U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A1
Amendment No. 1 to Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
MASON OIL COMPANY, INC.
(Name of Small Business Issuer as specified in its charter)
UTAH 87-109974
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(State or other jurisdiction of (I.R.S.
incorporation or organization) Employer
I.D. No.)
0-28184
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(SEC File No.)
1787 East Fort Union Blvd., #108
Salt Lake City, Utah 84121
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 942-0592
Securities registered pursuant to Section 12(b) of the Exchange
Act:
None
Securities registered pursuant to Section 12(g) of the Exchange
Act:
$0.001 par value common stock
---------------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index
herein.
<PAGE>
PART I
Item 1. Description of Business.
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Business Development.
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Mason Oil Company, Inc. (the "Company") was organized
under the laws of the State of Utah on October 2, 1980, under the
name "Sonic Petroleum, Inc." The Company was incorporated for
the primary purposes of acquiring and developing mineral
resources.
The Company was initially authorized to issue a total
of 50,000,000 shares of common stock having a par value of one
mill ($0.001) per share, with fully-paid stock not to be liable
for further call or assessment. Copies of the Company's initial
Articles of Incorporation and Bylaws were attached as exhibits to
its Registration Statement on Form 10- SB, which was filed with
the Securities and Exchange Commission on April 9, 1996, and are
incorporated herein by this reference. See the Exhibit Index,
Part III.
At the Company's inception, the Board of Directors
authorized the issuance of 9,508,627 "unregistered" and
"restricted" shares of its common stock to directors, executive
officers and persons who may be deemed to have been promoters or
founders of the Company for the total consideration of $27,000.
Commencing in October, 1980, and pursuant to an
exemption provided in Section 3(a)(11) of the Securities Act of
1933, as amended (the "1933 Act"), and Section 61-1-10 of the
Utah Uniform Securities Act, the Company publicly offered and
sold an aggregate total of 25,000,000 shares of its common stock
to public investors who were residents of the State of Utah, at a
price of two cents ($0.02) per share. The offering was
completed in November, 1980, with the Company receiving aggregate
gross proceeds of $500,000, before payment of legal, accounting
and printing expenses. A copy of the Offering Circular that the
Company used in connection with this offering was attached as an
exhibit to its Registration Statement on Form 10-SB, which was
filed with the Securities and Exchange Commission on April 9,
1996, and is incorporated herein by this reference. See the
Exhibit Index, Part III.
Following the completion of its public offering, on May
2, 1981, the Company entered into an Agreement for Plan of
Reorganization whereby the Company acquired all of the issued and
outstanding common stock of Wilnor Drilling, Inc., a Delaware
corporation ("Wilnor"), in exchange for the issuance of an
aggregate of 50,000,000 "unregistered" and "restricted" shares of
the Company's common stock to William R. Mason and Elenora D.
Mason (collectively, "the Masons"), who were the former principal
stockholders of Wilnor (the "Wilnor Agreement"). Wilnor was
engaged in the exploration and development of oil leases in the
State of Illinois. In connection with the Wilnor Agreement, the
Masons, together with their son, John Mason, were appointed to
three of the five positions on the Company's Board of Directors.
On May 26, 1981, the Company filed with the Secretary
of State of the State of Utah Articles of Amendment to its
Articles of Incorporation, which (i) changed the name of the
Company to "Mason Oil Company, Inc."; and (ii) increased the
authorized capital of the Company to 200,000,000 shares of common
stock, while retaining the par value at one mill ($0.001) and
with appropriate adjustments to the stated capital and capital
surplus accounts of the Company. A copy of the Articles of
Amendment effecting these changes was attached as an exhibit to
its Registration Statement on Form 10-SB, which was filed with
the Securities and Exchange Commission on April 9, 1996, and is
incorporated herein by this reference. See the Exhibit Index,
Part III.
Due to certain disagreements between the directors with
regard to the management and direction of the Company, on October
20, 1981, the Company and each of its directors executed a
Rescission Agreement whereby the Wilnor Agreement was rescinded;
the Company and the Masons returned all of the stock that they
had received pursuant to the Wilnor Agreement and the Masons
resigned their positions as directors and executive officers
of the Company. A copy of the Rescission Agreement was attached
as an exhibit to its Registration Statement on Form 10-SB, which
was filed with the Securities and Exchange Commission on April 9,
1996, and is incorporated herein by this reference. See the
Exhibit Index, Part III.
As a result of the claimed misappropriation of the
Company's funds by the Masons during their tenure with the
Company, on December 31, 1985, the Company filed a Chapter 11
Petition for Voluntary Bankruptcy in the United States
Bankruptcy Court for the District of Utah, Central Division. At
the Company's request, on January 14, 1988, the bankruptcy
proceedings were dismissed. The Company also filed a lawsuit
against Wilnor, receiving as final settlement $16,000 in oil
revenue.
Other than handling its bankruptcy case and the action
against Wilnor, the Company has had no business operations since
approximately 1981. Due to the substantial lapse of time since
the occurrence of these events, management does not anticipate
that they will have any adverse impact on any future operations
in which the Company may engage.
On March 6, 1996, acting without a meeting pursuant to
Section 16-10a-821 of the Utah Revised Business Corporation Act,
the Board of Directors of the Company unanimously resolved to
amend its Bylaws to exempt the Company from the provisions of the
Utah Control Shares Acquisitions Act (Section 61-6-1 et seq.,
Utah Code Annotated) (the "Acquisitions Act"). The Board members
approving this resolution were Craig Carpenter, Helen G.
Carpenter and Kathleen L. Morrison. A copy of the Amendment to
the Bylaws of the Company was attached as an exhibit to its
Registration Statement on Form 10-SB, which was filed with the
Securities and Exchange Commission on April 9, 1996, and is
incorporated herein by this reference. See the Exhibit Index,
Part III.
The Acquisitions Act, which applies only to certain
types of publicly-held corporations, provides that "control
shares" acquired under certain circumstances shall have
the same voting rights as they had before the acquisition only to
the extent that the stockholders of the corporation have approved
such rights. The Acquisitions Act also gives dissenter's rights
to the stockholders in the event that full voting rights are
accorded to shares acquired in a "control share acquisition" and
the acquiring person has acquired "control shares" with at least
a majority of all voting power. Section 61-6-6 permits a
corporation's articles of incorporation or bylaws to provide for
an exemption from the Acquisitions Act. The net effect of the
Company's exemption from the Acquisitions Act is to remove the
need for stockholder approval of acquisitions of controlling
interests in the Company. The Company will still be subject to
the provisions of Regulation 14A of the Securities and
Exchange Commission, regarding proxy solicitations. However,
these provisions deal with the nature and extent of disclosure
required when a matter is to be voted on, but not whether
a matter is to be voted on; accordingly, Regulation 14A in no way
negates the effect of the exemption from the Acquisitions Act.
See the heading "Need for any Governmental Approval of Principal
Products or Services" under the caption "Business," herein.
Again acting without a meeting pursuant to Section
16-10a-821 of the Utah Revised Business Corporation Act, on March
7, 1996, the Board of Directors of the Company unanimously
resolved: (i) to effect a 1 share for 20 reverse split of the
Company's 34,508,627 then-outstanding shares of common stock,
effective as of 8:00 p.m. Mountain Standard Time, on March 18,
1996, retaining the authorized capital at 200,000,000 shares and
the par value at one mill ($0.001) per share, with appropriate
adjustments being made in the additional paid in capital and
stated capital accounts of the Company and with fractional
shares to be rounded to the nearest whole share; (ii) to issue
1,500,000 post-split "unregistered" and "restricted" shares of
common stock to Craig Carpenter, who is a director and the
President of the Company, in consideration of the sum of
$7,500, which funds were to be used to pay costs associated with
the preparation of this Registration Statement; and (iii)
to engage Leonard W. Burningham, Esq., to prepare this
Registration Statement.
