U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A1
Post-Effective Amendment No. 1 to Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
ICON SYSTEMS, INC.
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(Name of Small Business Issuer as specified in its charter)
NEVADA 87-0565018
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(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
0-21899
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(SEC File No.)
4848 South Highland Drive, #353
Salt Lake City, Utah 84117
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 278-2805
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
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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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Icon Systems, Inc. (the "Company") was organized under the laws of the
State of Utah on August 26, 1987, under the name "Loki Holding Corp." The
Company was incorporated for the primary purposes of holding funds of,
managing the administrative matters of and investing in other business
entities and engaging in any and all other lawful business.
The Company was initially authorized to issue a total of 1,000,000
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 its current Bylaws were
attached to the Company's Registration Statement on Form 10-SB, which was
filed with the Securities and Exchange Commission on December 19, 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 10,000 "unregistered" and "restricted" shares of its common stock
to an executive officer who may be deemed to have been a promoter or founder
of the Company for the total consideration of $1,000.
In April 1988, the Company's sole stockholder conveyed all of the
issued and outstanding common stock of the Company to Dynamic Video, Inc., a
Utah corporation ("Dynamic"), in consideration of 1,000,000 "unregistered" and
"restricted" shares of common stock of Dynamic. As a result of this
transaction, the Company became a wholly-owned subsidiary of Dynamic.
On August 4, 1988, the Company changed its name to "Quazon
Investment Corporation" and assigned the right to the name "Loki Holding
Corp." to Dynamic. A copy of the Articles of Amendment whereby the Company
effected this name change was attached to the Company's previously-filed
Registration Statement on Form 10-SB and is incorporated herein by
this reference. See the Exhibit Index, Part III.
In October 1989, the Company issued an additional 52,500
"unregistered" and "restricted" shares of its common stock to Dynamic (which
had changed its name to "Loki Holding Corp."), for payment of $3,150.
Dynamic was incorporated under the laws of the State of Utah on June
26, 1981. Commencing in November 12, 1986, 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, Dynamic
had publicly offered and sold an aggregate total of 3,250,000 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 subsequently completed
with the Company receiving aggregate gross proceeds of $65,000, before payment
of legal, accounting and printing expenses.
Following the completion of its public offering, Dynamic was engaged
in the business of operating a video rental outlet. These operations were
unsuccessful and in 1990 the Board of Directors of Dynamic determined to
distribute Dynamic's shares of the Company to Dynamic's stockholders as a
partial liquidating dividend, in the ratio of one share of the Company for
every 10 shares held of record on May 25, 1990. Dynamic filed with the Utah
Securities Division (the "Division") a reorganization exemption application
under Rule 14.2p-1 of the rules of the Division. No objection was received
from the Division in accordance with its rules and on June 23, 1990, the
stockholders of Dynamic approved the partial liquidating dividend as proposed.
Each of the stockholders also executed a certificate of residency representing
that he or she was a bona fide resident of the State of Utah.
On June 23, 1990, the Board of Directors and the stockholders of the
Company resolved to (i) amend its Articles of Incorporation to change the name
of the Company to "Quazon International Corporation;" and (ii) issue 100,000
"unregistered" and "restricted" shares of common stock to Steven D. Moulton, a
stockholder, President and director of the Company, in consideration of office
equipment and the cancellation of debt. A total of 62,500 shares were voted
in favor of the amendment, with none voted against and none abstaining. A
copy of the Articles of Amendment whereby the Company effected this name
change was attached as an exhibit to the Company's previously-filed
Registration Statement on Form 10-SB and is incorporated herein by this
reference. See the Exhibit Index, Part III.
The Board of Directors of the Company unanimously resolved on March
13, 1991, to (i) increase its authorized capital from 1,000,000 shares to
100,000,000 shares of common stock, with the par value to remain at one mill
($0.001) per share; and (ii) call a special meeting of stockholders to vote on
the increase. At a special meeting held on March 25, 1991, the stockholders
of the Company voted to adopt the increase, with 500,000 shares voting in
favor, no shares voting against and none abstaining. A copy of the Articles
of Amendment whereby the Company effected this increase was attached to the
Company's previously-filed Registration Statement on Form 10-SB and is
incorporated herein by this reference. See the Exhibit Index, Part III.
On March 29, 1991, the Board of Directors unanimously resolved to
amend the Company's Articles of Incorporation to authorize the issuance of
10,000,000 shares of preferred stock having a par value of $0.001 per share,
with the Board of Directors having the authority to divide the preferred stock
into series and fix the relative rights and preferences between the series.
