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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 1995
Commission File No. 0-25658
Knight Natural Gas, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1002467
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
5650 Greenwood Plaza Blvd
Suite 216, Englewood, CO 80111
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(Address of principal executive offices) (zip code)
(303) 741-1118
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(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act: None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $0.00001 per share 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
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is 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-
KSB. [X]
State issuer's revenues for its most recent fiscal year $-0-
The aggregate market value of the voting stock of the Registrant held by
non-affiliates as of December 31, 1995 was not able to be determined since the
Registrant's stock has not ever traded.
The number of shares outstanding of the Registrant's common stock, as of
the latest practicable date, April 1, 1996, was 2,052,500.
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DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference are found in Item 13.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS
Knight Natural Gas, Inc. (the "Company" or the "Registrant"), is a Colorado
corporation. The principal business address is 5650 Greenwood Plaza Blvd., Suite
216, Englewood, Colorado 80111.
The Company was originally incorporated under the laws of the State of
Colorado on September 19, 1985 as a gas exploration company. On January 1, 1993,
the Company entered into the development stage.
In 1994, the present management became involved with the Company. Mr.
Gregory Skufca, one of the members of present management, provided consulting
services to reactivate the Company and received 1,500,000 post-split shares of
the Company for a consideration of par value. On November 1, 1994, the Company
did a one-for-twenty reverse split of its common stock. As of December 31, 1995,
the Company had a total of 2,052,500 common shares issued and outstanding. The
Company has not been subject to any bankruptcy, receivership or similar
proceeding.
(b) NARRATIVE DESCRIPTION OF THE BUSINESS
GENERAL
From December, 1989 to the date of this Registration Statement, the Company
has had no activities. During this period, the Company has carried no
inventories or accounts receivable. No independent market surveys have ever been
conducted to determine demand for the Company's products and services, since the
Company has never had any products or services which it has provided to anyone.
During this period, the Company has carried on no operations and generated no
revenues.
OIL AND GAS OPERATIONS
From inception to December, 1989, the Company operated briefly as an oil
and gas company. No operations remain from this period. The Company
investigated certain possibilities but drilled no oil or gas wells. This was the
entire extent of the Company's activities.
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ORGANIZATION
The Company presently comprises one corporation with no subsidiaries or
parent entities and is in the developmental stage.
(c) OPERATIONS
PROPOSED BUSINESS
Since January 1, 1993, the primary activity of the Company has been
directed towards organizational efforts. During this fiscal year, the Company
plans to search for and to identify potential acquisition candidates. As of the
date of this Registration Statement, the Company has not engaged in any
preliminary efforts intended to identify possible business opportunities and has
neither conducted negotiations nor entered into a letter of intent concerning
any business opportunity.
The Company proposes to implement a business plan to investigate and, if
warranted, merge with or acquire the assets or common stock of an entity
actively engaged in business which generates revenues. The Company will seek
opportunities for long-term growth potential as opposed to short-term earnings.
As of the date hereof, the Company has no business opportunities under
investigation. None of the Company's officers, directors, promoters or
affiliates have engaged in any preliminary contact or discussions with any
representative of any other company regarding the possibility of an acquisition
or merger between the Company and such other company.
The Company's Board of Directors will provide the Company's shareholders
with complete disclosure documentation in the form of a proxy statement
concerning any potential business opportunity and the structure of the proposed
business combination prior to its consummation. While such disclosure will
include audited financial statements of such a target entity, there is no
assurance that such audited financial statements will be available prior to
closing. However, the Board of Directors does intend to obtain certain
assurances of value of the target entity's assets prior to consummating such a
transaction, with further assurances that an audited statement would be provided
within sixty days after closing of such a transaction and such other assurances
as would permit the Company to comply with the securities laws in connection
with the acquisition. Closing documents relative thereto will include
representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in such
closing documents, or the transaction will be voidable.
The Registrant has no full-time employees. The Registrant's President and
Secretary-Treasurer have agreed to allocate a portion of their time to the
activities of the Registrant, without compensation. These officers anticipate
that the business plan of the Company can be implemented by their collectively
devoting approximately twenty-five hours per month to the business affairs
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of the Company and, consequently, conflicts of interest may arise with respect
to the limited time commitment of such officers.
