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__________________________________
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
__________________________________
FORM 10-SB/A-3
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
ZEDIK ENTERPRISES, INC.
(Exact name of registrant as specific in its charter)
Colorado Applied For
(State of Incorporation) (I.R.S. Employer I.D. No.)
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
(Address of principal executive offices, including zip code)
Telephone number, including area code: (303) 794-9450
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue, Suite 503
Spokane, Washington 99204
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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ITEM 1. BUSINESS.
HISTORY, ORGANIZATION AND CHANGE OF CONTROL
ZEDIK ENTERPRISES, INC. (the "Company"), was organized under
the laws of the State of Colorado, on February 23, 1996, to make
a distribution of the shares of Common Stock to friends and
business associates of the Company's officers and directors who are
accredited investors. The purpose of the distributions was to
allow the Company to become widely-held, thereby allowing it the
opportunity to merge in the future with a privately-held company
seeking a larger stockholder base. The Company has been inactive
since the time of its organization.
As a result of the foregoing distribution, the Company
currently has 235 shareholders.
The Company is filing this Form 10 on a voluntary basis. It
has no obligations pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Company believes that by
filing such Form 10 and being obligated to file reports pursuant to
Section 13 of the Exchange Act, it can attract an acquisition
candidate of greater financial value with a track record of
success. While the Company believes it will be a more attractive
acquisition candidate, there is no assurance that the foregoing
assumption is correct. Further, effective January 4, 1999, in
order to become listed for trading on the Bulletin Board operated
by the National Association of Securities Dealers, Inc., the
Company must be filing reports with the Securities and Exchange
Commission (the "Commission") pursuant to Section 13 of the
Exchange Act.
On January 21, 2000 the Division of Corporate Finance issued
an interpretive letter to the National Association of Securities
Dealers, Inc. wherein the Division of Corporate Finance concluded
that promoters or affiliates of a blank check company and their
transferees would act as "underwriters" under the Securities Act of
1933 (the "Act") when reselling or otherwise transferring the
securities of a blank check company. The letter also indicated
that the Division of Corporate Finance Division (the "Division")
believed that those securities could only the resold through
registration under the Act and that Rule 144 of the Act would not
be available for resale transactions despite technical compliance
with the requirements of that Rule. It is unclear at this time
whether the Division's opinion is shared by the Commission or
whether the opinion carries the force of law or will be the subject
of enforcement proceedings by the Commission if the opinion is not
followed by the Company's promoters and affiliates. It is
possible that the Division's opinion will limit resales of
securities by the Company's affiliates and promoters. However, the
Company believes that resales by its shareholders, other that the
Company's affiliates and promoters, may not be effected as none of
the Company's shareholders received shares from its promoters or
affiliates.
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The Office of Small Business, Division of Corporate of
Finance of the SEC, however, has advised the Company that it
disagrees with the Company's analysis aforesaid. It is the Office
of Small Business's position that all of the Company's shareholders
including the 235 shareholders who received securities for no
consideration in a Section 4(6) offering directly from the Company
cannot use Rule 144 to resell their securities, since their resale
transactions would appear to be designed to distribute or
redistribute securities to the public without compliance with the
registration requirements of the Securities Act.
The Company believes that there is a demand by non-public
corporations for shell corporations that have a public distribution
of securities, such as the Company. The Company believes that
demand for shells has increased dramatically since the Commission
imposed additional requirements upon "blank check" companies
pursuant to Reg. 419 of the Act. According to the Commission, Rule
419 was designed to strengthen regulation of securities offerings
by blank check companies, which Congress has found to have been a
common vehicle for fraud and manipulation in the penny stock
market. See Securities Act Releases No. 6891 (April 17, 1991), 48
SEC Docket 1131 and No. 6932 (April 13, 1992) 51 Docket 0382, SEC
Docket 0382. The foregoing regulation has decreased,
substantially, the number of "blank check" offerings filed with the
Commission, and as a result has stimulated an increased demand for
shell corporations. While the Company has made the foregoing
assumption, there is no assurance that the same is accurate or
correct and accordingly, no assurance that the Company will be
acquired by or acquire an existing non-public entity.
GENERAL
The Company proposes to seek, investigate and, if warranted,
acquire an interest in one or more business opportunities ventures.
As of the date hereof the Company has no business opportunities or
ventures under contemplation for acquisition but proposes to
investigate potential opportunities in the form of investors or
entrepreneurs with a concept which has not yet been placed in
operation, or in the form of firms which are developing companies.
The Company may seek out established businesses which may be
experiencing financial or operation difficulties and are in need of
the limited additional capital the Company could provide. The
Company anticipates that it will seek to merge with or acquire an
existing business. After the merger or acquisition has taken
place, the surviving entity will be the Company (ZEDIK ENTERPRISES,
INC.), however, management from the acquired entity will in all
likelihood operate the Company. There is however, a remote
possibility that the Company may seek to acquire and operate an
ongoing business, in which case the existing management might be
retained. Due to the absence of capital available for investment
by the Company, the types of business seeking to be acquired by the
Company will no doubt be smaller and higher risks types of
businesses. In all likelihood, a business opportunity will involve
the acquisition of or merger with a corporation which does not need
additional cash but which desires to establish a public trading
market for its Common Stock. Accordingly, the Company's ability to
acquire any business of substance will be extremely limited.
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The Company does not propose to restrict its search for
investment opportunities to any particular industry, or
geographical location and may, therefore, engage in essentially any
business, anywhere, to the extent of its limited resources.
It is anticipated that business opportunities will be
available to the Company and sought by the Company from various
sources, throughout the United States including its Officers and
Directors, professional advisors such as attorneys and accountants,
securities broker/dealers, venture capitalists, members of the
financial community, other businesses and others who may present
solicited and unsolicited proposals. The reason for this is to
attract the most favorable business opportunities and ventures
available. Management believes that business opportunities and
ventures will become available to it, due to a number factors,
including, among others: (a) management's willingness to enter
into unproven, speculative ventures; (b) management's contacts and
acquaintances; and, (c) the Company's flexibility with respect to
the manner in which it may structure potential financing and/or
acquisitions. However, there is no assurance that the Company will
be able to structure or finance and/or acquire any business
opportunity or venture.
OPERATION OF THE COMPANY
The Company intends to search throughout the United States for
a merger/acquisition candidate, however, because of the lack of
capital, the Company believes that the merger/acquisition candidate
will be conducting business within a limited geographical area.
The Company, however, intends to maintain its corporate
headquarters and principal place of business at 26 West Dry Creek
Circle, Suite 600, Littleton, Colorado 80120. All corporate
records will be maintained at said office, and it is anticipated
that all shareholders' meetings will take place in Colorado. In
the event that a merger or acquisition of the Company takes place,
no assurance can be given that the corporate records or
headquarters will continue to be maintained at Littleton, Colorado,
or that shareholders' meetings will be held in Colorado.
The Officers and Directors will personally seek
acquisition/merger candidates and/or orally contact individuals or
broker/dealers and advise them of the availability of the Company
as an acquisition candidate. The Officers and Directors will
review material furnished to them by the proposed
merger/acquisition candidates and decide if a merger/acquisition is
in the best interests of the Company and its shareholders.
The Company may employ outside consultants, however, until a
merger/acquisition candidate has been targeted by the Company,
management believes that it is impossible to consider the criteria
that will be used to hire consultants. While the Company may hire
independent consultants, it has not considered any criteria
regarding their experience, the services to be provided, or the
term of service. The Company has not had any discussions with any
consultants and there are no agreements or understandings with any
consultants.
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Other than as disclosed herein, there are no other plans for
accomplishing the business purpose of the Company.
SELECTION OF OPPORTUNITIES
The analysis of new business opportunities will be undertaken
by or under the supervision of the Officers and Directors, none of
whom is a professional business analyst or has any previous
training or experience in business analysis. Inasmuch as the
Company will have no funds available to it in its search for
business opportunities and venture, the Company will not be able to
expend significant funds on a complete and exhaustive investigation
of such business or opportunity. The Company will however,
investigate, to the extent believed reasonable by its management,
such potential business opportunities or ventures.
As part of the Company's investigation, Officers and Directors
will meet personally with management and key personnel of the firm
sponsoring the business opportunity, may visit and inspect plants
and facilities, obtain independent analysis or verification of
certain information provided, check references of management and
key personnel, and conduct other reasonable measures, to the extent
of the Company's limited financial resources and management and
technical expertise.
Prior to making a decision to recommend to shareholders
participation in a business opportunity or venture, the Company
will generally request that it be provided with written materials
regarding the business opportunity containing such items as a
description of products, services and company history; management
resumes; financial information; available projections with related
assumptions upon which they are based; evidence of existing
patents, trademarks or service marks or rights thereto; present and
proposed forms of compensation to management; a description of
transactions between the prospective entity and its affiliates
during relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; and,
other information deemed relevant.
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 costs
for accountants, attorneys and others. The Company's officers and
directors anticipate funding the Company's operations, including
providing funds necessary to search for acquisition candidates,
until an acquisition candidate is found, without regard to the
amount involved. Management will be loaning funds to the Company
to cover current and future operating expenses, including those
associated with being a public company, until a merger/acquisition
has been concluded by the Company. Accordingly, no alternative
cash resources have been explored.
There are no loan agreements or understandings. The Company
will not make any loans to officers or directors. Money advanced
by the officers and directors is and will be done gratuitously
without any obligation on the part of the Company to repay the
same.
