SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended April 30, 1996
[ ] 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 0-23180
A. G. HOLDINGS, INC.
(Exact name of small business issuer in its charter)
Washington 91-1253514
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)
45110 Club Drive, Suite B Indian Wells, California 92210
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 360-1042
-------------------
Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or 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
Check disclosure of delinquent filers in response to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
State issuer's revenues for its most recent fiscal year: $-0-
The aggregate market value of the voting stock held by non-affiliates
of the registrant was not determinable because the common stock does not trade
on any market.
The number of shares outstanding of the issuer's classes of Common
Stock as of April 30, 1996:
Common Stock, $.0001 Par Value - 15,000,000 shares
- ---------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
Item 1. Description of Business
Background
AG Holding, Inc. (the "Company") was organized under the laws of the
State of Washington on May 17, 1984. As originally organized, the Company's name
was Image Productions, Inc., and its business purpose was to produce video
productions for businesses in Eastern Washington. The Company undertook a public
offering of its securities in 1985 pursuant to an exemption form registration
afforded by Regulation A under the Securities Act of 1933, as amended (the
"Act"). In the public offering, the Company raised $500,000, and after payment
of expenses in the offering, received net proceeds of $408,941. The offering was
completed on March 29, 1985.
Following the public offering, the Company purchased various video
production equipment and other assets, and commenced business as a video
production company. The Company also made a loan in the amount of $230,000. The
loan subsequently went into default, and although the Company eventually
obtained a judgment on the defaulted note, the balance proved to be
uncollectible and was written off.
The Company engaged in the video production business from 1985 through
1991, and continually lost money, The Company's weak financial condition
prevented the Company from maintaining up to date video production equipment,
and forced the Company to use outside contractors for certain aspects of the
business. As a result, it was apparent to Management that the Company could not
achieve profitability as a publicly held video production company, and other
organizational structures were sought. The Company's President believed he could
operate successfully if he could reorganize the video production business as a
private concern.
To pursue a going private transaction, the Company then entered into a
transaction with a new group of controlling shareholders for a reorganization.
The new control group agreed to provide sufficient capital to complete the legal
and accounting work required for a reorganization and to seek a viable business
opportunity. In exchange, the former President canceled debts he was owed by the
Company, assumed liabilities of the video production business, and received all
of the video production operating assets of the Company. This transaction was
completed on January 17, 1992, and since that date, the Company has existed as
an inactive shell corporation with no current active business operations.
The primary activity of the Company will involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The Company has
not selected any company for acquisition or merger and does not intend to limit
potential acquisition candidates to any particular field or industry, but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry. The Company's plans are in the conceptual stage
only.
The executive offices of the Company are located at 45110 Club Drive,
Suite B, Indian Wells, California 92210. Its telephone number is (619) 360-1042.
Plan of Operation - General
The Company's current plans are to seek, investigate and, if such
investigation warrants, acquire an interest in one or more business
opportunities presented to it by persons or firms who or which desire to seek
the perceived advantages of a publicly held corporation. At this time, the
Company has no plan, proposal, agreement, understanding or arrangement to
acquire or merge with any specific business or company, and the Company has not
identified any specific business or company for investigation and evaluation. No
member of management or promotor of the Company has had any material discussions
with any other company with respect to any acquisition of that company. The
Company will not restrict its search to any specific business, industry or
geographical location, and the Company may participate in a business venture of
virtually any kind or nature. The discussion of the proposed business under this
caption and throughout this Registration Statement is purposefully general and
is not
2
<PAGE>
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities.
The Company intends to obtain funds in one or more private placements
to finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent on
the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. The officers and
directors of the Company have only limited experience in the proposed business
of the Company. There can be no assurance that the Company will be able to raise
any funds in private placements. In any private placement, management may
purchase shares on the same terms as offered in the private placement.
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
(See "Risk Factors.")
