<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_____ to ____
Commission file number 33-55254-29
STERLING WORLDWIDE CORPORATION
(FORMERLY KOALA CAPITAL CORPORATION)
(exact name of registrant as specified in its charter)
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<S> <C>
NEVADA 87-0438649
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
1301 N. CONGRESS AVENUE, SUITE 135
BOYNTON BEACH, FL 33426
(561) 732-1200
(Address and telephone number of principal executive offices)
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 Exchange Act 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 (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of the 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/
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Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Registrant has 500,000,000 shares of common stock authorized as of
October 14, 1997, 51,045,326 shares issued and outstanding, par value $.001.
Registrant has 10,000,000 shares of Preferred Stock, Class A authorized
and issued and outstanding as of October 14, 1997, par value $1.00.
Registrant has 490,000,000 shares of Preferred Stock, Class B
authorized but none issued and outstanding as of October 14, 1997, par value
$.001.
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TABLE OF CONTENTS
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Number Page
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Item 1. Description of Business............................................. 1
Item 2. Description of Properties........................................... 1
Item 3. Legal Proceedings................................................... 2
Item 4. Submission of Matter to a Vote of Security Holders.................. 3
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters..................................... 3
Item 6. Selected Financial Data............................................. 4
Item 7. Financial Statements................................................ 5
Item 8. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure.................. 5
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with
Section 16(a) of the Exchange Act................................... 6
Item 10. Executive Compensation.............................................. 7
Item 11. Security Ownership of Certain
Beneficial Owners and Management.................................... 9
Item 12. Certain relationships and Related Transactions...................... 11
Item 13. Exhibits and Report on Form 8....................................... 12
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Business Development
Sterling Worldwide Corporation (the "Company") was organized under the
laws of the State of Utah on May 2, 1986 under the name "Koala Capital
Corporation". The Company was subsequently reorganized under the laws of the
State of Nevada on December 30, 1993. On October 28, 1996, the Company's name
was changed to Sterling Worldwide Corporation. The initial purpose of the
Company was to engage in the business of investing and all other lawful
businesses.
On December 24, 1996 the Company concluded a transaction whereby the
Company acquired 585,000 shares of common stock or 86.4% of Travelnet
International in exchange for the issuance of 12,500 shares of restricted common
stock in the name of Laurie Doll Gladstone. Travelnet International owns and
operates Sterling Travel, an operating travel agency with unique characteristics
and profit generating aspects. Sterling actively recruits outside, independent
travel consultants. Presently, about 1,000 Sterling Travel affiliates use
Sterling's licenses, memberships and bonding to introduce and sell travel
products to their corporate and individual clients nationwide, commercial sabre
software, professional travel reference materials, training seminars, long
distance services, internet virtual mall sites (retail storefronts), and other
high profit products carried by Sterling cruise and tour departments. Sterling
AKG Corp., is a wholly owned subsidiary of Travelnet International.
The Company intends to continue to seek out the acquisition of assets,
property or business that may be beneficial to it and its stockholders. The
Company intends to concentrate on seeking opportunities in developing travel,
and resort/casino hotels on the east coast and Carribean. In considering whether
to complete any such acquisition, the Board of Directors shall make the final
determination, and the approval of stockholders will not be sought unless
required by applicable law, the Company's Articles of Incorporation or Bylaws or
contract. The Company can give no assurance that any such endeavor will be
successful or profitable.
ITEM 2. DESCRIPTION OF PROPERTIES.
As of December 31, 1996, the Company did not own any properties. On
July 31, 1997, the Company entered into a lease agreement for its operating
facilities in Boca Raton, Florida with lease payments of $21,035 for 1997 and
$12,918 for 1998. The lease was subsequently terminated, with no further
obligation and/or
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liability to the Company on August 13, 1997 when control of the Company was
transferred to the LaSalle Group Ltd.
On September 8, 1997, the Company acquired four entities which own and
operate the Fort Thomas Resort in St. Christopher, British Virgin Islands, in
exchange for 513,914 shares of common stock under Regulation S of the Securities
and Exchange Act of 1933, as amended and 513,914 shares of restricted common
stock of the Company each valued at $10.00 per share. The 68-room resort sits on
7.33 acres and operates year round to serve convention clients, tourists and
vacationers. Title to the Resort consisting of approximately 2.331 acres is
vested in Fort Thomas Development Company Ltd. Title to the 6.451 acre parcel
surrounding the Resort is vested in Limekiln Development Ltd. Fort Thomas
Management Company Ltd., is the operator of the Resort. Mado Investment Company
Ltd., owns 10,000 of the issued and outstanding shares of each of the foregoing
three corporations.
ITEM 3. LEGAL PROCEEDINGS.