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The Company will have unrestricted flexibility in seeking,
analyzing and participating in business opportunities. In its
efforts, the Company will consider the following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated
market expansion or new products;
(b) Competitive position as compared to other firms engaged in
similar activities;
(c) Strength of management;
(d) Capital requirements and anticipated availability of required
funds from future operations, through the sale of additional
securities, through joint ventures or similar arrangements or
from other sources; and,
(e) Other relevant 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.
Potential investors must recognize that due to the Company's
limited capital available for investigation and management's
limited experience in business analysis, 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 opportunity may
take several months or more. The Company does not plan to raise
any capital at the present time, by private placements, public
offerings, pursuant to Regulation S promulgated under the Act, or
by any means whatsoever. Further, there are no plans, proposals,
arrangements or understandings with respect to the sale or issuance
of additional securities prior to the location of an acquisition or
merger candidate.
FORM OF ACQUISITION
The manner in which the Company participates in an opportunity
will depend upon the nature of the opportunity, the respective
needs and desires of the Company and the promoters of the
opportunity, and the relative negotiating strength of the Company
and such promoters. The exact form or structure of the Company's
participation in a business opportunity or venture will be
dependent upon the needs of the of the particular situation. The
Company's participation may be structured as an asset purchase
agreement, a lease, a license, a joint venture, a partnership, a
merger, or acquisition of securities.
As set forth above, the Company may acquire its participation
in a business opportunity through the issuance of Common Stock or
other securities in the Company. Although the terms of any such
transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an
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acquisition is so-called "tax free" reorganization under Section
368(a)(1) of the Internal Revenue Code of 1954, as amended, may
depend upon the issuance to the shareholders of the acquired
company of at least eighty percent (80%) of the Common Stock of the
combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions
rather than other "tax free" provisions provided under the Internal
Revenue Code all prior shareholders may, in such circumstances,
retain twenty percent (20%) or less of the total issued and
outstanding Common Stock. If such a transaction were available to
the Company, it will be necessary to obtain shareholder approval to
effectuate a reverse stock split or to authorize additional shares
of Common Stock prior to completing such acquisition. This could
result in substantial additional dilution to the equity of those
who were shareholders of the Company prior to such reorganization.
Further, extreme caution should be exercised by any investor
relying upon any tax benefits in light of the proposed new tax
laws. It is possible that no tax benefits will exist at all.
Prospective investors should consult their own legal, financial and
other business advisors.
The present management and the shareholders of the Company
will in all likelihood not have control of a majority of the
voting shares of the Company following a reorganization
transaction. In fact, it is most probable that the shareholders of
the acquired entity will gain control of the Company. Further,
management may make available for purchase by shareholders of the
acquired entity of up to 75% of the shares of Common Stock owned by
them. The terms of sale of the shares presently held by officers
and/or directors of the Company will not be afforded to other
shareholders of the Company. As part of such a transaction, all or
a majority of the Company's Directors may resign and new Directors
may be appointed without any vote by shareholders.
Present stockholders have not agreed to vote their respective
shares of Common Stock in accordance with the vote of the majority
of all non-affiliated future stockholders of the Company with
respect to any business combination.
The Company may not borrow funds and use funds to make
payments to Company promoters, management or their affiliates or
associates.
The Company has an unwritten policy that it will not acquire
or merge with a business or company in which the Company's
management or their affiliates or associates directly or indirectly
have an ownership interest. Management is not aware of any
circumstances under which the foregoing policy will be changed and
management, through their own initiative, will not change said
policy.
The Company is required by the regulations promulgated under
the Securities Exchange Act of 1934 to obtain and file with the
Commission, audited financial statements of the acquisition
candidate not later than sixty days from the date the Form 8-K is
due at the Commission disclosing the acquisition/merger.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under the Colorado Corporation Code, a business combination
typically requires the approval of two-thirds of the outstanding
shares of both participating companies. The Company's Articles of
Incorporation reduce the voting requirement to a majority of the
Company's outstanding Common Stock. Shareholders who vote against
any business combination in certain instances may be entitled to
dissent and to obtain payment for their shares pursuant to Sections
7-4-123 and 7-4-124 of the Colorado Corporation Code. The
requirement of approval of the Company's shareholders in any
proposed business combination is limited to those transactions
identified as a merger or a consolidation. A business combination
identified as a share exchange does not require the approval of the
Company's shareholders, nor does it entitle shareholders to dissent
and obtain payment for their shares. Accordingly, unless the
acquisition is a statutory merger, requiring shareholder approval,
the Company will not provide shareholders with a disclosure
document containing audited or unaudited financial statements,
prior to such acquisition.
Prior to any business combination for which shareholder
approval is required, the Company intends to provide its
shareholders complete disclosure documentation concerning the
business opportunity or target company and its business. Such
disclosure will in all likelihood be in the form of a proxy
statement which will be distributed to shareholders at least 10
days prior to any shareholder's meeting.
None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals,
arrangements or understandings with any representatives of the
owners of any business or company regarding the possibility of an
acquisition or merger transaction contemplated in this registration
statement.
NOT AN "INVESTMENT ADVISER"
The Company is not an "investment adviser" under the Federal
Investment Advisers Act of 1940, which classification would involve
a number of negative considerations. Accordingly, the Company
will not furnish or distribute advice, counsel, publications,
writings, analysis or reports to anyone relating to the purchase or
sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C.
80b2(a)(11).
NOT AN "INVESTMENT COMPANY"
The Company may become involved in a business opportunity
through purchasing or exchanging the securities of such business.
The Company does not intend however, to engage primarily in such
activities and is not registered as an "investment company" under
the Federal Investment Company Act of 1940. The Company believes
such registration is not required.
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The Company must conduct its activities so as to avoid
becoming inadvertently classified as a transient "investment
company" under the Federal Investment Company Act of 1940, which
classification would affect the Company adversely in a number of
respects. Section 3(a) of the Investment Company Act provides the
definition of an "investment company" which excludes an entity
which does not engage primarily in the business of investing,
reinvesting or trading in securities, or which does not engage in
the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than United States
government securities or securities of majority-owned
subsidiaries") the value of which exceeds forty percent (40%) of
the value of its total assets (excluding government securities,
cash or cash items). The Company intends to implement its business
plan in a manner which will result in the availability of this
exemption from the definition of "investment company." The Company
proposes to engage solely in seeking an interest in one or more
business opportunities or ventures.
Effective January 14, 1981, the Securities and Exchange
Commission adopted Rule 3a-2 which deems that an issuer is not
engaged in the business of investing, reinvesting, owning, holding
or trading in securities for purposes of Section 3(a)(1), cited
above, if, during a period of time not exceeding one year, the
issuer has a bona fide intent to be engaged primarily, or as soon
as reasonably possible (in any event by the termination of a one
year period of time), in a business other than that of investing,
reinvesting, owning, holding or trading in securities and such
intent is evidenced by the Company's business activities and
appropriate resolution of the Company's Board of Directors duly
adopted and duly recorded in the minute book of the Company. The
Rule 3a-2 "safe harbor" may not be relied on more than a single
time.
COMPANY'S OFFICE
The Company's offices are located at 26 West Dry Creek Circle,
Suite 600, Littleton, Colorado 80120, and the telephone number is
(303) 794-9450. The Company's office is located in the office of
Earnest Mathis, Jr., the Company's President and a member of the
Board of Directors. The office will remain at Mr. Mathis's office
until an acquisition has been concluded. There are no written
documents memorializing the foregoing. The Company is not
responsible for reimbursement for out-of-pocket office expenses,
such as telephone, postage or supplies.
There are no preliminary agreements or understandings with
respect to the office facility subsequent to the completion of an
acquisition. Upon a merger or acquisition, the Company intends to
relocate its office to that of the acquisition candidate.
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Employees
The Company is a development stage company and currently has
no full-time employees and three part-time employees consisting of
its Officers and Directors. Each Officer and Director devotes
minimal time to the operations of the Company. Management of the
Company expects to use consultants, attorneys and accountants as
necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business
opportunities. The need for employees and their availability will
be addressed in connection with the decision whether or not to
acquire or participate in a specific business opportunity.
Year 2000
The Company is aware of the issues associated with the
programming code in existing computer systems as the millennium
(year 2000) approaches. The "year 2000" problem is pervasive and
complex as virtually every computer operation will be affected in
some way by the rollover of the two digit year value to 00. The
issue is whether computer systems will properly recognize date
sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous
data or cause a system to fail. Since the Company is not producing
or maintaining time sensitive operations at present, the year 2000
problem is not anticipated to have a significant impact on the
Company's operations.
RISK FACTORS
1. No Operating History. The Company was incorporated in the
state of Colorado on February 23, 1996. The Company has conducted
only organizational business and has no operating history. There
can be no assurance that the Company's activities will be
profitable. As of the date hereof, Prospectus, the Company has not
entered into any arrangement to participate in any business
ventures or purchase any products.
2. Assets of the Corporation. The Company has no
substantial, material, tangible assets as of the date hereof. Its
present assets are extremely limited. Any business activity that
the Company eventually undertakes may require substantial capital.