The stockholders of the Company approved the proposed amendment on April 8,
1991, with 500,000 of the 682,500 issued and outstanding shares of common
stock voting in favor and none voting against or abstaining. As of the date
of this Registration Statement, the Board of Directors has not fixed the
rights and preferences of the Company's preferred stock and no shares of
preferred stock have been issued. A copy of the Articles of Amendment whereby
the Company authorized the class of preferred stock was attached to the
Company's previously-filed Registration Statement on Form 10-SB and is
incorporated herein by this reference. See the Exhibit Index, Part III.
A special meeting of the Company's stockholders was held on August
15, 1991. At the meeting, a majority of the stockholders voted (i) to elect
the following persons as directors and executive officers of the Company: Jay
A. Tompkins (director and President); Barbara A. Tompkins (director and Vice
President); and Lynda C. Plemons (director and Secretary/Treasurer); (ii) to
change the name of the Company to "Tompkins Environmental Corporation;"
(iii)to change the Company's business address; (iv) to add "environmental
work" as a purpose of the Company; and (v) to acquire all of the issued and
outstanding shares of stock of Tompkins Environmental Corporation, an Oklahoma
corporation ("Tompkins Oklahoma"), in consideration of the issuance of
10,000,000 "unregistered" and "restricted" shares of the Company's common
stock to the former stockholders of Tompkins Oklahoma. A copy of the Articles
of Amendment whereby the Company effected this name change was attached to the
Company's previously-filed Registration Statement on Form 10-SB and is
incorporated herein by this reference. See the Exhibit Index, Part
III.
The new management of the Company intended to engage in the business
of hazardous waste disposal and building demolition. However, no such
business was ever undertaken and the Company has had no business operations at
any time. The Company was involuntarily dissolved by the State of Utah on
October 11, 1994, for failure to maintain a registered agent in the State.
On October 12, 1995, acting in response to a Verified Application filed
by Kevin Boyer, a stockholder of the Company, the Third Judicial District
Court of the State of Utah (the "Court")entered an Order that an annual
meeting of the stockholders of the Company be held for the sole purpose of
electing from among such persons as might be nominated to stand for election
from the floor at the meeting, three directors to serve until the next annual
meeting of stockholders or until their successors are elected (or appointed)
and qualified. The Order further provided that such shares as were owned by
the record registered owners of the Company's common stock as shown on its
then-current stockholder list and which shares were present in person or by
proxy at the meeting would constitute a quorum to conduct the meeting. A
majority of the issued and outstanding shares represented at the meeting,
which was held on October 24, 1995, were voted to elect Kevin Boyer, Diane
Reed and Steven D. Moulton directors of the Company. The Court issued an
Order Confirming Election of Directors on November 6, 1995.
Also on October 24, 1995, the directors of the Company unanimously
resolved to (i) appoint the following persons as executive officers, to serve
until their successors are elected and qualified or until their prior
resignation or termination: Kevin Boyer (President); Diane Reed (Vice
President); Steven D. Moulton (Secretary/Treasurer); (ii) authorize Steven D.
Moulton to execute all documents necessary to reinstate the Company in the
State of Utah; (iii) authorize Kevin Boyer and Steven D. Moulton to open and
maintain a bank account in the Company's name; (iv) change the principal
mailing address of the Company to its present address (v) issue 5,000,000
"unregistered" and "restricted" shares each to QBC Holding Corporation, doing
business as Wasatch Consulting Group ("Wasatch") and B.W. Blackstone, Ltd.
("Blackstone") for services rendered (vi) issue 2,000,000 "unregistered" and
"restricted" shares to Kevin Boyer for services rendered; (vii) abandon
Tompkins Oklahoma; and (viii) appoint Western States Transfer and to terminate
Atlas Stock Transfer as the Company's transfer agent. Steven D. Moulton is
the President, a director and a 9% stockholder of Wasatch. B. W. Blackstone,
Ltd. was a sole proprietorship owned by Barrett Hicken, an individual who is
unaffiliated with any of the current or former directors or executive officers
of the Company.
The Company was reinstated in the State of Utah on October 25, 1995.
At an annual meeting held on September 14, 1996, a majority of the
stockholders of the Company voted to (i) elect Michelle Wheeler, Jeff Taylor
and Steven D. Moulton directors until the next annual meeting of stockholders
or until their successors are elected and qualified; (ii) effect a reverse
split of the Company's common stock on the basis of one share for 1,000, while
retaining the authorized capital at 100,000,000 at the par value at one mill
($0.001) per share, with appropriate adjustments to the additional paid in
capital and stated capital accounts of the Company, and with no stockholder's
holdings to be reduced below 50 shares as a result of the reverse split; (iii)
change the name of the Company to "Icon Systems, Inc.;" (iv) issue 3,000,000
post-split "unregistered" and "restricted" shares of common stock to Wasatch
Consulting Group for services rendered and for the payment of $10,000 to the
Company; and (v) change the domicile of the Company from the State of Utah to
the State of Nevada. A copy of the Articles of Amendment effecting the
reverse split and the name change was attached to the Company's
previously-filed Registration Statement on Form 10-SB and is incorporated
herein by this
reference. See the Exhibit Index, Part III.