The Company may seek a business opportunity with a firm which only
recently commenced operations, or a developing company in need of additional
funds for expansion into new products or markets, or seeking to develop a new
product or service, or an established business which may be experiencing
financial or operating difficulties and is in the need for additional capital
which is perceived to be easier to raise by a public company. In some instances,
a business opportunity may involve the acquisition or merger with a corporation
which does not need substantial additional cash but which desires to establish a
public trading market for its common stock. The Company may purchase assets and
establish wholly owned subsidiaries in various business or purchase existing
businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some industries,
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of a publicly traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other factors. Potentially available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors. Management has adopted a policy that such a
finder's fee or real estate brokerage fee could, in certain circumstances, be
paid to any employee, officer, director or 5% shareholder of the Company, if
such person plays a material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may require that
management or other stockholders of the Company sell all or a portion of their
shares to the acquired company, or to the principals of the acquired company. It
is anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company's Common Stock.
The Company's funds are not expected to be used for purposes of any stock
purchase from insiders. The Company shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all or a
portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However, management
believes that since the anticipated
3
<PAGE>
sales price will be less than market value, that the potential of a stock sale
by management will not be a material factor on their decision to enter a
specific transaction.
The above description of potential sales of management stock is not
based upon any corporate bylaw, shareholder or board resolution, or contract or
agreement. No other payments of cash or property are expected to be received by
management in connection with any acquisition.
The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it will use the
services of such persons.
The Company has, and will continue to have following the completion of
this offering, insufficient capital with which to provide the owners of business
opportunities with any significant cash or other assets. However, management
believes the Company will offer owners of business opportunities the opportunity
to acquire a controlling ownership interest in a public company at substantially
less cost than is required to conduct an initial public offering. The owners of
the business opportunities will, however, incur significant post-merger or
acquisition registration costs in the event they wish to register a portion of
their shares for subsequent sale. The Company will also incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity including the costs of preparing Forms 8-K, agreements and related
reports and documents nevertheless, the officers and directors of the Company
have not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction for
the owners of a business opportunity.
The Company does not intend to make any loans to any prospective merger
or acquisition candidates or to unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities for possible
acquisition will be referred by various sources, including its officers and
directors, professional advisers, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals.
The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. It is not presently anticipated that the Company will
engage professional firms specializing in business acquisitions or
reorganizations.
The officers and directors of the Company are currently employed in
other positions and will devote only a portion of their time (not more than one
hour per week) to the business affairs of the Company, until such time as an
acquisition has been determined to be highly favorable, at which time, they
expect to spend full time in investigating and closing any acquisition for a
period of two weeks. In addition, in the face of competing demands for their
time, the officers and directors may grant priority to their full-time positions
rather than to the Company.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or
under the supervision of the officers and directors of the Company. Management
intends to concentrate on identifying prospective business opportunities which
may be brought to its attention through present associations with management. In
analyzing prospective business opportunities, management will consider such
matters as the available technical, financial and managerial resources; working
capital and other financial requirements; history of operation, if any;
prospects for the future; present and expected competition; the quality and
experience of management services which may be available and the depth of that
management; the potential for further research, development or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products,
4
<PAGE>
services or trades; name identification; and other relevant factors. Officers
and directors of each Company will meet personally with management and key
personnel of the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and the
Company's shareholders must, therefore, depend on the ability of management to
identify and evaluate such risk. In the case of some of the opportunities
available to the Company, it may be anticipated that the promoters thereof have
been unable to develop a going concern or that such business is in its
development stage in that it has not generated significant revenues from its
principal business activities prior to the Company's participation. There is a
risk, even after the Company's participation in the activity and the related
expenditure of the Company's funds, that the combined enterprises will still be
unable to become a going concern or advance beyond the development stage. Many
of the opportunities may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by the Company and,
therefore, its shareholders.
The Company will not restrict its search for any specific kind of
business, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is currently impossible to predict the status of any business
in which the Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly traded, or may
seek other perceived advantages which the Company may offer.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, franchise or licensing agreement with another corporation or entity. It
may also purchase stock or assets of an existing business. On the consummation
of a transaction, it is possible that the present management and shareholders of
the Company will not be in control of the Company. In addition, a majority or
all of the Company's officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's Common Stock may have a depressive effect on such
market. While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company would retain less than 20% of the issued and outstanding shares of the
surviving entity, which could result in significant dilution in the equity of
such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check reference of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
5
<PAGE>
The manner in which each company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and desires of the
Company and other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the Company
which target company shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a lesser percentage ownership interest in the Company following
any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares held
by the Company's then shareholders.
