the perceived public recognition or acceptance of products or services; name
identification; and other relevant factors.
It is not possible at present to predict the exact manner in which the
Company may participate in a business opportunity. Specific business
opportunities will be reviewed and, based upon such review, the appropriate
legal structure or method of participation will be decided upon by management.
Such structures and methods may include, without limitation, leases, purchase
and sale agreements, license, or joint ventures; and may involve merger,
consolidation, or reorganization. The Company may act directly or indirectly
through an interest in a partnership, corporation, or other form of
organization. However, it is most likely that the Company will acquire a
business venture by conducting a reorganization involving the issuance of the
Company's restricted securities. Such a reorganization may involve a merger (or
combination pursuant to state corporate statutes, where one of the entities
dissolves or is absorbed by the other), or it may occur as a consolidation,
where a new entity is formed and the Company and such other entity combine
assets in the new entity.
Generally, the issuance of securities in a reorganization transaction
would be undertaken in reliance upon one or more exemptions from the
registration provisions of applicable federal securities laws, including the
exemptions provided for non-public or limited offerings, distributions to
persons resident in only one state, and similar exemptions provided by state
law. Shares issued in a reorganization transaction based upon these exemptions
would be considered " restricted " securities under the 1933 Act. However, the
Company might undertake, in connection with such a reorganization transaction,
certain registration obligations in connection with such securities.
The Company may choose to enter into a venture involving the
acquisition of, or merger with, a company which does not need substantial
additional capital but desires to establish a public trading market for their
securities. Such a company may desire to consolidate its operations with the
Company through a merger, reorganization, asset acquisition, or other
combination, in order to avoid possible adverse consequences of undertaking its
own public offering. (Such consequences might include expense, time delays, or
loss of voting control). In the event of such a merger, the Company may be
required to issue significant additional shares, and it may be anticipated that
control over the Company's affairs may be transferred to others. It should also
be noted that this type of business venture might have the effect of depriving
the original minority shareholders of the protection of federal and state
securities laws, which normally affect the process of a company's becoming
publicly held.
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It is likely that the investigation and selection of business
opportunities will be complex, time-consuming, and extremely risky. However,
management believes that, even though the Company will have limited capital, the
fact that its securities will be publicly-held will make it a reasonably
attractive business prospect for other firms.
As part of their investigation of acquisition possibilities, the
Company's management may meet with executive officers of the business and its
personnel; inspect its facilities; obtain independent analysis or verification
of the information provided; and conduct other reasonable measures, to the
extent permitted by the Company's limited resources and management's limited
expertise. Generally, the Company intends to analyze and make a determination
based upon all available information without reliance upon any single factor as
controlling.
It may be anticipated that the investigation of specific business
opportunities and the negotiation, drafting, and execution of relevant
agreements, disclosure documents, and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys,
and others. Should a decision thereafter be made not to participate in a
specific business opportunity, is likely that costs already expended would not
be recoverable. It is also likely, in the event a transaction should eventually
fail to be consummated for any reason, that the costs incurred by the Company
would not be recoverable. The Company's officers and directors are entitled to
reimbursement for all expenses incurred in their investigation of possible
business ventures on behalf of the Company, and no assurance can be given that,
if the Company has available funds, they will not be depleted in such expenses.
In addition to the severe limitations placed upon the Company by virtue
of its unfunded status, the Company will also be limited in its investigation of
possible acquisitions, by the reporting requirements of the Securities Exchange
Act of 1934, pursuant to which certain information must be furnished in
connection with any significant acquisitions. The Company would be required to
furnish, with respect to any significant acquisition, certified financial
statements for the acquired company, covering one, two, or three years
(depending upon the relative size of the acquisition). Consequently, acquisition
prospects which do not have the requisite certified financial statements, or are
unable to obtain them, may be inappropriate for acquisition under the present
reporting requirements of the 1934 Act.
The Company does not intend to take any action which would render it an
investment company under the Investment Companies Act of 1940 (the "1940 Act").
The 1940 Act defines an investment company as one which (1) invests, reinvests,
or trades in securities as its primary business, (2) issues face-amount
certificates of the installment type or (3) invests, reinvests, owns, holds, or
trades securities or owns or acquires investment securities having a value
exceeding 40 percent of the value of its total assets (exclusive of Government
securities and cash items) on an unconsolidated basis. The above 40 percent
limitation may be exceeded so long as a company is primarily engaged, directly
or through wholly-owned subsidiaries, in a business or businesses other than
that of investing, reinvesting, owning, holding, or trading in securities. A
wholly-owned subsidiary is defined as one which is at least 95% owned by the
company.