The annual meeting of the Board of Directors of the Company was held
immediately after the annual meeting of the stockholders. At the meeting, a
majority of the Board of Directors voted: (i) to elect the following persons
to serve as executive officers of the Company until the next annual meeting of
the directors or until their successors are elected and qualified or until
their earlier resignation or termination: Michelle Wheeler (President); Jeff
Taylor (Vice President); and Steven D. Moulton (Secretary/Treasurer); (ii) to
approve the above-referenced issuance of 3,000,000 post-split "unregistered"
and "restricted" shares to Wasatch; (iii) to form a wholly-owned subsidiary in
the State of Nevada to effectuate the change of domicile; and (iv) to appoint
the executive officers of the Company to serve in the same capacities for the
wholly-owned subsidiary.
On September 24, 1996, the Company filed in the State of Nevada
Articles of Merger whereby the Company was merged into Icon Systems, Inc., a
Nevada corporation that was formed with authority to issue 100,000,000 shares
of $0.001 par value common voting stock and 10,000,000 shares of $0.001 par
value preferred stock, solely for the purpose of changing the Company's
domicile ("Icon Nevada"); this act was undertaken pursuant to a joint consent
of the Boards of Directors of the Company and Icon Nevada, dated September 18,
1996. Each outstanding share of the Company's common stock was exchanged for
one share of common stock of Icon Nevada. The Articles of Merger were filed
with the State of Utah on September 30, 1996. Copies of the Articles of
Incorporation and the Bylaws of Icon Nevada and the Joint Consent of Directors
of the Company and Icon Nevada, by which the companies adopted a Plan of
Merger, were attached to the Company's previously-filed Registration Statement
on Form 10-SB and are incorporated herein by this reference. See the Exhibit
Index, Part III. For the purposes of this Registration Statement, the
Company" shall be deemed to be Icon Nevada for all events occurring after
September 24, 1996.
The Board of Directors of the Company unanimously resolved on
October 10, 1996, to issue 500,000 "unregistered" and "restricted" post-split
shares of common stock to each of the following persons for services rendered:
Diane Reed; Michelle Wheeler; Jeff Taylor; and Steven D. Moulton. The Board
of Directors further resolved that the Company borrow $5,000 from Wasatch in
exchange for a promissory note, payable on demand, and bearing interest at the
rate of 10% per annum. On October 29, 1996, the amount of the loan was
increased to $10,000. The purpose of this loan transaction was to provide the
Company with sufficient capital to cover its operating expenses, including
legal fees and accounting fees associated with the preparation of this
Registration Statement and accompanying financial statements and the Company's
periodic reports under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). See the caption "Plan of Operation," Part I, Item 2 of this
Registration Statement and the Index to Financial Statements, Part F/S of this
Registration Statement.
On October 28, 1996, the Company filed with the Secretary of State
of the State of Nevada a Certificate of Amendment clarifying an inadvertent
inconsistency in its Articles of Incorporation which had authorized the
issuance of 100,000,000 shares of common stock and 10,000,000 shares of
preferred stock, with the subsequent statement that "all stock of the
[Company] shall be of the same class and shall have the same rights and
preferences." The Certificate of Amendment corrected this inconsistency by
deleting this clause from the Company's Articles of Incorporation. A copy of
the Certificate of Amendment was attached to the Company's previously-filed
Registration Statement on Form 10-SB and is incorporated herein by this
reference. See the Exhibit Index, Part III.
Business.
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The Company has never engaged in any substantive business
operations. 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 virtually 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; such an issuance would almost certainly result in a change in
control of the Company. This may also 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, Wasatch beneficially owns
approximately 60% of the outstanding shares of common stock of the Company,
and could approve any acquisition, reorganization or merger it 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.
Although the Company has not communicated with any other entity with
respect to any potential merger or acquisition transaction, management has
determined to file this Registration Statement on a voluntary basis. In order
to have stock quotations for its common stock on the National Association of
Securities Dealers' Automated Quotation System ("Nasdaq"), an issuer must have
such securities registered under the 1934 Act. Upon the effective date of
this Registration Statement, which took place on or about February 17, 1997,
the Company's common stock became registered for purposes of the 1934 Act.
Management believes that this will make the Company more desirable for
entities that may be interested in engaging in a merger or acquisition
transaction.
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 extremely limited current assets
and 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 transact
on 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 extremely limited resources, and is unlikely
to have any significant 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.