Immediately following the above-referenced reverse
split, 1,725,454 shares of the Company's common stock were
outstanding. Following the issuance of 1,500,000 "unregistered"
and "restricted" shares to Mr. Carpenter, 3,225,454 shares of
common stock are currently outstanding.
Business.
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The Company has had no business operations since
approximately 1981. To the extent that the Company intends to
continue to seek the acquisition of assets, property or
business that may benefit the Company and its stockholders, the
Company is essentially a "blank check" company. Because the
Company has no assets, conducts no business and has no employees,
management anticipates that any such acquisition would require
the Company to issue shares of its common stock as the sole
consideration for the acquisition. This may result in
substantial dilution of the shares of current stockholders. The
Company's Board of Directors shall make the final determination
whether to complete any such acquisition; the approval of
stockholders will not be sought unless required by applicable
laws, rules and regulations, the Company's Articles of
Incorporation or Bylaws, or contract. Even if stockholder
approval is sought, Craig Carpenter, who is a director and the
President of the Company, beneficially owns approximately 54
percent of the outstanding shares of common stock of the Company,
and could approve any acquisition, reorganization or merger he
deemed acceptable. The Company makes no assurance that any
future enterprise will be profitable or successful.
The Company is not currently engaging in any
substantive business activity and has no plans to engage in any
such activity in the foreseeable future. In its present form,
the Company may be deemed to be a vehicle to acquire or merge
with a business or company. The Company does not intend to
restrict its search to any particular business or industry, and
the areas in which it will seek out acquisitions, reorganizations
or mergers may include, but will not be limited to, the fields of
high technology, manufacturing, natural resources, service,
research and development, communications, transportation,
insurance, brokerage, finance and all medically related fields,
among others. The Company recognizes that because of its total
lack of resources, the number of suitable potential business
ventures which may be available to it will be extremely limited,
and may be restricted to entities who desire to avoid what
these entities may deem to be the adverse factors related to an
initial public offering ("IPO"). The most prevalent of these
factors include substantial time requirements, legal and
accounting costs, the inability to obtain an underwriter who is
willing to publicly offer and sell shares, the lack of or the
inability to obtain the required financial statements for such an
undertaking, limitations on the amount of dilution public
investors will suffer to the benefit of the stockholders of any
such entities, along with other conditions or requirements
imposed by various federal and state securities laws, rules and
regulations. Any of these types of entities, regardless of their
prospects, would require the Company to issue a substantial
number of shares of its common stock to complete any such
acquisition, reorganization or merger, usually amounting to
between 80 and 95 percent of the outstanding shares of the
Company following the completion of any such transaction;
accordingly, investments in any such private entity, if
available, would be much more favorable than any investment in
the Company.
Management intends to consider a number of factors
prior to making any decision as to whether to participate in any
specific business endeavor, none of which may be determinative or
provide any assurance of success. These may include, but will
not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new
products or marketing concepts; the merit of technological
changes; its present financial condition, projected growth
potential and available technical, financial and managerial
resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition;
the quality and experience of its management services and the
depth of its management; its potential for further research,
development or exploration; risk factors specifically related to
its business operations; its potential for growth, expansion and
profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and
numerous other factors which are difficult, if not impossible, to
properly analyze without referring to any objective criteria.
Regardless, the results of operations of any specific
entity may not necessarily be indicative of what may occur in the
future, by reason of changing market strategies, plant or product
expansion, changes in product emphasis, future management
personnel and changes in innumerable other factors. Further, in
the case of a new business venture or one that is in a research
and development mode, the risks will be substantial, and there
will be no objective criteria to examine the effectiveness or the
abilities of its management or its business objectives. Also, a
firm market for its products or services may yet need to be
established, and with no past track record, the profitability of
any such entity will be unproven and cannot be predicted with any
certainty.
Management will attempt to meet personally with
management and key personnel of the entity sponsoring any
business opportunity afforded to the Company, visit and inspect
material facilities, obtain independent analysis or verification
of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent
measures calculated to ensure a reasonably thorough review of any
particular business opportunity; however, since the Company has
no current assets or cash reserves, these activities may be
limited, and if undertaken, the cost and expense thereof will
be advanced by management, and may further dilute the interest of
the stockholders of the Company.
The Company is unable to predict the time as to when
and if it may actually participate in any specific business
endeavor. The Company anticipates that proposed
business ventures will be made available to it through personal
contacts of directors, executive officers and principal
stockholders, professional advisors, broker dealers in
securities, venture capital personnel, members of the financial
community and others who may present unsolicited proposals. In
certain cases, the Company may agree to pay a finder's fee or to
otherwise compensate the persons who submit a potential business
endeavor in which the Company eventually participates. Such
persons may include the Company's directors, executive officers,
beneficial owners or their affiliates. In this event, such fees
may become a factor in negotiations regarding a potential
acquisition and, accordingly, may present a conflict of interest
for such individuals. See the caption "Conflicts of Interest;
Related Party Transactions," below.
Although the Company has not identified any potential
acquisition target, the possibility exists that the Company may
acquire or merge with a business or company in which the
Company's executive officers, directors, beneficial owners or
their affiliates may have an ownership interest. Current Company
policy does not prohibit such transactions. Because no such
transaction is currently contemplated, it is impossible to
estimate the potential pecuniary benefits to these persons.
Although it currently has no plans to do so, depending
on the nature and extent of services rendered, the Company may
compensate members of management in the future for services that
they may perform for the Company. Because the Company currently
has no resources, and is unlikely to have any resources until it
has completed a merger or acquisition, management expects that
any such compensation would take the form of an issuance of the
Company's stock to these persons; this would have the effect of
further diluting the holdings of the Company's other
stockholders.
Further, substantial fees are often paid in connection
with the completion of these types of acquisitions,
reorganizations or mergers, ranging from a small amount to as
much as $250,000. These fees are usually divided among promoters
or founders, after deduction of legal, accounting and other
related expenses, and it is not unusual for a portion of these
fees to be paid to members of management or to principal
stockholders as consideration for their agreement to retire a
portion of the shares of common stock owned by them. Such fees
may become a factor in negotiations regarding any potential
acquisition by the Company and, accordingly, may present a
conflict of interest for such individuals. See the caption
"Conflicts of Interest; Related Party Transactions."
Involvement in Other "Blank Check" Companies.
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Other than the Company, neither Craig Carpenter nor
Helen G. Carpenter has been involved as a director, executive
officer or five percent stockholder of any "blank check"
company in the last ten years.
From November, 1993, until its reorganization in April,
1995, Kathleen L. Morrison, who is a director and the
Secretary/Treasurer of the Company, was a director and the
Secretary/Treasurer of Westcott Financial Corporation, a
Delaware corporation, now known as "Entertainment Technologies &
Programs, Inc." ("ETPI"). ETPI is publicly-held
and may be deemed to have been a "blank check" company until its
reorganization.
Craig Carpenter was the President and a director of the
Company at the time of its initial public offering. No current
director or executive officer has been involved in any
initial public offering involving the securities of a "blank
check" company in the ten-year period immediately preceding the
date of this Registration Statement.