On August 2, 1997, the Company agreed to transfer the Company's entire
interests in its operating subsidiaries, Travelnet International Corp. and
Sterling AKG Corp. to Laurie Doll Gladstone as part of an agreement pursuant to
which, among other things: (i) Ms. Gladstone was granted an irrevocable
three-year put option entitling her to put shares back to the Company in
exchange for $2,000,000 of the Company's ordinary shares, registered with the
Securities and Exchange Commission, and (ii) the Company agreed to the return to
Ms. Gladstone of such number of shares of the Company which would provide her
with 80% of the outstanding securities (on a fully diluted basis) of the Company
if the Company did not provide certified financial statements for the quarter
ended September 30, 1997 to Ms. Gladstone which presented U.S. $10,000,000 in
net assets (total assets less total liabilities) on the books of the Company as
at such date (the "Condition"). Ms. Gladstone contends that the resolutions of
the August 2, 1997 meeting contained resignations of the officers and directors
of the Company effective if the Condition was not met. Ms. Gladstone further
contends that the Company did not satisfy the Condition. The Company however,
believes that it was substantially in compliance by presenting to Ms. Gladstone
a certified statement from the accountant which did state that the Company had
booked $9,545,000 in assets as of September 30, 1997 which Ms. Gladstone
contends was not certified. As a result, a dispute exists with respect to the
ownership and control of the Company. The LaSalle Group had believed that an
oral compromise had been made to settle the dispute but Ms. Gladstone has denied
that any agreement was ever reached. The Company has been informed that on
October 2, 1997 a meeting of the Board of Directors of the Company was held in
which Mark Colacurcio was reappointed President and sole director of the
Company. Management of the Company prior to September 30,
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1997 believes that it is still the authorized management of the Company on the
date hereof and believes that Ms. Gladstone's only right is to commence
litigation. Management is in negotiations with Ms. Gladstone and her
representatives to resolve this matter amicably.
To the knowledge of management, no director or executive officer is
party to any action which has an interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTER 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, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
There is only a limited established "public market" for shares of
common stock of the Company. The stock is listed on the OTC Bulletin Board of
the National Association of Securities Dealers ("NASD"). Management does not
expect any expanded public market to develop unless and until the operations of
the Company are likewise expanded, when and if the Company completes an
acquisition or merger. In any event, no assurance can be given that any market
for the Company's common stock will develop or be maintained. When a public
market develops in the future, the sale of "unregistered" and "restricted"
shares of common stock pursuant to Rule 144 of the Securities and Exchange
Commission by members of management or others may have a substantial adverse
impact on any such public market.
Holders
The number of record holders of the Company's common stock as of the
fiscal year ended December 31, 1996 was 330. These numbers do not include an
indeterminate number of stockholders whose shares may be held by brokers in
street name.
Dividends
There are no present material restrictions that limit the ability of
the Company to pay dividends on common stock. The Company has not paid any
dividends on its common stock, and does not intend to do so in the foreseeable
future.
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ITEM 6.SELECTED FINANCIAL DATA
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ASSETS
1996 1995
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Current Assets
Cash and cash equivalents $406,109 $50,000
Accounts receivable:
Trade receivables 40,849
Officer receivables 77,397
Prepaid expenses 10,331
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Total Current Assets 534,686 50,000
Property and equipment, net 5,750
Intangible assets, net 18,781
Other assets 1,500
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Total Assets $560,717 $50,000
======== =======
LIABILITIES
Current Liabilities
Accounts payable $ 57,084
Payroll taxes payable 5,101
Accrued expenses 5,117
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Total Current Liabilities 67,302
Minority interest in subsidiary 46,049
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Total Liabilities 113,351
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</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Plan of Operation
Since, 1995, other than the operations of Travelnet, its wholly-owned
subsidiary, Sterling AKG Corp., the Company has not engaged in any material
operations. Current assets on December 31, 1996 were $560,717 as compared to net
current assets on December 31, 1995 at $50,000. The increase is attributable to
the acquisition of Travelnet and its wholly-owned subsidiary.
The Company intends to continue to seek out the acquisition of assets,
property or business that may be beneficial to the Company and its stockholders.
In this regard the Company has made several strategic acquisitions during 1997
as more particularly described in the Company Form 8-K filed on October 21,
1997. The Company is
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also negotiating with an affiliate for the right to develop lands in the
Caribbean. No assurance can be given as to the success of these proposed
negotiations.
The Company's cash requirements during the next 12 months cannot be
predicted at this time but it is anticipated that substantial funds will be
required to support any operations obtained through an acquisition and/or
merger. Therefore, management anticipates that the Company will have to raise
additional funds (in all likelihood substantial funds) during the next 12
months. There is no assurance that funds will be available on commercially
reasonable terms to consummate any of the above transactions.
Results of Operations
Since, 1995, other than the operations of Travelnet, as stated
above, the Company has not engaged in any material operations.