However, due to the minimal amount of time devoted to management by any person
other than Mr. Moulton, there are no preliminary agreements or understandings
with respect to management compensation (with the exception of Mr. Moulton's
salary of $500 per month). See the caption "Executive Compensation," Part I,
Item 6 of this Registration Statement.
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. It is not anticipated that any such opportunity will be afforded to
other stockholders. 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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From 1984 to 1990, Steven D. Moulton, a director and the
Secretary/Treasurer of the Company, served as a director and executive officer
of several publicly-held development stage companies including Safron, Inc.
(director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." Since 1995, he has served as director and executive officer of
the Company (director and Secretary/Treasurer) and Wasatch International
Corporation (formerly "Java, Inc.")(director and President). Mr. Moulton
resigned from his positions with Wasatch International Corporation in July,
1996. In addition, Mr. Moulton was the President and a director of the
Company from its inception to July 31, 1991. Each of these companies may be
deemed to have been a "blind pool" or "blank check" company at these times.
Safron, Inc., a Utah corporation, sold 3,000,000 units of its
securities at a price of $0.10 per unit, pursuant to a Registration Statement
on Form S-18 that was filed with the Securities and Exchange Commission with
an effective date of July 17, 1985. A total of $300,000 was raised under this
offering for the purpose of acquiring or participating in a then-unidentified
business opportunity. Mr. Moulton resigned his position with Safron, Inc. in
November, 1987.
Sagitta Ventures, Inc., a Utah corporation, filed a Registration
Statement on Form S-18, effective date April 30, 1987, with the Securities and
Exchange Commission. This Registration Statement provided for the sale of
12,000,000 units at a price of $0.02 per unit. The offering was closed on
July 8, 1987, after 7,479,500 units were sold for an aggregate price of
$149,590. Sagitta acquired all of the issued and outstanding common stock of
Onyx Holding Corporation, with the proceeds from its offering, and
subsequently distributed the Onyx shares as a partial liquidating dividend to
its stockholders. Mr. Moulton was the President and a director of Onyx from
July 10, 1987 through May 1, 1989.
On August 19, 1987, Jasmine Investments completed the sale of
2,338,390 units to the public pursuant to a Registration Statement on Form
S-18, at a price of $0.10 per share. A total of $233,839 was raised under
this offering. After Mr. Moulton's resignation, Jasmine consummated a merger
transaction and became known as "Audioventures Corporation."
Java, Inc. sold 1,320,350 shares of its common stock at $0.10 per
share pursuant to a Registration Statement on Form S-18, which became
effective on April 22, 1986. On November 7, 1986, the stockholders of Java
approved the acquisition of Quazon Communications, Inc., an Illinois
corporation, which was engaged in the business of manufacturing and marketing
computer terminals. Mr. Moulton resigned his position as Secretary/Treasurer
on November 7, 1986, and resigned from the Board of Directors in August, 1987.
Mr. Moulton resigned his positions with Omni International
Corporation before its securities offering and had no involvement therein.
Other than the Company, neither Michelle Wheeler nor Jeff Taylor has
been involved as a director, executive officer or five percent stockholder of
any "blank check" company in the last ten years.
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.
Extremely Limited Assets; No Source of Revenue. The Company has
virtually no assets and has had no revenue in either of its two most recent
fiscal 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 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 virtually 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 the caption "Management's
Discussion and Analysis or Plan of Operation," 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. See paragraph 8221, NASAA
Reports, CCH Topical Law Reports, 1990. Although it has no present plans to
register or qualify its securities in any state, 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. Because the Company does
not intend to make any offering of its securities in the foreseeable future,
management does not believe that any state restriction on "blank check"
offerings will have any effect on the Company.
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. It is expected that
members of management, other than Steven D. Moulton, will devote approximately
five to 10 hours per month to corporate maintenance. Mr. Moulton expects to
spend approximately 50 hours per month to the Company, including preparation
of periodic reports under the 1934 Act and, when management deems it
appropriate, seeking a quotation on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD") and seeking a candidate
for a merger or acquisition transaction.
Conflicts of Interest; Related Party Transactions. Although the
Company has not identified any potential acquisition target and management
does not believe that there is any "present potential" for such a transaction,
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. Although there is
no formal bylaw, stockholder resolution or agreement authorizing any such
transaction, corporate policy does not forbid it and 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 its ownership of a majority of the shares of
the Company's outstanding common stock, Wasatch 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. Although the
Company intends to submit for quotation of its common stock on the OTC
Bulletin Board of the NASD before any merger or acquisition transaction, and
to seek a broker-dealer to act as market maker for its securities (without the
use of any consultant), there is currently no market for such shares, there
have been no discussions with any broker-dealer or any other person in this
regard, and no market maker has been identified; 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) in issuers 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 in the last 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 OTC Bulletin
Board of the NASD.
