UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number: 0-6683
Sonoma International
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 94-0880052
- ------------------------------ ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation organization)
3930 S. Eastern Avenue, Suite 218, Las Vegas, Nevada 89109
- ---------------------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
(702) 361-3033
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 60,000,000
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Balance Sheets
September 30, 1996 and June 30, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statments.
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
--------------------- -------------------
(unaudited)
<S> <C> <C>
TOTAL ASSETS $ - $ -
===================== ===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accrued liabilities 24,307 275
Accrued interest 252,435 252,435
Notes payable 262,391 262,391
--------------------- -------------------
Total current liabilities 539,133 515,101
--------------------- -------------------
Total liabilities 539,133 515,101
--------------------- -------------------
Commitments and contingencies (Notes C and E)
Stockholders' deficit
Common stock, $.001 par value, authorized, issued
and outstanding shares, 60,000,000 60,000 60,000
Additional paid-in capital 4,274,616 4,274,616
Accumulated deficit (4,873,749) (4,849,717)
--------------------- -------------------
Total Stockholders' Deficit (539,133) (515,101)
--------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ - $ -
===================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Statements of Operations
For the three months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Three months ended
September 30
--------------------------------------------
1996 1995
--------------------- -------------------
(unaudited) (unaudited)
<S> <C> <C>
Revenue $ - $ -
--------------------- -------------------
Expenses
Professional fees 24,032 0
Interest 0 8,589
State taxes 0 800
--------------------- -------------------
Total expenses 24,032 9,389
Net income (loss) before extraordinary item (24,032) (9,389)
Extraordinary item
Gain from conversion of debt to equity net of income taxes of $-0- - 91,921
--------------------- -------------------
Net income (loss) $ (24,032) $ 82,532
===================== ===================
Net income (loss) per common share before extraordinary item $ 0.00 $ 0.00
===================== ===================
Net income (loss) per common share for extraordinary item $ 0.00 $ 0.00
===================== ===================
Net income (loss) per common share $ 0.00 $ 0.00
===================== ===================
Weighted average shares outstanding 60,000,000 25,656,394
===================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Statements of Cash Flows
For the three months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Three months ended
September 30
--------------------------------------------
1996 1995
--------------------- -------------------
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (24,032) $ 82,532
Gain on conversion of debt to equity - (91,921)
Increase (decrease) in accrued liabilities 24,032 9,389
--------------------- -------------------
Net cash provided by operations - -
Cash at beginning of year - -
--------------------- -------------------
Cash at end of year $ - $ -
===================== ===================
Supplemental disclosures of cash flow information
Noncash financing activities
Stock issued in exchange for relief of debt $ - $ 973
===================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Notes to the Financial Statements
September 30, 1996 and 1995
NOTE A - ORGANIZATION
Sonoma Quicksilver Mines, Inc. was incorporated under the laws of the State of
Nevada on June 10, 1940. The name was subsequently changed to Sonoma
International (the "Company" or "Sonoma"). The Company had several failed
business operations and since 1988 its only activity has been to search for a
company or assets to acquire.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
The Company accounts for income taxes in accordance with the asset and liability
approach. Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.
Income (loss) per share
Income loss per share of common stock is based upon the weighted average number
of common shares outstanding.
Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could vary from the estimates that were
used.
Accounting Standards Not Yet Adopted
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" ("SFAS 123"), was issued. This
statement requires the fair value of stock options and other stock-based
compensation issued to employees to either be included as compensation expense
in the income statement, or the pro forma effect on net income and earnings per
share of such compensation expense to be disclosed in the footnotes to the
Company's financial statements commencing with the Company's 1996 fiscal year.
