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, 1998
[ ] 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
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(State or other jurisdiction of incorporation or
organization) ( I.R.S. Employer
Identification No.)
45110 Club Drive, Suite B Indian Wells, California 92210
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(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 X NO
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-
<PAGE>
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, 1998:
Common Stock, $.0001 Par Value - 3,130,078 shares
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DOCUMENTS INCORPORATED BY REFERENCE: NONE
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.
A.G. Holdings Inc.(the "Company") announced in December of 1997
that it had recently
acquired a Hong Kong corporation named Green Bamboo Ltd., which owns 65% of
Jiangyin Zhiye Real Estate Co. The company changed its name to Bahui USA, Inc.
and three weeks after the transaction closed, the government of China
intervened and requested a rescission. The company did not issue any
compensation to its officers and directors, however it did issue 3,100,000
shares to a related company where A G Holdings' officers and directors hold
similar positions. The transaction has since been rescinded because the
Green Bamboo shareholder was unable to deliver his shares of Green Bamboo. The
company has changed its name back to AG Holdings, Inc.
The executive offices of the Company are located at 45110 Club Drive,
Suite B, Indian Wells, California 92210. Its telephone number is (760) 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 promoter 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 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 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, 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
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
of the surviving entity, which could result in significant dilution in the
equit
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.
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 dilution 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.
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 4 years.
(b) Holders
As of April 30, 1998, 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, 1998
and 1997 Statement of Operations for the years ended April 30,
1998 and 1997 Statement of Stockholders' Equity (Deficit)
Statement of Cash Flows for the years ended April 30, 1998 and
1997 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 April30, 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.
On November 1, 1996 the Registrant engaged Pritchett, Siler &
Hardy, P.C. as its new independent accountants.
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 implying consent to management's informal method of
allocating opportunities, there can be no assurance that such belief will be
supported by the Nevada courts.
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
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 3,130,078 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 and all share amounts reflect the 1 for 500 reverse
stock split effected on August 20, 1997.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C>
Dempsey K. Mork(1) 2,818,000(2) 90.0 %
Randall A Baker(1) 100,000 3.2 %
Robert J Filiatreaux(1) 100,000 3.2 %
All officers and directors
as a group (3 persons) 3,020,000 96.5 %
</TABLE>
(1) The address of this person is c/o of the Company.
(2) Includes shares issued in name of wife.
Item 12. Certain Relationships and Related Transactions
Not Applicable.
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.
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: August 24, 1998 A.G. HOLDINGS, INC.
By: /s/ Dempsey K. Mork
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 August 24, 1998.
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
A. G. HOLDINGS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
APRIL 30, 1998 AND 1997
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, 1998 and 1997 2
- Statements of Operations, for the years ended
April 30, 1998 and 1997 and for the cumulative
period from April 30, 1992 through April 30, 1998 3
- Statement of Stockholders' Equity (Deficit), from
April 30, 1992 through April 30, 1998 4 - 5
- Statements of Cash Flows for the years ended
April 30, 1998 and 1997 and for the cumulative
period from April 30, 1992 through April 30, 1998 6
- Notes to Financial Statements 7 - 10
<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, 1998 and 1997, and the
related statements of operations, stockholders' equity (deficit) and
cash flows for the years ended April 30, 1998 and 1997 and for the
cumulative period from April 30, 1992 through April 30, 1998. 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,
1998 and 1997, and the results of its operations and its cash flows for
the years ended April 30, 1998 and 1997, and for the cumulative period
from April 30, 1992 through April 30, 1998 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.