One of the Company's officers and directors has been involved and all plan
to be involved with other "blank check" companies and, as a result, additional
potential conflicts of interest may arise. If such a conflict does arise in the
future and an officer or director of the Company is presented with business
opportunities under circumstances where there may be doubt as to whether the
opportunity should belong to the Company or another "blank check" company with
which they are affiliated, they will disclose the opportunity to the Boards of
Directors of all such companies. If a situation arises in which more than one
company desires to merge with or acquire that business opportunity, and the
principals of the business opportunity have no preference as to which company
will merge with or acquire such business opportunity, the company which first
contacted or was contacted by the proposed business opportunity will be entitled
to proceed with the proposed transaction.
The primary attraction of the Registrant as a merger partner or as an
acquisition vehicle will be its status as a public company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present shareholders of the Registrant.
The Articles of Incorporation of the Company provides that the Company may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, the assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification. See Part II, Item 5 below.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, to acquire controlling interest in business opportunities presented to
it by persons or firms who or which desire to seek the perceived advantages of
an Exchange Act registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location. The Company may
participate in a business venture of virtually any kind or nature.
The Company may seek a business opportunity in the form of firms which have
recently commenced operations, are developing companies in need of expansion
into new products or markets, are seeking to develop a new product or service or
are established, mature businesses.
In seeking business opportunities, the management decision of the Company
will be based upon the objective of seeking long-term appreciation in the value
of the Company. Current income will only be a minor factor in such decisions.
It is not anticipated that the Company will be able to participate in more
than one business opportunity. However, Management may, in its sole discretion,
elect to enter into more than one acquisition if it believes these transactions
Can be effectuated on terms favorable to the Company.
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This lack of diversification will not permit the Company to offset potential
losses from one business opportunity against profits from another and should be
considered a substantial risk to shareholders of the Company.
The analysis of new business opportunities will be undertaken by or under
the supervision of the officers and directors. The Company will have
unrestricted flexibility in seeking, analyzing and participating in business
opportunities. In its efforts, the Company will consider the following, among
other, factors:
(a) potential for growth, as indicated by new technology, anticipated
market expansion or new products;
(b) competitive position compared to other firms of similar size and
experience within the industry segment, as well as within the industry
as a whole;
(c) strength and diversity of management, either in place or scheduled for
recruitment;
(d) Capital requirements and anticipated availability of required funds to
be provided by the target company from operations, through the sale of
additional securities, the formation of joint ventures or similar
arrangements, or from other sources;
(e) the cost of participation by the Company as compared to the perceived
tangible and intangible values and potential;
(f) the extent to which the business opportunity can be advanced;
(g) the accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items;
and
(h) such other relevant factors as may arise from time to time, including
investor and market maker, if any, interest.
In applying the foregoing criteria, no one of which is now known to be
controlling, Management will attempt to analyze all relevant factors and make a
determination based upon reasonable investigative measures and available data.
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. Because of the Company's lack of capital, the
Company may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business
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opportunity may take a substantial amount of time after the effective date of
this Registration Statement.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity and containing such items as: (i) a
description of product, service and company history; (ii) management resumes;
(iii) financial information (including projections and audited financial
statements, if available); (iv) available projections with related assumptions
upon which they are based; (v) an explanation of proprietary products and
services; (vi) evidence of existing patents, trademarks or service marks or
rights thereto; (vii) present and proposed forms of compensation to management;
(viii) a description of transactions between the target and its affiliates
during relevant periods; (ix) a description of present and required facilities;
(x) an analysis of risks and competitive conditions; (xi) a financial plan of
operation and estimated capital requirements; and (xii) other information deemed
relevant under the circumstances, including investor and market makers, but only
after the release of public information on the target.
As part of the Company's investigation, officers and directors will meet
personally with management and key personnel, visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check references of management and key personnel and take other
reasonable investigative measures to the extent of the Company's limited
financial resources. Management of the Company will utilize the services of its
present attorney and accountants in the investigation of prospective
acquisitions. The Company may also utilize the services of hired consultants.
At the present time, the Company has no arrangements, nor has it identified any
such consultants.
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 perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for 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.
(d) MARKETS
The Company's initial marketing plan will be focused completely on finding
an acquisition candidate as discussed above. No efforts toward this marketing
plan have been made as of the date of this Registration Statement.
