Form 10-QSB - Page-
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-7349
WEBCOR ELECTRONICS, INC.
(Exact name of Issuer as specified in its charter)
Delaware 59-3453153
other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1612 N. Osceola Avenue
Clearwater, Florida 33755
(Address of principal offices)
(727) 443-3434
(Issuer's telephone number, including area code)
Indicate by check mark whether the Issuer (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 Issuer was required to file
such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
dates.
Title of Each Class Outstanding at December 31, 1998
Common Stock, $0.01 Par Value 3,476,370 Shares
Subject to Reverse Split of 11.5879.
See Item 4 of 10-K March 1997.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
ITEM 1 Financial Statements
Consolidated Balance Sheets as of December 31, 1998 3
Consolidated Statements of Operations for thePeriods
Ended December 31, 1998 and December 31, 1997. 4
Consolidated Statements of Cash Flow for the
Periods Ended December 31, 1998 and December 31, 1997.5
Notes to Financial Statements 6
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
9
SIGNATURES 9
WEBCOR ELECTRONICS INC.
(a Dormant State Company)
Consolidated Balance Sheet
December 31, 1998 and December 31, 1997
(unaudited)
12/31/9812/31/97
Assets
Organization Cost $ 0 $ 0
Total Assets 0 0
Liabilities and Shareholder's Equity
Stockholders' Equity
Common Stock par value at $.01 per share
20,000,000 shares authorized,
3,476,370 shares issued
and outstanding $ 0 0
Additional Paid in Capital $56,378 25,232
Retained Earnings (Deficit) (54,575) (23,650)
Net Income/Loss (1,623) (1,582)
Total Shareholders' Equity 0 0
______ _______
Total Liabilities and
Shareholders Equity $ 0 $ 0
========= ========
See accompanying notes to financial statements
WEBCOR ELECTRONICS INC.
(a Dormant State Company)
Consolidated Statements of Operations
for the period ending December 31, 1998, and December 31, 1997
(unaudited)
1998 1997
12/31/98 12/31/97
_______ ________
Revenues $ 0 $ 0
Expenses
Administrative Expenses $(1,623) $(1,582)
Net Income/Loss for the period $(1,623) $(1,582)
========= ========
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC.
(a Dormant State Company)
Consolidated Statements of Cash Flows
for periods ended December 31, 1998 and December 31, 1997
(unaudited)
For the Years Ended
12-31-98 12-31-97
Cash Flows
Operating Activities
Net Income $(25,232) $(1,746)
Net Cash Provided (used) /
By Operating Activities 0 0
Expenses Paid by Capston 25,232 1,746
Net Cash Increase (Decrease) 0 0
Cash at Beginning of Period 0 0
Cash at End of Period $ 0 $ 0
======= ======
See accompanying notes to financial statements
WEBCOR ELECTRONICS, INC.
(A Dormant State Company)
September 30, 1998
Note 1. HISTORY OF THE COMPANY
WEBCOR ELECTRONICS INC., (A Dormant State Company), was
incorporated on December 3, 1971, under the laws of the State of
Delaware. The Company conducted an initial public offering of
its Common Stock in May 1982 and in connection with an
application to list its Common Stock on the AMEX system, the
Company also registered its Common Stock pursuant to Section
12(g) of the Securities Exchange Act of 1934. The Company's
Common Stock remained listed on the AMEX system until April 09,
1987.
On February 01, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy Act (Case No. 89-10328) in the
U.S. Bankruptcy Court for the Eastern District of New York. On
October 16, 1990, the Company's case under Chapter 11 was
voluntarily converted into a case under Chapter 7 of the
Bankruptcy Act. As a result of the voluntary conversion of the
Company's bankruptcy case, all assets of the Company were
transferred to the Trustee in Bankruptcy on the conversion date
and the Company ceased all operations. Subsequently, the Trustee
in Bankruptcy effected an orderly liquidation of corporate assets
and used the proceeds to repay the Company's creditors. On
November 13,1996 the Company's case under Chapter 7 was closed by
an order of the Court and the Trustee in Bankruptcy was
discharged. As a result of the Bankruptcy, the Company has no
assets, liabilities, management or ongoing operations and has not
engaged in any business activities since February 1990.