Liquidity
At December 31, 1996, the Company had total assets of $560,717 and
liabilities of $113,351. Assets of the Company include cash of $406,109.
ITEM 7. FINANCIAL STATEMENTS.
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For the period ended Page number of
December 31, 1996 Financial Statement
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Independent Auditor's Reports........................ Exhibit A
Balance Sheets....................................... A-2
Statements of Operations............................. A-3
Statements of Stockholders'
Equity (Deficit)..................................... A-4
Statements of Cash Flows............................. A-5
Notes of the Financial
Statements........................................... A-6 to A-12
</TABLE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The accounting firm of Berkovits & Company, P.A. with an office in Boca
Raton, Florida was appointed to replace Smith &
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Company, of Salt Lake City, Utah, effective March 13, 1997, when the Company
relocated its corporate offices to Boca Raton, Florida.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
Identification of Directors and Executive Officers
The following table sets forth, in alphabetical order, the names and
the nature of all positions and offices held by all directors and executive
officers of the Company to date and for the fiscal year ended December 31, 1996,
and the period or periods during which each such director or executive officer
served in his or her respective positions.
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===========================================================================================================================
NAME AGE POSITION HELD DATE OF ELECTION DATE OF
OR DESIGNATION RESIGNATION
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Krista Casteleton Nielson 34 President, Director May, 1986 Oct., 1996
- ---------------------------------------------------------------------------------------------------------------------------
David R. Yeaman 50 Secretary, Director May, 1986 Oct., 1996
Treasurer,
- ---------------------------------------------------------------------------------------------------------------------------
Mark Colacurio 39 President, Director October, 1996 August, 1997
- ---------------------------------------------------------------------------------------------------------------------------
Anne M.E. Greyling* 54 Chief Executive August, 1997
Officer, President,
Director
- ---------------------------------------------------------------------------------------------------------------------------
Mary Duncan* 47 Corporate Secretary August, 1997
===========================================================================================================================
</TABLE>
* These persons presently serve in the capacities indicated opposite
their respective names, however a dispute exist as to the proper
officers of the Company, see Item 3., Legal Proceedings.
Term of Office
The term of office of Anne M.E. Greyling as Chief Executive Officer,
President and Director shall continue until the annual meeting of stockholders.
The annual meeting of the Board of
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Directors immediately follows the annual meeting of stockholders, at which
officers for the coming year are elected. Following the agreement to surrender
the shares held by Laurie Doll Gladstone, Mr. Colacurio resigned and Anne M.E.
Greyling became the sole director and officer of the Company.
Set forth below are the backgrounds of the officers and directors of the
Company:
ANNE M.E. GREYLING is an experienced executive in real estate related
business. Ms. Greyling has in excess of 25 years of experience in the
development, management and marketing of hotels, condominium projects, apartment
complexes and single family home subdivision development and construction.
MARY F. DUNCAN, over the last five (5) years, has served in similar
administrative capacities for several private and public companies.
Family Relationships
No family relationship exists between any director, executive officer
or person nominated to become such.
Compliance with Section 16(a) of the Exchange Act
No securities of the Company are registered pursuant to Section 12(g)
of Securities Exchange Act of 1934, and the Company files reports under Section
15(d) of the Securities Exchange Act of 1934; accordingly, directors, executive
officers and 10 percent stockholders are not required to make filings under
Section 16 of the Securities Exchange Act of 1934.
ITEM 10. EXECUTIVE COMPENSATION.
No officer or director has received any material compensation in the
previous fiscal year.
Cash Compensation
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
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SUMMARY COMPENSATION TABLE
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Long Term Compensation
------------------------
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years $ $ Other Re- Option/ LTIP All
Principal or Salary Bonus Annual strict- SAR's Payouts Other
Position Periods Com- ed (#) ($) Compen-
Ended pen- Stock sation
1996 sation Awards ($)
($) ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Krista 0 0 0 0 0 0 0 0
Casteleton
Nielson
President,
Director
David R. 0 0 0 0 0 0 0 0
Yeaman
Secretary,
Director &
Treasurer,
Mark Colacurio 0 0 0 0 0 0 0 0
President,
Director
Anne M.E. 0 0 0 0 0 0 0 0
Greyling,
CEO, Pres. &
Director
Mary Duncan, 0 0 0 0 0 0 0 0
Secretary
</TABLE>
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the fiscal
years ending December 31, 1996, and 1995. Further, no member of the Company's
management has been granted any option or stock appreciation right; accordingly,
no table relating to such items has been included within this Item. See the
Summary Compensation Table of this Item.
Compensation of Directors
There are no arrangements pursuant to which the Company's directors are
compensated for any services provided as director and no additional amounts are
payable to the Company's directors for committee participation or special
assignments.