Section 15(g) of the 1934 Act, 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.
- --------------------------------
The extremely 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.
- -------------------------------------------------
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.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- --------------------------------
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 these
endeavors; however, the Company, having virtually no assets or cash reserves,
will no doubt be at a competitive disadvantage in competing with entities
which have recently completed IPO's, have significant cash resources and have
operating histories when compared with the complete lack of any substantive
operations by the Company.
Sources and Availability of Raw Materials and Names of Principal Suppliers.
- ----------------------------------------------------------------------------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
- ----------------
None; not applicable.
Need for any Governmental Approval of Principal Products or Services.
- ---------------------------------------------------------------------
On the effectiveness of the Company's Registration Statement on Form
10-SB, which occurred on or about February 17, 1997, the Company became
subject to Regulation 14A regarding proxy solicitations promulgated by the
Securities and Exchange Commission under 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 Wasatch, 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 fiscal 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 virtually 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.
Upon the effectiveness of its Registration Statement on Form 10-SB,
on or about February 17, 1997, the Company became subject to the periodic
reporting obligations of Section 13 of the 1934 Act. This will require the
Company to file (i) an annual report on Form 10-KSB with the Securities and
Exchange Commission within 90 days of the close of each fiscal year (Reg.
Sections 240.13a-1 and 249.310b); (ii) a quarterly report on Form 10-QSB
within 45 days of the end of each of the first three quarters of its fiscal
year (Reg. Sections 240.13a-13 and 249.308b); and (iii) a current report on
Form 8-k within 15 days of the occurrence of certain material events (e.g.,
changes in accountants, acquisitions or dispositions of a substantial amount
of assets not in the ordinary course of business) (Reg. Sections 240.13a-11
and 249.308). In addition, annual reports on Form 10-KSB must be accompanied
by audited financial statements as of the end of the issuer's most recent
fiscal year. These reporting requirements may deter potential reorganization
candidates that are not willing to undergo the public and agency scrutiny
resulting therefrom.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing and
making the requisite filings with the Securities and Exchange Commission 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. Management does not intend to raise any required funds through
any private placement of "unregistered" and "restricted" securities or any
public offering of its common stock. Nor does the Company intend to undertake
any offering of its securities under Regulation S of the Securities and
Exchange Commission. As of the date of this Registration Statement, the
Company has not begun seeking any acquisition and there are no plans,
proposals, arrangements or understandings with respect to the sale or issuance
of additional securities by the Company prior to the location of any
acquisition or merger candidate.
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.
- ---------------------------------
Other than cash in the amount of approximately $12,000, the Company
has no appreciable assets, property or business; its principal executive
office address and telephone number are the business office address and
telephone number of its Secretary/Treasurer, Steven D. Moulton, 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, in the State of Nevada, and with preparing this Registration
Statement, the accompanying financial statements and the Company's periodic
reports under the 1934 Act. These activities have consumed an insignificant
amount of management's time; therefore, the costs to Mr. Moulton of
providing the use of his office and telephone have been minimal. Accordingly,
there is no written lease between the Company and Mr. Moulton and there are no
preliminary agreements or understandings with respect to the use of the office
facility, either now or in the future.
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 December 6,
1996. Each of these persons has sole investment and sole voting power over
the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Steven D. Moulton 500,000 (1) 9.9%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Diane Reed 500,000 9.9%
2201 Hugo Avenue
Salt Lake City, Utah 84117
Jeff Taylor 500,000 9.9%
1879 Siggard Drive
Salt Lake City, Utah 84106
Wasatch Consulting Group 3,005,000 59.8%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Michelle Wheeler 500,000 9.9%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
--------- -----
TOTALS 5,005,000 99.4%
</TABLE>
(1) Due to his status as a director and the President of Wasatch, Mr. Moulton
may also be deemed to control Wasatch, which owns 59.8% of the Company's
issued and outstanding common stock. See the caption "Business Development,"
Part I, Item 1 of this Registration Statement.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of December 6, 1996. Each of these
persons has sole investment and sole voting power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Steven D. Moulton 500,000 (1) 9.9%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Jeff Taylor 500,000 9.9%
1879 Siggard Drive
Salt Lake City, Utah 84106
Michelle Wheeler 500,000 9.9%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
----- -----
All directors and executive
officers as a group (3) 1,500,000 29.7%
</TABLE>
(1) Due to his status as a director and the President of Wasatch, Mr. Moulton
may also be deemed to control Wasatch, which owns 59.8% of the Company's
issued and outstanding common stock. See the caption "Business Development,"
Part I, Item 1 of this Registration Statement.
