<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment Number One
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: August 31, 1996
Commission file number: 33-68570
LEGGOONS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1239043
---------------------- ---------------------------------
(State of incorporation) (IRS Employer Identification number)
400 South Lindell, Vandalia, Missouri, 63382
---------------------------------------------------
(Address of principal executive offices and Zip Code)
(573) 594-6418
--------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Leggoons, Inc. Common Stock $.01 Par Value
Leggoons, Inc. Class A Warrants
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.
Yes No X
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or informational statements incorporated by reference in Part III of this
form 10-KSB/A or any amendment to this form 10-KSB/A. [ X ]
Revenue's for the fiscal year ended August 31, 1996: $0
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing average bid and asked price of the
Common Stock on November 30, 1996, as reported on the OTC Bulletin Board,
was $225,000.
Number of shares of common stock outstanding as of November 30, 1996:
2,787,000
Documents Incorporated by Reference: Exhibit's in Registrant's Annual Report
on Form 10-K filed on December 14, 1995, are incorporated by reference to
the exhibit index attached hereto. Exhibits in Registrant's Annual Report on
Form 10-K filed on November 29, 1994, are incorporated by reference to
the exhibit index attached hereto. Exhibits in Registrant's Registration
Statement on Form S-1 filed on October 28, 1993, are incorporated by
reference to the exhibit index attached hereto.
<PAGE>
LEGGOONS, INC.
Index to Annual Report
on Form 10-KSB/A
Part I Page
- ------ ----
Item 1- Description of Business 3
Item 2- Description of Property 4
Item 3- Legal Proceedings 4
Item 4- Submission of Matters to a
Vote of Security Holders 4
Part II
- -------
Item 5- Market for Common Equity
and Related Stockholder Matters 4-5
Item 6- Plan of Operations 5-6
Item 7- Financial Statements 6
Item 8- Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 6
Part III
- --------
Item 9- Directors, Executive Officers
and Compliance With Section 16(a)
of the Exchange Act 7
Item 10- Executive Compensation 8
Item 11- Security Ownership of Certain
Beneficial Owners and Management 8-9
Item 12- Certain Relationships and Related
Transactions 9-10
Part IV
- -------
Item 13- Exhibits, Financial Statement
Schedules and Reports on Form 8-K 10
-2-
<PAGE>
PART I
------
Item 1. Description of Business
- -----------------------------------
(a) Business Development
Leggoons, Inc. (the "Company") was organized under the laws of the State
of Missouri on September 1, 1981, as HANDY-TOP, INC. On April 20, 1983, the
Articles of Incorporation were amended to change the name of the corporation
to HTI Corporation. On May 28, 1993, the Articles of Incorporation were
amended to change the name of the corporation to Leggoons, Inc. In addition
to changing the Company's name, the May 28,1993, amendment to the Articles of
Incorporation increased the number of authorized shares of common stock from
40,000 to 10,000,000 and decreased the par value of the common stock from
$1.00 per share to $.01 per share. Also on May 28, 1993, the Company
declared a 14-for-1 stock split. Unless otherwise indicated, all share and
per share data are reflected on a post split basis throughout this Form
10-KSB/A.
On June 12, 1996, the Company transferred all of its assets and
liabilities to a third party assignee, under an "Assignment for the Benefit
of Creditors" (the "Assignment"). An Assignment is a business liquidation
device available as an alternative to bankruptcy. The third party assignee,
a Nebraska corporation, also named Leggoons, Inc. (the "Assignee"), will be
required to properly, timely, and orderly dispose of all remaining assets for
the benefit of creditors. The Company will continue to maintain its' status
as a shell corporation.