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The Company's directors were not compensated during the Company's last
completed fiscal year or the previous two fiscal years for any services provided
as director. See the Summary Compensation Table of this Item.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to
be received from the Company, with respect to any person named in the Summary
Compensation Table set out above which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of such person's employment with the Company or its subsidiaries, or
any change in control of the Company, or change in the person's responsibilities
following a change in control of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Security Ownership of Certain Beneficial Owners.
The following table sets forth the shareholdings of those persons who
own more than five percent (5%) of the Company's common stock as of October 13,
1997.
<TABLE>
<CAPTION>
Number and Percentage
Name and Address of Shares Beneficially Owned
- ---------------- ----------------------------
<S> <C>
LaSalle Group Approximately 36,000,000 Shares
153 St. John's Road of Common Stock representing
Tunbridge Wells, Kent 72% of the Company's
United Kingdom outstanding Common Stock.
LaSalle Group 10,000 Shares of Preferred Class
153 St. John's Road A, par value $1.00 representing
Tunbridge Wells, Kent 100% of the Company's
United Kingdom outstanding Preferred Class A,
stock.
LY Transportation Construction Approximately 12,000,000 Shares
Ltd. of Common Stock representing
c/o Commonwealth Management Ltd. 24% of the Company's
Drake Chambers, Tortola outstanding Common Stock.
British Virgin Islands
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the shareholdings of the Company's
directors and executive officers as of the date of filing and fiscal year ended
December 31, 1996.
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Number and Percentage
of Shares Beneficially Owned
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<CAPTION>
NAME & ADDRESS OF
BENEFICIAL OWNER OR NUMBER OF PERCENT OF
IDENTITY OF GROUP(1) SHARES OWNED* CLASS (2)
- -------------------- ------------- ---------
<S> <C> <C>
Krista Casteleton Nielson 40,000 .03%
President, Director
David R. Yeaman 500,000 3.9%
Secretary, Director Treasurer,
Mark Colacurio 0 0%
President, Director
Anne M.E. Greyling 49,600,000 98.0%
Chief Executive Officer,
President, Director
153 St. Johns Road
Tunbridge Wells Kent
TN4 9UP
United Kingdom
Mary Duncan 0 0%
Corporate Secretary
1301 N. Congress Avenue
Boynton Beach FL 33426
</TABLE>
* These figures take into account all of the shares from the Company's
reverse stock split. See Item 1 of this Report.
As of December 31, 1996, the Company's directors and executive officers
as a group (3) beneficially owned a total of 10,000,000 post-split shares of the
Company's common stock, or approximately 80% of the outstanding voting
securities of the Company. Pursuant to an agreement, all of these shares were
surrendered by Ms. Laurie Doll Gladstone to the Company in exchange for 585,000
shares of Travel Net.
Changes in Control
To the knowledge of management, there are no present arrangements or
pledges of the Company's securities which may result in a change in its control
except that on August 13, 1997, 50,000,000 shares of common stock or 99% of the
issued and
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outstanding stock of the Company were issued and transferred to the LaSalle
Group Ltd., a Cayman Island Corporation with offices in Kent, England in
consideration of (1) the transfer from LaSalle of 100% of the issued and
outstanding stock of LY Transportation Construction Ltd., a British Virgin
Islands Company and (2) LaSalle's agreement to transfer four corporate entities
upon formation, to be known as Natural Park Bahamas, Ltd, Natural Park S.A.,
Ltd., Natural Park Alaska, Inc. and Natural Park USA. A disagreement exist as to
whether or not all the conditions of said transaction have been met as more
particulary set fourth above in Item 3., Legal Proceedings.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
Except as indicated below, there were no material transactions, or
series of similar transactions, during the Company's fiscal year ended December
31, 1996, or any currently proposed transaction, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeded $60,000 and in which any director,
executive officer or any security holder who is known to the Company to own of
record or beneficially more than five percent of any class of the Company's
common stock, or any member of the immediate family of any of the foregoing
persons, had an interest.
Related party transactions, after fiscal year ended December 31, 1996
are more particulary disclosed on the Company's Form 8-K filed on October 21,
1997.
Indebtedness of Management
Except as indicated under the heading "Transaction with Management and
Others" above, there were no material transactions, or series of similar
transactions, during the Company's last fiscal year or any currently proposed
transactions, or series of similar transactions, to which it or any of its
subsidiaries was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director, executive officer or any security holder who
is known to the Company to own of record or beneficially more than five percent
of any class of its common stock, or any member of the immediate family of any
of the foregoing persons, had an interest.
Transactions with Promoters
Except as indicated under the heading "Transactions with Management and
Others" above, there were no material transactions, or series of similar
transactions, during the Company's last three fiscal years, or any currently
proposed transactions, or series of similar transactions, to which it or any of
its subsidiaries was or
11
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is to be a party, in which the amount involved exceeded $60,000 and in which any
promoter or founder or any member of the immediate family of any of the
foregoing persons, had an interest.