The Company will not have sufficient funds (unless it is able to raise
funds in a private placement) to undertake any significant development,
marketing and manufacturing of any products which may be acquired. Accordingly,
following the acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing or obtain
funding from third parties, in exchange for which the Company would probably be
required to give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able either to obtain
additional financing or interest third parties in providing funding for the
further development, marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs therefore incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate that
transaction may result in the loss of the Company of the related costs incurred.
The costs of the investigation and analysis of a potential acquisition will be
funded by the Company's limited cash on hand or by advances from officers.
Management believes that the Company may be able to benefit from the
use of "leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. During periods when interest rates
are relatively high, the benefits of leveraging are not as great as during
periods of lower interest rates because the investment in the business
opportunity held on a leveraged basis will only be profitable if it generates
sufficient revenues to cover the related debt and other costs of the financing.
Lenders from which the Company may obtain funds for purposes of a leveraged
buy-out may impose restrictions on the future borrowing, distribution, and
operating policies of the Company. It is not possible at this time to predict
the restrictions, if any, which lenders may impose or the impact thereof on the
Company.
6
<PAGE>
Competition
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be a significant competitive disadvantage vis-a-vis the
Company's competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as
an issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading of securities. While the Company
does not intend to engage in such activities, the Company could become subject
to regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood the Company could be classified as an "investment company."
The Company intends to structure a merger or acquisition in such manner
as to minimize federal and state tax consequences to the Company and to any
target company.
Employees
The Company's only employees at the present time are its officers and
directors, who will devote as much time as the Board of Directors determine is
necessary to carry out the affairs of the Company.
Item 2. Description of Property
The Company shares a nominal amount of office space with an officer.
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 Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
The Company's Common Stock has not traded on any market for
the past 3 years.
(b) Holders
7
<PAGE>
As of April 30, 1996, there were approximately 850 holders of
Company Common Stock.
(c) Dividends
The Company has not paid any dividends on its common stock.
The Company currently intends to retain any earnings for use in its business,
and therefore does not anticipate paying cash dividends in the foreseeable
future.
Item 6. Management's Discussions and Analysis or Plan of Operations
See Item 1.
Item 7. Financial Statements and Supplementary Data
Financial Statements
The following financial statements are included herein:
Independent Auditors' Report
Balance Sheet at April 30, 1996 and 1995
Statement of Operations for the years ended April 30, 1996 and
1995 Statement of Stockholders' Equity (Deficit) Statement of
Cash Flows for the years ended April 30, 1996 and 1995 Notes
to Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Registrant's former independent accountants Terrance J. Dunne, CPA
("Dunne") resigned on November 1, 1996. The report by Dunne on the financial
statements of the Registrant dated November 8, 1994, including the statement of
financial condition as of April 30, 1994, and the statements of operations, cash
flows and changes in shareholders' equity for the year then ended did not
contain an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles except as to
the going concern nature of the Company. During the period covered by the
financial statements through the date of resignation of the former accountant,
there were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
A letter from the former independent accountant is filed as Exhibit 16
to this Annual Report. On November 1, 1996 the Registrant engaged Pritchett,
Siler & Hardy, P.C. as its new independent accountants.
8
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the
Exchange Act.
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
Information as to the directors and executive officers of the Company is set
forth below.
Name Age Position
Dempsey K. Mork 55 President, Chief Financial Officer
and Director
Randall Baker 53 Vice President, Secretary and Director
Robert Filiatreaux 66 Director
Dempsey K. Mork, age 55, has been President and a Director since
July 1993. He has been
Secretary/Treasurer of Development Bancorp, Ltd. since December 1992 and
President and Director of Gaensel Gold
Mines, Inc. since February 1996. He is president of Magellan Capital
Corporation, a merger and acquisition firm.