The Company expects to adopt SFAS 123 on a disclosure basis only. As such,
implementation of SFAS 123 is not expected to impact the Company's balance sheet
or statement of operations.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Notes to the Financial Statements
September 30, 1996 and 1995
NOTE C - NOTES PAYABLE
Notes payable consists of the following at September 30, 1996:
<TABLE>
<S> <C>
Notepayable dated June 12, 1991, due on demand to an individual bearing
interest at 15% per annum; unsecured. Interest of $44,316 has been
accrued through the settlement date. On September 27, 1996 a conditional
settlement agreement was reached relieving Sonoma of the principal and
accrued interest in exchange for 800,000 common shares of Sonoma. This
settlement agreement is contingent upon Sonoma stock obtaining a market
value and that
the stock can be liquidated. $ 60,974
Notepayable to two individuals, due on demand and unsecured. Interest of
$15,861 has been accrued through the settlement date. On July 25, 1995,
a conditional settlement agreement was reached releasing Sonoma of
principal and accrued interest in exchange for 200,000 shares of the
Company. This settlement agreement is contingent upon Sonoma stock
obtaining a market
value and that the stock can be liquidated. 45,861
Notepayable to Sunwest Bank, due on demand with interest accruing at 10.5%;
unsecured. Interest of $42,557 has been accrued through the settlement
date. On September 7, 1995, a conditional settlement agreement was
reached relieving Sonoma of the outstanding principal and accrued
interest in exchange for a nominal cash amount and the issuance of
200,000 shares of Sonoma common stock. This settlement is conditioned
upon Sonoma common stock being listed on the National Bulletin Board and
having a market value
and that the stock can be liquidated. 43,556
Notepayable to Garfield Bank, due on demand with interest accruing at 16%;
unsecured. Interest of $164,997 has been accrued through the settlement
date. On September 8, 1995, a conditional settlement agreement had been
reached relieving Sonoma of the principal amount owed and all accrued
interest thereon conditioned on 850,000 shares of Sonoma common stock
being transferred into the name of Garfield Bank (from other
shareholders)
and Sonoma common stock having a market value that can be liquidated. 112,000
-------
Total notes payable $262,391
</TABLE>
<PAGE>
SONOMA INTERNATIONAL
(A Nevada Corporation)
Notes to the Financial Statements
September 30, 1996 and 1995
NOTE D - INCOME TAXES
The Company generated negligible taxable income and/or net operating losses
during the years ended June 30, 1996 and 1995 and the period ending September
30, 1996. Any existing available net operating losses at September 30, 1996
would be lost upon consummation of the acquisition transaction described in Note
E. At September 30, 1996, the Company has a deferred tax asset of approximately
$94,000 relating to amounts deducted for financial reporting losses not deducted
for income tax reporting purposes. This asset has a valuation allowance recorded
against it due to the uncertainty of generating future taxable income. There was
no significant change in the valuation allowance from June 30, 1996.
NOTE E - ACQUISITION AGREEMENTS
Effective on September 12, 1996, the Company entered into an agreement (the
"Agreement") with Clear Creek Investments, LLC, a Kentucky Limited Liability
Company ("Clear Creek"), and holders of the limited partnership interests in
Jamestown Resort & Marina, Ltd, a Kentucky limited partnership ("JRML"). JRML
owns a resort and marina located on the Cumberland Lake in south central
Kentucky.
The Agreement requires the transfer and assignment to Sonoma of JRML's general
partner and all limited partnership interests. There are several conditions to
closing including the delivery to the Company of an appraisal which states that
the assets of JRML as of the date of the appraisal have a fair market value of
not less than $10,000,000. That appraisal has been delivered to the Company. In
addition, the Agreement requires that the Company effect a one for two hundred
reverse split, leaving 300,000 shares issued and outstanding, and issue
1,700,000 shares to Clear Creek and affiliated and related entities or
individuals for the acquisition of JRML.
Effective on October 31, 1996, the Company entered into a second agreement (the
"Second Agreement") with Key West Conch Harbor, Inc. ("KWCHI"), an
S-Corporation, incorporated in the State of Florida. KWCHI owns and operates a
marina in Key West, Florida.
The Second Agreement requires the transfer and assignment to the Company all of
the common stock of KWCHI in exchange for 300,000 shares of the Company's common
stock.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The only expenses incurred by the Company have been expenses incurred
with legal and accounting fees relating to the transfer of assets into the
Corporation and filing of periodic reports. The closing of these transactions
are now contemplated for early December, 1996.
<PAGE>
PART II - OTHER INFORMATION
Exhibit 27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sonoma International
- ------------------------------- ---------------------------------------
Date Harry W. Hendersen, President and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FOR 10-QSB
FINANCIAL STATMENTS FOR THE THREE MONTHS ENDED SPETEMBER 30,1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 539133
<BONDS> 0
0
0
<COMMON> 60000
<OTHER-SE> (599133)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (24032)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (24032)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24032)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