June 26, 1998
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
BALANCE SHEETS
ASSETS
April 30,
____________________________
1998 1997
___________ ___________
CURRENT ASSETS:
Cash $ - $ -
___________ ___________
Total Current Assets - -
___________ ___________
$ - $ -
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and
other accrued liabilities $ 5,353 $ 1,145
Note payable 1,518 1,571
Advances from related parties 21,295 19,965
___________ ___________
Total Current Liabilities 28,166 22,681
___________ ___________
STOCKHOLDERS' EQUITY (DEFICIT) [Restated]:
Common stock, $.0001 par value,
100,000,000 shares authorized,
3,130,078 and 30,078 shares
issued and outstanding at
April 30, 1998 and 1997 313 3
Capital in excess of par value 470,188 470,188
Retained earnings (deficit) (450,047) (450,047)
Deficit accumulated during
the development stage (48,620) (42,825)
___________ ___________
Total Stockholders' Equity (Deficit) (28,166) (22,681)
___________ ___________
$ - $ -
___________ ___________
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,
1998 1997 1998
_____________________________________
REVENUE
Sales $ - $ - $ -
_____________________________________
Total Revenue - - -
_____________________________________
EXPENSES:
General and administrative 4,901 3,625 47,134
_____________________________________
Total Expenses 4,901 3,625 47,134
_____________________________________
LOSS FROM OPERATIONS (4,901) (3,625) (47,134)
OTHER INCOME (EXPENSE) - - -
INTEREST EXPENSE 894 168 1,486
_____________________________________
LOSS FROM OPERATIONS BEFORE
INCOME TAXES (5,795) (3,793) (48,620)
CURRENT INCOME TAX - - -
DEFERRED INCOME TAX - - -
_____________________________________
NET LOSS $ (5,795) $ (3,793) $(48,620)
_____________________________________
LOSS PER SHARE $ (.01) $(.13) $ (.24)
_____________________________________
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, 1998
[RESTATED]
Deficit
Accumu-
Common Stock Additional Common Retained lated
______________ Paid-in Stock Earnings From May
Shares Amount Capital Subscribed (Deficit) 1,1992
_______ _____ _______ ________ _________ _______
BALANCE, April 30, 1992 10,000 $1 $459,190 $(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 10,000 1 459,190 - (450,047) (11,394)
Shares of common stock
issued for services
at $.0001 per share 20,000 2 998 - - -
Prior period adjustment - - 10,000 - - (10,000)
Net loss for the year
ended April 30, 1994 - - - - - (13,510)
_____________________________________________________
BALANCE, April 30, 1994 30,000 3 470,188 - (450,047) (34,904)
Net loss for the year
ended April 30, 1995 - - - - - (3,761)
_____________________________________________________
BALANCE, April 30, 1995 30,000 3 470,188 - (450,047) (38,665)
Net loss for the year
ended April 30, 1996 - - - - - (367)
_____________________________________________________
BALANCE, April 30, 1996 30,000 3 470,188 - (450,047) (39,032)
Net loss for the year
ended April 30, 1997 - - - - - (3,793)
_____________________________________________________
[Continued]
-4-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM APRIL 30, 1992 THROUGH APRIL 30, 1998
[RESTATED]
[CONTINUED]
Deficit
Accumu-
Common Stock Additional Common Retained lated
________________ Paid-in Stock Earnings From May
Shares Amount Capital Subscribed (Deficit) 1,1992
_______________ _________ _____ _________ _______
BALANCE, April 30, 1997 30,000 3 470,188 - (450,047) (42,825)
Issuance of 14,670,000
shares of common stock
at par value of $.0001
per share during December,
1997, in connection
with a business
acquisition 14,670,000 1,467 - - - -
Cancellation of
14,670,000 shares of
common stock previously
issued with
unsuccessful business
acquisition (14,670,000) (1,467) - - - -
Issuance of 3,100,000
shares of common stock
at par value of $.0001
per share in payment of
consulting fees during
December, 1997, in
connection with
unsuccessful business
acquisition 3,100,000 310 - - - -
Shares issued due to
rounding in 1 for 500
common stock split,
August, 1997 78
Net loss for the year
ended April 30, 1998 - - - - - (5,795)
_______________________________________________________
BALANCE, April 30, 1998 3,130,078 $ 313 $470,188 $ - $(450,047) $(48,620)
_______________________________________________________
The accompanying notes are an integral part of these financial statements.
-5-
<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,
1998 1997 1998
____________________________________
Cash Flows Used By
Operating Activities:
Net income (loss) $ (5,795) $ (3,793) $(48,620)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Issuance of stock in payment of
consulting fees 310 - 1,310
Changes in assets and liabilities:
Increase (decrease) in
accounts payable,
related party advances,
and other accrued
liabilities 5,485 3,793 25,406
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
Cash paid during the year for:
Interest $ - $ - $ -
Income Tax $ - $ - $ -
[Continued]
-6-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
[CONTINUED]
Supplemental Schedule of Noncash Investing and Financial Activities:
For the year ended April 30, 1998:
During December, 1997, 14,670,000 shares of common stock were issued
in connection with a business acquisition. The acquisition was
subsequently rescinded and the shares were returned for cancellation.
In connection with the unsuccessful business acquisition a total of
3,100,000 shares were issued at a nominal value to officers and
directors of the company for consulting services rendered.
For the year ended April 30, 1997:
None.
The accompanying notes are an integral part of these financial
statements.
-7-
<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.
Earnings (Loss) Per Share - The computation of loss per share is based
on the weighted average number of shares outstanding during the period
presented in accordance with FASB 128 "Earnings Per Share".