Randall A. Baker. Mr. Baker is 53 years old. He attended the
University of Minnesota. After a tour
in the United States Navy and a navigation teaching stint in San Francisco, he
began his investment career with the
Pacific Coast Stock Exchange followed by employment with a number of major
brokerage houses. He then was
employed for twenty years as Executive Vice President with Wm. Mason & Company,
an Investment Counseling
firm in Los Angeles. Mr. Baker designed and implemented all data systems, was
responsible for trading, personnel
and was the client/broker liaison. Mr. Baker is currently employed as the Vice
President for Magellan Capital
Corporation, a merger and acquisition firm.
Robert Filiatreaux. Mr. Filiatreaux is 66 years of age and has been
engaged in international business for
the past 27 years. He attended school in Wisconsin where he received his degree
from the University of Wisconsin.
During the Korean Conflict Mr. Filiatreaux served a three year tour of duty in
the US Air Force. The majority of
international business experience came from the airline industry where Mr.
Filiatreaux worked for many years in
various executive capacities in sales and marketing. Mr. Filiatreuax has worked
and traveled to over 55 countries
and is currently an associate in the merger and acquisition firm of Magellan
Capital Corporation of Indian Wells,
California.
Conflicts of Interests
Certain conflicts of interest now exist and will continue to exist
between the Company and its officers and directors due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
The Company has not established other policies or procedures for the
resolution of current or potential conflicts of interests between the Company,
its officers and directors or affiliated entities because management has not
been able to develop any workable policies or procedures. There can be no
assurance that management will resolve all conflicts of interest in favor of the
Company, and failure by management to conduct the Company's business in the
Company's best interest may result in liability to the management. The officers
and directors are accountable to the Company as fiduciaries, which means that
they are required to exercise good faith and integrity in handling the Company's
affairs. Officers and directors will be required to disclose to each company the
liability of each potential acquisition. Shareholders who believe that the
Company has been harmed by failure of an officer or director to appropriately
resolve any conflict of interest may, subject to applicable rules of civil
procedure, be able to bring a class action or derivative suit to enforce their
rights and the Company's rights. Although officers and directors believe that
future shareholders are impliedly consenting to management's informal method of
allocating opportunities, there can be no assurance that such belief will be
supported by the Nevada courts.
9
<PAGE>
The Company has no arrangement, understanding or intention to enter
into any transaction for participating in any business opportunity with any
officer, director, or principal shareholder or with any firm or business
organization with which such persons are affiliated, whether by reason of stock
ownership, position as an officer or director, or otherwise.
Item 10. Executive Compensation
No compensation is paid or anticipated to be paid by the Company
until an acquisition is made.
On acquisition of a business opportunity, current management may
resign and be replaced by persons associated with the business opportunity
acquired, particularly if the Company participates in a business opportunity by
effecting a reorganization, merger or consolidation. If any member of current
management remains after effecting a business opportunity acquisition, that
member's time commitment will likely be adjusted based on the nature and method
of the acquisition and location of the business which cannot be predicted.
Compensation of management will be determined by the new board of directors, and
shareholders of the Company will not have the opportunity to vote on or approve
such compensation.
Compliance with Section 16
Not Applicable.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial
ownership of Company Common Stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group, based on 15,000,000 shares outstanding. The addresses of each other and
directors is in care of the Company. All persons have sole investment and voting
power unless otherwise noted.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C>
Dempsey K. Mork(1) 9,800,000 65.3%
Randy Baker(1) 100,000 .6%
Robert Filiatreaux(1) 100,000 .6%
Brad E. Herr
South 5512 Magnolia
Spokane, Washington 99223 2,475,000 16.5%
All officers and directors
as a group (3 persons) 10,000,000 66.7%
</TABLE>
(1) The address of this person is c/o of the Company.
Item 12. Certain Relationships and Related Transactions
Not Applicable.
10
<PAGE>
PART IV
Item 13. Exhibits
Exhibit No. Document Description
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(1)
3.2 Bylaws(1)
10.
16. Letter from Terrence J. Dunne, CPA independent auditor(2)
(1) Incorporated by reference to such exhibits filed as exhibit 2 with the
Company's Registration Statement on
Form 10-SB, file no. 0-23180 (the "Form 10").