Related Party Transactions
1. Receivable Officer.
At December 31, 1996, the Company is owed $4,000.00 from its President
for funds advanced from the Company. The loan is non-interest bearing and it is
anticipated that it will be repaid in the near future.
2. Receivable Related Party.
As of December 31, 1996, the Company is owed $53,750 by Richard
Gladstone, the husband of the former controlling shareholder of Travelnet
International Corporation. Richard Gladstone is owed $500,00 for a loan made to
New Contenders, Inc., the promoters of the boxing match between Sugar Ray
Leonard and Hector Camacho which was held in February, 1997. The loan bears
interest at 24% per annum. $250,000 was due by March 15, 1997 and $250,000 plus
all unpaid interest and a commission of $37,500 was due April 15, 1997. The loan
is secured by the promoter's sale of foreign transmission rights up to $600,000.
In October 1996, the Company purchased 10% of Gladstone's interest in the
receivable for $50,000. A $3,750 commission was accrued at October 31, 1996
which represents the Company's 10% share of the commission. The amounts will be
repaid to Sterling on the same terms that it made the advance to Gladstone. No
amounts have been repaid to date.
In addition at December 31, 1996 the Company is owed $19,647 by Richard
Gladstone, for advances made by Sterling AKG Corp., a subsidiary of the Company.
Interest has been accrued in the amount of $719.
ITEM 13. EXHIBITS AND REPORT ON FORM 8-K
Reports on Form 8-K
Form 8-K filed on October 28, 1997
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<CAPTION>
Where Incorporated Page
In This Report Number
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<S> <C> <C>
Current Report on Form
8-K filed on or about
October 21, 1986. Part I *
</TABLE>
* These documents and related exhibits have previously been filed with
the Securities and Exchange Commission and are incorporated herein by
this reference.
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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.
Date: October 28, 1997 By: /s/ ANNE M.E. GREYLING
------------------------------------
Anne M.E. Greyling, Director
and President
Date: October 28, 1997 By: /s/ MARY DUNCAN
------------------------------------
Mary Duncan, Secretary
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.
Date: October 28, 1997 By: /s/ ANNE M.E. GREYLING
------------------------------------
Anne M.E. Greyling, Director
and President
Date: October 28, 1997 By: /s/ MARY DUNCAN
------------------------------------
Mary Duncan, Secretary
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Sterling Worldwide Corporation
(Formerly Known as Koala Capital Corporation) And Subsidiaries
Consolidated Financial Statements
As of December 31, 1996
Together with
Report of Independent Certified Public Accountants
<PAGE> 18
Sterling Worldwide Corporation and Subsidiaries
Consolidated Financial Statements
As of December 31, 1996
Index
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Page
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Report of Independent Certified Public Accountants 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-12
</TABLE>
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BERKOWITS & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
8211 WEST BROWARD BOULEVARD - SUITE 340
PLANTATION, FLORIDA 33324
(954) 475-3199
DADE (305) 944-9326
FAX (954) 472-2308
(800) 686-3521
http//www.berkowits-cpa.com
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Sterling Worldwide Corporation and Subsidiaries
We have audited the consolidated balance sheet of Sterling Worldwide Corporation
(Formerly Koala Capital Corporation) and Subsidiaries as of December 31, 1996
and the related statements of operations, stockholders' equity and cash flows
for the year ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Sterling Worldwide Corporation and
Subsidiaries as of December 31, 1996 and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Plantation, Florida
July 28, 1997
-1-
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Sterling Worldwide Corporation and Subsidiaries
Consolidated Balance Sheet
December 31, 1996 and 1995
Assets
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Current Assets
Cash and cash equivalents $406,109 $ 50,000
Accounts receivable:
Trade receivables 40,849
Officer receivables 77,397
Prepaid expenses 10,331
-------- --------
Total Current Assets 534,686 50,000
Property and equipment, net 5,750
Intangible assets, net 18,781
Other assets 1,500
-------- --------
Total Assets $560,717 $ 50,000
======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 57,084
Payroll taxes payable 5,101
Accrued expenses 5,117
-------- --------
Total Current Liabilities 67,302
Minority interest in subsidiary 46,049
-------- --------
Total Liabilities 113,351
======= ========
Stockholders' Equity
Preferred stock, Class A, $1 par value,10,000,000
shares authorized, no shares issued and
outstanding
Preferred stock, Class B, $.001 par value,490,000,000
shares authorized, no shares issued and
outstanding
Common stock; $.001 par value;
500,000,000 shares authorized; 16,375
shares issued and outstanding (1,375
at 12/31/95) 16 1
Additional paid in capital 467,796 51,999
Accumulated (deficit) ( 20,446) ( 2,000)
------- -------
Total Stockholders' Equity 447,366 50,000
------- -------
Total Liabilities and Stockholders' Equity $560,717 $ 50,000