Neither the Company nor any of its officers or directors are registered
as investment advisers under the Investment Advisers Act of 1940 (the " Advisers
Act "), and so there is no authority to pursue any course of business or
activities which would render the Company or its management " investment
advisers " as defined in the Advisers Act. Management believes that registration
under the Advisers Act
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is not required and that certain exemptions are available, including the
exemptions for persons who may render advice to a limited number of other
persons and who may advise other persons located in one state only.
The Company expects to encounter intense competition in its efforts to
locate suitable business opportunities in which to engage. The primary
competition for desirable investments may come from other small companies
organized and funded for similar purposes, from small business development
corporations, and from public and private venture capital organizations. As the
Company will be completely unfunded, it can fairly be said that all of the
competing entities will have significantly greater experience, resources,
facilities, contacts, and managerial expertise than the Company and will,
consequently, be in a better position than the Company to obtain access to, and
to engage in, business opportunities. Due to its lack of funds, the Company may
not be in a position to compete with larger and more experienced entities for
business opportunities which are low-risk. Business opportunities in which the
Company may ultimately participate are likely to be highly risky and extremely
speculative.
ITEM 2. Properties.
The Company owns no properties and utilizes space on a rent-free basis.
This arrangement is expected to continue until such time as the Company becomes
involved in a business venture which necessitates its relocation, as to which no
assurances can be given. The Company has no agreements with respect to the
maintenance or future acquisition of office facilities, however, if a successful
merger/acquisition is negotiated, it is anticipated that the office of the
Company will be moved to that of the acquired company.
ITEM 3. Legal Proceedings.
There are no legal proceedings against the Company or its new Directors
or Officers or the major controlling Shareholder.
Regarding previous Directors of the Company, the reader may refer to
the previous Form 10K for the fiscal year ended December 31, 1996.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to the Company's security holders for a vote
during the fiscal year ending December 31, 1997.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
There currently is not a trading market for the Company's $.001 par
value common stock, nor has there been a trading market for the Company's stock
since its inception.
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As of January, 1998, there were 745 record holders of the Company's
common stock. The Company has not previously declared or paid any dividends on
its common stock and does not anticipate declaring any dividends in the
foreseeable future.
ITEM 6. Selected Financial Data.
STAR DOLPHIN, INC.
SUMMARY OF OPERATIONS
DECEMBER 1997
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Assets 0 0 0 0 0
Revenues 0 0 0 0 0
Operating Expenses 0 0 0 0 0
Net Earnings (Loss) (3,600) 0 0 0 0
Per Share Data
Earnings (Loss) 0 0 0 0 0
Average Common Shares
Outstanding... 1,032,877 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The Company has had no operational history and has yet to engage in
business of any kind. All risks inherent in new and inexperienced enterprises
are inherent in the Company's business. The Company has not made a formal study
of the economic potential of any business. At the present, the Company has not
identified any assets or business opportunities for acquisition.
As of December, 1997, the Company has no liquidity and no presently
available capital resources, such as credit lines, guarantees, etc. and, should
a merger or acquisition prove unsuccessful, it is possible that the Company may
be dissolved by the State of Nevada for failing to file reports, at which point
the Company would no longer be a viable corporation under Nevada law and would
be unable to function as a legal entity. Should management decide not to further
pursue its acquisition activities, management may abandon its activities and the
shares of the Company would become worthless. However, the Company's new major
shareholder has made an oral undertaking to make loans to the Company in amounts
sufficient to enable it to satisfy its reporting requirements and other
obligations incumbent on it as a public company, and to commence, on a limited
basis, the process of investigating possible merger and acquisition candidates.
The Company's status as a publicly-held corporation may enhance its ability to
locate potential business ventures. The loans will be interest free and are
intended
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to be repaid at a future date, if or when the Company shall have received
sufficient funds through any business acquisition. The loans are intended to
provide for the payment of filing fees, professional fees, printing and copying
fees, and other miscellaneous fees.
Based on current economic and regulatory conditions, new Management
believes that it is possible, if not probable, for a company like the Company,
without assets or liabilities, to negotiate a merger or acquisition with a
viable private company. The opportunity arises principally because of the high
legal and accounting fees and the length of time associated with the
registration process of " going public ".