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(e) RAW MATERIALS
The use of raw materials is not now material factor in the Company's
operations at the present time.
(f) CUSTOMERS AND COMPETITION
At the present time, the Company is expected to be an insignificant
participant among the firms which engage in the acquisition of business
opportunities. There are a number of established companies, such as venture
capital and financial concerns, many of which are larger and better capitalized
than the Company and/or have greater personnel resources and technical
expertise. In view of the Company's combined extremely limited financial
resources and limited management availability, the Company will continue to be
at a significant competitive disadvantage compared to the Company's competitors.
(g) BACKLOG
At December 31, 1995, the Company had no backlogs.
(h) EMPLOYEES
At as of the date hereof, the Company has no employees. The Company does
not plan to hire employees in the future.
(i) PROPRIETARY INFORMATION
The Company has no proprietary information.
(j) GOVERNMENT REGULATION
The Company is not subject to any material governmental regulation or
approvals.
(k) RESEARCH AND DEVELOPMENT
The Company has never spent any amount in research and development
activities.
(l) ENVIRONMENTAL COMPLIANCE
At the present time, the Company is not subject to any costs for compliance
with any environmental laws.
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Item 2. DESCRIPTION OF PROPERTIES.
As of December 31, 1995, the Company's business office was located at 5650
Greenwood Plaza Blvd., Suite 216, Englewood, Colorado 8011, the office of Mr.
Gregory W. Skufca, its President, for which it pays no rent. The Company has no
other properties.
Item 3. LEGAL PROCEEDINGS.
No legal proceedings of a material nature to which the Company is a party
were pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company did not submit any matter to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(a) PRINCIPAL MARKET OR MARKETS.
The Company's securities have never been listed for trading on any market
and are not quoted at the present time. At the present time, the Company does
not know where secondary trading will eventually be conducted. The place of
trading, to a large extent, will depend upon the size of the Company's eventual
acquisition. To the extent, however, that trading will be conducted in the over-
the-counter market in the so-called "pink sheets" or the NASD's "Electronic
Bulletin Board," a shareholder may find it more difficult to dispose of or
obtain accurate quotations as to price of the Company's securities. In addition,
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock.
(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
As of the date hereof, a total of 2,052,500 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was approximately 35. All of the Company's
shareholders acquired their respective shares in the Company prior to 1990, with
the exception of Mr. Skufca, who acquired his shares in 1994 for cash at par
value. All of the issued and outstanding shares of the Company's common stock,
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$0.00001 par value, were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended,
in that these were private offerings to individuals who was sophisticated
investors and received all pertinent information relative to these investments.
(c) DIVIDENDS
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
were paid by the Company during the periods reported herein nor does the Company
anticipate paying dividends in the foreseeable future.
(d) THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless the Company can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that the Company's securities, for some period of time,
would be defined under that Act as a "penny stock." As a result, those who trade
in the Company's securities may be required to provide additional information
related to their fitness to trade the Company's shares. These requirements
present a substantial burden on any person or brokerage firm who plans to trade
the Company's securities and would thereby make it unlikely that any liquid
trading market would ever result in the Company's securities while the
provisions of this Act might be applicable to those securities.
(e) BLUE SKY COMPLIANCE
The trading of blank check companies may be restricted by the securities
laws ("Blue Sky" laws) of the several states. Management is aware that a number
of states currently prohibit the unrestricted trading of blank check companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for the shares of the Company and to make
resale of shares acquired by investors more difficult.
The impact of these Blue Sky laws is considered to be minimal since the
Company does not intend to qualify the Company's outstanding securities for
secondary trading in any state until such time as an acquisition or merger has
been consummated.
(f) INVESTMENT COMPANY ACT OF 1940
The Company does not intend to engage in any activities which would cause
it to be classified as an "investment company" under the Investment Company Act
of 1940, as amended. However, to the extent that the Company would inadvertently
become an investment company
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because of its activities, the Company would be subjected to additional, costly
and restrictive regulation.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations
The Company has generated no substantial revenues from its operations and
has been a development stage company since inception. Since the Company has not
generated revenues and has never been in a profitable position, it operates with
minimal overhead. The Company's primary activity will be to seek an acquisition
candidate. As of the end of the reporting period, the Company has concluded no
acquisitions and has spoken with no potential candidates. The attempt to seek an
acquisition candidate or candidates will be the primary focus of the Company's
activities in the coming fiscal year.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year.