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 21
Sterling Worldwide Corporation and Subsidiaries
Consolidated Statement of Operations
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
1996 1995
-------- -------
<S> <C> <C>
Revenues
Commissions $ 3,750 $ -0-
Interest 719 -0-
-------- -------
Total Revenues 4,469 -0-
-------- -------
Costs and Expenses
General and administrative 22,915 -0-
-------- -------
Total Costs and Expenses 22,915 -0-
-------- -------
Net (loss) $(18,446) $ -0-
======== =======
Weighted average number of shares
outstanding 5,438 1,261
======== =======
Net (loss) per common share $ (3.39) $ -0-
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 22
Sterling Worldwide Corporation
Consolidated Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional
Par Value $0.001 Paid In Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance- 12/31/94 1,250 $ 1 $ 1,999 $ (2,000) $ -0-
Insurance of common
stock (restricted) at
$400 per share at
12/1/95 125 50,000 50,000
Net income for year -0- -0-
------ -------- -------- --------- --------
Balance- 12/31/95 1,375 1 51,999 (2,000) 50,000
Issuance of common
stock (Regulation S)
for cash at $50
per share on
10/29/96 2,500 3 124,997 125,000
Issuance of common
stock (restricted)
on 12/24/96 for net
assets of Travelnet
International Corp. 12,500 12 290,800 290,812
Net loss for year (18,446) (18,446)
------ -------- -------- --------- --------
Balance-12/31/96 16,375 $ 16 $467,796 $ (20,446) $447,366
====== ======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 23
Sterling Worldwide Corporation and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
1996 1995
-------- ------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(18,446) $ -0-
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 241 -0-
-------- -------
f Net cash used in operating activities (18,205) -0-
-------- -------
Cash flows provided for investing activities:
Increase in officer receivable (58,469) -0-
Acquisition of property and equipment (1,388) -0-
Increase in organizational costs (3,050) -0-
-------- -------
Net cash used in investing activities (62,907) -0-
-------- -------
Cash flows from financing activities:
Proceeds from sale of common stock 125,000 50,000
-------- -------
Net cash provided by financing activities 125,000 50,000
-------- -------
Net increase in cash and cash equivalents 43,888 50,000
Cash and cash equivalents, beginning of year 50,000 -0-
-------- -------
Cash and cash equivalents, end of year $ 93,888 $50,000
======== =======
SUPPLEMENTAL CASH FLOW DISCLOSURES
Non cash investing activity
</TABLE>
The Company acquired $366,464 in assets and assumed $75,652 in liabilities of
Travelnet International Corporation in exchange for 12,500 common restricted
shares of its common stock.
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 24
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
Note 1 ORGANIZATION
The Company was incorporated under the laws of the State of
Utah on May 2, 1986 as Koala Capital Corporation and was in
the development stage since incorporation until December 24,
1996. On December 30, 1993, the Company was dissolved as a
Utah corporation and reincorporated as a Nevada corporation.
On October 28, 1996, the name was changed to Sterling
Worldwide Corporation. On December 24, 1996, the Company
acquired 86.4% of Travelnet International Corporation, A
Florida Corporation and its subsidiary Sterling AKG
Corporation, A Florida corporation in exchange for 12,500
common restricted shares of its common stock.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of Consolidation- The consolidated financial
statements include the accounts of Sterling Worldwide
Corporation and majority owned subsidiary Travelnet
International Corporation and its subsidiary Sterling AKG
Corp. All significant intercompany transactions have been
eliminated.
Accounting Methods-The Company recognizes income and expenses
based on the accrual method of accounting in accordance with
generally accepted accounting principles.
Dividend Policy- The Company has not yet adopted any policy
regarding payment of dividends.
Organization Costs- The Company amortizes its organization
costs over a five year period.
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 significant income as of the date of this report, no
provision for income taxes has been made.
The Company utilizes the liability method of accounting for
income taxes as set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109").
Under the liability method, deferred taxes are determined
based on the difference between the financial statement and
tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to
reverse. An allowance against deferred tax assets is recorded
when it is more likely than not that such tax benefits will
not be realized.
-6-
<PAGE> 25
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
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. The Company maintains its cash in financial
institutions which are federally insured up to a limit of
$100,000. At December 31, 1996 the Company had one bank
account with a balance of $179,183 which is $79,183 in excess
of the federally insured limit.
Loss Per Share- Loss per share is calculated by dividing net
loss by the weighted average common stock and common stock
equivalents outstanding during the period, adjusted to give
effect to a 1 for 4 reverse stock split in April 1997 and a 1
for 200 reverse split in July 1997.