ITEM 8. Financial Statements and Supplementary Data.
See Item 14.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The following table shows the positions held by the Company's officers
and directors. The present directors were appointed December 19, 1997, and will
serve until the next annual meeting of the Company's stockholders, and until
their successors have been elected and have qualified. The officers were
appointed to their positions, and continue in such positions, at the discretion
of the directors.
Name Age Position
- --------- --- --------
Phillip Wong Wah Lik 47 President, Director
Siu Cheung Leung 46 Vice-President, Director
Beom Hyeock Lee 42 Secretary, Director
Carlye W L Tsui 49 Director
Chris Wong Ho Ching 50 Director
PHILLIP WONG WAH LIK has been President and Director of the Company since
December 19, 1997. In addition to his management position with the Company, he
has been since 1989 managing Director of Sinotex Consultants Limited, Sinotex
Property Consultants (Shanghai) Co Ltd., Oriental Land International Ltd,
Shanghai Dong Long Commercial Centre Ltd, Shanghai Long Jiang Business Centre
Ltd, Asian Ray Company Ltd and Palace (China) Ltd. , Henan Central Land Property
Co. Ltd. and WTT (Holdings) Ltd.
Mr. Wong is a Fellow of the Chartered Institute of Management Accountants (UK)
and a fellow of the Hong Kong Society of Accountants. He is also Chairman of
Management Committee of Continuing
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Education Centre, Scout Association of Hong Kong and a Member of Political
Consultative Committee Zhencheng, Guangdong Province, PRC.
Mr. Wong is a Member, The Outstanding Young Person's Assn.; Member, Rotary Club
of Hong Kong Harbour; Council Member, The Chartered Institute of Management
Accountants, Hong Kong Division; Member, Advisory Committee on Social Work and
Training & Manpower Planning; and Member, Hong Kong Management Association.
Mr. Wong was awarded the Outstanding Young Persons Award (TOYP award) in Hong
Kong in 1975 and has been elected Vice-Chairman of the Outstanding Young
Persons' Association, an exclusive non- project-making organization that pulls
talents of the TOYPA awardees to promote the well-being of the community. Mr.
Wong was one of the trustees of TOYPA Trust Fund.
He is also a Member (Co. Representative,) Hong Kong General Chamber of Commerce
and Full Member, Hong Kong Jockey Club.
SIU CHEUNG LEUNG has been Vice-President and Director of the Company since
December 19, 1997, and, in addition to his management position with the Company,
he is Solicitor and Partner since 1986 of the firm Lo, Chan & Leung, Solicitors
and Notaries and Member of the Law Society of Hong Kong.
BEOM HYEOCK LEE has been Secretary and Director of the Company since December
19, 1997, and, in addition to his management position with the Company, he is
President of Continental Management Co. and former Vice-President of SKR
International Trading Inc.
CARLYE W L TSUI has been newly appointed director of the Company.
She is Managing Director, Fansway Business Consultants Limited, the consultancy
arm of Fan, Chan & Co. (auditing firm) and associate of global network SC
International, providing clients with professional consultancy services in
business growth, organization and human resources development and management
practices; Managing Director, Great River Corporation Limited, a group
specialising in management consultancy and Managing Director, The PR Company
Hong Kong Limited, a firm specialising in marketing strategies and public
relations service for clients.
Her professional qualifications are Fellow, the Hong Kong Institution of
Engineers; Fellow, the British Computer Society; Fellow, Institute of Directors;
Fellow Institute of Management, Honourable Fellow, Hong Kong Association for
Computer Education and member, Institute of Public Relations. In 1997, she was
awarded Member of the Most Excellent Order of the British Empire (MBE).
She also devoted part of her time as an Urban Councillor, Council Member,
Advisory Council on AIDS and particularly Chairman of the Committee on Education
& Publicity on AIDS (CEPAIDS) , as member, Council for the AIDS Trust Fund and
Air Transport Licensing Authority.
Ms. Tsui also acted as Current Chairman of Chung Ying Theatre Company; Council
Member of Hong Kong Polytechnic University; Executive Committee Member, The
Boys' and Girls' Clubs Association and Member, Save The Children Fund Council.
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Ms. Tsui has been since 1973, involved with Zonta International, a worldwide
service organisation of executives in business and the professions working
together to advance the status of women, where she was between 1994-96, the only
Asian on its international Board of directors.