Note 2. RESTORATION OF CORPORATE STATUS
On December 26, 1996, acting in its capacity as the holder of
5000 shares (0.0014%) of the Company's common stock, and without
first receiving the consent, approval or authorization of any
other person associated with the Company, Capston Network Company
effected a renewal, revival and restoration of the Company's
certificate of incorporation pursuant to Section 312 of the
General Corporation Law of Delaware. Thereafter, Capston filed a
10-K for the years ending March 31, 1989-1996, and a Proxy
Statement seeking approval and ratification of its actions, along
with authorization to seek a suitable business combination
transaction. This proxy statement was ultimately distributed to
the Company's stockholders and the proposals therein were
approved by the holders of a majority of the Company's issued and
outstanding shares.
Under the terms of the original Proxy Statement, Capston was
authorized to seek a suitable business combination transaction on
behalf of the Company and to submit the terms of any proposed
business combination transaction to the Company's stockholders
for their approval. Capston did not receive and was not entitled
to receive any equity interest in the Company as a result of it's
actions prior to the date of the Proxy Statement. Moreover,
Capston was not entitled to reimbursement for any expenses
incurred by it on behalf of the Company except to the extent
that the terms of a business combination transaction provided for
the reimbursement of such expenses. However, because Sally Fonner
is both the President of WEBCOR ELECTRONICS INC. and Capston,
prior Staff Accounting Bulletins require under generally accepted
accounting principles the treatment of debiting the expenses with
corresponding credit to paid-in capital. Future expenses of
Capston or others will be treated this way. These expenses are
actual cash expenditures and do not reflect any costs associated
with the operation of Capston nor any personnel time or cost.
Note 3. FUTURE EXPENSES
Capston will continue to extend administrative expenses to keep
WEBCOR ELECTRONICS, INC. current with its reporting requirements,
keeping the Corporation in good standing, any required proxy
solicitation or acquisition efforts. These amounts should not
exceed more than an additional $100,000 in out-of-pockets costs.
In addition, if approved, and as a result of a suitable
acquisition, additional fees paid for by issuance of equity
position would be for: (i) Capston's shares, (ii)acquisition
shares(s), (iii)up to 5% of the acquisition for a finder's fee,
and (iv)fees for consulting and legal activities..
Item 2. Management Discussion and Analysis of Financial Condition
and Results of Operations.
Financial Condition
WEBCOR ELECTRONICS INC. has no operations, assets or
liabilities. Expenses incurred to keep it in good standing with
governmental and regulatory bodies, maintain the transferability
of its stock and interact with stockholders, are paid by Capston.
Corporate Background Information
WEBCOR ELECTRONICS INC., (the Registrant), was incorporated on
December 3, 1971, under the laws of the State of Delaware. The
Company conducted an initial public offering of its Common Stock
in May 1982 and in connection with an application to list its
Common Stock on the AMEX system, the Company also registered its
Common Stock pursuant to Section 12(g) of the Securities Exchange
Act of 1934. The Company's Common Stock remained listed on the
AMEX system until April 09, 1987.
On February 01, 1989, the Company filed a voluntary petition
under Chapter 11 of the Bankruptcy Act (Case No. 89-10328) in
the U.S. Bankruptcy Court for the Eastern District of New York.
On October 16, 1990, the Company's case under Chapter 11 was
voluntarily converted into a case under Chapter 7 of the
Bankruptcy Act. As a result of the voluntary conversion of the
Company's bankruptcy case , all assets of the Company were
transferred to the Trustee in Bankruptcy on the conversion date
and the Company ceased all operations. Subsequently, the Trustee
in Bankruptcy effected an orderly liquidation of corporate assets
and used the proceeds to repay the Company's creditors. On
November 13,1996 the Company's case under Chapter 7 was closed by
an order of the Court and the Trustee in Bankruptcy was
discharged. As a result of the Bankruptcy, the Company has no
assets, liabilities, management or ongoing operations and has not
engaged in any business activities since February, 1990.