3. Speculative Nature of Company's Proposed Operations. The
success of the Company's proposed plan of operation will depend to
a great extent on the operations, financial condition and
management of the companies with which the Company may merge or
which it acquires. While management intends to seek a merger or
acquisition of privately held entities with established operating
histories, there can be no assurance that the Company will be
successful in locating an acquisition candidate meeting such
criteria. In the event the Company completes a merger or
acquisition transaction, of which there can be no assurance, the
success of the Company's operations will be dependent upon
management of the successor firm and numerous other factors beyond
the Company's control. The Company anticipates that it will seek
to merge with an existing business. After the merger has taken
place, the surviving entity will be the Company (ZEDIK ENTERPRISES,
INC.), however, management from the acquired entity will in all
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likelihood operate the Company. There is, however, a remote
possibility that the Company may seek to acquire and operate an
ongoing business, in which case the existing management might be
retained.
4. Dilution in Merger or Acquisition Transaction. The
Company's plan of operation is based upon a merger with or
acquisition of a private concern, which in all likelihood would
result in the Company issuing securities to shareholders of any
such target concern. The issuance of previously authorized and
unissued Common Stock of the Company would result in substantial
dilution to present and prospective shareholders of the Company,
which may necessarily result in a change in control or management
of the Company.
5. Dependence on Management. The success of the Company will
largely be dependent upon the active participation of its
President, Earnest Mathis Jr., and its Secretary/Treasurer, Gary
McAdams. Earnest Mathis, Gary McAdams and Gary Agron have
experience in the business in which the Company proposes to engage,
the acquisition of business opportunities, however, management will
probably be required to obtain independent outside professionals to
effectively evaluate and appraise potential use and markets for and
to render evaluations relating to potential opportunity, product,
investment or business acquisition. Each of the Officers and
Directors has other full time employment and will be available to
participate in management decisions only on a part time or as
needed basis. It is expected that management will each devote
approximately one percent (1%) of their time to the business
affairs of the Company. Officers and directors will not be
compensated prior to a merger or acquisition. Once the Company
acquires a business opportunity, the present management will
probably be asked to resign. The amount of time the Officers and
Directors devote to Company matters may increase once the Company
operates an active business. The time which the Officer and
Directors devote to the business affairs of the Company and the
skill with which they discharge their responsibilities, will
substantially impact the Company's success.
6. Impact of Limited Time Devoted to the Company.
Opportunities available to the Company for mergers or acquisitions
may be lost or delayed as a result of the limited amount of time
devoted to the Company by management. As a result, an acquisition
or merger may never take place.
7. No Business Plan. The Company has not identified the
business opportunities in which it will attempt to obtain an
interest. The Company therefore cannot describe the specific risks
presented by such business. In general, it may be expected that
such business will present such a level of risks that conventional
bank financing would not be available on favorable terms. Such
business may involve an unproven product, technology or marketing
strategy, the ultimate success of which cannot be assured. The
acquired business opportunity may be in competition with larger,
more established firms over which it will have no competitive
advantage. The Company's investment in a business opportunity may
be expected to be highly illiquid and could result in a total loss
to the Company if the opportunity is unsuccessful.
<PAGE> 12
8. Company's Securities are Subject to Penny Stock Rules.
The Company's shares are "penny stocks" consequently they are
subject to Securities and Exchange Commission regulations which
impose sales practice requirements upon broker/dealer.
9. Conflicts of Interest. All of the Directors are
associated with other firms or occupations involving a range of
business activities. Because of these affiliations and because
these individuals will devote only a minor amount of time to the
affairs of the Company. There are potential inherent conflicts of
interest in their acting as Directors and Officers of the Company.
All of the Company's Directors and Officers are or may be Directors
or controlling shareholders of other entities engaged in a variety
of businesses which may in the future have various transactions
with the Company. Additional conflicts of interest and non-arm's
length transactions may also arise in the future in the event the
Company's Officers or Directors are involved in the management of
any firms with which the Company transacts business. Management
has adopted a policy that the Company will not seek a merger with
or an acquisition of any entity with which any of the Officers or
Directors serve as Officers, Directors or partners or in which they
or their family member own or hold an ownership interest. Business
combinations with entities owned or controlled by affiliates or
associates of the Company will not be considered, however,
securities owned or controlled by the affiliates and associates of
the Company may be sold in the business combination transaction
without affording all existing shareholders a similar opportunity.
A buy-out of managements' shares could occur from an offer by
existing shareholders, or by an offer from a merger/acquisition
candidate. In addition, management is not aware of any
circumstances which would precipitate a change in their intention
not to negotiate for the buy-out of their stock. Public
shareholders will not be entitled to receive any portion of the
buy-out premium and will not have an opportunity to approve such
related party transaction.
10. Rights of Dissenting Shareholders. A shareholder of the
Company shall have the right to dissent to any plan of merger or
consolidation to which the Company is a party under Colorado state
law. A dissenting shareholder shall have the right to have his or
her shares purchased by the Company at the fair market value
thereof as of the day prior to the date which the vote was taken
approving the proposed corporation action. Such action by a
dissenting shareholder could result in a cancellation of any
proposed merger or acquisition. Colorado state law governs the
rights of shareholders to dissent. No other state's laws regarding
the Company's shareholders rights to dissent are applicable.
11. Dependence on Outside Advisors. In order to supplement
the business experience of management, the Company may employ
accountants, technical experts, appraisers, attorneys or other
consultants or advisors. The selection of any such advisors will
be made by management and without any control from shareholders.
Additionally, it is anticipated that such persons may be engaged by
the Company on an independent basis without a continuing fiduciary
or other obligation to the Company.
<PAGE> 13
12. No Dividends Anticipated. At the present time the
Company does not anticipate paying dividends, cash or otherwise, on
its Common Stock in the foreseeable future. Future dividends will
depend on earnings, if any, of the Company, its financial
requirements and other factors. Investors who anticipate the need
of an immediate income from their investment in the Company's
Common Stock should refrain from the purchase of the Company's
securities.
13. Year 2000. The Company has reviewed its internal
computer systems and products and their capability of recognizing
the year 2000 and years thereafter. The Company expects that any
costs relating to ensuring such systems to be year 2000 compliant
will not be material to the financial condition or results of
operations of the Company.
14. No Business Opportunities. The Company was recently
formed for the purpose of acquiring interest in one or more
business opportunities believed by management to hold potential for
profit. The Company has not yet obtained, however, any interest
in any product, property or business and may not be able to
acquire any such interest upon terms favorable to the Company.
15. Scarcity of and Competition for Merger or Acquisition
Prospects. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and
acquisitions of small private entities. A large number of
established and well financed entities, including venture capital
firms, are active in mergers and acquisitions of private companies
which may be desirable target candidates for the Company. Nearly
all such entities have significantly greater financial resources,
technical expertise and managerial capabilities than the Company,
and consequently, the Company will be at a competitive disadvantage
in identifying possible merger or acquisition candidates with
numerous other small public companies.
16. No Agreement for Business Combination or Other
Transaction. The Company has no arrangement, agreement or
understanding with respect to engaging in a merger with, or
acquisition of, any entity private or public. There can be no
assurance the Company will be successful in identifying and
evaluating suitable merger or acquisition candidates or in
concluding a merger or acquisition transaction. Management has not
identified any specific business within an industry for evaluation
by the Company. There is no assurance the Company will be able to
negotiate a merger or acquisition on terms favorable to the
Company.
17. No Agreement to Vote Shares. Present Officers, Directors
and principal stockholders have not agreed to vote their respective
shares of Common Stock in accordance with the vote of the majority
of all non-affiliated future stockholders of the Company with
respect to any business combination.
<PAGE> 14
18. Lack of Market Research or Marketing Organization. The
Company has neither conducted nor has the Company engaged other
entities to conduct market research such that management has
assurance market demand exists for the transactions contemplated by
the Company. Moreover, the Company does not have and does not plan
to establish, a marketing organization. Even in the event demand
is identified for a merger or acquisition of the type contemplated
by the Company, there is no assurance the Company will be
successful in completing any such transaction.
19. Impracticability of Exhaustive Investigation. The
Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a business opportunity before the
Company commits its capital or other resources thereto. Therefore,
management decisions will likely be made without detailed
feasibility studies, independent analysis, market surveys and the
like which, if the Company had more funds available to it, would be
desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking
the Company's participation. There are numerous individuals,
publicly held companies, and privately held companies seeking
merger and acquisition prospects. There is significant competition
among such groups for attractive merger and acquisition prospects.
However, the number of suitable and attractive prospects is limited
and the Company may find a scarcity of suitable companies with
audited financial statements seeking merger partners of the type
and size of the Company.
20. Possible Lack of Diversification. The Company may be
unable to diversify its business activities, which creates the
possibility of a total loss to the Company and its shareholders
should an acquisition by the Company prove to be unprofitable. The
Company's failure or inability to diversify its activities into a
number of areas may subject the Company to economic fluctuations
within a particular business or industry and, therefore, increase
the risks associated with the Company's operations.
21. The Company May Pay a Finder's Fee. In connection with
a merger/acquisition, the Company may issue "restricted" shares of
the Company's Common Stock to finders. A finder's fee will not be
paid, however, to any officer, director, shareholder or other
affiliated party. At the present time, there are no plans to pay
any finder's fees.
22. Issuance of Additional Shares. Approximately 24,023,800
shares of Common Stock or 96.10% of the 25,000,000 authorized
shares of Common Stock of the Company remain unissued. The Board of
Directors has the power to issue such shares subject to shareholder
approval and may do so in an exchange offer or a stock for stock
exchange agreement. The Company may also issue additional shares
of Common Stock pursuant to a plan and agreement of merger with a
private corporation. Although the Company presently has no
commitments, contracts or intentions to issue any additional shares
to other persons, the Company may in the future attempt to issue
shares to acquire products, properties or businesses, or for other
corporate purposes.