CHRIS WONG HO CHING, has been newly appointed director of the Company.
Dr. Chris Wong who has a Doctor of Engineering from Xian Jiaotong University, in
China, is actually the Director of the Industrial Centre at The Hong Kong
Polytechnic University.
Dr. Wong is Chartered Engineer and Fellows of the Institution of Electrical
Engineers, of the Institution of Manufacturing Engineers, of the Hong Kong
Institution of Engineers of the Institution of Marine Engineers. He is also
Member of the Chartered Institute of Building Services Engineers and of the
Institute of Training & Development and Senior Member of the Institute of
Industrial Engineers.
Dr. Wong currently holds many government appointments among which is membership
of the First Hong Kong Special Administration Region Selection Committee.
Dr. Wong is also Director of the Institute of Industrial Engineers, Hong Kong;
of the Business & Technology Centre and of Hong Kong Plastics Technology Centre
Co Ltd. He is a Founding Member of World Federation of Technology Organization
and Vice President of the Institute of Industrial Engineers, USA for Asia
Pacific Regional operations.
Dr. Wong has been appointed by the Hong Kong Government Member of the following
: Safety Officer Advisory Committee; Construction Industry Training Authority;
Appeal Board Panel, Consumer Goods Safety; Council of City University of Hong
Kong and Plastics Committee of the Industry & Technology Development Council.
He was also appointed by the Chinese Government as Member of the Chinese
People's Political Consultative Conference, Shenzhen Municipal Committee.
Dr. Wong was consultant to the United Nations Educational Scientific and
Cultural Organisation (UNESCO) and China Association of Science and Technology.
He was elected the Outstanding Young Person and listed in Who's Who in Hong
Kong, Asia and the World as well as received many awards from America and
Britain, including International Man of the Year. He is also
Honourable/Consultant Professor to a number of Universities in China (Tongji
University, Shanghai University, Shanghai Jiatong University and Nanjing
University of Aeronautics & Astronautics) and was recently elected the first
outstanding Alumni of the Poly. U (Hong Kong) and Fellow of the Institute of
Industrial Engineers, U.S.A., the first ever made to an Asian.
ITEM 11. Executive Compensation.
The Company has made no arrangements for the remuneration of its
officers and directors. No remuneration has been paid to the Company's officers
or directors prior to the filing of this form. There are no agreements or
understandings with respect to the amount or remuneration that officers and
directors are expected to receive in the future. Management takes no salaries
from the Company at this
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time. No present prediction or representation can be made as to the compensation
or other remuneration which may ultimately be paid to the Company's management,
since upon the successful consummation of a business opportunity, substantial
changes may occur in the structure of the Company and its management. At such
time, contracts may be negotiated with new management requiring the payment of
annual salaries or other forms of compensation which cannot presently be
anticipated. Use of the term " new management " is not intended to preclude the
possibility that any of the present officers or directors of the Company might
be elected to serve in the same or similar capacities upon the Company's
decision to participate in one or more business opportunities.
The Company's management may benefit directly or indirectly by payments
of consulting fees, sales of insiders' stock positions in whole or in part to
the private company, the Company or management of the Company, or through the
payment of salaries, or any other methods of payments through which insiders or
current investors receive funds, stock, other assets or anything of value
whether tangible or intangible.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1997, information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the outstanding shares, by each of the directors
and by the officers and directors as a group.
<TABLE>
<CAPTION>
Title of class Name and address Amount of Percent
of beneficial owner beneficial ownership of class
<S> <C> <C> <C>
Common Stock Phillip Wong Wah Lik 1,465,800 73.2%
Rm 506-7, Grand Centre
8 Humphreys Avenue
Tsimshatsui,
Kowloon, Hong Kong
</TABLE>
ITEM 13. Certain Relationships and Related Transactions.
No officer, director, nominee for election as a director, or associate
of such officer, director, or nominee is or has been in debt to the Company
during the last fiscal year. However, the Company's major shareholder, has made
an oral undertaking to make loans to the Company in amounts sufficient to enable
it to satisfy its reporting requirements and other obligations incumbent on it
as a public company, and to commence, on a limited basis, the process of
investigating possible merger and acquisition candidates. The Company's status
as a publicly-held corporation may enhance its ability to locate potential
business ventures. The loans will be interest free and are intended to be repaid
at a future date, if or when the Company shall have received sufficient funds
through any business acquisition. The loans are intended to provide for the
payment of filing fees, professional fees, printing and copying fees, and other
miscellaneous fees.