During the pendancy of the Bankruptcy, the management of the
Registrant neglected to file franchise tax returns with and pay
the required franchise taxes to the State of Delaware. As a
result, the Company's corporate charter was revoked by order of
the Secretary of State of the State of Delaware on March 1, 1991.
Similarly, the management of the Registrant neglected to file
with the SEC either (a) the regular reports that are required of
all companies that have securities registered under the Exchange
Act, or (b) a certification on Form 15 terminating its
registration under the Exchange Act. As a result, the Company
remained a Registrant under the Exchange Act but was seriously
delinquent in its SEC reporting obligations.. Acting in its
capacity as a Stockholder of the Company, and without first
receiving any consent, approval or authorization of any officer,
director or other Stockholder of the Company, Capston effected a
renewal, revival and restoration of the Company's certificate of
incorporation pursuant to Section 312 of the General Corporation
Law of the State of Delaware. In general, Section 312 provides
that any corporation may "procure an extension, restoration,
renewal or revival of its certificate of incorporation, together
with all the rights, franchises, privileges and immunities and
subject to all of its duties, debts and liabilities which had
been secured or imposed by its original certificate of
incorporation" upon compliance with certain procedural
requirements.
After reviewing the applicable files, Capston determined
that the only debt of the Company that was "secured or imposed by
its original certificate" was the obligation of the Registrant to
pay its Delaware taxes. Therefore, Capston paid all past due
franchise taxes on behalf of the Company and then filed a
Certificate of Renewal, Revival, Extension and Restoration of the
Company's Certificate of Incorporation on behalf of the Company
under the authority granted by Section 312(h). The total out-of-
pocket costs paid by Capston incurred in connection with the
restoration of the Company's charter was $450. This Certificate
was filed in the office of the Secretary of the State of
Delaware on December 26, 1996 and at the date of this Statement
the Company is lawfully incorporated, validly existing and in
good standing under the laws of the State of Delaware.
Proposed Operations
In February of 1997, the Registrant sent to its stockholders a
Notice of Special Meeting and Proxy Statement which described a
number of proposals relating to a plan of reorganization proposed
by Capston Network Company ("Capston"), a stockholder of the
Company. Subsequently, on March 10, 1997, a Special meeting of
the Stockholders was held and all of the proposals were approved
by a majority vote of the Stockholders. The principal proposals
approved by the stockholders were:
1. A proposal to ratify the actions of Capston in (i) effecting
a renewal, revival and restoration of the Company's
Certificate of Incorporation; (ii) adopting amended by-laws
to govern the business affairs of the Company, and (iii)
filing the reports and other documents necessary to bring the
Company current with respect to its reporting obligations
under the Securities Exchange Act of 1934;
2. A proposal to elect a person designated by Capston to serve
as the sole member of the Board of Directors until the 1998
annual Meeting of Stockholders, or until her successor is
elected and qualified;
3. A proposal to consider and vote upon proposed an Amendment to
the Company's Certificate of Incorporation that will effect a
reverse split of all issued and outstanding shares of Common
Stock in the ratio of one (1) share of new Common Stock for
each 11.5879 shares presently outstanding so that immediately
thereafter the Company will have a total of 300,000 shares
issued and outstanding;
4. A proposal to consider and vote upon a proposal to issue
200,000 shares of Common Stock to persons designated by
Capston as compensation for services rendered in connection
with the implementation of the Plan;
5. A proposal to consider and vote upon a proposal which will
give the Board of Directors authority to pay an in-kind
Finder's Fee to unrelated third party finders who introduce
the Company to a suitable acquisition prospect.