<PAGE> 15
23. Creation of Subsidiary Entities. The Company will not
engage in the creation of subsidiary entities with a view to
distributing their securities to the shareholders of the Company.
24. Regulation. Although the Company will be subject to
regulation under the Securities Act of 1933 and the Securities
Exchange Act of 1934, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940
insofar as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company
engages in business combinations which result in the Company
holding passive investment interests in a number of entities, the
Company could be subject to regulation under the Investment Company
Act of 1940. In such event, the Company will be required to
register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange
Commission as to the status of the Company under the Investment
Company Act of 1940, and consequently, any violation of such Act
will subject the Company to material adverse consequences.
25. Probable Change in Control and Management. Mergers or
acquisitions involving the issuance of the Company's Common Stock
will in all likelihood result in shareholders of a target company
obtaining a controlling interest in the Company. Any such merger
or acquisition candidate may require management of the Company to
sell or transfer all or a portion of the Company's Common Stock
held by them, although management would make no such requirement as
a condition precedent of an acquisition. See "Proposed Business."
The resulting change in control of the Company could result in
removal of present Officers and Directors of the Company and a
corresponding reduction in their participation in the future
affairs of the Company. While management has no present intention
to dispose of its ownership interest in the Company, it is
impossible to predict the extent to which management will
participate in the future affairs of the Company following the
completion of a merger or acquisition. On January 21, 2000 the
Division of Corporate Finance issued an interpretive letter to the
National Association of Securities Dealers, Inc. wherein the
Division of Corporate Finance concluded that promoters or
affiliates of a blank check company and their transferees would act
as "underwriters" under the Securities Act of 1933 (the "Act") when
reselling or otherwise transferring the securities of a blank check
company. The letter also indicated that the Division of Corporate
Finance Division (the "Division") believed that those securities
could only the resold through registration under the Act and that
Rule 144 of the Act would not be available for resale transactions
despite technical compliance with the requirements of that Rule.
It is unclear at this time whether the Division's opinion is shared
by the Commission or whether the opinion carries the force of law
or will be the subject of enforcement proceedings by the Commission
if the opinion is not followed by the Company's promoters and
affiliates. It is possible that the Division's opinion will limit
resales of securities by the Company's affiliates and promoters.
However, the Company believes that resales by its shareholders,
other that the Company's affiliates and promoters, may not be
effected as none of the Company's shareholders received shares from
its promoters or affiliates. The Office of Small Business,
<PAGE> 16
Division of Corporate of Finance of the SEC, however, has advised
the Company that it disagrees with the Company's analysis
aforesaid. It is the Office of Small Business's position that all
of the Company's shareholders including the 235 shareholders who
received securities for no consideration in a Section 4(6) offering
directly from the Company cannot use Rule 144 to resell their
securities, since their resale transactions would appear to be
designed to distribute or redistribute securities to the public
without compliance with the registration requirements of the
Securities Act.
26. Competition. The Company will have numerous competitors
and potential competitors, many of whom will have considerably
greater financial and personal resources than the Company. There
is no assurance that the Company will be successful in obtaining
suitable investments. The Company will be competing with numerous
other entities, most all of which are larger, well established
companies with greater assets and financial reserves than the
Company will possess.
27. Lack of Public Market for Securities. At present, no
market exists for the Company's securities and there is no
assurance that a regular trading market will develop and if
developed, that it will be sustained. A market for the securities
cannot develop until a merger or acquisition has been concluded.
A purchaser of stock may, therefore, be unable to resell the
securities offered herein should he or she desire to do so.
Furthermore, it is unlikely that a lending institution will accept
the Company's securities as pledged collateral for loans unless a
regular trading market develops. On January 21, 2000 the Division
of Corporate Finance issued an interpretive letter to the National
Association of Securities Dealers, Inc. wherein the Division of
Corporate Finance concluded that promoters or affiliates of a blank
check company and their transferees would act as "underwriters"
under the Securities Act of 1933 (the "Act") when reselling or
otherwise transferring the securities of a blank check company.
The letter also indicated that the Division of Corporate Finance
Division (the "Division") believed that those securities could only
the resold through registration under the Act and that Rule 144 of
the Act would not be available for resale transactions despite
technical compliance with the requirements of that Rule. It is
unclear at this time whether the Division's opinion is shared by
the Commission or whether the opinion carries the force of law or
will be the subject of enforcement proceedings by the Commission if
the opinion is not followed by the Company's promoters and
affiliates. It is possible that the Division's opinion will limit
resales of securities by the Company's affiliates and promoters.
However, the Company believes that resales by its shareholders,
other that the Company's affiliates and promoters, may not be
effected as none of the Company's shareholders received shares from
its promoters or affiliates. The Office of Small Business,
Division of Corporate of Finance of the SEC, however, has advised
the Company that it disagrees with the Company's analysis
aforesaid. It is the Office of Small Business's position that all
of the Company's shareholders including the 235 shareholders who
received securities for no consideration in a Section 4(6) offering
directly from the Company cannot use Rule 144 to resell their
<PAGE> 17
securities, since their resale transactions would appear to be
designed to distribute or redistribute securities to the public
without compliance with the registration requirements of the
Securities Act.
28. No Cumulative Voting and Preemptive Rights and Control.
There are no preemptive rights in connection with the Company's
Common Stock. Cumulative voting in the election of Directors is
not allowed. Accordingly, the holders of a majority of the shares
of Common Stock, present in person or by proxy, will be able to
elect all of the Company's Board of Directors.
29. Limited Participation of Officers and Directors in
Management Decisions. Each of the Officers and Directors has
full-time employment and will be available to participate in
management decisions on a part-time or as-needed basis only. The
amount of time which Officers and Directors are able to devote to
Company business may be inadequate in which to properly attend to
Company business.
30. No Marketmaker. There is no assurance that Company's
securities will be traded on the "Bulletin Board" or in the "Pink
Sheets" maintained by members of the National Association of
Securities Dealers, Inc. ("NASD"). The Company has no agreement
with any member of the NASD to act as a marketmaker for the
Company's securities. Although management intends to contact
several broker/dealers concerning their possible participation as
marketmakers in the Company's securities following the conclusion
of a merger or acquisition, there is no assurance management will
be successful in obtaining a marketmaker. If the Company is
unsuccessful in obtaining one or more marketmakers, the trading
level and/or price of the Company's securities will be materially
adversely affected. On January 21, 2000 the Division of Corporate
Finance issued an interpretive letter to the National Association
of Securities Dealers, Inc. wherein the Division of Corporate
Finance concluded that promoters or affiliates of a blank check
company and their transferees would act as "underwriters" under the
Securities Act of 1933 (the "Act") when reselling or otherwise
transferring the securities of a blank check company. The letter
also indicated that the Division of Corporate Finance Division (the
"Division") believed that those securities could only the resold
through registration under the Act and that Rule 144 of the Act
would not be available for resale transactions despite technical
compliance with the requirements of that Rule. It is unclear at
this time whether the Division's opinion is shared by the
Commission or whether the opinion carries the force of law or will
be the subject of enforcement proceedings by the Commission if the
opinion is not followed by the Company's promoters and affiliates.
It is possible that the Division's opinion will limit resales of
securities by the Company's affiliates and promoters. However, the
Company believes that resales by its shareholders, other that the
Company's affiliates and promoters, may not be effected as none of
the Company's shareholders received shares from its promoters or
affiliates. The Office of Small Business, Division of Corporate
of Finance of the SEC, however, has advised the Company that it
disagrees with the Company's analysis aforesaid. It is the Office
of Small Business's position that all of the Company's shareholders
including the 235 shareholders who received securities for no
consideration in a Section 4(6) offering directly from the Company
<PAGE> 18
cannot use Rule 144 to resell their securities, since their resale
transactions would appear to be designed to distribute or
redistribute securities to the public without compliance with the
registration requirements of the Securities Act.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has inadequate cash to maintain operations during
the next twelve months. In order to meet its cash requirements,
the Company's officers and directors will be gratuitously advancing
the Company funds until an acquisition/merger is completed by the
Company. Until an acquisition/merger is completed by the Company,
the Company will not take any steps to overcome the going concern
qualification contained in the independent accountant's report.
Further, until such time as an acquisition/merger is completed, the
Company will not be raising any capital through the sale of
securities. Because the Company is engaged in the business of
seeking a merger/acquisition candidate and because the Company
believes that the demand for such a candidate is quite high, the
Company believes that continuing expenses incurred prior to a
merger/acquisition will be insignificant. However, in the event
the Company's officers/directors do not make the necessary advances
of money to the Company to pay for accounting and legal costs
associated with a merger/acquisition, the Company may have to cease
operations entirely.
The Company does not intend to conduct any research or
development of its services during the next twelve months.
The Company does not intend to purchase a plant or any
equipment.
The Company will not hire any additional employees, however,
the Company may engage attorneys, accountants, or consultants on an
as needed basis in order to conclude and acquisition/merger. As of
the date hereof, the Company has no plans to engage additional
attorneys, accountants, or consultants and cannot speculate upon
the circumstances which would require such engagement at this time.