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".
Reclassification - The financial statements for periods prior to 1998
have been reclassified to conform to the titles and headings used in
the 1998 financial statements.
Stock Split - During August, 1997, the Board of directors authorized a
1 for 500 reverse stock split of the issued and outstanding common
shares of the Company. The Company retained the authorized shares at
100,000,000 shares with the par value at $.0001 per share. The
financial statements for all periods presented have been restated to
reflect the effect of the reverse common stock split.
NOTE 2 - NOTES PAYABLE
The company has various notes payable issued to related parties in the
total amount of $1,518. These notes bear interest at rates of 12% and
18% per annum on the unpaid balance, and are payable on demand.
NOTE 3 - DUE TO SHAREHOLDER
During 1997, the president of the Company advanced funds to the
Company. These advances are non-interest bearing and are due upon
demand. The unpaid advances amount to $4,276 and $2,946 as of April
30, 1998 and 1997.
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 as of April 30, 1998 and 1997.
-8-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK
Common Stock - During December, 1997, the Company issued 3,100,000
shares of common stock valued at $.0001 per share to certain officers,
directors, and consultants of the Company in payment of consulting
fees related to an unsuccessful business acquisition. [See Note 10]
During December, 1997, the Company issued 14,670,000 shares of common
stock in connection with the acquisition of Green Bamboo, Ltd. The
transaction was subsequently rescinded and the shares were cancelled.
[See Note 10]
During August, 1997, the Board of Directors effected a 1 for 500
reverse stock split of the issued and outstanding common shares of the
Company. Immediately after the split there were 30,078 shares issued
and outstanding. The financial statements for all periods presented
have been restated to reflect the stock split. [See Note 10]
On July 31, 1993, the Company issued to an officer and director 20,000
shares of common stock valued at $.0001 per share for services
rendered valued at $1,000.
During 1992, the Company issued 450 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 2,550 shares of common stock for cancellation of a
promissory note and 3,000 shares of common stock for services valued
at $10,000. Total proceeds amounted to $8,500.
During May, 1984 in connection with its organization the Company
issued 4,000 shares of its previously authorized, but unissued common
stock. Total proceeds amounted to $449,191.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company issued 3,100,000 shares of common stock to officers,
directors, and other related parties during December, 1997, in payment
of consulting fees related to an unsuccessful business acquisition.
The stock was issued at $.0001 per share. [See Note 4]
At April 30, 1998 and 1997 the Company had $1,518 and $1,518 in
related party notes payable, and $21,295 and $19,965 in advances from
related parties.
The Company issued 20,000 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.
-9-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
FASB 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting
methods and any available operating loss or tax credit carryforwards.
At April 30, 1998 and 1997, the Company has available unused operating
loss carryforwards of approximately $248,000 and $242,000, which may
be applied against future taxable income and which expire in various
years from 2005 through 2013.
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 net deferred tax assets are approximately $84,250 and $82,000 as
of April 30, 1998 and April 30, 1997, with an offsetting valuation
allowance of the same amount resulting in a change in the valuation
allowance of approximately $2,250 during 1998.
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.
-10-
<PAGE>
A. G. HOLDINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - EARNINGS PER SHARE
The following data shows the amounts used in computing loss per share
for the periods ended April 30, 1998 and 1997:
1998 1997
_________ ________
Loss from continuing operations
available to common shareholders
(numerator) $(5,795) $(3,793)
_________ ________
Weighted average number of common
shares outstanding used in loss per
share calculation for the period
(denominator) 1,049,256 30,000
_________ ________
NOTE 10 - BUSINESS ACQUISITION AND RESCISSION
A.G. Holdings Inc. (the "Company") announced in December of 1997 that
it had recently acquired a Hong Kong corporation named Green Bamboo
Ltd., which owns 65% of Jiangyin Zhiye Real Estate Co. The Company
changed its name to Bahui USA, Inc. The transaction was subsequently
rescinded because the Green Bamboo shareholder was unable to deliver
his shares of Green Bamboo. The Company subsequently changed its name
back to A.G. Holdings, Inc. In connection with the unsuccessful
business acquisition the Company effected a 1 for 500 reverse common
stock split. The company issued 14,670,000 shares in connection with
the acquisition, and all 14,670,000 shares were subsequently returned
and cancelled due to the rescission. The Company also issued 3,100,000
shares of common stock valued at $.0001 per share to officers,
directors, and other related parties of the Company for their
consulting services related to the unsuccessful acquisition.
-11-
<PAGE>
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0
0
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