Risk Factors.
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In any business venture, there are substantial risks
specific to the particular enterprise and which cannot be
ascertained until a potential acquisition, reorganization or
merger candidate has been identified; however, at a minimum, the
Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in
any new or unproven venture, and will include those types of risk
factors outlined below and in the initial Offering Circular of
the Company, a copy of which was attached as an exhibit to its
Registration Statement on Form 10-SB, which was filed with the
Securities and Exchange Commission on April 9, 1996. See the
Exhibit Index, Part III.
No Assets; No Source of Revenue. The Company has no
assets and has had no revenue in either of its two most recent
calendar years or to the date hereof. Nor will the Company
receive any revenues until it completes an acquisition,
reorganization or merger, at the earliest. The Company can
provide no assurance that any acquired business will produce
any material revenues for the Company or its stockholders or that
any such business will operate on a profitable basis.
Discretionary Use of Proceeds; "Blank Check" Company.
Because the Company is not currently engaged in any substantive
business activities, as well as management's broad discretion
with respect to the acquisition of assets, property or business,
the Company may be deemed to be a "blank check" company.
Although management intends to apply substantially all of the
proceeds that it may receive through the issuance of stock or
debt to a suitable acquisition, subject to the criteria
identified above, such proceeds will not otherwise be designated
for any more specific purpose. The Company can provide no
assurance that any allocation of such proceeds will allow it to
achieve its business objectives.
Absence of Substantive Disclosure Relating to
Prospective Acquisitions. Because the Company has not yet
identified any assets, property or business that it may
potentially acquire, potential investors in the Company will have
virtually no substantive information upon which to base a
decision whether or not to invest in the Company. Potential
investors would have access to significantly more information if
the Company had already identified a potential acquisition or if
the acquisition target had made an offering of its securities
directly to the public. The Company can provide no assurance
that any investment in the Company will not ultimately prove to
be less favorable than such a direct investment.
Unspecified Industry and Acquired Business;
Unascertainable Risks. To date, the Company has not identified
any particular industry or business in which to concentrate its
acquisition efforts. Accordingly, prospective investors
currently have no basis to evaluate the comparative risks and
merits of investing in the industry or business in which the
Company may invest. To the extent that the Company may acquire a
business in a highly risky industry, the Company will become
subject to those risks. Similarly, if the Company acquires
a financially unstable business or a business that is in the
early stages of development, the Company will become subject to
the numerous risks to which such businesses are subject.
Although management intends to consider the risks inherent in any
industry and business in which it may become involved, there can
be no assurance that it will correctly assess such risks.
Uncertain Structure of Acquisition. Management has had
no preliminary contact or discussions regarding, and there are no
present plans, proposals or arrangements to acquire any specific
assets, property or business. Accordingly, it is unclear whether
such an acquisition would take the form of an exchange of capital
stock, a merger or an asset acquisition. However, because the
Company has no resources as of the date of this Registration
Statement, management expects that any such acquisition would
take the form of an exchange of capital stock. See Part I, Item
2 of this Registration Statement.
State Restrictions on "Blank Check" Companies. A total
of 36 states prohibit or substantially restrict the registration
and sale of "blank check" companies within their borders.
Additionally, 36 states use "merit review powers" to exclude
securities offerings from their borders in an effort to screen
out offerings of highly dubious quality. SeeParagraph 8221,
NASAA Reports, CCH Topical Law Reports, 1990. The Company
intends to comply fully with all state securities laws, and plans
to take the steps necessary to ensure that any future offering of
its securities is limited to those states in which such offerings
are allowed. However, these legal restrictions may have a
material adverse impact on the Company's ability to raise capital
because potential purchasers of the Company's securities must be
residents of states that permit the purchase of such securities.
These restrictions may also limit or prohibit stockholders from
reselling shares of the Company's common stock within the borders
of regulating states.
By regulation or policy statement, eight states (Idaho,
Maryland, Missouri, Nevada, New Mexico, Pennsylvania, Utah and
Washington), some of which are included in the group of 36 states
mentioned above, place various restrictions on the sale or resale
of equity securities of "blank check" or "blind pool" companies.
These restrictions include, but are not limited to, heightened
disclosure requirements, exclusion from "manual listing"
registration exemptions for secondary trading privileges and
outright prohibition of public offerings of such companies.
In most jurisdictions, "blank check" and "blind pool"
companies are not eligible for participation in the Small
Corporate Offering Registration ("SCOR") program, which
permits an issuer to notify the Securities and Exchange
Commission of certain offerings registered in such states by
filing a Form D under Regulation D of the Securities and
Exchange Commission. All states (with the exception of Alabama,
Delaware, Florida, Hawaii, Illinois, Minnesota, Nebraska and New
York) have adopted some form of SCOR. States participating in
the SCOR program also allow applications for registration of
securities by qualification by filing a Form U-7 with the states'
securities commissions. Nevertheless, the Company does not
anticipate making any SCOR offering or other public offering in
the foreseeable future, even in any jurisdiction where it may be
eligible for participation in SCOR despite its status as a "blank
check" or "blind pool" company.
The net effect of the above-referenced laws, rules and
regulations will be to place significant restrictions on the
Company's ability to register, offer and sell and/or to
develop a secondary market for shares of the Company's common
stock in virtually every jurisdiction in the United States.
Management to Devote Insignificant Time to Activities
of the Company. Members of the Company's management are not
required to devote their full time to the affairs of the Company.
Because of their time commitments, as well as the fact that the
Company has no business operations, the members of management
anticipate that they will devote an insignificant amount of time
to the activities of the Company, at least until such time as the
Company has identified a suitable acquisition target.
Conflicts of Interest; Related Party Transactions.
Although the Company has not identified any potential acquisition
target, the possibility exists that the Company may acquire or
merge with a business or company in which the Company's executive
officers, directors, beneficial owners or their affiliates may
have an ownership interest. Such a transaction may occur if
management deems it to be in the best interests of the Company
and its stockholders, after consideration of the above referenced
factors. A transaction of this nature would present a conflict
of interest to those parties with a managerial position and/or
an ownership interest in both the Company and the acquired
entity, and may compromise management's fiduciary duties to the
Company's stockholders. An independent appraisal of
the acquired company may or may not be obtained in the event a
related party transaction is contemplated. Furthermore, because
management and/or beneficial owners of the Company's common stock
may be eligible for finder's fees or other compensation related
to potential acquisitions by the Company, such compensation may
become a factor in negotiations regarding such potential
acquisitions.
Voting Control. Due to his ownership of a majority of
the shares of the Company's outstanding common stock, Craig
Carpenter has the ability to elect all of the Company's
directors, who in turn elect all executive officers, without
regard to the votes of other stockholders.
No Market for Common Stock; No Market for Shares. The
Company's common stock is currently listed in the "pink sheets"
of the National Quotation Bureau, Inc. (the "NQB") and on the OTC
Bulletin Board of the National Association of Securities Dealers,
Inc. (the "NASD"). However, there is currently no "established
trading market" for such shares; there can be no assurance that
such a market will ever develop or be maintained. Any market
price for shares of common stock of the Company is likely to be
very volatile, and numerous factors beyond the control of the
Company may have a significant effect. In addition, the stock
markets generally have experienced, and continue to experience,
extreme price and volume fluctuations which have affected the
market price of many small capital companies and which have often
been unrelated to the operating performance of these companies.
These broad market fluctuations, as well as general economic and
political conditions, may adversely affect the market price of
the Company's common stock in any market that may develop.