(b) Business of Issuer
The Company was engaged in the design, manufacture and distribution of
apparel and related accessories which are sold to better specialty and
department stores nationwide under the brands: Leggoons, CPO by Leggoons,
John Lennon Artwork Apparel and Snooggel. On January 19, 1996, the Company
entered into a Licensing Agreement with Robert Tamsky, a former director and
employee of the Company. Pursuant to the terms of the Licensing Agreement,
the Company granted Mr. Tamsky effective January 1, 1996, the right to use the
LEGGOONS trademark in connection with the design, production, marketing, sales
and sublicensing of all clothing, wearing apparel and accessories bearing
the "LEGGOONS" symbol. This right will continue until December 31, 1998,
and may be extended thereafter each year for an additional year. In
consideration for the license, Mr. Tamsky, according to the Licensing
Agreement, shall pay to the Company a royalty of five percent of the net
sales of "LEGGOONS" products.
Also on January 19, 1996, the Company adopted a formal plan to
discontinue the designing, selling, manufacturing and distribution of its
apparel products. As part of such plan, the Company discontinued production
on April 30, 1996, and intends to either sell or liquidate the operations
within twelve months of that date. On June 12, 1996, the Company transferred
all of its assets and liabilities to a third party assignee, under an
"Assignment for the Benefit of Creditors." Included in the Assignment were
the rights and obligations of the Licensing Agreement.
After the Assignment the Company is continuing its status as a public
shell corporation with the intention of marketing the shell for a merger or
acquisition in the future. The Company does not currently have any employees.
-3-
<PAGE>
Item 2. Description of Property
- -----------------------------------
The Company is using office space provided by the Assignee at 400 South
Lindell, Vandalia, Missouri, to maintain its shell operations.
Item 3. Legal Proceedings
- -----------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------------------
Not Applicable
PART II
-------
Item 5. Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------------------
(a) Market Information
The Common Stock is traded in the over-the-counter market and the
range of closing bid prices shown below is as reported by the OTC Bulletin
Board. The quotations shown reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1996
High Low
---- ---
<S> <C> <C>
First Quarter 1 7/8 3/4
Second Quarter 1 9/16 7/8
Third Quarter 1 9/16 5/16
Fourth Quarter 15/16 3/8
<CAPTION>
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1995
High Low
---- ---
<S> <C> <C>
First Quarter 1 1/4 7/8
Second Quarter 15/16 3/8
Third Quarter 5/8 3/8
Fourth Quarter 5/8 3/8
</TABLE>
(b) Holders of Common Equity
As of August 31, 1996, the Company estimates there were 350 beneficial
shareholders of the Company's Common Stock.
(c) Dividends
The Company has not declared or paid a cash dividend to stockholders
since it became a "C" corporation on November 18, 1993. The Board of
Directors presently intends to retain any earnings to finance Company
operations and does not expect to authorize cash dividends in the foreseeable
future. Any payment of cash dividends in the future will depend upon the
Company's earnings, capital requirements and other factors.
-4-
<PAGE>
Item 6. Plan of Operations
- ------------------------------
The Company is currently satisfying its cash requirements by obtaining
advances from its principal stockholder, James S. Clinton. Mr. Clinton is
also the President and a member of the Board of Directors of the Company.
Mr. Clinton has advised the Company that he will continue to provide cash
advances for operations for at least the next twelve months. It is
anticipated that the Company will employ one or two employees in the next
twelve months to provide for the procedures required to market the public
shell for merger or acquisition.
On May 22, 1996, the Company entered into an Addendum to the Stock
Purchase Agreement it initially entered into on September 5, 1995, with
Infinitron Investments International, Inc. of Vancouver B.C. ("Infinitron").
Pursuant thereto 100% of the shares of common stock of Infinitron would be
exchanged for approximately 4,797,500 shares of common stock of the Company
which would represent approximately 95% of the post-split Company's
outstanding common stock. The Addendum provided, among other things, that
Leggoons would use its best efforts to obtain SEC clearance of its proxy
statement by July 22, 1996, and Infinitron will use its best efforts to
fully cooperate with the Company in obtaining such clearance.