6. Consider and vote upon a proposal that will give the Board of
Directors discretionary authority to (i) change the Company's
name and (ii) issue up to 4,500,000 shares of Common Stock to
unrelated third parties, all without prior stockholder
approval, in connection with a business combination
transaction of the type contemplated by the Plan; and
7. A proposal to consider and vote upon a proposed Amendment to
the Company's Certificate of Incorporation that will increase
the authorized capital stock of the Company to 25,000,000
shares of $0.01 par value Common Stock and 5,000,000 shares
of $0.01 par value Preferred Stock.
Detailed disclosure respecting each of the amendments is set
forth in the Registrant's Proxy Statement dated January 29, 1997
which is incorporated herein by this reference.
Incorporated herein as a reference is a proxy for a meeting,
which was first held on June 19, 1998, which contains a detailed
disclosure respecting the changes proposed by management. The
meeting has been continued due to lack of quorum. Management has
continued the meeting in accordance with Delaware law until
quroum is achieved or all hope is abandoned to doing so.
Management feels that the issues brought forth in the proxy
provide a more desirable structure for acquisition targets.
Operations
The Company has no assets, liabilities, management or
ongoing operations and has not engaged in any business
activities. Capston believes that it may be possible to recover
some value for the Stockholders through the adoption and
implementation of a Plan whereby the Company will be restructured
as a "public shell" for the purpose of effecting a business
combination transaction with a suitable privately-held company
that has both business history and operating assets.
Capston believes the Company will offer owners of a suitable
privately-held company the opportunity to acquire a controlling
ownership interest in a public company at substantially less cost
than would otherwise be required to conduct an initial public
offering. Nevertheless, Capston is not aware of any empirical
statistical data that would independently confirm or quantify
Capston's beliefs concerning the perceived value of a merger or
acquisition transaction for the owners of a suitable privately-
held company. The owners of any existing business selected for a
business combination with the Company will incur significant
costs and expenses, including the costs of preparing the required
business combination agreements and related documents, the costs
of preparing a Current Report on Form 8-K describing the business
combination transaction and the costs of preparing the
documentation associated with any future reporting under the
Exchange Act and registrations under the Securities Act.
The Company is fully reactivated and can be used as a
corporate vehicle to seek, investigate and, if the results of
such investigation warrant, effect a business combination with a
suitable privately-held company or other business opportunity
presented to it by persons or firms that seek the perceived
advantages of a publicly held corporation. The business
operations proposed in the Plan are sometimes referred to as a
"blind pool" because Stockholders will not ordinarily have an
opportunity to analyze the various business opportunities
presented to the Company, or to approve or disapprove the terms
of any business combination transaction that may be negotiated by
Capston and Ms. Fonner on behalf of the Company. Consequently,
the Company's potential success will be heavily dependent on the
efforts and abilities of Ms. Fonner, Capston and its officers,
directors and consultants, who will have virtually unlimited
discretion in searching for, negotiating and entering into a
business combination transaction. Ms. Fonner and Capston have had
limited experience in the proposed business of the Company.
Although Ms. Fonner and Capston believes that the Company will be
able to enter into a business combination transaction within 12
months after the approval of the new Plan by the Stockholders,
there can be no assurance as to how much time will elapse before
a business combination is effected, if ever. 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.
Capston and its officers, directors and consultants
anticipate that the selection of a business opportunity for the
Company will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in
some industries, and shortages of available capital, Capston
believes that there are numerous privately-held companies seeking
the perceived benefits of a publicly traded corporation. Such
perceived benefits may include facilitating debt financing or
improving the terms on which additional equity or may be sought,
providing liquidity for the principals of the business, creating
a means for providing incentive stock options or similar benefits
to key employees, providing liquidity for all stockholders and
other factors.
Potential 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.
Capston, Ms. Fonner, legal advisers and consultants anticipate
that the Company will be able to participate in only one business
venture. This lack of diversification should be considered a
substantial risk inherent in the Plan because it will not permit
the Company to offset potential losses from one venture against
gains from another. Moreover, due to the Company's lack of any
meaningful financial, managerial or other resources, Capston, Ms.