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PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Financial Statements and Financial Statement Schedules.
Financial Statements - December 31, 1997.
Reports on Form 8-K.
A report on Form 8-K was filed during the last quarter of fiscal year ending
December 31, 1997, to announce the change in control of the Company and change
in officers and directors. The 8-K was dated December 29, 1997.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STAR DOLPHIN, INC.
(S) Phillip Wong Wah Lik
--------------------------------------
Date : January 20, 1998 By Phillip Wong Wah Lik, President and
Director
Pursuant to the requirements of 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.
(S) Phillip Wong Wah Lik
--------------------------------------
Date : January 20, 1998 By : Phillip Wong Wah Lik, President, Director,
CEO
(S) Siu Cheung Leung
--------------------------------------
Date : January 20, 1998 By : Siu Cheung Leung, Vice-President,
Director
--------------------------------------
Date : By : Beom Hyeock Lee, Secretary,
Director
(S) Carlye W L Tsui
--------------------------------------
Date : January 20, 1998 By : Carlye W L Tsui, Director
(S) Chris Wong Ho Ching
--------------------------------------
Date : January 20, 1998 By : Chris Wong Ho Ching, Director
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SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: CRANDALL BUILDING SUITE 700
AMERICAN INSTITUTE OF 10 WEST 100 SOUTH
CERTIFIED PUBLIC ACCOUNTANTS SALT LAKE CITY, UTAH 84101
UTAH ASSOCIATION OF TELEPHONE: (801) 575-8297
CERTIFIED PUBLIC ACCOUNTANTS FACSIMILE: (801) 575-8306
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Star Dolphin, Inc. (A Development Stage Company)
We have audited the accompanying balance sheets of Star Dolphin, Inc. (a
development stage company) as of December 31, 1997 and 1996, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years ended December 31, 1997, 1996, and 1995 and for the period of April
16, 1986 (date of inception) to December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Star Dolphin, Inc. (a
development stage company) as of December 31, 1997 and 1996 and the results of
its operations, changes in stockholders' equity and its cash flows for the years
ended December 31, 1997, 1996, and 1995 and for the period of April 16, 1986
(date of inception) to December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
January 13, 1998
F-1
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
12/31/97 12/31/96
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 0 $ 0
----------------- -----------------
TOTAL CURRENT ASSETS 0 0
OTHER ASSETS
Organization costs (Note 1) 0 0
----------------- -----------------
0 0
----------------- -----------------
$ 0 $ 0
================= =================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 0 $ 0
----------------- -----------------
TOTAL CURRENT LIABILITIES 0 0
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding
2,000,000 shares (1,000,000 in 1996) 2,000 1,000
Additional paid-in capital 3,600 1,000
Deficit accumulated during
the development stage (5,600) (2,000)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 0 0
----------------- -----------------
$ 0 $ 0
================= =================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
4/16/86
Year Year Year (Date of
ended ended ended inception) to
12/31/97 12/31/96 12/31/95 12/31/97
------------ ------------ ----------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0
------------ ------------ ----------- -----------------
GROSS PROFIT 0 0 0 0
General & administrative
expenses 3,600 0 0 5,600
------------ ------------ ----------- -----------------
NET LOSS $ (3,600) $ 0 $ 0 $ (5,600)
============ ============ =========== =================
Net income (loss) per weighted
average share $ (.00) $ .00 $ .00
============ ============ ===========
Weighted average number of
common shares used to compute
net income (loss) per weighted
average share 1,032,877 1,000,000 1,000,000
============ ============ ===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During
Par Value $0.001 Paid-in Development
Shares Amount Capital Stage
-------------- -------------- ----------------- --------------
Balances at 4/16/86
<S> <C> <C> <C> <C>
(Date of inception) 0 $ 0 $ 0 $ 0
Issuance of common
stock (restricted)
at $.002 per share
at 6/4/86 1,000,000 1,000 1,000
Net loss for period (1,950)
-------------- -------------- ----------------- --------------
Balances at 12/31/86 1,000,000 1,000 1,000 (1,950)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/87 1,000,000 1,000 1,000 (1,960)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/88 1,000,000 1,000 1,000 (1,970)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/89 1,000,000 1,000 1,000 (1,980)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/90 1,000,000 1,000 1,000 (1,990)
Net loss for year (10)
-------------- -------------- ----------------- --------------
Balances at 12/31/91 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/92 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/94 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/95 1,000,000 1,000 1,000 (2,000)