Risks of "Penny Stock." The Company's common stock may
be deemed to be "penny stock" as that term is defined in Reg.
Section 240.3a51-1 of the Securities and Exchange Commission.
Penny stocks are stocks (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized"
national exchange; (iii) whose prices are not quoted on the
NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) is an issuer with net
tangible assets less than $2,000,000 (if the issuer has been in
continuous operation for at least three years) or $5,000,000 (if
in continuous operation for less than three years), or with
average revenues of less than $6,000,000 for the last three
years.
There has been no "established public market" for the
Company's common stock during the past five years. At such time
as the Company completes a merger or acquisition transaction, if
at all, it may attempt to qualify for listing on either NASDAQ or
a national securities exchange. However, at least initially, any
trading in its common stock will most likely be conducted in the
over-the-counter market in the "pink sheets" or the "Electronic
Bulletin Board" of the National Association of Securities
Dealers, Inc. (the "NASD").
Section 15(g) of the Securities Exchange Act of 1934,
as amended, and Reg. Section 240.15g-2 of the Securities and
Exchange Commission require broker-dealers dealing in penny
stocks to provide potential investors with a document disclosing
the risks of penny stocks and to obtain a manually signed and
dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account.
Potential investors in the Company's common stock are urged to
obtain and read such disclosure carefully before purchasing any
shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and
Exchange Commission requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. This
procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has
sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the
basis on which the broker-dealer made the determination in (ii)
above; and (iv) receive a signed and dated copy of such statement
from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and
investment objectives. Compliance with these requirements may
make it more difficult for investors in the Company's common
stock to resell their shares to third parties or to otherwise
dispose of them.
Principal Products and Services.
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The limited business operations of the Company, as now
contemplated, involve those of a "blank check" company. The only
activity to be conducted by the Company is to seek out and
investigate the acquisition of any viable business opportunity by
purchase and exchange for securities of the Company or pursuant
to a reorganization or merger through which securities of the
Company will be issued or exchanged.
Distribution Methods of the Products or Services.
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Management will seek out and investigate business
opportunities through every reasonably available fashion,
including personal contacts, professionals, securities broker
dealers, venture capital personnel, members of the financial
community and others who may present unsolicited proposals; the
Company may also advertise its availability as a vehicle to
bring a company to the public market through a "reverse"
reorganization or merger.
Status of any Publicly Announced New Product or Service.
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None; not applicable.
Competitive Business Conditions.
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There are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the
Company; many of these companies have substantial current assets
and cash reserves. Competitors also include thousands of other
publicly-held companies whose business operations have proven
unsuccessful, and whose only viable business opportunity is that
of providing a publicly-held vehicle through which a private
entity may have access to the public capital markets. There is
no reasonable way to predict the competitive position of the
Company or any other entity in the strata of these endeavors;
however, the Company, having no assets and no cash reserves, will
no doubt be at a competitive disadvantage in competing with
entities which have recently completed IPO's, have cash resources
and have limited operating histories when compared with the
history and past failures of the Company.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
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None; not applicable.
Dependence on One or a Few Major Customers.
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None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
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None; not applicable.
Need for any Governmental Approval of Principal Products or
Services.
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On the effectiveness of the Company's Registration
Statement on Form 10-SB, the Company will be subject to
Regulation 14A regarding proxy solicitations promulgated by
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Section
14(a) of the 1934 Act requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the
rules and regulations of the Securities and Exchange Commission
regarding proxy solicitations outlined in Regulation 14A.
Matters submitted to stockholders of the Company at a special or
annual meeting thereof or pursuant to a written consent shall
require the Company to provide its stockholders with the
information outlined in Schedules 14A or 14C of Regulation 14;
preliminary copies of this information must be submitted to the
Securities and Exchange Commission at least 10 days prior to the
date that definitive copies of this information are forwarded to
stockholders.
Management intends to conduct a full evaluation of the
worthiness of any business proposal presented to it; nonetheless,
it believes this process may provide additional time within which
to evaluate any business proposal presented to it, and may
eliminate proposals from entities not willing to undergo the
public and agency scrutiny involved in providing and filing
information required under Regulation 14. Management recognizes
that this filing process may deter other potential business
venturers by reason of their inability to predict the timeliness
of their potential acquisition, reorganization or merger due to
the uncertainty related to the time involved in reviewing
Regulation 14A filings by the Securities and Exchange Commission;
however, acquisitions or reorganizations not requiring
stockholder approval may be completed by management, in its sole
discretion, with the submission by management of an Information
Statement pursuant to Regulation 14C outlining any remedial
proposals attendant to any such acquisition or reorganization,
including changing the name of the Company or increasing or
decreasing the number of authorized or outstanding shares of
the Company's common stock.
Costs associated with filings required by the Company
under Section 12(g) of the 1934 Act and Regulation 14A of the
Securities and Exchange Commission will have to be advanced by
management, the Company's principal stockholders or any potential
business venturer, and may further dilute the interest of the
public stockholders. In the case of a merger requiring prior
stockholder approval and the submission of financial statements
of the Company and other party or parties to the merger, legal
and accounting costs will be significantly higher, even though
the adoption, ratification and the approval of any such merger
will be virtually assured if recommended by Craig Carpenter, the
principal stockholder of the Company.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
Since the Company was initially incorporated, federal
and state securities laws, rules and regulations have made the
participation in or the conducting of an IPO substantially
easier for certain small and developmental stage companies,
reducing the time constraints previously involved, the legal and
accounting costs and the financial periods required to be
included in the financial statements. Rule 504 of Regulation D
of the Securities and Exchange Commission no longer requires the
filing of a Registration Statement with any state or territory as
a condition to its use; however, this Rule is no longer available
to "blank check" companies. Accordingly, because the Company is
presently deemed to be a "blank check" company, this method of
raising funds is foreclosed to it. Rule 504 is also not
available to "reporting issuers," which the Company will become
on the effectiveness of this Registration Statement.
The integrated disclosure system for small business
issuers adopted by the Securities and Exchange Commission in
Release No. 34-30968 and effective as of August 13, 1992,
substantially modified the information and financial requirements
of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer;
is not an investment company; and if a majority owned subsidiary,
the parent is also a small business issuer; provided, however, an
entity is not a small business issuer if it has a public float
(the aggregate market value of the issuer's outstanding
securities held by non-affiliates) of $25 million or more.
A number of state securities commissions have adopted
the use of Form U-7 for SCOR, which also substantially simplifies
the registration process for IPO's; Form U-7 is primarily used in
connection with offerings conducted pursuant to Rule 504 of the
Securities and Exchange Commission, but is not limited to this
use. To the extent that Rule 504 and the use of SCOR are
unavailable to the Company due to its status as a "blank check"
company, the use of Form U-7 will also be unavailable in this
regard.
The Securities and Exchange Commission, state
securities commissions and the North American Securities
Administrators Association, Inc., ("NASAA") have expressed an
interest in adopting policies that will streamline the
registration process and make it easier for a small business
issuer to have access to the public capital markets. The present
laws, rules and regulations designed to promote availability for
the small business issuer to these capital markets and similar
laws, rules and regulations that may be adopted in the future
will substantially limit the demand for "blank check" companies
like the Company, and may make the use of these companies
obsolete.
Research and Development.