Management feels that the Company has inadequate working capital to pursue
any business opportunities other than seeking an acquisition candidate. The
Company will have negligible capital requirements prior to the consummation of
any acquisition but can pursue an acquisition candidate. The Company does not
intend to pay dividends in the foreseeable future.
Item 7. FINANCIAL STATEMENTS.
The complete financial statements are included at Item 13 herein.
Item 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
The Company did not have any disagreements on accounting and financial
disclosures with its present accounting firm during the reporting period.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Directors and Executive Officers of the Company, their ages and
positions held in the Company as of December 31, 1995 are as follows:
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NAME AGE POSITION HELD
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Gregory W. Skufca 33 President and Director
Gerald Loffredo 51 Secretary, Treasurer, and Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
Messrs. Gregory W. Skufca and Gerald Loffredo should be considered
"parents" or "promoters" of the Company (as such terms are defined under the
Securities Act), inasmuch as Mr. Loffredo has taken significant initiative in
founding and organizing the business of the Company and because of the
shareholdings and control positions held by each in the Company.
GREGORY W. SKUFCA. Mr. Skufca has been the president and a director of the
Company since August, 1994, and has been the president of Financial
Communications Corp. (Financial Communications) since January, 1989. Mr. Skufca,
through Financial Communications, advises public and private investors, assists
in the obtaining and structuring of venture capital financing and assists
companies in their public relations. Previous to Financial Communications, Mr.
Skufca served as a loan officer and consultant with Skufca-Meyer Financial
Corp., Lakewood, Colorado, May, 1987, until January, 1989. Skufca-Meyer was a
small, privately-held Denver area lender specializing in residential mortgages
and corporate financing, but is no longer in business. From May, 1985, until
May, 1987, Mr. Skufca was employed as an independent sales representative with
Charles Milne and Associates, Denver, Colorado, a privately-held wholesale
office furniture and supply company. Previous to that he was employed as a new
home salesman with Skufca and Shelton Company, Denver, Colorado,, between
October, 1984, and May, 1985. This entity is also no longer in business. None
of these companies or any other company with which Mr. Skufca is affiliated will
provide services for the Company. There is no written policy of the Company to
this effect. However, Mr. Skufca has indicated his intention not to have any
company with which he is or has been associated, including, but not limited to
Financial Communications Corp., provide services while he is an officer and
director.
Mr. Skufca earned a bachelor's degree from the University of Colorado at
Boulder in 1980 and has attended numerous seminars in financial planning, real
estate, and marketing. He is also licensed with the NASD as a sales agent. Mr.
Skufca is currently devoting approximately 15 hours per month to the affairs of
the Company.
GERALD LOFFREDO. Mr. Loffredo has been an officer and a director of the
Company since 1989. He was employed by IBM from 1966 through 1991 in various
capacities, with the last
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being Engineering and Program Manager for approximately 13 years. From 1991 to
the present, he has been an Engineering Manager with Storage Technology
Corporation. He was a co-developer of a subdivision of duplexes, an apartment
complex, and individual homes in the Austin, Texas area. He is a partner of CF &
C, a private partnership which develops oil and gas properties in Colorado. He
has also acted as Vice President of Princeton Oil and Gas, a private company
which is in the business of acquisition and development of petroleum production
opportunities in the Ohio Valley. All are ventures which have been profitable.
Mr. Loffredo has an undergraduate degree in Mathematics, Physics, and Astronomy
from the University of Illinois. He has also done graduate work in Physics. He
will devote approximately 10 hours per month to the affairs of the Company.
PREVIOUS BLANK CHECK OFFERINGS
Mr. Loffredo has not previously participated in Blank Check Offerings.
Mr. Skufca has participated in the following Blank Check Offerings:
Mr. Skufca served Marantha II, Inc. (Marantha), as a director and as
president from its inception on September 18, 1987, until July 12, 1988. This
entity is publicly-held, made an initial "blank check" offering substantially
similar to the offering being made by the Company and previously had a plan of
operation which was similar to the Company's. On July 12, 1988, this
corporation acquired, as a wholly-owned subsidiary, Equity Investors,, Inc.