(2) Incorporated by reference to the Company's Current Report on Form 8-K,
dated November 1, 1996.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: April 1, 1997 A.G. HOLDINGS, INC.
By:
Dempsey K. Mork
President
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 indicated on April 1, 1997.
By: /s/ Dempsey K. Mork President, Chief Financial Officer and Director
Dempsey K. Mork (chief executive, financial and accounting officer)
By: /s/ Randall Baker Secretary and Director
Randall Baker
By: /s/ Robert Filiatreaux Director
Robert Filiatreaux
12
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
CONTENTS
PAGE
_ Independent Auditors' Report 1
_ Balance Sheets, April 30, 1996 and 1995 2
_ Statements of Operations, for the years ended
April 30, 1996 and 1995 and for the cumulative
period from April 30, 1992 through April 30, 1996 3
_ Statement of Stockholders' Equity (Deficit), from
April 30, 1992 through April 30, 1996 4
_ Statements of Cash Flows for the years ended
April 30, 1996 and 1995 and for the cumulative
period from April 30, 1992 through
April 30, 1996 5
_ Notes to Financial Statements 6 - 8
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
(801) 328-2727
INDEPENDENT AUDITORS' REPORT
Board of Directors
A. G. HOLDINGS, INC.
Indian Wells, California
We have audited the accompanying balance sheet of A. G. Holdings,
Inc. [a development stage company] at April 30, 1996 and 1995,
and the related statements of operations, stockholders' equity
(deficit) and cash flows for the years ended April 30, 1996 and
1995 and for the cumulative period from April 30, 1992 through
April 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits. The financial statements of A. G. Holdings, Inc. for
the years ended April 30, 1994, 1993 and 1992 were audited by
other auditors whose reports dated November 8, 1994 and September
10, 1993 expressed an unqualified opinion including an
explanatory paragraph stating a concern about the Company
continuing as a going concern.
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 misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion and based on the opinions of other auditors, the
financial statements audited by us present fairly, in all
material respects, the financial position of A. G. Holdings, Inc.
as of April 30, 1996 and 1995, and the results of its operations
and its cash flows for the years ended April 30, 1996 and 1995,
and for the cumulative period from April 30, 1992 through April
30, 1996 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 8 to the financial statements, the Company has incurred
substantial losses, has liabilities in excess of assets and has a
stockholders deficit. The Company has not yet established
profitable operations, raising substantial doubt about its
ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 8. The
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/S/ PRITCHETT, SILER & HARDY, P.C.
December 3, 1996
-1-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
BALANCE SHEETS
ASSETS
April 30,
____________________________
1996 1995
___________ ___________
CURRENT ASSETS:
Cash $ - $ -
___________ ___________
Total Current Assets - -
___________ ___________
$ - $ -
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 467 $ 250
Note payable 1,402 1,252
Advances from related parties 17,019 17,019
___________ ___________
Total Current Liabilities 18,888 18,521
___________ ___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.0001 par value,
100,000,000 shares authorized,
15,000,000 shares issued
and outstanding at April 30,
1996 and 1995 1,500 1,500
Capital in excess of par value 468,691 468,691
Retained earnings (deficit) (450,047) (450,047)
Deficit accumulated during
the development stage (39,032) (38,665)
___________ ___________
Total Stockholders' Equity (Deficit) (18,888) (18,521)
___________ ___________
$ - $ -
___________ ___________
The accompanying notes are an integral part of these financial
statements.