- -------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable. However, environmental laws,
rules and regulations may have an adverse effect on any business
venture viewed by the Company as an attractive acquisition,
reorganization or merger candidate, and these factors may further
limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------
None.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
- ----------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations
or had any revenues from operations during the last two calendar
years. The Company's plan of operation for the next 12 months is
to continue to seek the acquisition of assets, property or
business that may benefit the Company and its stockholders.
Because the Company has no resources, management anticipates that
to achieve any such acquisition, the Company will be required to
issue shares of its common stock as the sole consideration for
such acquisition.
During the next 12 months, the Company's only
foreseeable cash requirements will relate to maintaining the
Company in good standing or the payment of expenses
associated with reviewing or investigating any potential business
venture, which may be advanced by management or principal
stockholders as loans to the Company. Because the Company has
not identified any such venture as of the date of this
Registration Statement, it is impossible to predict the amount of
any such loan. However, any such loan will not exceed $25,000
and will be on terms no less favorable to the Company than would
be available from a commercial lender in an arm's length
transaction. As of the date of this Registration Statement, the
Company has not begun seeking any acquisition.
Because the Company is not currently making any
offering of its securities, and does not anticipate making any
such offering in the foreseeable future, management does not
believe that Rule 419 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended,
concerning offerings by blank check companies, will have any
effect on the Company or any activities in which it may engage in
the foreseeable future.
Item 3. Description of Property.
- ---------------------------------
The Company has no assets, property or business; its
principal executive office address and telephone number are the
business office address and telephone number of its President,
Craig Carpenter, and are provided at no cost. Because the
Company has no business, its activities have been limited to
keeping itself in good standing in the State of Utah and,
recently, with preparing this Registration Statement and the
accompanying financial statements. These activities have
consumed an insignificant amount of management's time;
accordingly, the costs to Mr. Carpenter of providing the use of
his office and telephone have been minimal.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
- -----------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of
those persons who own more than five percent of the Company's
common stock as of May 24, 1996:
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Craig Carpenter 1,956,300 60.7%
7412 Rosalind Circle
Salt Lake City, Utah
84121 --------- -----
1,956,300 60.7%
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the
Company's directors and executive officers as of May 24, 1996:
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Craig Carpenter 1,956,300 60.7%
7412 Rosalind Circle
Salt Lake City, Utah
84121
Helen G. Carpenter1 - 0 - - 0 -
7412 Rosalind Circle
Salt Lake City, Utah
84121
Kathleen L. Morrison - 0 - - 0 -
1787 E. Ft. Union Blvd., #106
Salt Lake City, Utah 84121 ----- -----
All directors and executive 1,956,300 60.7%
officers as a group (3)
</TABLE>
1 As the spouse of Craig Carpenter, Helen G.
Carpenter may also be deemed to beneficially own
the 1,956,300 shares of the Company's common stock
that are beneficially owned by Mr. Carpenter.
See Item 5, Part I, below, for information concerning the
offices or other capacities in which the foregoing persons serve
with the Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the
Company's securities which may result in a change in control of
the Company.
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
- --------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current
directors and executive officers of the Company. These persons
will serve until the next annual meeting of the stockholders
(held on June 16 of each year) or until their successors are
elected or appointed and qualified, or their prior resignation or
termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Craig Carpenter President 10/81 *
Director 10/80 *
Helen G. Carpenter Vice President 4/94 *
Director 4/94 *
Kathleen L. Morrison Secretary/ 4/94 *
Treasurer 4/94 *
Director 4/94 *
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Craig Carpenter, Director and President. Mr.
Carpenter, age 52, was born and raised in Salt Lake City, Utah,
where he attended East High School. During the past five
years, Mr. Carpenter has been the President and a director of the
Company and of Parker Energy Technology, Inc., an operating oil
and gas company.
Helen G. Carpenter, Director and Vice President. Ms.
Carpenter is 45 years of age. In addition to her positions with
the Company, she works in a managerial position with U.S. West
Communications, where she has been employed since 1968.
Kathleen L. Morrison, Director and Secretary/Treasurer.
Ms. Morrison is 40 years old. For the past four years, she
has been the office manager for two persons, one of whom is Craig
Carpenter, the Company's President. For seven years, she was the
editor of "Super Group," a vertical market computer magazine
targeting HP3000 users. Ms. Morrison received a B.A. degree from
Colorado State University in 1978.
Significant Employees.
- ----------------------
The Company has no employees who are not executive
officers, but who are expected to make a significant contribution
to the Company's business.
Family Relationships.
- ---------------------
Craig Carpenter (director and President of the Company)
and Helen G. Carpenter (director and Vice President) are husband
and wife. Other than this relationship, there are no family
relationships between any directors or executive officers of the
Company, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former
director, executive officer or person nominated to become a
director or an executive officer of the Company:
(1) was a general partner or executive officer of any
business against which any bankruptcy petition was filed, either
at the time of the bankruptcy or two years prior to
that time;
(2) was convicted in a criminal proceeding or named
subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) was subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in
a civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate
compensation paid by the Company for services rendered during the
periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Long Term
Compensation
Annual Compensation Awards
Payouts
(a) (b) (c) (d) (e) (f) (g)
(h) (i)
Name and Years or Other Restricted Option/
LTIP All
Principal Periods $ $ Annual Stock SAR's
Payouts Other
Position Ended Salary Bonus Compen- Awards ($) (#)
($) Compensa-
1994, sation($)
tion ($)
1995 &
1996
Craig
Carpenter 12/31/94 -0- -0- -0- -0- -0-
-0- -0-
President, 12/31/95 -0- -0- -0- -0- -0-
-0- -0-
Director 2/29/96 -0- -0- -0- -0- -0-
-0- -0-
Helen G.
Carpenter 12/31/94 -0- -0- -0- -0- -0-
-0- -0-
Vice Pres.,12/31/95 -0- -0- -0- -0- -0-
-0- -0-
Director 2/29/96 -0- -0- -0- -0- -0-
-0- -0-
Kathleen L.
Morrison 12/31/94 -0- -0- -0- -0- -0-
-0- -0-
Sec./Treas.,12/31/95 -0- -0- -0- -0- -0-
-0- -0-
Director 2/29/96 -0- -0- -0- -0- -0-
-0- -0-
</TABLE>
No cash compensation, deferred compensation or
long-term incentive plan awards were issued or granted to the
Company's management during the calendar years ended December 31,
1995, or 1994, or the period ending on the date of this Registration
Statement. Further, no member of the Company's management has been
granted any option or stock appreciation right; accordingly, no tables
relating to such items have been included within this Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which
the Company's directors are compensated for any services provided as
director. No additional amounts are payable to the Company's
directors for committee participation or special assignments.
There are no arrangements pursuant to which any of the
Company's directors was compensated during the Company's last
completed calendar year for any service provided as director.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
- -------------------------------
There are no employment contracts, compensatory plans
or arrangements, including payments to be received from the Company,
with respect to any director or executive officer of the Company which
would in any way result in payments to any such person because of his
or her resignation, retirement or other termination of employment with
the Company or its subsidiaries, any change in control of the
Company, or a change in the person's responsibilities following a
change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of
similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or
beneficially more than five percent of the Company's common stock, or
any member of the immediate family of any of the foregoing persons,
had a material interest. However, on March 7, 1996, the Board of
Directors of the Company resolved to issue 1,500,000 post-split
"unregistered" and "restricted" shares of common stock to Craig
Carpenter, who is a director and the President of the Company, in
consideration of the sum of $7,500. See Part I, Item 1 and Part II,
Item 4 of this Registration Statement.
Certain Business Relationships.