On July 3, 1996, counsel for Infinitron informed the Company that
Infinitron does not intend to proceed with the transactions contemplated by
the Stock Acquisition Agreement. Counsel for Infinitron stated that the
basis for that action was that he noted "a number of irregularities in the
relationships and dealings among the principals of Leggoons and Infinitron,"
however he did not provide any specifics relating to that allegation. The
Company believes these claims to be baseless and without merit.
Settlement negotiations have been completed, including approval by all
Infinitron and the Company of the settlement documents, which are currently
being circulated for signatures. Generally, under the terms of the
settlement, the Company is to receive $510,000 in cash over a period of six
months, along with 186,721 shares of Infinitron common stock, which
represents approximately 3% of Infinitron's outstanding shares of common
stock on August 5, 1996. The 186,721 shares of common stock of Infinitron
will be held for the benefit of the Company's stockholders as their "loss of
the bargain" under the proposed merger. The $510,000 of cash proceeds will
be distributed in accordance with the Assignment.
-5-
<PAGE>
As of December 31, 1996, the settlement agreement has not been executed
by all parties. If, and when, this settlement agreement is executed the
Company will be able to determine how the proceeds of the settlement
agreement affect its plan of operations for the next twelve months.
Item 7. Financial Statements
- --------------------------------
Financial statements for the two years ended August 31, 1996 and 1995
are presented in a separate section of this report following Part IV.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- ---------------------------------------------------------------------------
On November 3, 1995, the Company engaged the services of BDO Seidman in
St. Louis, Missouri, to provide an audit of its financial statements for the
fiscal year ended August 31, 1995. The former accountant, KPMG Peat Marwick
LLP in Omaha, Nebraska, declined to stand for re-election for the 1995
engagement. The independent auditors' reports for August 31, 1993 and 1994,
were modified as to uncertainties about the entity's ability to continue as a
going concern. The decision to change accountants was approved by the
Company's board of directors with the selection of the successor accountants.
The Company and its' former accountants had no disagreements during the
fiscal years ended August 31, 1993 and 1994, and through the date they
declined to stand for re-election.
-6-
<PAGE>
PART III
--------
Item 9. Directors, Executive Officers and Compliance With Section 16(a)
of the Exchange Act
- ---------------------------------------------------------------------------
(a) Directors and Executive Officers
James S. Clinton, 56, Chief Executive Officer, President and Director of
the Company since 1983. Director of Eselco, Inc., an investor owned electric
utility.
Steven D. Walters, 29, Chief Financial Officer and Director of the
Company since 1994. Audit Supervisor/Senior in Certified Public Accounting
firms from 1991 to 1994.
Larry D. Langston, 56, Director of the Company since 1983. Executive
Vice President of the Company from 1983 to 1995.
Richard F. Giannotti, 50, Director of the Company since 1995. Vice
President of Multi Financial Securities since 1995. Securities and Corporate
Finance with Regional Brokerage firms from 1991 to 1995.
(b) Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons holding 10% or more of the
Company's common stock to file reports regarding their ownership and regarding
their acquisitions and dispositions of the Company's common stock with the
Securities and Exchange Commission. The Company is unaware that any required
reports were not timely filed.
-7-
<PAGE>
Item 10. Executive Compensation
The following table sets forth information concerning compensation paid
by Leggoons, Inc. for services rendered during fiscal year 1996, 1995, and
1994 for the Chief Executive Officer and for each of the Company's other
executive officers whose annual salary and bonus exceeds $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Awards Payouts
All
Annual Compensation Other
Name and Restricted LTIP Compen-
Principal Salary Bonus Other Stock Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- --------- ---- ------ ----- ---- ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James S. 1996 -0- -0- -0- -0- -0- -0- -0-
Clinton, 1995 17,631 -0- -0- -0- -0- -0- -0-
President and 1994 38,200 -0- -0- -0- -0- -0- -0-
Chief Execu-
tive Officer
</TABLE>
Perquisites and other personal benefits are omitted because they do not
exceed either $50,000 or 10% of the total of annual salary and bonus for the
named executive officer.