The Company does not expect to earn revenues until such time
as an acquisition/merger is concluded, and in the event that an
acquisition/merger is concluded, there is no assurance that the
Company will ever earn any revenues.
Results of Operations - (February 23, 1996) through December 31,
1998.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7.
There have been no operations since incorporation.
Liquidity and Capital Resources.
The Company issued 895,000 shares of its Common Stock to
officers, directors and others and issued 81,200 shares of Common
Stock to friends and business associates of the Company's officers
and directors. The Company has no operating history and no
material assets. The Company has $34 in cash as of December 31,
1998.
<PAGE> 19
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company has no assets.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth as of February 28, 1999, the
Common Stock ownership of each person known by the Company to be
the beneficial owner of five percent or more of the Company's
Common Stock, each director individually and all officers and
directors of the Company as a group. Each person has sole voting
and investment power with respect to the shares of Common Stock
shown, and all ownership is of record and beneficial.
Name and address Number of Percent
of owner Shares Position of Class
- -------------------------------------------------------------------
Earnest Mathis, Jr. [1] 298,334 President and a 30.56%
26 W. Dry Creek Circle member of the
Suite 600 Board of Directors
Littleton, CO 80120
Gary J. McAdam [2] 298,333 Secretary/Treasurer 30.56%
14 Red Tail Drive and a member of the
Highlands Ranch, CO 80126 Board of Directors
Gary A. Agron [3] 298,333 Member of the Board 30.56%
5445 DTC Parkway of Directors
Suite 520
Englewood, CO 80111
All officers and 895,000 91.68%
directors as a
group (3 persons)
[1] The 298,334 shares are held in the name of Mathis Family
Partners, a Colorado Limited Partnership of which Mr. Mathis
is the general partner.
[2] The 298,333 shares are held in the name of GM/CM Family
Partners, Ltd., a family limited partnership of which Mr.
McAdam is the general partner.
[3] Includes 41,200 shares held by Mr. Agron's wife and 123,063
shares held by a family limited partnership of which Mr. Agron
is the general partner.
<PAGE> 20
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Officers and Directors.
The officers and directors of the Company are as follows:
Name Age Position
Earnest Mathis Jr. 39 President and a member of the
Board of Directors
Gary J. McAdam 46 Secretary/Treasurer and a member of
the Board of Directors
Gary A. Agron 54 Member of the Board of Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or until
they resign or have been removed from office.
Earnest Mathis Jr. - President and a member of the Board of
Directors.
From September 1988 to present, Mr. Mathis has been President
and director of Express Capital Concepts, Inc., a blank check
company. Express Capital is a Delaware corporation formed in May
1988. In 1988 Express completed a public offering after its S-18
registration statement was cleared by the SEC. Mr. Mathis
purchased stock in Express at the time of formation and still owns
the shares. In June 1997 Express entered into a binding letter of
intent with privately held GreyStone Technologies, Inc. As of
August 1999, Express remains in its letter of intent pending
approval of Express' recently filed S-4 registration statement.
GreyStone is an operating company engaged in the design,
manufacture and marketing of its proprietary software. Express
trades on the Bulletin Board under the symbol "EXCC." From April
1994 to February 1997 Mr. Mathis was President and a director of
Galt Financial Corporation, a Colorado corporation formed in June
1987. Prior to Mr. Mathis being involved with Galt, the Company
had completed a public offering through a S-18 registration
statement. In April 1994, Mr. Mathis restructured Galt and
purchased stock from the corporation. In February 1997, Galt
completed a business combination with Capital Growth Holdings
Corporation, a development stage financial services company and
Galt changed its name to Microcap Financial. Mr. Mathis resigned
as an officer and director of Galt upon the completion of the
business combination. No other relationships existed with Galt
after the completion of the business combination. In 1999, the
company changed its name to Globalnet Financial. Com, Inc. and its
securities are traded on the Bulletin Board under the symbol
"GLBND." From May 1994 to September 1996, Mr. Mathis was
President and a director of Dynasty Capital Corporation, a Florida
corporation formed in October 1986. Prior to Mr. Mathis's
involvement, in June 1987, Dynasty completed a public offering of
<PAGE> 21
its securities. In May 1994, Mr. Mathis purchased stock from the
corporation. In September 1996, Dynasty completed a business
combination with Visitor Services, Inc., an operating company
engaged in travel services. Dynasty changed its name following the
combination to Visitor Services International Corp., and trades on
the Bulletin Board under the symbol "TSIG." Mr. Mathis resigned as
an officer and director upon completion of the combination. No
other relationships existed with the Dynasty after completion of
the business combination. Mr. Mathis has not received any
compensation from Dynasty. From July 1989 to December 1995 Mr.
Mathis was President and a director of Jefferson Capital
Corporation a Nevada corporation formed in July 1989. Jefferson
completed a distribution of its stock to public shareholders
through an S-18 registration statement in January 1990. Mr. Mathis
purchased stock in Jefferson in July 1989. In December 1995
Jefferson completed a business combination with privately held
Spirit Gaming Corporation, a development stage company engaged in
the development of Indian casinos and Jefferson changed its name to
Spirit. Spirit trades on the Bulletin Board under the symbol
"SPGG." Mr. Mathis resigned as an officer and director of the
corporation upon completion of the business combination. No other
relationships existed with Jefferson after the completion of the
business combination. Mr. Mathis has not received any compensation
from Spirit. From April 1996 to April 1999, Mr. Mathis was
President and a director of Cancun Acquisitions, Inc., a Colorado
corporation formed in April 1989. In March 1996 the principal
stockholders of Cancun agreed to sell majority interests to Earnest
Mathis, Gary McAdam, and a third party. Messrs. Mathis and McAdam
became the officers and directors of the Company. In April 1999
Cancun completed a business combination with privately held
Metallico, Inc., an operating company engaged in fabricating,
smelting and refining of lead and non-ferrous scrap metal
recycling. Cancun changed its name to Metalico, Inc. Mr. Mathis
resigned as an officer and director of Cancun upon completion of
the business combination. No other relationships existed with
Issuer after the completion of the business combination. As of
August 1999, no market existed for Metalico's securities. Mr.
Mathis has not received any compensation from Metalico. From
February 1996 to February 1998, Mr. Mathis was President and a
director of Hai Enterprises, Inc., a Colorado corporation formed in
February 1996. In February 1998 Hai Enterprises, Inc. completed a
business combination with Wrapsters, Inc. Upon completion of the
transaction Hai changed its name to Wrapsters, Inc. Wrapsters is a
development stage company engaged in the development of fast food
sandwich shops whose securities trade on the Bulletin Board under
the symbol "WRAP." Mr. Mathis resigned as an officer and director
of the corporation upon the completion of the business combination.
No other relationships existed with Hai after the completion of the
business combination. Mr. Mathis has not received any compensation
from Wrapsters. From February 1996 to September 1998 Mr. Mathis
was President and a director of Gimmel Enterprises, Inc., a
Colorado corporation formed in February 1996. In September 1998
Gimmel completed a business combination with Win Systems, Inc., an
operating company engaged in post secondary education. After the
combination took place, Gimmel changed its name to Whitney
Information Network, Inc. The company's securities trade on the
Bulletin Board under the symbol "RUSS." Mr. Mathis resigned as an
officer and a director of Gimmel upon the completion of the
<PAGE> 22
business combination. No other relationships existed with Gimmel
after the completion of the business combination. Mr. Mathis has
not received any compensation from Whitney. From February 1996 to
March 1999, Mr. Mathis was President and a director of Zion
Enterprises, Inc., a Colorado corporation formed in February 1996.
In March 1999, Zion Enterprises completed a business combination
with Genysis Information Systems, Inc., an operating company
engaged in the development of enterprise software. After the
combination took place, Zion changed its name to Genysis
Information Systems, Inc. Mr. Mathis resigned as an officer and
a director of Zion upon the completion of the business combination.
No other relationships existed with Zion after the completion of
the business combination. No market exists for the company's
securities as of August 1999. Mr. Mathis has not received any
compensation from Genysis. From February of 1996 to present. Mr.
Mathis has been President and a director of Zedik, Tesh and Vov.
In July 1999 Mr. Mathis became President of Chay Enterprises Inc.
All of these companies are inactive Colorado Corporations. From
November 1996 to the present, Mr. Mathis has been President and a
director of Mauna Kea Enterprises, Inc., Kahului Enterprises, Inc.,
Haleakala Enterprises, Inc., Kihei Enterprises, Inc., Kauai
Enterprises, Inc. All are inactive Colorado corporations. From
February 1997 to May 1997, Mr. Mathis was President and a director
of Hana Acquisitions, Inc., a Colorado corporation formed in May
1991. In May 1997 a principal stockholder of Hana sold control of
Hana to a third party and Mr. Mathis resigned at that time. Mr
Mathis received cash compensation in the amount of $60,000 for his
assistance in the sale. In February 1999, Mr. Mathis purchased
controlling interest in publicly held Milestone Capital, Inc. a
Colorado corporation formed in February 1987, from an insider of
the company. In February 1999, Mr. Mathis became and remains
President and director of Milestone. Milestone has had no
operations during the past three years and its securities do not
trade.
Gary J. McAdam - Secretary/Treasurer and a member of the Board of
Directors.