Property and Equipment- Property and equipment are recorded at
cost. The Company follows the practice of charging
expenditures for additions or major replacements to the asset
accounts. When assets are retired or otherwise disposed of,
the cost or other basis thereof, and the related accumulated
depreciation are eliminated from the respective accounts with
any gain or loss being recognized in that period. The Company
provides for depreciation using the straight-line method over
the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
Years
-----
<S> <C> <C>
Equipment, Furniture and Improvements 5
</TABLE>
Note 3 CAPITALIZATION
On the date of incorporation, the Company sold 1,250 shares of
its common stock to Capital General Corporation for $2,000
cash for an average consideration of $1.60 per share. On
December 1, 1995, the Company sold an additional 125 shares of
its common stock to Capital General Corporation for $50,000
cash for an average consideration of $400 per share. On
October 29, 1996, the Company sold 2,500 shares of Regulation
S stock for $125,000 cash for an average consideration of $50
per share.
-7-
<PAGE> 26
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
NOTE 4 ACQUISITIONS
On December 24, 1996, Sterling Worldwide Corporation acquired
585,000 shares of Travelnet International Corporation or 86.4%
of its outstanding stock by transferring 12,500 shares of
common restricted shares of its common stock.
The acquisition was accounted for as a purchase with the
results of operations of Travelnet International and its
wholly owned subsidiary Sterling AKG Corp. included from the
acquisition date. However, due to the few number of days
remaining in 1996 these results were deemed immaterial. The
fair value of assets acquired was $366,464 and liabilities
assumed was $75,652 which is net of the minority interest. The
proforma results listed below are unaudited and reflect
purchase price accounting adjustments assuming the acquisition
occurred at the beginning of each year presented.
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C> <C>
Revenues $5,737,676 $3,580,890
Net (loss) (117,485) (34,932)
(Loss) per share $(21.60) $(27.70)
Average shares outstanding 5,438 1,261
</TABLE>
NOTE 5 MINORITY INTERESTS
On December 24, 1996, Sterling Worldwide Corporation acquired
86.4% of the outstanding stock of Travelnet International
Corporation. Total assets of $424,452 were acquired with
liabilities assumed of $87,591. For financial reporting
purposes the assets and liabilities are included in Sterling
Worldwide Corporation consolidated financial statements and
the outside investors interest in Travelnet International
Corporation is reflected as a minority interest.
-8-
<PAGE> 27
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
Note 6 PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31,
1996
----
<S> <C>
Equipment $ 4,211
Furniture 2,484
Improvements 1,454
--------
8,149
Less accumulated depreciation (2,399)
--------
$ 5,750
========
</TABLE>
Depreciation expense for the year ended December 31, 1996 was
$1,256.
Note 7 RELATED PARTY TRANSACTIONS
1. Receivable Officer
At December 31, 1996, the Company is owed $4,000 from its
President for funds advanced from the Company. The loan is
non-interest bearing and it is anticipated that it will be
repaid in the near future.
2. Receivable Related Party
At December 31, 1996, the Company is owed $53,750 by Richard
Gladstone, the husband of the former controlling shareholder
of Travelnet International Corporation. Richard Gladstone is
owed $500,000 for a loan made to the promoters, New
Contenders, Inc. of the boxing match between Sugar Ray Leonard
and Hector Camacho which was held in February, 1997. The loan
bears interest at 24% per annum. $250,000 was due by March 15,
1997 and $250,000 plus all unpaid interest and a commission of
$37,500 was due April 15, 1997. The loan is secured by the
promoter's sale of foreign transmission rights up to
$600,000. In October 1996, the Company purchased 10% of
Gladstone's interest in the receivable for $50,000. A $3,750
commission was accrued at October 31, 1996 which represents
the Company's 10% share of the commission. The amounts will be
repaid to Sterling on the same terms that New Contenders, Inc.
repays its advance to Richard Gladstone. No amounts have been
repaid to date.
In addition at December 31, 1996, the Company is owed $19,647
by Richard Gladstone, for advances made by Sterling AKG Corp a
subsidiary of the company. Interest has been accrued in the
amount of $719.
-9-
<PAGE> 28
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
NOTE 8 COMMITMENTS
The Company entered into a twelve month lease which expires
July 31, 1998 for its operating facilities in Boca Raton,
Florida. The lease calls for a monthly base rental plus
Florida sales tax.
Future minimum payments under noncancellable operating leases
with initial terms of one year or more (excluding taxes and
cost of living adjustments) are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
1997 $ 21,035
1998 12,918
------
Total minimum lease payments $ 33,953
======
</TABLE>
Note 9 SUBSEQUENT EVENTS
On April 15, 1997, The Company reverse split its common stock
on a 1 for 4 basis. The number of shares outstanding prior to
the split was 13,100.000. The number of shares outstanding
after this split is 3,275,000.
On July 2, 1997, the Company reverse split its common stock on
a 1 for 200 basis. The number of shares outstanding prior the
split was 3,275,000. The number of shares outstanding after
this split is 16,375.
All references to common stock retroactively reflect the stock
splits.