See the caption "Directors, Executive Officers, Promoters and Control
Persons," 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 in May 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>
Michelle Wheeler President 9/96 *
Director 9/96 *
Jeff Taylor Vice President 9/96 *
Director 9/96 *
Steven D. Moulton Secretary/ 10/95 *
Treasurer 10/95 *
Director 10/95 *
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Michelle Wheeler, Director and President. Ms. Wheeler, age 30, is a
1991 graduate of the University of Utah, where she received a B.S. degree in
Communications. From July, 1991 through January, 1994, she was a reservation
agent for Delta Airlines in Salt Lake City, Utah. Since then, she has been a
homemaker. Ms. Wheeler has NASD series 6 and 63 licenses.
Jeff Taylor, Director and Vice President. Mr. Taylor is 31 years of
age. He graduated from Hiram Johnson High School in Sacramento, California,
in 1983. From 1988 to 1991, he was employed as an auto painter at Fabrication
Specialties in Sacramento. In 1991, Mr. Taylor moved his family to Utah. Mr.
Taylor has an A.S. degree from Utah Valley State College and is currently
enrolled in the College of Nursing at the University of Utah. He plans to
pursue a masters degree in Nurse Anesthesia.
Steven D. Moulton, Director and Secretary/Treasurer. Mr. Moulton is
34 years of age. He graduated from Olympus High School in Salt Lake City,
Utah in 1980. From 1984 to 1990, he served as a director and executive
officer of several publicly-held development stage companies including Safron,
Inc. (director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." Since 1995, he has served as director and executive officer of
the Company (director and Secretary/Treasurer) and Wasatch International
Corporation (director and President). Mr. Moulton resigned from his positions
with Wasatch International Corporation in July, 1996. With the exception of
Sagitta Ventures, Omni International Corporation and Wasatch International
Corporation, none of these companies was subject to the reporting requirements
of the Securities and Exchange Commission. Mr. Moulton owned and operated a
Chem-Dry carpet cleaning franchise from 1991 to 1995. In addition, Mr.
Moulton was the President and a director of the Company from its inception
until his resignation on July 31, 1991.
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. It
is expected that current members of management and the Board of Directors will
be the only persons whose activities will be material to the Company's
operations. Members of management are the only persons who may be deemed to
be promoters of the Company.
Family Relationships.
- ---------------------
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
Long Term Compensation
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
(i)
Name and Year or Other
All
Principal Period $ $ Annual Restricted Option
LTIP Other
Position Ended Salary Bonus Compen Stock SAR's
Payouts Compensation
sation Awards($) (#) ($)
($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Michelle Wheeler 6/30/95 0 0 0 0 0 0
0
President 6/30/96 0 0 0 0 0 0
0
Director 10/31/96 0 0 0 (1) 0 0
0
Jeff Taylor 6/30/95 0 0 0 0 0 0
0
Vice President, 6/30/96 0 0 0 0 0 0
0
Director 10/31/96 0 0 0 (1) 0 0
0
Steven D.
Moulton 6/30/95 0 0 0 0 0 0
0
Sec./Treasurer, 6/30/96 0 0 0 (3) 0 0
0
Director 10/31/96 $1,500(4) 0 0 (1),(2) 0 0
0
Kevin Boyer, 6/30/95 0 0 0 0 0 0
0
Former President 6/30/96 0 0 0 (3) 0 0
0
Former Director 10/31/96 0 0 0 0 0 0
0
Jay A. Tompkins 6/30/95 0 0 0 0 0 0
0
Former President 6/30/96 0 0 0 0 0 0
0
Former Director 10/31/96 0 0 0 0 0 0
0
Diane Reed 6/30/95 0 0 0 0 0 0
0
Former Vice Pres.6/30/96 0 0 0 0 0 0
0
Former Director 10/31/96 0 0 0 (1) 0 0
0
</TABLE>
(1) In October, 1996, 500,000 post-split "unregistered" and
"restricted" shares of the Company's common stock were
issued to each of these persons in consideration of
services rendered. See the caption "Business Development,"
Part I, Item 1 of this Registration Statement.
(2) In September, 1996, the Company issued 3,000,000 post-split
"unregistered" and "restricted" shares of common stock to
QBC Holding Corporation, doing business as Wasatch Consulting
Group ("Wasatch"), a corporation of which Mr. Moulton is the
President, a director and a 9% stockholder, in consideration of
services rendered and the payment of $10,000. See the caption
"Business Development," Part I, Item 1 of this Registration
Statement.
(3) In October, 1995, 5,000,000 shares of "unregistered" and
"restricted" common stock were issued to Wasatch and
Blackstone in consideration of services rendered.