- -------------------------------
There have been no material transactions, series of
similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or
beneficially more than five percent of the Company's common stock, or
any member of the immediate family of any of the foregoing persons,
had a material interest. However, see Part I, Item 1 of this
Registration Statement.
Indebtedness of Management.
- ---------------------------
There have been no material transactions, series of
similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or
beneficially more than five percent of the Company's common stock, or
any member of the immediate family of any of the foregoing persons,
had a material interest. However, see Part I, Item 1 of this
Registration Statement.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that
Craig Carpenter, the principal stockholder, may be deemed to be a
parent of the Company. See Part I, Item 1 of this Registration
Statement.
Transactions with Promoters.
- ----------------------------
There have been no material transactions, series of
similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeded
$60,000 and in which any promoter or founder, or any member of
the immediate family of any of the foregoing persons, had a material
interest. However, on March 7, 1996, the Board of Directors of the
Company resolved to issue 1,500,000 post-split "unregistered" and
"restricted" shares of common stock to Craig Carpenter, who is a
director and the President of the Company, in consideration of the sum
of $7,500. See Part I, Item 1 and Part II, Item 4 of this
Registration Statement.
Item 8. Description of Securities.
- -----------------------------------
The Company has only one class of securities
authorized, issued or outstanding, that being capital stock of the
Company consisting of 200,000,000 shares of one mill ($0.001) par
value common stock. The holders of the Company's common stock are
entitled to one vote per share on each matter submitted to a vote
at a meeting of stockholders. The shares of common stock do not carry
cumulative voting rights in the election of directors.
Stockholders of the Company have no pre-emptive rights
to acquire additional shares of common stock or other securities. The
common stock is not subject to redemption rights and carries no
subscription or conversion rights. In the event of liquidation of the
Company, the shares of common stock are entitled to share equally
in corporate assets after satisfaction of all liabilities. All shares
of the common stock now outstanding are fully paid and non-assessable.
There are no outstanding options, warrants or calls to
purchase any of the authorized securities of the Company.
There is no provision in the Company's Articles of
Incorporation, as amended, or Bylaws, as amended, that would delay,
defer, or prevent a change in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common
Equity and Other Stockholder Matters.
- --------------------------------------
Market Information.
- -------------------
The Company's common stock is currently listed in the
"pink sheets" of the NQB and the OTC Bulletin Board of the NASD under
the symbol "MSNO." However, there has been no "established trading
market" for shares of the Company's common stock during
the past five years and management does not expect any such
market to develop unless and until the Company completes an
acquisition or merger. In any event, no assurance can be
given that any "established trading market" for the Company's
common stock will develop or be maintained. If such a market ever
develops in the future, the sale of "unregistered" and "restricted"
shares of common stock pursuant to Rule 144 of the Securities and
Exchange Commission by Craig Carpenter may have a substantial adverse
impact on any such public market. See the caption "Business" of Part
I, Item 1 of this Registration Statement.
The high and low bid prices for shares of common stock
of the Company for each quarter within the last calendar year and the
period from January 1, 1996, to March 26, 1996, are as follows:
<TABLE>
<CAPTION>
Bid
---
Quarter ending: High Low
- --------------- ---- ---
<S> <C> <C>
March 31, 1995 0.0001 0.0001
June 30, 1995 0.0001 0.0001
September 30, 1995 0.0001 0.0001
December 31, 1995 0.0001 0.0001
January 2, 1996, through 0.001 0.0001
March 19, 1996
March 20, 1996 through 1/8 0.02
March 26, 1996*
</TABLE>
* These prices reflect the 1 share for 20 reverse
split of the Company's common stock, which became
effective as of March 18, 1996. See Part I, Item 1 of
this Registration Statement.
No price data are available for the calendar year ended
December 31, 1994. The above bid prices were obtained from the
National Quotation Bureau, Inc. ("NQB") and do not
necessarily reflect actual transactions, retail markups, mark
downs or commissions.
There are no outstanding options, warrants or calls to
purchase any of the authorized securities of the Company.
The sale of 1,500,000 "unregistered" and "restricted"
shares of common stock to Craig Carpenter in March, 1996, were the
only sales of any securities of the Company during the past three
years. Future sales of any of these securities or any securities of
the Company issued in any acquisition, reorganization or merger may
have a future adverse effect on any "public market" that may develop
in the common stock of the Company. See Part I, Item 1 of this
Registration Statement.
Holders.
- --------
The number of record holders of the Company's common
stock as of the date of this Registration Statement is approximately
2,476.
Dividends.
- ----------
The Company has not declared any cash dividends with
respect to its common stock or its previously authorized preferred
stock, and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be
ascertained with any certainty, and if and until the Company completes
any acquisition, reorganization or merger, no such policy will be
formulated. There are no material restrictions limiting, or that
are likely to limit, the Company's ability to pay dividends on
its common stock.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal
proceeding. No federal, state or local governmental agency is
presently contemplating any proceeding against the Company.
No director, executive officer or affiliate of the Company or
owner of record or beneficially of more than five percent of the
Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
- ------------------------------------
Ronald P. Harrington, Certified Public Accountant, of
Salt Lake City, Utah, compiled the financial statements of the Company
for the years ended December 31, 1994 and 1993.
As a result of the conflict of interest created by the
appointment of Mr. Harrington as the Company's transfer agent in 1995,
Mantyla, McReynolds & Associates, Certified Public Accountants, of
Salt Lake City, Utah, were engaged by the President of the Company to
audit the balance sheet of the Company for the calendar year ended
December 31, 1995 and the related statements of stockholders' deficit,
operations and cash flow for the calendar years ended December 31,
1995 and 1994. These financial statements accompany this Registration
Statement. See Part F/S of this Registration Statement.
There were no disagreements between the Company and
Ronald P. Harrington, whether resolved or not resolved, on any matter
of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which, if not resolved, would have
caused him to make reference to the subject matter of the disagreement
in connection with his reports.
The reports of Ronald P. Harrington do not contain any
adverse opinion or disclaimer of opinion, and are not qualified or
modified as to uncertainty, audit scope or accounting principles.
During the Company's two most recent calendar years,
and since then, neither Mantyla, McReynolds & Associates nor Ronald P.
Harrington has advised the Company that any of the following exist or
are applicable:
(1) That the internal controls necessary for the
Company to develop reliable financial statements do not
exist, that information has come to their
attention that has led them to no longer be able
to rely on management's representations, or that has
made them unwilling to be associated with
the financial statements prepared by management;
(2) That the Company needs to expand significantly the
scope of its audit, or that information has come to
their attention that if further investigated may
materially impact the fairness or reliability of a
previously issued audit report or the underlying
financial statements or any other financial
presentation, or cause them to be unwilling to rely
on management's representations or be associated
with the Company's financial statements for the
foregoing reasons or any other reason; or
(3) That they have advised the Company that information has
come to their attention that they have concluded
materially impacts the fairness or reliability of
either a previously issued audit report or the
underlying financial statements for the foregoing
reasons or any other reason.
During the Company's two most recent calendar years and
since then, the Company has not consulted Mantyla, McReynolds &
Associates regarding the application of accounting principles to a
specified transaction, either completed or proposed; or the type of
audit opinion that might be rendered on the Company's financial
statements or any other financial presentation whatsoever.