Item 11. Security Ownership of Certain Beneficial Owners and Management
- ---------------------------------------------------------------------------
The following table sets forth, as of November 30, 1996, the beneficial
ownership of the Company's Common Stock by each person who is known by the
Company to own beneficially more than 5% of the issued and outstanding shares
of the Company's Common Stock.
-8-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
------------------- -------------------- ----------
<S> <C> <C>
James S. Clinton 1,416,000(1) 50.8%
30 Ginger Cove Road
Valley, NE 68064
Larry D. Langston 266,000(1) 9.6%
301 W. Saint John
Vandalia, MO 63382
</TABLE>
(1) On January 24, 1996, Mr. Langston entered into an Option Agreement
with Steven Walters, an officer and director of the Company which
grants Mr. Walters an option to purchase 261,500 of Mr. Langston's
shares. The option price is $100,000, the option may not be exercised
prior to November 23, 1996, and expires on July 24, 1997. Mr. Walters,
in turn, has assigned the right to purchase 130,750 of such shares to
the Claude E. Clinton Family Trust for which Mr. Clinton, an officer
and director of the Company, acts as Trustee (Mr. Clinton is not the
beneficiary of the trust but has the right to vote the shares) in
consideration of $50,000 cash and a loan to Mr. Walters in the amount
of $50,000. It is anticipated that the option will be exercised
immediately prior to July 24, 1997, as long as the then market price
is higher than the option price.
The following table shows, as of November 30, 1996, certain information
with respect to Leggoons, Inc. Common Stock beneficially owned by directors
and executive officers of the Company. Unless otherwise noted, all shares
are owned directly or indirectly with sole voting and investment power.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership1 Class
---------------- --------------------- ----------
<S> <C> <C>
James S. Clinton (2) 1,416,000 50.8%
Larry D. Langston (3) 266,000 9.6%
Steven D. Walters (2) 1,000 -0-
Richard Giannotti (3) 1,000 -0-
All Directors and
Officers as a Group 1,684,000 60.4%
</TABLE>
(1) Shares reported include shares owned by spouses of officers
and directors. No options to acquire any Leggoons, Inc. common
stock are owned by any officer or director.
(2) Officer and director of the Company.
(3) Director of the Company.
Item 12. Certain Relationships and Related Transactions
- -----------------------------------------------------------
During fiscal 1995, the saliant details of certain transactions which
occurred between the Company and its officers and directors are set forth
below. With respect to each such transaction, the Company believes that the
terms of each transaction were approximately as favorable to the Company as
could have been obtained from an unrelated third party.
-9-
<PAGE>
In January 1995, the Company authorized the issuance of 140,000 shares of
restricted common stock to James Clinton. At such time, Mr. Clinton was the
President and a member of the Board of Directors of the Company. Such
issuance was in consideration of the forgiveness by Mr. Clinton of $140,000
in debt owed by the Company to Mr. Clinton. The Board of Directors of the
Company, by unanimous written consent, deemed the issuance of such shares to
be fair and equitable in view of the book value and market value of the
Company's common stock.
In July 1995, the Company sold the useable assets of its facility in
Omaha to James S. Clinton, President of the Company, at the approximate
market value of the assets. No material gain or loss was incurred in the
transaction. The market value of the assets was determined by management
analysis of the assets in the transaction.
PART IV
-------
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -----------------------------------------------------------------------------
(a) Index to Financial Statements and Schedules
See index to financial statements and supporting schedules on page 11 of
this annual report on Form 10-KSB/A.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated as of June 12, 1996, was filed with
respect to the sale of assets and liabilities to the Assignee in conjunction
with the Assignment for the Benefit of Creditors filed by the Company on June
12, 1996.