("Equity"), which was then and continues to be engaged in the business of real
estate investment, management and related services. Upon effectiveness of the
acquisition, Marantha's name was changed to Equity Financial Group, Inc.
Concurrently, Marantha also changed its plan of operation so that there is no
longer any similarity to the Company's plan of operation. As of 1989, Mr.
Skufca has no affiliations whatsoever with Marantha.
Mr. Skufca accepted the positions of director and president of Parle'
International, Inc. (Parle), in April of 1988. Parle' completed an initial
public offering of its securities on a "blank check" basis to the public in
October of 1988 and acquired Vision Pictures, Inc. (Vision), a Los Angeles based
motion picture company in a share exchange during December of 1988. Upon
consummation of the acquisition, Mr. Skufca resigned as an officer, but remained
a director of Parle'. He resigned in 1989 and has no further affiliation.
Also in 1988, Mr. Skufca became the president and a director of Kiwi III
Ltd. (Kiwi), a corporation which previously adopted a plan of operation
substantially similar to the Company's. Kiwi conducted an initial public
offering of its securities on a "Blank Check" basis to the public and acquired
Beat the House Enterprises, Inc., a Las Vegas, Nevada, based manufacturer of
gaming devices in October of 1989 pursuant to a share exchange. Mr. Skufca
resigned as an officer of the corporation upon completion of the acquisition and
ceased all affiliations with this company in 1989.
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Mr. Skufca served Focus V, Inc. (Focus), as a director and as president
until December of 1989, when he resigned as president and director. This entity
is publicly-held, made an initial "blank check" offering substantially similar
to the offering being made by the Company with this Prospectus, and had a plan
of operation which was similar to the Company's. In December of 1989, Focus
acquired Work Recovery Centers, Inc. (WRCI), a Tucson, Arizona, based
manufacturer and distributor of computerized work stations and assessment
centers for the workman' rehabilitation industry. Subsequent to the acquisition,
the name of Focus was changed to Work Recovery, Inc. Concurrently, Focus also
changed its plan of operation so that there is no longer any similarity to the
Company's plan of operation. Mr. Skufca has ceased all affiliations with Focus
as of 1990.
Mr. Skufca previously served Plantation Capital Corp. (Plantation) as a
director and as president/treasurer, and has served in these capacities from the
inception of the corporation in August of 1988 to 1990. He has had no
affiliation whatsoever with this company since 1990.
Mr. Skufca has disposed of all substantial ownership in each of the
foregoing companies. He owns between zero and less than 1% of the issued and
outstanding shares.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors and persons owning more than ten
percent of the Company's Common Stock to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Additionally, Item 405 of Regulation S-B under the 34 Act requires the Company
to identify in its Form 10-KSB and proxy statement those individuals for whom
one of the above referenced reports was not filed on a timely basis during the
most recent fiscal year or prior fiscal years. Given these requirements, the
Company has the following report to make under this section. None of the
Company's officers or directors made timely filings of the Forms 3. As of the
date hereof, no officers and directors have filed Forms 3 and 5. The Company has
instituted a program to foster future compliance.
Item 10. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered to the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Registrant has generated revenues from operations. Any compensation will be
dependent upon a combination of factors, including the percentage of time a
person devotes to the business of the Registrant, experience, ability of the
Registrant to pay, and other items.
The Company has no retirement, pension, profit sharing, stock option,
insurance or other similar programs.
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Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following sets forth the number of shares of the Registrant's $0.00001
par value common stock beneficially owned by (i) each person who, as of December
31, 1995, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) the individual Directors of the Registrant and
(iii) the Officers and Directors of the Registrant as a group. As of December
31, 1995, there were 2,052,500 common shares issued and outstanding.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2) CLASS
- ------------------- --------------------------- ----------
Gregory W. Skufca 1,500,000 73.1%
Gerald Loffredo 88,125 4.3%
All Officers and
Directors as a Group 1,588,125 77.4%
(two persons)
(1) All ownership is beneficial and on record, unless indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's business office have been located at 5650 Greenwood Plaza
Blvd., Suite 216, Englewood, Colorado 80111, the office of Mr. Gregory W.