The Company has provided Ronald P. Harrington with a
copy of the disclosure provided under this caption of this
Registration Statement, and has advised him to provide the
Company with a letter addressed to the Securities and Exchange
Commission as to whether he agrees or disagrees with the disclosures
made herein. A copy of his response is attached hereto and
incorporated herein by this reference. See Item 7 of this
Registration Statement.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
On March 7, 1996, the Company's Board of Directors
unanimously voted to issue 1,500,000 "unregistered" and "restricted"
shares of common stock to Craig Carpenter in consideration of the sum
of $7,500. These shares are fully-paid and were issued to Mr.
Carpenter on or about March 18, 1996. See Part I, Item 1 of this
Registration Statement.
Management believes that Mr. Carpenter is an
"accredited investor" as that term is defined under applicable federal
and state securities laws, rules and regulations. Further, Mr.
Carpenter is a director and the President of the Company and had
access to all material information regarding the Company prior to the
offer or sale of these securities. The offers and sales of these
securities are believed to have been exempt from the registration
requirements of Section 5 of the Securities Act of 1933 pursuant
to Section 4(2) thereof, and from similar states' securities laws,
rules and regulations requiring the offer and sale of securities by
available state exemptions from such registration.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 16-10a-902(1) of the Utah Revised Business
Corporation Act authorizes a Utah corporation to indemnify any
director against liability incurred in any proceeding if he
or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct
was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from
indemnifying a director in a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation or in a proceeding in which the director was adjudged
liable on the basis that he or she improperly received a personal
benefit. Otherwise, Section 16-10a-902(5) allows indemnification for
reasonable expenses incurred in connection with a proceeding by or in
the right of a corporation.
Unless limited by the Articles of Incorporation, Section
16-10a-905 authorizes a director to apply for indemnification to the
court conducting the proceeding or another court of competent
jurisdiction. Section 16-10a-907(1) extends this right to officers of
a corporation as well.
Unless limited by the Articles of Incorporation,
Section 16-10a-903 requires that a corporation indemnify a director
who was successful, on the merits or otherwise, in defending any
proceeding to which he or she was a party against reasonable expenses
incurred in connection therewith. Section 16-10a-907(1) extends
this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may
advance a director's expenses incurred in defending any proceeding
upon receipt of an undertaking and a written affirmation of his or her
good faith belief that he or she has met the standard of conduct
specified in Section 16-10a-902. Unless limited by the Articles
of Incorporation, Section 16- 10a-907(2) extends this protection to
officers, employees, fiduciaries and agents of a corporation as well.
Regardless of whether a director, officer, employee,
fiduciary or agent has the right to indemnity under the Utah Revised
Business Corporation Act, Section 16-10a-908 allows the corporation to
purchase and maintain insurance on his or her behalf against
liability resulting from his or her corporate role.
Article XII of the Company's Articles of Incorporation
provides for the mandatory indemnification and reimbursement of any
director or executive officer for actions or omissions in such
capacity, except for claims or liabilities arising out of his or her
own negligence or willful misconduct.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(i) Audited Financial Statements
December 31, 1995 and 1994
--------------------------
Independent Auditors' Report
Balance Sheet, December 31, 1995
Statements of Stockholders' Deficit
for the years ended December 31, 1995
and 1994
Statements of Operations for the
years ended December 31, 1995 and
1994
Statements of Cash Flows for the
years ended December 31, 1995 and
1994
Notes to Financial Statements
(ii) Unaudited Financial Statements
February 29, 1996
-----------------
Balance Sheet, February 29, 1996
Statements of Operations
for the two months ended February 29,
1996
Statements of Cash Flows for the
two months ended February 29, 1996
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this
Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
2.1 Agreement for Plan of Reorganization,
dated May 2, 1981**
2.2 Rescission Agreement, dated October 20,
1981**
3.1 Articles of Incorporation**
3.2 Articles of Amendment to Articles of
Incorporation, filed on May 26, 1981**
3.3 Bylaws**
3.4 Amendment to Bylaws, dated March 6,
1996**
16 Letter on change in certifying accountant**
27 Financial Data Schedule**
99 Offering Circular**
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
* These documents and related exhibits have
previously been filed with the Securities and
Exchange Commission and are incorporated
herein by reference.
SIGNATURES
In accordance with Section 12 of the Securities
Exchange Act of 1934, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
MASON OIL COMPANY, INC.
Date: 5-14-96 By /s/
------------------------
Craig Carpenter, Director
and President
Date: 5-14-96 By /s/
------------------------
Helen G. Carpenter,
Director and Vice
President
Date: 5-14-96 By /s/
------------------------
Kathleen L. Morrison,
Director and
Secretary/Treasurer
<PAGE>
MASON OIL COMPANY, INC.
Salt Lake City, Utah
Independent Auditors' Report
and
Financial Statements
December 31, 1995
<PAGE>
MASON OIL COMPANY, INC.
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Page
Independent Auditors' Report . . . . . . . . . . . . . . .. . 1
Balance Sheet - December 31, 1995 . . . . . . . . . . . .. . 2
Statements of Stockholders' Equity (Deficit) for the Years
Ended December 31, 1995 and 1994 . . . . . . . . . . . . . . 3
Statements of Operations for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . 4
Statements of Cash Flows for the Years Ended December 31,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . 6-8
<PAGE>
To the Board of Directors
MASON OIL COMPANY, INC.
Salt Lake City, Utah
We have audited the balance sheet of Mason Oil Company, Inc. as of
December 31, 1995 and the related statements of stockholders' equity,
operations and cash flows for the years ended December 31, 1995 and
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Mason Oil
Company, Inc. as of December 31, 1995, and the results of its
operations and its cash flows for the years ended December 31, 1995
and 1994, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Mason Oil Company, Inc. will continue as a going concern. As
discussed in note C to the financial statements, the Company has
accumulated losses from inception and has insignificant working
capital as of the audit date, which raise substantial
doubt about the ability to continue as a going concern. Management's
plans in regard to these matters are also described in note C. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Mantyla, McReynolds & Associates
Salt Lake City, Utah
March 27, 1996
<PAGE>
MASON OIL COMPANY, INC.
Balance Sheet
December 31, 1995
</TABLE>
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current Assets
Cash $ 424
---
Total Current Assets 424
---
TOTAL ASSETS $ 424
---
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities -0-
Stockholders' Equity
Common stock - 200,000,000 shares
authorized at $.001 par; 1,725,454
shares issued and outstanding
at December 31, 1995 - Note E 1,725
Paid-in capital 440,989
Accumulated deficit (442,290)
---------
Total Stockholders' Equity 424
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 424
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MASON OIL COMPANY, INC.
Statements of Stockholders' Equity (Deficit)
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Paid-in Net
Common Common Capital Stockholders'
Stock Stock Excess of Accumulated Equity
Shares Amount Par Value Deficit (Deficit)
------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Balance,
12/31/93 1,725,454 $1,725 $ 440,989 $(446,664) $ (3,950)
Net Loss for
the Year
Ended
12/31/94 (903) (903)
----- ----- ----- ----- -----
Balance,
12/31/94 1,725,454 1,725 440,989 (447,567) (4,853)
Net Income
for the Year
Ended 12/31/95 5,277 5,277
----- ----- ----- ----- -----
Balance,
12/31/95 1,725,454 $1,725 $ 440,989 $(442,290) $ 424
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MASON OIL COMPANY, INC.
Statements of Operations
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues $ -0- $ -0-
Operating Expenses 623 803
--- ---
Net Loss From Operations (623) (803)
Other Income/(Expense)
Provision for income tax (100) (100)
Forgiveness of debt-Note B 6,000 -0-
Net Income (Loss) 5,277 (903)
----- -----
Net Income/(Loss) Per Share $ 0.01 $ (0.01)
---- ------
Weighted Average Number of
Shares Outstanding 1,725,454 1,725,454
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MASON OIL COMPANY, INC.