(c) Index to Exhibits
Any exhibits filed with the Securities and Exchange Commission will be
supplied upon written request of Steven D. Walters, Vice President of Finance,
Leggoons, Inc., 400 S. Lindell, Vandalia, MO 63382. A charge will be made
to cover copying costs. See Exhibit Index below.
Number Exhibit Description
3.1 Leggoons, Inc. Articles of Incorporation and Amendments,
incorporated by reference to Exhibit 3.1 of Leggoons,
Inc. Registration Statement on Form S-1 filed on October
28, 1993.
3.2 Leggoons, Inc. Bylaws Amended, incorporated by reference
to Exhibit 3.2 of Leggoons, Inc. Registration Statement
on Form S-1 filed on October 28, 1993.
4.2 Class A Warrant Agreement, incorporated by reference to
Exhibit 4.2 of Leggoons, Inc. Registration Statement on
Form S-1 filed on October 28, 1993.
10.1 Assignment for Benefit of Creditors, incorporated by
reference to Exhibit 10.1 of Leggoons, Inc., Form 8-K
filed on June 27, 1996.
-10-
<PAGE>
Leggoons, Inc.
Financial Statements
Years Ended August 31, 1996 and 1995
<PAGE>
Leggoons, Inc.
Financial Statements
Years Ended August 31, 1996 and 1995
Independent Auditors' Report F-2
Financial Statements
Balance sheet F-3
Statements of operations F-4
Statements of stockholders' equity (deficit) F-5
Statements of cash flows F-6 - F-7
Summary of accounting policies F-8
Notes to financial statements F-9 - F-12
<PAGE>
Independent Auditors' Report
The Board of Directors
Leggoons, Inc.
Vandalia, Missouri
We have audited the accompanying balance sheet of Leggoons, Inc. as of August
31, 1996, and the related statements of operations, stockholders' equity
(deficit) and cash flows for the years ended August 31, 1996 and 1995. 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
presentation of the financial statements. 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 Leggoons, Inc. as of August
31, 1996 and 1995, and the results of its operations and its cash flows for
the years then ended, in conformity with generally accepted accounting
principles. Also, our opinion presents fairly, in all material respects, the
information set forth therein.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 2 and 3 to
the financial statements, the Company discontinued its apparel operations and
disposed of all its assets and liabilities as of June 12, 1996. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are described
in Note 7. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
St. Louis, Missouri
December 17, 1996
<PAGE>
Leggoons, Inc.
Balance Sheet
<TABLE>
<CAPTION>
August 31,1996
- ----------------------------------------------------------------------------
<S> <C>
Assets
Total Assets $ -
============================================================================
Liabilities and Stockholders' Deficit
Current
Due to stockholder $ 8,188
Accounts payable 12,339
- ----------------------------------------------------------------------------
Total Liabilities 20,527
- ----------------------------------------------------------------------------
Commitments and Contingencies (Notes 7 and 10)
Stockholders' Deficit (Notes 3, 5 and 6)
Preferred stock, $.01 par value - shares authorized,
5,000,000; no shares issued and outstanding -
Common stock, $.01 par value - shares authorized,
10,000,000; issued and outstanding, 2,787,000 27,870
Additional paid-in capital 3,522,792
- ----------------------------------------------------------------------------
Accumulated deficit (3,571,189)
- ----------------------------------------------------------------------------
Total Stockholders' Deficit (20,527)
============================================================================
Total Liabilities and Stockholders' Deficit $ -
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-3
<PAGE>
Leggoons, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Years Ended August 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
General and Administrative Expenses $ 128,920 $ 47,706
- ----------------------------------------------------------------------------
Loss from Continuing Operations (128,920) (47,706)
Discontinued Operations (Note 2)
Loss from discontinued apparel operations (259,302) (1,359,277)
Loss on disposal of apparel operations,
including provision for operating losses
during the phaseout period (469,174) -
- ----------------------------------------------------------------------------
Loss from Discontinued Operations (728,476) (1,359,277)
============================================================================
Net Loss $(857,396) $(1,406,983)
============================================================================
Net Loss per Common Share $ (.31)$ (.51)
============================================================================
Weighted Average Number of Common Shares
Outstanding 2,787,000 2,734,500
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-4
<PAGE>
Leggoons, Inc.