-2-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
Cumulative
From
For the Years Ended April 30,
April 30, 1992 through
__________________________ April 30,
1996 1995 1996
_____________________________________
REVENUE
Sales $ - $ - $ -
_____________________________________
Total Revenue - - -
_____________________________________
EXPENSES:
General and administrative 217 3,627 28,608
_____________________________________
Total Expenses 217 3,627 28,608
_____________________________________
LOSS FROM OPERATIONS (217) (3,627) (28,608)
OTHER INCOME (EXPENSE) - - -
INTEREST EXPENSE 150 134 424
_____________________________________
LOSS FROM OPERATIONS BEFORE
INCOME TAXES (367) (3,761) (29,032)
CURRENT INCOME TAX - - -
DEFERRED INCOME TAX - - -
_____________________________________
NET LOSS $ (367) $ (3,761) $(29,032)
_____________________________________
LOSS PER SHARE $ (.01) $ (.01) $ (.01)
_____________________________________
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM APRIL 30, 1992 THROUGH APRIL 30, 1996
Deficit
Accum-
Common Stock Additional Common Retained lated
_________________ Paid-in Stock Earnings From May
Shares Amount Capital Subscribed (Deficit) 1, 1992
________________________________________________________
BALANCE, April 30, 1992 5,000,000 $ 500 $458,691 $(8,500) $(450,047) $ -
Subscription receivable
offset against officer
loan - - - 8,500 - -
Net loss for the year
ended April 30, 1993 - - - - - (11,394)
_______________________________________________________
BALANCE, April 30, 1993 5,000,000 500 458,691 - (450,047) (11,394)
Shares of common stock
issued for services
at $.0001 per share 10,000,000 1,000 - - - -
Prior period adjustment - - 10,000 - - (10,000)
Net loss for the year
ended April 30, 1994 - - - - - (13,510)
_______________________________________________________
BALANCE, April 30, 1994 15,000,000 1,500 468,691 - (450,047) (34,904)
Net loss for the year
ended April 30, 1995 - - - - - (3,761)
_______________________________________________________
BALANCE, April 30, 1995 15,000,000 1,500 468,691 - (450,047) (38,665)
Net loss for the year
ended April 30, 1996 - - - - - (367)
_______________________________________________________
BALANCE, April 30, 1996 15,000,000 $1,500 $468,691 $ - $(450,047) $(39,032)
_______________________________________________________
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Cumulative
From
For the Years Ended April 30,
April 30, 1992 through
__________________________ April 30,
1996 1995 1996
____________________________________
Cash Flows to Operating Activities:
Net income (loss) $ (367) $ (3,761) $(28,815)
Adjustments to reconcile net loss to
net cash used by operating activities:
Issuance of stock in payment of
services - - 1,000
Changes in assets and liabilities:
Increase (decrease) in accounts
payable and related party
advances 367 3,761 5,911
____________________________________
Net Cash Flows to Operating
Activities - - (21,904)
____________________________________
Cash Flows to Investing Activities:
Proceeds from sale of property
and equipment - - -
____________________________________
Net Cash to
Investing Activities - - -
____________________________________
Cash Flows from Financing Activities:
Proceeds from notes payable - - 1,118
Proceeds from shareholder advances - - 20,142
____________________________________
Net Cash from
Financing Activities - - 21,260
____________________________________
Net Cash Flow Activity - - (644)
Cash at Beginning of the Year - - 644
____________________________________
Cash at End of the Year $ - $ - $ -
____________________________________
Supplemental Disclosures of Cash
Flow Information:
None
Supplemental Schedule of Noncash Investing and Financial
Activities:
None
The accompanying notes are an integral part of these financial
statements.
-5-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Washington and was previously engaged in filming and
editing video productions for businesses in Eastern Washington
until 1992. The Company is considered to have re-entered into
a development stage for fiscal 1993. The Company is presently
an inactive shell pursuing a suitable business opportunity.
Any transaction with an operating company will likely be
structured as a reverse acquisition in which a controlling
interest in the Company will be acquired by the successor
operation. In such a transaction, the shareholders of the
Company will likely own a minority interest in the combined
company after the acquisition, and present management of the
company will likely resign and be replaced by the principals
of the operating company. This type of transaction will leave
the current shareholders with only a small minority voice in
the operating business and their interest may be insufficient
to control any seats of the board of directors or to have any
substantial voice in other corporate transactions.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented.
Statement of Cash Flows - For purposes of the statement of
cash flows, the Company considers all highly liquid debt
investments purchased with a maturity of three months or less
to be cash equivalents.
Income Taxes - The Company accounts for its income taxes in
accordance with Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" which requires the
liability approach for the effect of income taxes.