At the same time, 2,000,000 "unregistered" and "restricted"
shares were issued to Mr. Boyer, also in consideration of
services rendered.
(4) Commencing in October, 1996, the Company has paid Mr. Moulton a
salary of $500 per month for services rendered to the Company.
As of the date of this Registration Statements, these services
include keeping the Company in good standing in the State of
Nevada and assisting with the preparation of this Registration
Statement and the Company's periodic reports under the 1934 Act.
There is no written agreement between the Company and Mr. Moulton
in this regard.
With the exception of the sum of $500 per month payable to Mr.
Moulton commencing in October, 1996, no cash compensation, deferred
compensation or long-term incentive plan awards were issued or granted to the
Company's management during the fiscal years ended June 30, 1996, or 1995, 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.
There are no plans whereby the Company would issue any of its
securities to management, promoters, their affiliates or associates in
consideration of services rendered or otherwise.
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 fiscal 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.
Nor are there any agreements or understandings for any director or
executive officer to resign at the request of another person; none of the
Company's directors or executive officers is acting on behalf of or will act
at the direction of any other person.
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, each of the current
directors and executive officers and certain of the Company's former directors
and executive officers has received "unregistered" and "restricted" shares of
the Company's common stock in consideration of services rendered and Wasatch,
an entity that may be deemed to be an affiliate of Steven D. Moulton, has
received an aggregate of 3,005,000 "unregistered" and "restricted" post-split
shares in consideration of services rendered and the sum of $10,000. See the
captions "Business Development" and "Executive Compensation" 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 the caption
"Transactions with Management and Others" 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 the caption
"Transactions with Management and Others" of this Registration Statement.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that Wasatch, the
principal stockholder, may be deemed to be a parent of the Company. See the
caption "Business Development" 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, see the caption
"Transactions with Management and Others" of this Registration Statement.
Item 8. Description of Securities.
- -----------------------------------
The Company has two classes of securities authorized, consisting of
100,000,000 authorized shares of one mill ($0.001) par value common voting
stock and 10,000,000 authorized shares of one mill ($0.001) par value
preferred 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.
The Company has authorized a class of preferred stock having a par
value of one mill ($0.001) per share. A total of 10,000,000 shares of
preferred stock are authorized but, as of the date of this Registration
Statement, no rights or preferences have been assigned to these shares and no
shares of preferred stock have been issued.
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.
- -------------------
There has never been any established "public market" for shares of
common stock of the Company. The Company intends to submit for listing on the
OTC Bulletin Board of the National Association of Securities Dealers, Inc.
(the "NASD"); however, management does not expect any public market to develop
unless and until the Company completes an acquisition or merger. In any
event, no assurance can be given that any market for the Company's common
stock will develop or be maintained. If a public 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 members of
management or Wasatch may have a substantial adverse impact on any such public
market. See the caption "Business" of this Registration Statement.
There are no outstanding options, warrants or calls to purchase any
of the authorized securities of the Company.
The sales of an aggregate of 5,012,000 "unregistered" and
"restricted" post-split shares of common stock to Wasatch, Blackstone, and
certain current and former directors and executive officers of the Company,
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 the captions "Business Development" and "Recent Sales of
Unregistered Securities" of this Registration Statement.
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 126.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock or its 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 securities.
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.
- ------------------------------------
There have been no changes in the Company's principal independent
accountant in the past two fiscal years or as of the date of this Registration
Statement.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
On October 24, 1995, the Company's Board of Directors unanimously
voted to issue 5,000,000 "unregistered" and "restricted" pre-split shares of
common stock each to Wasatch and Blackstone, in consideration of services
rendered. On the same date, the Board of Directors unanimously resolved to
issue 2,000,000 such shares to Kevin Boyer, also in consideration of services
rendered.
The stockholders and the Board of Directors authorized the issuance
of 3,000,000 post-split "unregistered" and "restricted" shares of common stock
to Wasatch in consideration of services rendered and the payment of $10,000 on
September 14, 1996.
On October 10, 1996, the Board of Directors voted to issue 500,000
post-split "unregistered" and "restricted" shares each to Diane Reed, Michelle
Wheeler, Jeff Taylor and Steven D. Moulton in consideration of services
rendered.
These shares are fully-paid and have been issued to each of these
entities. See the caption "Business Development" of this Registration
Statement.
With the exception of Wasatch and Blackstone, each of these entities
is a current or former director and executive officer of the Company and had
access to all material information regarding the Company prior to the offer or
sale of these securities. In addition, Steven D. Moulton, who is the
Secretary/Treasurer and a director of the Company, is the President, a
director and a 9% stockholder of Wasatch. 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 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes
a Nevada corporation to indemnify any director, officer, employee, or
corporate agent "who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his corporate role. Section 78.751(1)
extends this protection "against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted
in good faith and in a manner which he 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
conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith and
with the reasonable belief that his actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or agent
is successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense."