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Common stock
------------ AdditionalTotal
Number Par Preferred paid-in Accumulated stockholders'
of shares value stock capital deficit equity (deficit)
--------- ----- ------- ------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance
at Sept.
1, 1994 2,647,000 $26,470 $ - $2,251,470 $(1,306,810) $ 971,130
Issuance
of
140,000
shares of
common
stock on
January
13, 1995
at $1.00
per share
(Note 6) 140,000 1,400 - 138,600 - 140,000
- -----------------------------------------------------------------------------
Net loss - - - - (1,406,983) (1,406,983)
Balance
at Aug.
31, 1995 2,787,000 27,870 - 2,390,070 (2,713,793) (295,853)
Capital
contri-
bution
as a
result
of
Assign-
ment
for
Benefit
of
Creditors
(Note 3) - - - 1,132,722 - 1,132,722
- -----------------------------------------------------------------------------
Net loss - - - - (857,396) (857,396)
=============================================================================
Balance
at Aug.
31, 1996 2,787,000 $27,870 $ - $3,522,792 $(3,571,189) $ (20,527)
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-5
<PAGE>
Leggoons, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
Years Ended August 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Continuing operations:
Net loss $(128,920) $ (47,706)
Changes in assets and liabilities:
- ----------------------------------------------------------------------------
Accounts payable 6,377 4,962
- ----------------------------------------------------------------------------
Cash used in continuing operations (122,543) (42,744)
Discontinued operations:
Net loss (728,476) (1,359,277)
Adjustments to reconcile net loss to net cash
provided by(used in) discontinued operations:
Depreciation and amortization 101,620 139,615
Loss on disposal of equipment - 5,117
Allowance for doubtful accounts receivable (10,000) (20,000)
Loss (gain) on investment in partnership 111,940 (4,985)
Changes in assets and liabilities:
Accounts receivable 21,550 432,339
Inventories 423,626 646,028
Deferred charges 145,218 190,275
Prepaid expenses 89,233 (24,160)
- ----------------------------------------------------------------------------
Accounts payable (245,393) 18,124
- ----------------------------------------------------------------------------
Accrued expenses 131,017 (21,838)
- ----------------------------------------------------------------------------
Cash provided by discontinued operations 40,335 1,238
Cash Used in Operating Activities (82,208) (41,506)
- ----------------------------------------------------------------------------
Investing Activities
Discontinued operations:
Decrease in other assets - 909
Distributions from partnership - 38,567
Cash Provided by Investing Activities - 39,476
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-6
<PAGE>
Leggoons, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
<S> <C> <C>
Financing Activities
Continuing operations:
Proceeds from additional borrowings from
stockholder 41,354 -
Cash provided by continuing operations 41,354 -
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-7
<PAGE>
Leggoons, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended August 31, 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Discontinued operations:
Checks issued against future deposits - (28,512)
Net payments on note payable to bank (160,439) (26,447)
Payments on long-term debt (40,903) (92,173)
Payments on note payable to stockholder - (46,446)
Proceeds from additional borrowings from
stockholder 259,969 205,489
Cash transferred under Assignment for
Benefit of Creditors (27,654) -
- ----------------------------------------------------------------------------
Cash provided by discontinued operations 30,973 11,911
- ----------------------------------------------------------------------------
Cash Provided by Financing Activities 72,327 11,911
- ----------------------------------------------------------------------------
Net Increase (Decrease) in Cash (9,881) 9,881
============================================================================
Cash at Beginning of Year 9,881 -
Cash at End of Year $ - $ 9,881
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-8
<PAGE>
Leggoons, Inc.