NOTE 2 - NOTES PAYABLE
The Company has two outstanding notes payable. The first note
had an original balance of $1,100 on May 1, 1993, carried
interest at 12% per annum and had scheduled payments of $50
per month, including interest. This note is payable to
Huppin, Ewing, Anderson and Paul (Attorneys) and was scheduled
to be paid in full on or before June 30, 1994. The balance of
this note on April 30, 1996 and 1995 was $878 and $784
respectively. The second note is payable to Fruci and
Associates, CPA's (former auditors of the Company), and the
original balance as of November 30, 1993, was $867. The note
bears interest at 12% per annum and was due on February 28,
1994. The balance on April 30, 1996 and 1995, was $524 and
$468 respectively. Accrued interest has been added to the
balance of the notes.
NOTE 3 - DUE TO SHAREHOLDER
A shareholder and former president of the Company has
periodically advanced funds to the Company. These advances
are non-interest bearing and are due upon demand. The unpaid
advances amounted to $17,019 and $17,019 as of April 30, 1996
and 1995, respectively.
-6-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Common Stock - During May, 1984 in connection with its
organization the Company issued 2,000,000 shares of its
previously authorized, but unissued common stock. Total
proceeds amounted to $449,191.
During 1992, the Company issued 225,000 shares of common stock
at $.0001 per share for cash. Total proceeds amounted to
$1,500.
During the year ended April 30, 1992 the Company's former
president was issued 1,275,000 shares of common stock for
cancellation of a promissory note and 1,500,000 shares of
common stock for services valued at $10,000. Total proceeds
amounted to $8,500.
On July 31, 1993, the Company issued to an officer and
director 10,000,000 shares of common stock valued at $.0001
per share for services rendered valued at $1,000.
NOTE 5 - RELATED PARTY TRANSACTIONS
At April 30, 1996 and 1995 the Company had $1,402 and $1,252
in related party notes payable, and $17,019 in advances from
related parties.
The Company issued 10,000,000 shares of common stock to a
related party during 1994 for services rendered. [See Note 4]
During the year ended April 30, 1993, the stock subscription
receivable was offset against amounts payable to the Company's
former president for a $7,655 loan made to the Company, and
for services provided in the amount of $845.
Office Space - The Company has not had a need to rent office
space. An officer of the Company allows the Company to use
his address, as needed, on a rent free basis.
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" which requires the liability
approach for the effect of income taxes.
The Company has available at April 30, 1996 unused operating
loss carryforwards of approximately $240,000, which may be
applied against future taxable income and which expire in
various years beginning in 2005 through 2009. If certain
substantial changes in the Company's ownership should occur,
there could be an annual limitation on the amount of net
operating loss carryforward which can be utilized. The amount
of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot
be determined. Because of the uncertainty surrounding the
realization of the loss carryforwards the Company has
established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset
has been recognized for the loss carryforwards. The change in
the valuation allowance is equal to the tax effect of the
current period's net loss.
-7-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - PRIOR PERIOD ADJUSTMENT
Legal fees of $10,000, which were incurred for services in
1992 and owed to the Company's president, were not properly
charged to operations in the proper year. This correction is
recorded as a prior period adjustment in the year ended April
30, 1994.
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company has incurred significant losses the past
few years, has liabilities in excess of assets (a stockholders
deficit), and has not yet established profitable operations.
This raises substantial doubt about the ability of the Company
to continue as a going concern. In this regard, management is
proposing to raise additional funds through loans and /or
through additional sales of its common stock which funds will
be used to assist in establishing on-going operations or
through a business acquisition. There is no assurance that
the Company will be successful in raising this additional
capital or achieving profitable operations. The financial
statements do not include any adjustments that might result
from the outcome of these uncertainties.
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1996 APR-30-1995
<PERIOD-END> APR-30-1996 APR-30-1995
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 18,888 18,521
<BONDS> 0 0
0 0
0 0
<COMMON> 1,500 1,500
<OTHER-SE> (20,388) (20,021)
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 150 134
<INCOME-PRETAX> (367) (3,761)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (367) (3,761)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (367) (3,761)
<EPS-PRIMARY> (.01) (.01)
<EPS-DILUTED> 0 0
</TABLE>