On July 11, 1997, the Company amended its Articles of
Incorporation and Bylaws to provide for the following amended
capital structure:
1. Authorized share capital be increased from
100,000,000 total shares of common stock to
500,000,000 shares of $.001 par value.
2. Authorized a series of 10,000,000 shares of Class A
Preferred Stock of $1.00 per share par value. The
Class A Preferred Shares shall have superpriority
voting rights of 100,000 votes per share and that the
holders of the Class A shares shall have the right to
elect majority of the directors to the Board of the
Company, and
3. Authorized 490,000,000 shares of Class B referred
Stock which shares shall be non-voting and have a par
value of $.001 per share and shall be convertible
into one share of common stock at a conversion rate
of ten shares of common stock for each Preferred
Share surrendered.
-10-
<PAGE> 29
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
Note 9 On July 11, 1997, the Board of Directors adopted a stock grant
for key employees, consultants and attorneys. The maximum
number of shares available for issuance under the plan is
1,000,000 shares of common stock.
Note 10 EVENTS SUBSEQUENT TO THE DATE OF REPORT OF INDEPENDENT
ACCOUNTANTS (UNAUDITED)
On August 7, 1997, the Company agreed to dispose of the
Company's majority owned operating subsidiary, Travelnet
International Corporation and its wholly subsidiary Sterling
AKG Corp. in exchange for the common stock owned by its
majority shareholder, Laurie Doll Gladstone. The shares are
now owned by LaSalle Group, Ltd. Gladstone received an
irrevocable three year put option which requires the
corporation to purchase Gladstone's 584,400 shares in
Travelnet for $2,000,000 in fully registered shares of the
corporation. If the corporation does not show $10,000,000 in
net assets on its certified financial statements for the
quarter ended September 30, 1997 on or prior to October 1,
1997, then the corporation must return to Ms. Gladstone any
such number of shares of the corporation which would provide
her with 80% of the outstanding securities (on a fully diluted
basis) of the corporation.
On August 13, 1997, the Board approved the acquisition by the
Company of International Property Investments Corporation, a
licensed Florida real estate brokerage engaged in the real
estate brokering business of commercial real estate, in
exchange for 150,000 shares of restricted
common stock of the Company.
On August 13, 1997 the Company agreed to acquire Resort
Marketing Group, Inc., a Florida company specializing in the
marketing of Resort condominiums and resort-related properties
in exchange for 150,000 shares of restricted common stock.
On August 13, 1997 in a related party transaction, the Board
approved the acquisition from LaSalle Group, Ltd. of 100% of
the issued and outstanding stock of LY Transportation
Construction Ltd., a BVI company and four corporate entities
to be known as Natural Park Bahamas, Ltd., Natural Park S.A.
Ltd., Natural Park Alaska, Inc. and Natural Park U.S.A, Inc.
in exchange for the issuance of 10,000,000 shares of Class A
Preferred of $1.00 par value and 50,000,000 shares of newly
issued restricted common stock of the Company.
-11-
<PAGE> 30
Sterling Worldwide Corporation and Subsidiaries
(Formerly Koala Capital Corporation)
Notes to Financial Statements
On August 19, 1997, the Company approved a Resolution to
acquire the Fort Thomas Resort in St. Kitts in exchange for
the issue of 1,027,828 shares of common stock to be valued at
$10.00 per share in exchange for the real property commonly
known as the Fort Thomas Resort. The Company has issued
1,027,828 shares of common stock to be held in escrow pending
the closing of this transaction.
On August 19, 1997 the Company agreed, subject to due
diligence, to proceed with the acquisition of FINdex.com , a
Florida company engaged in the offering of services on the
Internet via its web site www.FINdex.com.
On August 19, 1997 the Board approved a private placement in
the sum of $100,000,000 to be offered under Rule 144(a) to
institutional investors. The Company President was authorized
to enter into an exclusive private placement agreement with
AIBC Investment Services Corporation, investment bankers, for
the purpose of raising $100,000,000 in equity funds to be
utilized by Sterling to make an equity investment of
$100,000,000 in the Natural Park Public Company, Ltd. of
Thailand, or in the alternative, to acquire a substantial
portfolio of properties from the Natural Park of Thailand
portfolio.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 406,109
<SECURITIES> 0
<RECEIVABLES> 118,246
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 534,686
<PP&E> 8,149
<DEPRECIATION> 2,399
<TOTAL-ASSETS> 560,717
<CURRENT-LIABILITIES> 67,302
<BONDS> 0
0
0
<COMMON> 16
<OTHER-SE> 447,350
<TOTAL-LIABILITY-AND-EQUITY> 560,717
<SALES> 3,750
<TOTAL-REVENUES> 4,469
<CGS> 0
<TOTAL-COSTS> 22,915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,446)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,446)
<EPS-PRIMARY> (3.39)
<EPS-DILUTED> 0
</TABLE>