Summary of Accounting Policies
Earnings (Loss) per Common Share
- -------------------------------
Net earnings (loss) per common share is computed using the weighted average
number of common and common equivalent shares outstanding during the period.
Shares issuable pursuant to outstanding stock warrants have been excluded
from the computation as the effect is antidilutive. Fully diluted net loss
per share for all periods presented is not materially different from primary
net loss per share.
Income Taxes
- ------------
Deferred income taxes are recognized for temporary differences between the
bases of assets and liabilities for financial statement and income tax
purposes. If it is more likely than not that some portion of a deferred tax
asset will not be realized, a valuation allowance is recorded.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
F-9
<PAGE>
Leggoons, Inc.
Notes to Financial Statements
I. Nature of Operations
- -----------------------
The Company has historically been a manufacturer of sports and leisure wear
clothing primarily for boys. Sales were to retailers nationwide with
emphasis in the Eastern United States. The Company has been operating as a
shell corporation since the disposition of all its assets and liabilities.
2. Discontinued Operations
- --------------------------
On January 19, 1996, the Company adopted a formal plan to discontinue the
designing, selling, manufacturing and distribution of its apparel products.
As part of such plan, the Company discontinued production on April 30, 1996
and culminated with the Assignment for Benefit of Creditors on June 12, 1996
(Note 3).
The loss from operations of this discontinued business was $259,302 and the
loss on disposal including operating losses during the period January 19,
1996 to June 12, 1996 were $469,174. Sales for this discontinued business
were $1,013,926 and $2,260,872 for the years ended August 31, 1996 and 1995,
respectively.
The Company's 1995 financial statements have been reclassified to conform
with the 1996 presentation.
3. Disposition of Assets and Liabilities
- ----------------------------------------
On June 12, 1996, the Company transferred all of its assets and liabilities
to a third party assignee, under an "Assignment for Benefit of Creditors."
An Assignment is a business liquidation device available as an alternative to
bankruptcy. The third party assignee, a Nebraska corporation, also named
Leggoons, Inc. (the Assignee), will be required to property, timely and
orderly dispose of all remaining assets for the benefit of creditors. The
Company will continue to maintain its status as a shell corporation. The
approximate book values of all assets and liabilities transferred on June 12,
1996 are as follows:
F-10
<PAGE>
Leggoons, Inc.
Notes to Financial Statements
<TABLE>
<CAPTION>
Assets
(liabilities)
- ----------------------------------------------------------------------------
<S> <C>
Cash $ 27,654
Accounts receivable, less allowance for doubtful
accounts 204,567
Inventories 130,670
Property, plant and equipment, less accumulated
depreciation 80,929
Trademark, less accumulated amortization 210,440
Notes payable to banks (518,836)
Notes payable to stockholder (755,510)
Accounts payable (293,586)
Accrued expenses (213,537)
Bank overdraft (5,513)
- -----------------------------------------------------------------------------
Net liabilities transferred $(1,132,722)
=============================================================================
</TABLE>
The net liabilities as of June 12, 1996 were removed from the Company's
financial statements by a corresponding credit to additional paid-in capital
of $1,132,722.
There was minimal financial activity of the Assignee for the period June 13,
1996 to August 31, 1996.
4. Income Taxes
- ---------------
The Company has fully reserved the tax benefits arising from unused net
operating carryforwards of approximately $2,770,000 at August 31, 1996. The
unused net operating losses expire in various amounts from 2009 to 2011.
The components of deferred tax assets consist of the following at August 31,
1996:
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards $1,080,300
Other 4,900
- ----------------------------------------------------------------------------
Total gross deferred tax assets 1,085,200
Less valuation reserve 1,085,200
$ -
</TABLE>
The change in the valuation allowance for deferred tax assets was an increase
of $68,515 for the year ended August 31, 1996.
F-11
<PAGE>
Leggoons, Inc.