From February 1996 until November 1996, Mr. McAdam was an
officer and a director of Hai Enterprises Inc., a Colorado
corporation, formed in February 1996. Mr. McAdam purchased a
principal shareholder position at the time of its formation and was
a promoter of Hai. In November 1996, he resigned as an officer and
director. Mr. McAdam has had no other relationship with Hai nor has
he received any compensation from Hai. At the time of his
resignation, Hai was an inactive company. From February 1996 until
November 1996, Mr. McAdam was an officer and a director of Gimmel
Enterprises, Inc., a Colorado corporation, formed in February 1996.
Mr. McAdam purchased a principal shareholder position at the time of
its formation and was a promoter of Gimmel. In November 1996, he
resigned as an officer and director. Mr. McAdam has had no other
relationship with Gimmel nor has he received any compensation from
Gimmel. At the time of his resignation, Gimmel was an inactive
company. From February 1996 until March 1999, Mr. McAdam was an
officer and a director of Zion Enterprises Inc., a Colorado
corporation, formed in February 1996. Mr. McAdam purchased a
principal shareholder position at the time of its formation and was
a promoter of Zion. Mr. McAdam resigned his positions upon the
<PAGE> 23
completion of a business combination with privately held Genysis
Information Systems, Inc., an operating company engaged in the
development of enterprise software. Mr. McAdam has had no other
relationship with the Zion nor has he received any compensation from
Zion. No public market has existed or current exists for Zion's
securities. From April 1996 until April 1999, Mr. McAdam was an
officer and a director of Cancun Acquisitions, Inc., a Colorado
corporation, formed in April 1989. Mr. McAdam purchased a principal
shareholder position of Cancun in 1996. Mr. McAdam resigned his
positions upon the completion of a business combination with
privately held Metallico, Inc., an operating company engaged in
fabricating, smelting and refining of lead and non-ferrous scrap
metal recycling. Mr. McAdam has had no other relationship with
Cancun nor has he received any compensation from Cancun. No public
market has existed or current exists for Cancun's securities. From
May 1994 until September 1996, Mr. McAdam served as an officer and
director of Dynasty Capital Corporation, a Florida corporation,
formed in October 1986. Mr. McAdam purchased a principal shareholder
position in 1994. Dynasty completed an offering of its securities in
1987. Mr. McAdam resigned as an officer and director upon completion
of Dynasty's business combination with Visitor Services, Inc. an
operating company engaged in travel services. Dynasty changed its
name following the combination to Visitor Services International
Corp. and trades on the bulletin Board under the symbol "TSIG." Mr.
McAdam has had no other relationship with Dynasty nor has he received
any compensation from Dynasty. In December 1996, Mr. McAdam became
an officer and director in Florida Venture Fund, Inc., a Florida
corporation, formed in December 1988. Mr. McAdam resigned his
positions in February 1999. Mr. McAdam has had no other relationship
with Florida Venture Fund nor has he received any compensation from
Florida Venture Fund. At the time of his resignation, Florida
Venture Fund had not completed a business combination. From April
1994 until February 1997, Mr. McAdam was a director of Galt Financial
Corporation, a Colorado corporation, formed in June 1987. Mr. McAdam
purchased a principal shareholder position in 1994. Galt completed
a public offering through an S-18 registration statement in 1988. In
February 1997, Galt completed a business combination with Capital
Growth Holdings Corporation, a development stage financial services
company and changed its name to Capital Growth Holdings, Ltd. The
Company then changed its name to Microcap Financial and more recently
changed its name to Globalnet Financial.Com, Inc. Its securities are
traded on the Bulletin Board under the symbol "GLBN." Mr. McAdam
resigned as an officer and director of Galt upon the completion of
the business combination. Mr. McAdam has had no other relationship
with Galt nor has he received any compensation from Galt. From May
1997 through June 1997, Mr. McAdam was an officer and director of
Hana Acquisitions, Inc., a Colorado Corporation, formed in May 1991.
Mr. McAdam purchased a principal shareholder position in 1997. In
June 1997, Mr. McAdam resigned his positions at the time of a
business combination with Liberty Mint, Inc., an operating company
engaged in custom minting of coins, sculptures, jewelry and other
collectables. The stock of the company trades on the bulletin board
under the symbol "LIBYD." Mr. McAdam resigned as an officer and
director of Hana upon the completion of the business combination.
Mr. McAdam has had no other relationship with Hana. Summer Breeze,
LLC, an entity which Mr. McAdam controls received 1,700,000 warrants
to purchase 1,700,000 shares in connection with the business
combination. Since December 1996, Mr. McAdam has been an officer and
<PAGE> 24
director of Zycom, Inc., a Colorado corporation, formed in May 1983.
Mr. McAdam purchased a principal shareholder position in 1996. Zycom
trades on the Bulletin Board with a symbol of "ZYCN." Mr. McAdam has
had no other relationship with the Company and has received no
compensation from Zycom. Zycom remains inactive at this time. From
February 1996 until July 1999, Mr. McAdam was an officer and a
director of Hesh Enterprises Inc., a Colorado corporation, formed in
February 1996. Mr. McAdam purchased a principal shareholder position
at the time of its formation and was a promoter of Hesh. He resigned
his positions in July 1999. Mr. McAdam has had no other relationship
with Hesh, nor has he received compensation from Hesh. Hesh remained
inactive through the time of his resignation. From November 1996 to
the present, Mr. McAdam has been and remains an officer and director
of Mauna Lani Enterprises, Inc., Molokai Enterprises, Inc., Molokini
Enterprises, Inc., Oahu Enterprises, Inc. and Waikiki Enterprises,
Inc., all Colorado corporations formed in November 1996. Mr. McAdam
purchased a principal shareholder position at the time of their
formation and was a promoter of each of these companies. Mr. McAdam
has had no other relationship with the companies nor has he received
any compensation from the companies. These companies remain inactive
to date. From February 1996 until February 1998, Mr. McAdam was an
officer and director of Bes Enterprises Inc. and Dalid Enterprises,
Inc., both Colorado corporations formed in February 1996. Mr. McAdam
purchased a principal shareholder position at the time of their
formation and was a promoter of these companies. Mr. McAdam resigned
those positions in February 1998. In July 1999, Mr. McAdam became
and remains an officer and director of the Companies. Mr. McAdam has
had no other relationship with the companies nor has he received any
compensation from the companies. These companies remain inactive to
date. From February 1996 until July 1999, Mr. McAdam was an officer
and director of Chay Enterprises Inc., and Tesh Enterprises, Inc.
Colorado corporations formed in February 1996. Mr. McAdam purchased
a principal shareholder position at the time of their formation and
was a promoter of these companies. Mr. McAdam resigned those
positions in July 1999. Mr. McAdam has had no other relationship
with the two companies nor has he received any compensation from
them. The companies remained inactive through the time of his
resignation. From February 1996 until present, Mr. McAdam has been
an officer and director of Vov Enterprises Inc. and Zedik
Enterprises, Inc., both Colorado corporations formed in February
1996. Mr. McAdam purchased a principal shareholder position at the
time of their formation and was a promoter of these companies. Mr.
McAdam has had no other relationship with the two companies nor has
he received any compensation from the companies. These companies
remain inactive to date.
Gary A. Agron - Member of the Board of Directors.
From May 1991 to April 1996, Mr. Agron was an officer and
director of Cancun Acquisitions, Inc., a Colorado corporation formed
in May 1991. In April 1996 he resigned as an officer and director and
sold the majority of his shares in Cancun. Mr. Agron has had no other
relationships with Cancun nor has he received any compensation from
Cancun. At the time of his resignation, Cancun was an inactive
company. From May 1991 to November 1994, Mr. Agron was president and
a director of Kapalua Acquisitions, Inc., a Colorado corporation
formed in May 1991. In November 1994 he resigned as an officer and
director and sold all of his shares in Kapalua. Mr. Agron has had no
<PAGE> 25
other relationships with Kapalua nor has he received any compensation
from Kapalua. At the time of his resignation, Kapalua was an inactive
company. From May 1991 to November 1995, Mr. Agron was president and
a director of Lahaina Acquisitions, Inc., a Colorado corporation
formed in May 1991. In November 1995 he resigned as an officer and
director and sold all of his shares in Lahaina. Mr. Agron has had no
other relationships with Lahaina nor has he received any compensation
from Lahaina. At the time of his resignation, Lahaina was an
inactive company. From May 1991 to November 1996, Mr. Agron was
president and a director of Wailea Acquisitions, Inc., a Colorado
corporation formed in May 1991. In November 1996 he resigned as an
officer and director and sold all of his shares in Wailea. Mr. Agron
has had no other relationships with Wailea nor has he received any
other compensation from Wailea. At the time of his resignation,
Wailea was an inactive company. From May 1991 to November 1996, Mr.
Agron was president and a director of Napili Acquisitions, Inc., a
Colorado corporation formed in May 1991. In November 1996 he
resigned as an officer and director and sold all of his shares in
Napili. Mr. Agron has had no other relationships with Napili nor has
he received any other compensation from Napili. At the time of his
resignation, Napili was an inactive company. From May 1991 to
December 1995, Mr. Agron was president and a director of Paia
Acquisitions, Inc., a Colorado corporation formed in May 1991. In
December 1995, Paia completed a business combination with BancPro,
Inc. and changed its name to BancPro. BancPro is an operating
company engaged in consumer lending and its common stock trades on
the Bulletin Board under the symbol "BCPO." Other than his less than
10% stock ownership, Mr. Agron has had no relationships with BancPro
nor has he received any other compensation from BancPro. From
February 1996 until the present, Mr. Agron has been president,
director and principal shareholder of Bes Enterprises, Inc. and
Dalid Enterprises, Inc., Colorado corporations formed in February
1996 and Hanama Enterprises, Inc., Hapuna Enterprise, Inc., Kahala
Enterprises, Inc., Kona Enterprises, Inc. and Lanai Enterprises,
Inc., Colorado corporations formed in November 1996. All of these
companies are inactive. From February 1996 until July 1999, Mr.