Fonner, legal advisers and consultants believe the Company will
not be viewed as a suitable business combination partner for
either developing companies or established business that are in
need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination
transaction, the Registrant 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. After the
consummation of a business combination transaction, it is likely
that the present Stockholders of the Registrant will only own a
small minority interest in the combined companies. In addition,
as part of the terms of the acquisition transaction, all of the
Registrant's officers and directors will ordinarily resign and be
replaced by new officers and directors without a vote of the
Stockholders. Capston does not intend to obtain the approval of
the Stockholders prior to consummating any acquisition other than
a statutory merger that requires a Stockholder vote. Capston and
its officers, directors and consultants do not intend to sell any
shares held by them in connection with a business acquisition
until after the completion of the acquisition occurs, and then,
only in an orderly manner.
It is anticipated that any securities issued in a business
combination transaction will be issued in reliance on exemptions
from registration under applicable Federal and state securities
laws. In some circumstances, however, as a negotiated element of
a business combination, the Registrant may agree to register such
securities either at the time the transaction is consummated or
at some specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading
market that may develop may have a depressive effect on such
market. While the actual terms of a transaction to which the
Registrant 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
stockholders of the Registrant would retain less than 20% of the
issued and outstanding shares of the combined companies, which
could result in significant dilution in the equity of such
stockholders. The Registrant intends to structure any business
combination in such manner as to minimize Federal and state tax
consequences to the Registrant and any target company.
As part of the Registrant's investigation of potential
business opportunities, Capston and its officers, directors and
consultants will ordinarily 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 Registrant's limited resources and Capston's limited
expertise. The manner in which the Registrant participates in an
opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Registrant and other parties
and the relative negotiating strength of the Registrant and such
other management.
With respect to any business combination negotiations,
Capston will ordinarily focus on the percentage of the Registrant
which target company stockholders would acquire in exchange for
their ownership interest in the target company. Depending upon,
among other things, the target company's assets and liabilities,
the Registrant's stockholders will in all likelihood only own a
small minority interest in the combined companies upon completion
of the business combination transaction. Any business combination
effected by the Registrant can be expected to have a significant
dilutive effect on the percentage of shares held by the
Registrant's current Stockholders.
Upon completion of a business combination transaction, there
can be no assurance that the combined companies will have
sufficient funds to undertake any significant development,
marketing and manufacturing activities. Accordingly, the combined
companies may be required to either seek additional debt or
equity financing or obtain funding from third parties, in
exchange for which the combined companies might be required to
issue a substantial equity position. There is no assurance that
the combined companies will be able to obtain additional
financing on terms acceptable to the combined companies.
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 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 Registrant of the related costs
incurred.
Exemption from Rule 419
As an existing Registrant under the Exchange Act, the
Company's proposed activities are not subject to SEC Rule 419
which was adopted to strengthen the regulation of "blind pool"
companies which Congress has found to have been common vehicles
for fraud and manipulation in the penny stock market. The Company
is not subject to Rule 419 because it is not offering stock to
the public in an offering registered under the Securities Act.
Accordingly, Stockholders are not entitled to the substantive
protection provided by Rule 419.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
NONE
ITEM 2.CHANGES IN SECURITIES
NONE
ITEM 3.DEFAULTS ON SENIOR SECURITIES
NONE
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Incorporated herein as a reference is a proxy for a
meting which was first held on June 19, 1998. The meeting has
been continued due to lack of quorum. Management has continued
the meeting in accordance with Delaware law until quroum is
achieved or all hope is abandoned to doing so. Management feels
that the issues brought forth in the proxy provide a more
desirable structure for acquisition targets.
ITEM 5. OTHER INFORMATION
NONE
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits None
B. Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
WEBCOR ELECTRONICS, INC.
Date: 01/15/99 By____________________
Sally Fonner,
Director
President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934 this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on the date
indicated.
Date: 01/15/99 By_____________________
Sally Fonner,
Director
President
and Chief Financial Officer