Notes to Financial Statements
5. Common Stock Warrants
- ------------------------
The Company has outstanding warrants to purchase approximately 900,000 shares
of common stock. The warrants are exercisable at $3.75 per share and expire
on November 18, 1997. The warrants are callable in total by the Company
after November 18, 1994 at a redemption price of $.05 per warrant upon 60
days prior notice if the common stock has traded above $3.75 for at least 20
out of the 30 trading days preceding the date of the notice of redemption.
6. Stockholders' Equity (Deficit)
- ---------------------------------
On January 13, 1995, the Company's principal stockholder forgave $140,000 of
debt owed to him by the Company in exchange for 140,000 shares of common
stock of the Company.
7. Plan of Operations
- ---------------------
The Company is currently satisfying its cash requirements by obtaining
advances from its principal stockholder, James S. Clinton. Mr. Clinton is
also the President and a member of the Board of Directors of the Company.
Mr. Clinton had advised the Company that he will continue to provide cash
advances for operations for at least the next 12 months.
8. Fourth Quarter Adjustments
- -----------------------------
In the fourth quarter of 1995, the Company recorded adjustments which
increased its net loss by approximately $380,000. These adjustments included
a $280,000 increase in reserve for inventory obsolescence and $100,000
amortization of deferred production costs.
9. Supplemental Cash Flow Information
- -------------------------------------
The Company paid $43,382 and $104,823 for interest for the years ended August
31, 1996 and 1995, respectively.
F-12
<PAGE>
Leggoons, Inc.
Notes to Financial Statements
The following summarizes noncash investing and financing transactions:
<TABLE>
<CAPTION>
Year Ended August 31, 1996
- ---------------------------------------------------------------------------
<S> <C>
Transfer of assets and liabilities under
Assignment for Benefit of Creditors (Note 3) $1,132,722
==========================================================================
Year Ended August 31, 1995
- --------------------------------------------------------------------------
Issuance of 140,000 shares of common stock
to the Company's principal stockholder in
payment of $140,000 of debt owed him
(Note 6) $140,000
Transfer of fixed assets and inventory with
a market value of $56,814 to the Company's
principal stockholder in payment of $56,814
of debt owed him $56,814
==========================================================================
</TABLE>
10. Subsequent Event
- --------------------
The Company has concluded settlement negotiations of a dispute with
Infinitron Investments International, Inc. (Infinitron), who, under a Stock
Acquisition Agreement, had previously agreed to acquire the Company. Final
settlement documents are being circulated for signature. Generally, under
the terms of the settlement, the Company is to receive $510,000 in cash over
a period of six months from Infinitron, along with 186,721 shares of common
stock of Infinitron, which represents approximately 3% of Infinitron's
outstanding shares of common stock on August 5, 1996.
The 186,721 shares of common stock of Infinitron will be held for the benefit
of the Company's stockholders as their "loss of the bargain" under the
proposed merger. The $510,000 of cash proceeds will be distributed in
accordance with the Assignment for Benefits of Creditors.
F-13
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on January 14,
1997.
(Registrant) LEGGOONS, INC.
BY(Signature) /s/ James S. Clinton
BY(Signature) /s/ Steven D. Walters
(Date) January 14, 1997
(Name and Title) James S. Clinton
Chairman of the Board and President
(Name and Title) Steven D. Walters
Chief Financial Officer
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.
BY(Signature) /s/ James S. Clinton
(Date) January 14, 1997
(Name and Title) James S. Clinton
Chairman of the Board,
President and Director
BY(Signature) /s/ Larry Langston
(Date) January 14, 1997
(Name and Title) Larry Langston
Director
BY(Signature) /s/ Steven D.Walters
(Date) January 14, 1997
(Name and Title) Steven D. Walters
Vice President and
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 8,188
<BONDS> 0
0
0
<COMMON> 2,787,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 128,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (857,396)
<INCOME-TAX> 0
<INCOME-CONTINUING> (128,920)
<DISCONTINUED> (728,476)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (857,396)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