Statements of Cash Flows
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flows Used for
Operating Activities
Net Income/(Loss) $ 5,277 $ (903)
Adjustments to reconcile net
loss to net cash used
for operating activities:
Reduction in note payable
shareholder as a result
of forgiveness of debt (6,000) -0-
------- ---
Net Cash Used for
Operating Activities (723) (903)
Cash Flows Provided by
Investing Activities -0- -0-
Cash Flows Provided by
Financing Activities -0- -0-
--- ---
Net Decrease in Cash (723) (903)
Beginning Cash Balance 1,147 2,050
----- -----
Ending Cash Balance $ 424 $ 1,147
Supplemental Disclosure of
Cash Flow Information:
Cash paid for income taxes $ 100 $ 100
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MASON OIL COMPANY, INC.
Notes to Financial Statements
For the Years Ended December 31, 1995 and 1994
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company Background
------------------
The Company incorporated in the state of Utah on October 2, 1980,
using the name Sonic Petroleum, Inc. The Company was incorporated for
the primary purpose of acquiring and developing mineral resources.
The Company was initially authorized to issue a total of 50,000,000
shares of common stock with a par value of $.001 per share.
At the Company's inception, the Board of Directors authorized the
issuance of 9,508,627 shares of its common stock to directors,
executive officers and persons who may be deemed to have been founders
of the Company for total consideration of $27,000.
In October, 1980, the Company commenced a public offering,
resulting in the sale of 25,000,000 shares of its common stock to the
public at a price of two cents ($.02) per share. The offering was
completed in November, 1980, with the Company receiving $500,000,
before the payment of legal, accounting, underwriting and printing
expenses.
On May 2, 1981, the Company entered into an Agreement for Plan of
Reorganization whereby the Company acquired all of the issued and
outstanding common stock of Wilnor Drilling, Inc., a Delaware
corporation, in exchange for the issuance of 50,000,000 shares of the
Company's common stock. On May 26, 1981, the Company filed an
amendment to its Articles of Incorporation which changed the name of
the Company to Mason Oil Company, Inc., and increased the authorized
number of shares to 200,000,000, leaving the par value of $.001
unchanged.
On October 20, 1981, the Company entered into a Recision
Agreement whereby the agreement with Wilnor Drilling, Inc. was
rescinded. Under the agreement all shares issued in this transaction
were returned to their previous owners.
On December 31, 1985, the Company filed a Chapter 11 Petition for
Voluntary Bankruptcy. On January 14, 1988, bankruptcy proceedings
were dismissed.
On March 7, 1996, the Company effected a 1 share for 20 reverse
split of the Company's 34,508,627 shares of the then outstanding
common stock, retaining the authorized number of shares at 200,000,000
and the par value at $0.001 per share. In addition, the Company
issued 1,500,000 post-split shares to its president in consideration
for $7,500 cash.
Paid-in Capital
---------------
The amount shown on the financial statements as additional
paid-in capital consists of proceeds from the sale of common stock in
excess of its par value, reduced by any direct expenses of such sales.
NOTE A(continued)
Income/(Loss) per Share of Common Stock
---------------------------------------
Net income/(loss) per common share has been computed by dividing
the net income/(loss) by the weighted average number of common shares
outstanding during each period. Net income/(loss) per share has been
rounded to the nearest one cent ($0.01).
Income Taxes
------------
No provision has been made in the financial statements for income
taxes because the Company has accumulated losses totaling $442,290
since inception.
NOTE B NOTE PAYABLE - SHAREHOLDER/FORGIVENESS OF DEBT
During 1995, the president of the Company, who is also chairman
of the Board and a shareholder in the Company forgave a non-interest
bearing loan representing advances he had made to the Company over the
years. No consideration was given to the president in exchange for
the relief of this obligation.
NOTE C LIQUIDITY AND FINANCIAL RESOURCES
The Company has incurred losses from inception totaling $442,290,
and has insignificant working capital at December 31, 1995. The
Company's ability to achieve a level of profitable operations or
outside financing impacts the Company's ability to continue as it is
presently organized. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Upon the completion
of the filing of Form 10-SB with the Securities and Exchange Commission,
management intends to seek a merger with a company that has a viable
financial condition. There is no guarantee that management will be
successful in its endeavors.
NOTE D SUBSEQUENT EVENTS
As referenced in Note A above, the Company effected a 1 share for
20 reverse split of the then outstanding 34,508,627 shares of common
stock, resulting in 1,725,454 (including rounding of fractional
shares). The effect of this reverse split is presented retroactively
on the financial statements since it was known prior to issuance of
the financial statements. In addition, the Company issued 1,500,000
shares of post-split common stock to the Company's president in
exchange for $7,500.
This transaction was effected on March 18, 1996.
NOTE E INCOME TAXES
The Company adopted FASB Statement Number 109 as of January 1,
1994. Prior years' financial statements have not been restated to
apply the provisions of FASB Statement Number 109. No provision has
been made in the financial statements for income taxes because the
Company has accumulated substantial losses since inception.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at December 31, 1995
have no impact on the financial position of the Company. A valuation
allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. Because of
the lack of taxable earningshistory, the Company has established a
valuation allowance for all future deductible temporary differences.
<PAGE>
MASON OIL COMPANY, INC.
Balance Sheet
February 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current Assets
Cash $ 424
Total Current Assets 424
---------
TOTAL ASSETS $ 424
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities -0-
Stockholders' Equity
Common stock - 200,000,000 shares
authorized at $.001 par; 1,725,454
shares issued and outstanding
at February 29, 1996 1,725
Paid-in capital 440,989
Accumulated deficit (442,290)
---------
Total Stockholders' Equity 424
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 424
</TABLE>
<PAGE>
MASON OIL COMPANY, INC.
Statements of Operations
For the Two Months Ended February 29, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues $ -0- $ -0-
Operating Expenses -0- -0-
--- ---
Net Income/(Loss) -0- -0-
Net Income/(Loss) Per Share $ 0.00 $ 0.00
---- ----
Weighted Average Number of
Shares Outstanding 1,725,454 1,725,454
</TABLE>
<PAGE>
MASON OIL COMPANY, INC.
Statements of Cash Flows
For the Two Months Ended February 29, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash Flows Used for
Operating Activities
--------------------
Net Income/(Loss) $ -0- $ -0-
Adjustments to reconcile net
loss to net cash used
for operating activities: -0- -0-
Net Cash Used for
Operating Activities -0- -0-
--------------------
Cash Flows Provided by
Investing Activities -0- -0-
--------------------
Cash Flows Provided by
Financing Activities -0- -0-
--------------------
Net Decrease in Cash -0- -0-
- --------------------
Beginning Cash Balance 424 1,147
- ----------------------
Ending Cash Balance $ 424 $ 1,147
- -------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001011972
<NAME> MASON OIL COMPANY, INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR 2-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1995 FEB-29-1996
<CASH> 424 424
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 424 424
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 424 424
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 1,725 1,725
<OTHER-SE> (1,301) (1,301)
<TOTAL-LIABILITY-AND-EQUITY> 424 424
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 623 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 6,000 0
<INCOME-TAX> 100 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,277 0
<EPS-PRIMARY> 0.01 0.00
<EPS-DILUTED> 0.01 0.00
</TABLE>