Net income for year 0
-------------- -------------- ----------------- --------------
Balances at 12/31/96 1,000,000 1,000 1,000 (2,000)
Issued for expenses at
$.0036 at 12/19/97 1,000,000 1,000 2,600
Net loss for year (3,600)
-------------- -------------- ----------------- --------------
Balances at 12/31/97 2,000,000 $ 2,000 $ 3,600 $ (5,600)
============== ============== ================= ==============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
4/16/86
Year Year Year (Date of
ended ended ended Inception) to
12/31/97 12/31/96 12/31/95 12/31/97
-------------- -------------- -------------- --------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ (3,600) $ 0 $ 0 $ (5,600)
Adjustments to reconcile
net income (loss) to
cash used by operating
activities:
Stock issued for expenses 3,600 3,600
Amortization 0 0 0 50
-------------- -------------- -------------- --------------
NET CASH USED BY
OPERATING ACTIVITIES 0 0 0 (1,950)
INVESTING ACTIVITIES
Organization costs 0 0 0 (50)
-------------- -------------- -------------- --------------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 (50)
FINANCING ACTIVITIES
Proceeds from sale of
common stock 0 0 0 2,000
-------------- -------------- -------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 0 0 2,000
-------------- -------------- -------------- --------------
INCREASE IN CASH
AND CASH EQUIVALENTS 0 0 0 0
Cash and cash equivalents
at beginning of year 0 0 0 0
-------------- -------------- -------------- --------------
CASH & CASH EQUIVALENTS
AT END OF YEAR $ 0 $ 0 $ 0 $ 0
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods:
The Company recognizes income and expenses based on the accrual method
of accounting.
Dividend Policy:
The Company has not yet adopted any policy regarding payment of
dividends.
Organization Costs:
The Company amortized its organization costs over a five year period.
Cash and Cash Equivalents:
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or less
when purchased to be cash equivalents.
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 and
liabilities at the date of the financial statements and the reported
amount of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Income Taxes:
The Company records the income tax effect of transactions in the same
year that the transactions enter into the determination of income,
regardless of when the transactions are recognized for tax purposes.
Tax credits are recorded in the year realized. Since the Company has
not yet realized income as of the date of this report, no provision for
income taxes has been made.
In February, 1992, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which supersedes substantially all existing authoritative
literature for accounting for income taxes and requires deferred tax
balances to be adjusted to reflect the tax rates in effect when those
amounts are expected to become payable or refundable. The Statement was
applied in the Company's financial statements for the fiscal year
commencing January 1, 1993.
At December 31, 1997 a deferred tax asset has not been recorded due to
the Company's lack of operations to provide income to use the net
operating loss carryover of $5,600 which expires as follows:
Year Ended Expires Amount
December 31, 1986 December 31, 2001 $ 1,950
December 31, 1987 December 31, 2002 10
December 31, 1988 December 31, 2003 10
December 31, 1989 December 31, 2004 10
December 31, 1990 December 31, 2005 10
December 31, 1991 December 31, 2006 10
December 31, 1997 December 31, 2012 3,600
------------
$ 5,600
============
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Utah on
April 16, 1986 and has been in the development stage since
incorporation. On December 30, 1993, the Company was dissolved as a
Utah corporation and reincorporated as a Nevada corporation.
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of its
common stock to Capital General Corporation for $2,000 cash for an
average consideration of $.002 per share. The Company's authorized
stock includes 100,000,000 shares of common stock at $.001 par value.
During 1997, the Company issued 1,000,000 shares of its stock to its
President in exchange for $3,600 of expenses he paid on behalf of the
Company.
F-6
<PAGE>
STAR DOLPHIN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE 4: RELATED PARTY TRANSACTIONS
The Company neither owns or leases any real property. Office services
are provided, without charge, by current management. Such costs are
immaterial to the financial statements, and, accordingly, have not been
reflected therein. During 1997, the Company issued 1,000,000 shares of
its stock to its President in exchange for $3,600 of expenses he paid
on behalf of the Company. The officers and directors of the Company are
involved in other business activities and may, in the future, become
involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from STAR DOLPHIN, INC. December 31, 1997 financial statements
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000894532
<NAME> ayn5*cii
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,000
<OTHER-SE> (2,000)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,600)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