Skufca, its President, for which it pays no rent. Otherwise, there have been no
related party transactions, or any other transactions or relationships required
to be disclosed pursuant to Item 404 of Regulation S-B.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following financial information is filed as part of this
report:
(1) FINANCIAL STATEMENTS
(2) SCHEDULES
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(3) EXHIBITS. The following exhibits required by Item 601
to be filed herewith are incorporated by reference to
previously filed documents:
Exhibit number to
Item 601 Registration Statement
Exhibit No. Description on Form 10-SB
- ----------- ----------- ----------------------
* 3A Articles of Incorporation
* 3B Articles of Amendment
* 3C Bylaws
*Previously Filed
(b) REPORTS ON FORM 8-K. The Company filed no reports on Form 8-
K during the fourth quarter of the fiscal year ended December 31, 1995.
15
<PAGE>
KNIGHT NATURAL GAS, INC.
FINANCIAL STATEMENTS
with
Independent Auditors' Report
For The Years Ended December 31, 1995 and 1994
And For the Period January 1, 1993 (Inception)
through December 31, 1995
<PAGE>
KNIGHT NATURAL GAS, INC.
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-4
Statement of Shareholder's Equity F-5
Notes to the Financial Statements F-6-F-7
<PAGE>
[KISH-LEAKE & ASSOCIATES, P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Knight Natural Gas, Inc. (a
Developmental Stage Company), at December 31, 1994, and the related statement of
operations, shareholders' equity, and cash flows for the year ended December 31,
1995 and 1994 and the period January 1, 1993 (Inception) through December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
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 the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Knight Natural Gas, Inc. at
December 31, 1995 and the results of its operations and its cash flows for the
year ended December 31, 1995 and 1994 and the period January 1, 1993 (Inception)
through December 31, 1995 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
enterprise. The deficiency in working capital as of December 31, 1995 raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.
/s/ Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
April 26, 1996
F-1
<PAGE>
KNIGHT NATURAL GAS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December
NOTES 31, 1995
----- --------
<S> <C> <C>
ASSETS - Cash $ 647
---------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES $ 0
---------
SHAREHOLDERS' EQUITY 1,2
Common Stock, $.00001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding 2,052,500 Shares 21
Capital Paid In Excess Of
Par Value Of Common Stock 422,649
Preferred Stock, $.10 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares 0
Retained Deficit Prior To January 1, 1993 (417,421)
Deficit Accumulated During
The Development Stage (4,602)
---------
TOTAL SHAREHOLDERS' EQUITY 647
---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 647
---------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-2
<PAGE>
KNIGHT NATURAL GAS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January
1, 1993
(Inception)
Through
December December December
NOTES 31, 1995 31, 1994 31, 1995
----- -------- -------- -----------
<S> <C> <C> <C> <C>
Revenue $0 $0 $0
--------- --------- ---------
Expenses:
Office 127 195 392
Professional 3,850 94 4,210
--------- --------- ---------
Total 3,977 289 4,602
Net (Loss) ($3,977) ($289) ($4,602)
--------- --------- ---------
Net (Loss) Per Common Share 1 ($0.00) ($0.00) ($0.00)
--------- --------- ---------
Weighted Average Common Shares
Outstanding 2 2,052,500 2,052,500 2,052,500
--------- --------- ---------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-3
<PAGE>
KNIGHT NATURAL GAS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January
1, 1993
(Inception)
Through
December December December
NOTES 31, 1995 31, 1994 31, 1994
----- -------- -------- -----------
<S> <C> <C> <C> <C>
Net (Loss) Accumulated
During The Development Stage (3,977) (289) (4,602)
Stock Issued Not For Cash 0 15 15
----- ----- -----
Cash Flows From Operations (3,977) (274) (4,587)
----- ----- -----
Cash Flows From Financing Activities:
Contributions Of Capital 3,700 0 3,700
----- ----- -----
Cash Flows From Financing 3,700 0 3,700
----- ----- -----
Net (Decrease) In Cash (277) (274) (887)
Cash At Beginning Of Period 924 1,198 1,534
----- ----- -----
Cash At End Of Period $647 $924 $647
----- ----- -----
Summary Of Non-Cash Investing And Financing
Activities:
1,500,000 Shares Issued For Service @ $.00001
Per Share $15
---
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-4
<PAGE>
KNIGHT NATURAL GAS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Capital Accumulated