Agron was a director of Hesh Enterprises, Inc. and Chay Enterprises,
Inc., two inactive Colorado corporations formed in February 1996.
From February 1996 to March 1999, Mr. Agron was a director and
principal shareholder of Hai Enterprises, Inc. and Zion Enterprises,
Inc., and from February 1996 to November 1996, he was a director and
principal shareholder of Hai Enterprises, Inc., two Colorado
corporations formed in February 1996. At the time of his resignation,
both companies were inactive. Mr. Agron has had no other
relationships with either company nor has he received any
compensation from either company. From February 1996 until September
1998, Mr. Agron was a director and principal shareholder of Gimmel
Enterprises, Inc. In September 1998, Gimmel completed a business
combination with WIN Systems, Inc., an operating company engaged in
post secondary education services. Whitney's securities are traded on
the Bulletin Board under the symbol "RUSS." Mr. Agron resigned as a
director of Whitney upon the completion of the business combination.
Mr. Agron has no relationships with Whitney other than he is a less
than 10% stockholder. Mr. Agron has received no compensation from
Whitney, other than legal fees which have amounted to less than
$5,000 since September 1998. From February 1997 to May 1997 Mr.
Agron was president, director and principal shareholder of Hana
<PAGE> 26
Acquisitions, Inc., a Colorado corporation formed in May 1991. In
May 1997, he sold all of his shares in Hana. Mr. Agron has had no
other relationship with Hana nor has he received any compensation
from Hana. At the time of his resignation, Hana was an inactive
company.
Messrs. Mathis, McAdams and Agron are also promoters or
founders of the Company and other than as disclosed in this
registration statement. Messrs. Mathis, McAdams and Agron have not
received anything of value from the Company or will not receive
anything of value from the Company in the future. Further, other
than as disclosed in the registration statement, the Company will not
acquire any assets from Messrs. Mathis, McAdams or Agron.
There are no family relationship between any director or
executive office and any other director or executive officer.
There are no agreements or understandings for any officer or
director to resign at the request of another person and that none of
the officers or directors are acting on behalf of or will act at the
direction of any other person. The officers and directors may
resign, however, at the time of the acquisition or merger at the
request of the management of the acquisition candidate.
The activities of each Officer and Director will be material to
the operation of the Company. No other person's activities will be
material to the operation of the Company. There are no promoters of
the Company, other than its Officers and Directors.
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers or directors currently receives
any salary from the Company. The Company does not anticipate
entering into employment agreements with any of its officers or
directors in the near future. Directors do not receive compensation
for their services as directors and are not reimbursed for expenses
incurred in attending board meetings.
Other than consulting fees and finder's fees which may be paid
to unaffiliated third parties, no other individuals will receive any
salaries or fees from the Company. The Company's officers and
directors will not receive finder's fees, consulting fees or
salaries. Officers, directors and/or principal shareholders may
receive cash or stock from the sale of their shares of the Company's
stock to the Company's merger/acquisition candidate or principals of
the merger/acquisition candidate.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was incorporated on February 23, 1996. In February
1996, the Company issued a total of 895,000 shares of Common Stock to
the Company's Officer, Directors, and one director's wife.
<PAGE> 27
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
No market exists for the Company's securities and there is no
assurance that a regular trading market will develop, or if
developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities
referred to herein should he or she desire to do so. Furthermore, it
is unlikely that a lending institution will accept the Company's
securities as pledged collateral for loans unless a regular trading
market develops.
There are no plans, proposals, arrangements or understandings
with any person with regard to the development of a trading market in
any of the Company's securities.
As of February 28, 1999, the Company has 235 holders of record
of its Common Stock.
The Company has not paid any dividends since it is inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
On January 21, 2000 the Division of Corporate Finance issued an
interpretive letter to the National Association of Securities
Dealers, Inc. wherein the Division of Corporate Finance concluded
that promoters or affiliates of a blank check company and their
transferees would act as "underwriters" under the Securities Act of
1933 (the "Act") when reselling or otherwise transferring the
securities of a blank check company. The letter also indicated that
the Division of Corporate Finance Division (the "Division") believed
that those securities could only the resold through registration
under the Act and that Rule 144 of the Act would not be available for
resale transactions despite technical compliance with the
requirements of that Rule. It is unclear at this time whether the
Division's opinion is shared by the Commission or whether the opinion
carries the force of law or will be the subject of enforcement
proceedings by the Commission if the opinion is not followed by the
Company's promoters and affiliates. It is possible that the
Division's opinion will limit resales of securities by the Company's
affiliates and promoters. However, the Company believes that resales
by its shareholders, other that the Company's affiliates and
promoters, may not be effected as none of the Company's shareholders
received shares from its promoters or affiliates. The Office of
Small Business, Division of Corporate of Finance of the SEC, however,
has advised the Company that it disagrees with the Company's analysis
aforesaid. It is the Office of Small Business's position that all of
the Company's shareholders including the 235 shareholders who
received securities for no consideration in a Section 4(6) offering
directly from the Company cannot use Rule 144 to resell their
<PAGE> 28
securities, since their resale transactions would appear to be
designed to distribute or redistribute securities to the public
without compliance with the registration requirements of the
Securities Act.
Blue Sky Considerations.
The laws of some states prohibit the resale of securities issued
by "blank check" or "shell" corporations. The Company may be
considered a "blank check" or "shell" corporation for the purpose of
state securities laws. Accordingly, it is possible that current
shareholders may be unable to resell their securities in other
states. The Company is unaware which particular states prohibit such
resales, other than Idaho and Indiana.
The Commission has suggested that the Company take steps to
prohibit further transfer of the securities distributed to current
shareholders, unless the Company is assured that the further transfer
would not violate the securities laws of the fifty states. The
Company believes that the Commission has no authority to cause the
Company to place restrictions on the securities it previously
distributed and which it currently does not own. Such action by the
Company would legally be construed as a unilateral modification of a
fully executed contract and would be considered as a breach thereof.
Further, the Company believes that such action by the Commission
would be a usurpation of the authority granted it by Congress.
Further, because each state has a series of exempt securities
transaction predicated upon the particular facts of each transaction,
it is impossible to determine if a contemplated transaction by an
existing shareholder would possibly violate the securities laws of
any particular state.
In the event a current shareholder or broker/dealer resells its
securities in a state where such resale is prohibited, the Company
believes that the seller thereof may be liable criminally or civilly
under that particular state's laws. The Company believes that it
will not be liable for such improper secondary sales.
Existing shareholders should exercise caution in the resale of
their shares of common stock in light of the foregoing.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company was incorporated on February 23, 1996. In February
1996, the Company issued a total of 895,000 shares of Common Stock to
the Company's officers and directors and an officer's wife. The
foregoing shares were issued pursuant to Section 4(2) of the Act.
On April 1996, the Company issued 81,200 shares of Common Stock,
to friends and business associates of the Company's officers and
directors of the Company. The distribution was only made to
"accredited investors" as that term is defined in Reg. 501 of the
Act. No commissions of other form of remuneration was paid to anyone
in connection with the distribution. The distribution was made
pursuant to Reg. 506 and Section 4(6) of the Act. Section 4(6) of the
Act provides for an exemption from registration under Section 5 of
<PAGE> 29
the Act for sales to accredited investors. Pursuant to the
foregoing, the shares were distributed only to accredited investors;
the Company, through its officers and directors, had a preexisting
business or personal relationship with each of the recipients of the
shares; no consideration was received for the shares; there was no
advertising or public solicitation in connection with the transaction
by the Company or anyone acting on the Company's behalf; and, a Form
D was filed with the Securities and Exchange Commission.
On January 21, 2000 the Division of Corporate Finance issued an
interpretive letter to the National Association of Securities
Dealers, Inc. wherein the Division of Corporate Finance concluded
that promoters or affiliates of a blank check company and their
transferees would act as "underwriters" under the Securities Act of
1933 (the "Act") when reselling or otherwise transferring the
securities of a blank check company. The letter also indicated that
the Division of Corporate Finance Division (the "Division") believed
that those securities could only the resold through registration
under the Act and that Rule 144 of the Act would not be available for
resale transactions despite technical compliance with the
requirements of that Rule. It is unclear at this time whether the
Division's opinion is shared by the Commission or whether the opinion
carries the force of law or will be the subject of enforcement
proceedings by the Commission if the opinion is not followed by the
Company's promoters and affiliates. It is possible that the
Division's opinion will limit resales of securities by the Company's
affiliates and promoters. However, the Company believes that resales
by its shareholders, other that the Company's affiliates and
promoters, may not be effected as none of the Company's shareholders
received shares from its promoters or affiliates. The Office of
Small Business, Division of Corporate of Finance of the SEC, however,
has advised the Company that it disagrees with the Company's analysis
aforesaid. It is the Office of Small Business's position that all of
the Company's shareholders including the 235 shareholders who
received securities for no consideration in a Section 4(6) offering
directly from the Company cannot use Rule 144 to resell their
securities, since their resale transactions would appear to be
designed to distribute or redistribute securities to the public
without compliance with the registration requirements of the
Securities Act.