Number Of Paid In Number Of During The
Common Common Excess Of Preferred Preferred Retained Development
Notes Shares Stock Par Value Shares Stock Deficit Stage Total
----- ------ ----- --------- ------ ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance At January 1, 1993 552,500 $6 $418,949 0 0 ($417,421) 0 $1,534
Net (Loss) December 31, 1993 (336) (336)
--------- --- -------- -- -- ---------- ------- -------
Balance At December 31, 1993 552,500 6 418,949 0 0 (417,421) (336) $1,198
Issuance Of Common Stock: 1,2
November 1, 1994 - Services @
$.00001 per Share 1,500,000 15 0 15
Net (Loss) December 31, 1994 (289) (289)
--------- --- -------- -- -- ---------- ------- -------
Balance At December 31, 1994 2,052,500 $21 $418,949 0 0 ($417,421) ($625) $924
Capital Contribution 3,700 3,700
Net (Loss) December 31, 1995 (3,977) (3,977)
--------- --- -------- -- -- ---------- ------- -------
Balance At December 31, 1995 2,052,500 $21 $422,649 $0 $0 ($417,421) ($4,602) $647
--------- --- -------- -- -- ---------- -------- -------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-5
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Notes to Financial Statements
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
On September 19, 1985 Knight Natural Gas, Inc. (the Company) was incorporated
under the laws of Colorado, for the purpose of gas exploration. In December
1989 the Company ceased operations in the oil and gas business. On January 1,
1993 the Company's new management decided to search for a merger or acquisition
candidate and therefore has entered into the development stage.
Developmental Stage:
The Company is currently in the developmental stage and has no significant
operations to date.
Income Taxes:
In 1988 the Company, with the consent of its shareholders, elected to have its
income taxes under section 1372 of the Internal Revenue Code which provides
that, in lieu of corporation income taxes, the shareholders are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision or
liability for Federal or State income taxes is included in these financial
statements.
Statement of Cash Flows:
For purposes of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest and taxes for the years ended December 31, 1995 and 1994
was $-0-.
F-6
<PAGE>
Knight Natural Gas, Inc..
(A Development Stage Company)
Notes to Financial Statements
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
Net (Loss) Per Common Share:
The net (loss) per common share is computed by dividing the net (Loss) for the
period by the weighted average number of shares outstanding at December 31, 1995
and 1994.
NOTE 2 - CAPITAL STOCK AND CAPITAL IN EXCESS OF PAR VALUE
Common Stock:
The Company had authorized 100,000,000 shares of $.00001 par value common stock
and 1,000,000 shares of $.10 par value, nonvoting preferred stock.
On January 1, 1993, the Company had issued 11,050,000 shares of common stock.
On November 1, 1994, the Company's Board of Directors approved a 20 to 1 reverse
split and then issued 1,500,000 shares of common stock for services valued @
$.00001 per share.
NOTE 3 - RELATED PARTY EVENTS
The Company maintains a mailing address provided by a shareholder on a cost free
basis. The office is located at 5650 Greenwood Plaza Blvd. Suite 216 Englewood,
CO 80111. No expense has been recorded as the value of the address is
considered immaterial.
F-7
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Knight Natural Gas, Inc.
Dated: 5-10-96 By: /s/ Gregory W. Skufca
--------------- ---------------------------------------
Gregory W. Skufca
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL AND ACCOUNTING OFFICER
Dated: 5-10-96 By: /s/ Gerald Loffredo
--------------- ---------------------------------------
Gerald Loffredo
Treasurer
SECRETARY
Dated: 5-10-96 By: /s/ Gerald Loffredo
--------------- ---------------------------------------
Gerald Loffredo
Secretary
16
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
EXHIBITS
TO
Knight Natural Gas, Inc.
<PAGE>
INDEX TO EXHIBITS
Exhibit Page or
Number Description Cross Reference
- --------- --------------- ---------------
* 3A Articles of Incorporation
* 3B Articles of Amendment
* 3C Bylaws
* Previously filed.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 647
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 647
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 647
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 21
<OTHER-SE> (626)
<TOTAL-LIABILITY-AND-EQUITY> 647
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3977
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3977)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3977)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3977)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