ITEM 11. DESCRIPTION OF THE COMPANY'S SECURITIES TO BE
REGISTERED.
COMMON STOCK
The authorized Common Stock of the Company consists of
25,000,000 shares, of common stock, no par value per share. All
shares have equal voting rights and are not assessable. Voting
rights are not cumulative and, therefore, the holders of more than
50% of the Common Stock could, if they chose to do so, elect all of
the directors of the Company.
<PAGE> 30
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for
any securities of the Company and have no right to require the
Company to redeem or purchase their shares. The shares of Common
Stock presently outstanding are fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of
preferred stock, no par value. The preferred stock may be issued in
series from time to time with such designation, rights, preferences
and limitations as the Board of Directors of the Company may
determine be resolution. The rights, preferences and limitations of
separate series of preferred stock may differ with respect to such
matters as may be determined by the Board of Directors, including,
without limitation, the rate of dividends, method and nature of
payment of dividends, terms of redemption, amounts payable on
liquidation, sinking fund provisions (if any), conversion rights (if
any) and voting rights. No preferred stock has been issued by the
Company and the Company has no current plans, arrangements,
commitments or understandings to issue blank check preferred stock.
DIVIDENDS
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is
contemplated in the foreseeable future.
TRANSFER AGENT
Corporate Stock Transfer, Inc., 370 Seventeenth Street, Suite
2350, Denver, Colorado 80202, is the Company's transfer agent.
ISSUANCE OF ADDITIONAL SECURITIES
The Company has not considered and does not know, at the present
time, of circumstances which may result in the issuance to
management, promoters or their affiliates or associates of securities
of the Company, other than the possible issuance of securities to a
finder of the acquisition/merger candidate. The Company will not,
however, issue securities to a finder who is an Officer, Director or
affiliate of the Company. Currently, there are no agreements nor
have there been any discussions with anyone to pay a finder's fee in
cash or securities.
<PAGE> 31
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-3-10(o) of the Colorado Revised Statutes and certain
provisions of the Company's Articles of Incorporation under certain
circumstances provide for indemnification of the Company's Officers,
Directors and controlling persons against liabilities which they may
incur in such capacities. A summary of the circumstances in which
such indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a
party, if that person's actions were in good faith, were believed to
be in the Company's best interest, and were not unlawful. Unless
such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by
independent decision of the Board of Directors, by legal counsel, or
by a vote of the shareholders, that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with respect to
such actions, indemnification is granted only with respect to
expenses actually incurred in connection with the defense or
settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to
have been in the Company's best interest, and have not been adjudged
liable for negligence or misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a vote
of shareholders or Directors. The statutory provision cited above
and the Company's Articles of Incorporation also grant the power to
the Company to purchase and maintain insurance which protects its
Officers and Directors against any liabilities incurred in connection
with their service in such a position, and such a policy may be
obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements begin on following page.
<PAGE> 32
LARRY LEGEL, CPA
5100 NORTH FEDERAL HIGHWAY, #409
FORT LAUDERDALE, FL 33308
(954) 493-8900
INDEPENDENT AUDITOR'S REPORT
Stockholders
Zedik Enterprises, Inc.
(a Development Stage Enterprise)
Englewood, Colorado
I have audited the accompanying balance sheet of Zedik Enterprises,
Inc. (a Development Stage Enterprise) as of December 31, 1998 and
1997, and the related statements of operations, changes in
stockholders' equity, and cash flows for the periods from February
23, 1996 (date of inception) through December 31, 1998. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audits provide a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present
fairly, the financial position of Zedik Enterprises, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its
cash flows for the periods February 23, 1996 (date of inception) to
December 31, 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The continuation of the
Company's business is dependent upon its ability to maintain adequate
financing arrangements and ultimately, upon future profitable
operations. These matters raise substantial doubt about its ability
to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
LARRY LEGEL
Certified Public Accountant
March 24, 1999
F-1
<PAGE> 33
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS OF DECEMBER 31, 1998 AND 1997
1998 1997
A S S E T S
CURRENT ASSETS:
Cash and cash equivalents $ 34 $ 81
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: $ -0- $ -0-
--------- --------
STOCKHOLDERS' EQUITY:
Common stock, no par value,
25,000,000 shares authorized
976,200 shares issued and
outstanding 2,602 2,602
Retained earnings (deficit
accumulated during the
development stage) (2,568) (2,521)
--------- -------
Total stockholders' equity 34 81
--------- -------
TOTAL $ 34 $ 81
========= =======
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE> 34
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
For the For the
Year Ended Year Ended
December 31, December 31, From
1998 1997 Inception
REVENUES $ -0- $ -0- $ -0-
EXPENSES 47 46 2,568
---------- --------- -------
LOSS BEFORE TAXES 47 46 2,568
PROVISION FOR
INCOME TAXES -0- -0- -0-
---------- --------- -------
NET LOSS $ 47 $ 46 $ 2,568
========== ========= =======
NET LOSS PER SHARE $ .00 $ .00
========== =========
Weighted average number
of common shares
outstanding 976,200 976 200
========== =========
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE> 35
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
Common Stock Retained
No. of No Earnings
Shares Par Value (Deficit) TOTAL
February 23, 1996 -
initial issue 895,000 $ 1,790 $ 1,790
Issuance of common
stock for no cash
on April 15, 1996 81,200 812 812
Net loss for period
ended December 31, 1996 (2,475) (2,475)
------- ------- -------- --------
Balance -
December 31, 1996 976,200 2,602 (2,475) 127
Net loss for period ended
December 31, 1997 (46) (46)
------- ------- -------- --------
Balance
December 31, 1997 976,200 2,602 (2 521) 81
Net loss for period
ended December 31, 1998 (47) (47)
------- ------- -------- --------
Balance
December 31, 1998 976,200 $ 2,602 $ (2,568) $ 34
======= ======= ======== ========
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 36
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
For the For the
Year Ended Year Ended
December 31, December 31, From
1998 1997 Inception
CASH FLOWS FROM
OPERATING ACTIVITIES:
Payment of expenses $ 47 $ 46 $ 1,756
------ ------ --------
Cash disbursed for
operating activities 47 46 1,756
------ ------ --------
Net cash flow provided
by (used in)operating
activities (47) (46) (1,756)
------ ------ --------
CASH FLOWS FROM INVESTING
ACTIVITIES: -0- -0- -0-
------ ------ --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of stock -0- -0- 1,790
------ ------ --------
Net cash flow provided
by financing
activities -0- -0- 1,790
------ ------ --------
NET INCREASE (DECREASE)
IN CASH (47) (46) 34
BEGINNING OF PERIOD -
Cash and cash
equivalents 81 127 -0-
------ ------ --------
END OF PERIOD -
Cash and cash
equivalents $ 34 $ 81 $ 34
====== ====== ========
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE> 37
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Zedik Enterprises, Inc. was incorporated under the laws of the State
of Colorado on February 23, 1996. Since its inception, the Company
has been in the development stage and has conducted no business. The
Company's only activities to date have been the initial issuance of
common stock, and the completion of a private placement dated April
15, 1996. (See Note 3).
At the organization of the Company, 895,000 shares of common stock
were purchased for $1,790
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
NOTE 2 - PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of no par value
preferred stock which may be issued in one or more series at the
discretion of the Board of Directors.
NOTE 3 - PRIVATE PLACEMENT
The Company, under a private placement dated April 15, 1996,
describes the intended distribution by the Company of 105,000 shares
of common stock up to 300 individuals, each of whom will receive 350
shares at no cost. The purpose was to allow the Company to become
widely - held, thereby allowing it the opportunity to merge in the
future with a privately - held Company seeking a larger stockholder
base. 81,200 shares were accepted under the subscription agreements.
F-6
<PAGE> 38
ITEM 14. DISAGREEMENTS WITH ACCOUNTANTS, AND ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
List of Financial Statements
Independent Auditor's Report
Balance Sheet
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statement
EXHIBITS
Exhibit No. Description
3.1 * Articles of Incorporation.
3.2 * Bylaws of the Company.
4.1 * Specimen Stock Certificate.
27 * Financial Data Schedule
* Previously filed.
<PAGE>
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment
No. 3 to the Form 10 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Denver,
Colorado, on this 28th day of April, 2000.
ZEDIK ENTERPRISES, INC.
BY: /s/ Earnest Mathis, Jr.
Earnest Mathis, Jr., President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Earnest Mathis, Jr., as true
and lawful attorney-in-fact and agent, with full power of
substitution, for his and in his name, place and stead, in any and
all capacities, to sign any and all amendment (including
post-effective amendments) to this registration statement, and to
file the same, therewith, with the Securities and Exchange
Commission, and to make any and all state securities law or blue sky
filings, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing
requisite or necessary to be done in about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying the confirming all that said attorney-in-fact and agent, or
any substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Amendment No. 3 to the Form 10 Registration Statement has
been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
/s/ Earnest Mathis, Jr.
Earnest Mathis, Jr. President and a member 04/28/00
of the Board of Directors
/s/ Gary J. McAdam
Gary J. McAdam Secretary/Treasurer 05/01/00
and member of the
Board of Directors
/s/ Gary A. Agron
Gary A. Agron Member of the Board 04/30/00
of Directors