Section 78.751 (4) of the NRS limits indemnification under Sections
78.751 (1) and 78.751(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any action
or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his
corporate role.
Article VIII of the Company's Bylaws restates the above-referenced
indemnification provisions of the NRS. This right to indemnification
continues as to persons who have ceased to be agents of the Company and inures
to the benefit of such persons' heirs, executors and administrators.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(i) Audited Financial Statements
October 31, 1996, June 30, 1996
and 1995
--------
Independent Auditors' Report
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
(Deficit)
Statements of Cash Flows
Notes to the Financial Statements
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 Joint Consent of Directors of Icon
Systems, Inc., a Utah corporation,
and Icon Systems, Inc., a Nevada
corporation**
3.1 Articles of Incorporation of Loki
Holding Corp., filed on August 26, 1987**
3.2 Articles of Amendment to Articles of
Incorporation, filed on August 4, 1988**
3.3 Articles of Amendment to Articles of
Incorporation, filed on June 25, 1990**
3.4 Articles of Amendment to Articles of
Incorporation, filed on March 27, 1991**
3.5 Articles of Amendment to Articles of
Incorporation, filed on April 17, 1991**
3.6 Articles of Amendment to Articles of
Incorporation, filed on September 27, 1991**
3.7 Articles of Amendment to Articles of
Incorporation, filed on September 18, 1996**
3.8 Articles of Incorporation of Icon Systems,
Inc., a Nevada corporation, filed on
September 24, 1996**
3.9 Bylaws of Icon Systems, Inc., a Nevada
corporation**
3.10 Certificate of Amendment to Articles of
Incorporation, filed on October 28, 1996**
27 Financial Data Schedule
</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 been
previously 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.
ICON SYSTEMS, INC.
Date: 03/24/97 By /s/ Michelle Wheeler
---------- ------------------------
Michelle Wheeler, Director
and President
Date: 03-25-97 By /s/ Jeff Taylor
---------- ------------------------
Jeff Taylor, Director and Vice
President
Date: 3/24/97 By /s/ Steven D. Moulton
---------- ------------------------
Steven D. Moulton,
Director and Secretary/Treasurer
JONES, JENSEN
[LOGO} & COMPANY
------------------
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
----------------------------------
The Board of Directors
Icon Systems, Inc.
(Formerly Tompkins Environmental Corporation)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Icon Systems, Inc.
(formerly Tompkins Environmental Corporation) (a development stage company) as
of October 31, 1996 and June 30, 1996 and 1995, and the related statements of
operations, stockholders' equity (deficit), and cash flows for the four months
ended October 31, 1996 and for the years ended June 30, 1996, 1995 and 1994
and for the period from inception on August 26, 1987 through October 31, 1996.
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 audits.
We conducted our audits 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 audits provide 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 Icon Systems, Inc. (formerly
Tompkins Environmental Corporation) (a development stage company) as of
October 31, 1996 and June 30, 1996 and 1995, and the results of its operations
and its cash flows for the four months ended October 31, 1996 and for the
years ended June 30, 1996, 1995 and 1994 and for the period from inception on
August 26, 1987 through October 31, 1996, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raise substantial doubt about its
ability to continue as a going concern. Management's plans with regard to
these matters are also described in the Note 3. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
November 19, 1996
50 South Main Street, Suite 1450, Salt Lake City, Utah 84144
Telephone (801) 3328-4408 * Facsimile (801) 328-4461
<PAGE>
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
FINANCIAL STATEMENTS
October 31, 1996, June 30, 1996 and 1995
PAGE
<PAGE>
C O N T E N T S
Independent Auditors' Report......................................3
Balance Sheets....................................................4
Statements of Operations......................................... 5
Statements of Stockholders' Equity (Deficit)..................... 6
Statements of Cash Flow..........................................10
Notes to the Financial Statements................................12
<PAGE>
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Balance Sheets
ASSETS
---------------
June 30,
October 31, --------------------
1996 1996 1995
------------ --------- ----------
CURRENT ASSETS
Cash $ 11,884 $ - $ -
Prepaid expenses 656 - -
------------ --------- ----------
Total Current Assets 12,540 - -
------------ ---------- ----------
TOTAL ASSETS $ 12,540 $ - $ -
============ ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 3,666 $ - $ -
Accrued interest 34 - -
Note payable - related
party (Note 2) 10,000 - -
------------- ---------- ----------
Total Current Liabilities 13,700 - -
------------- ---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 10,000,000
preferred shares at $0.001 par
value authorized; -0- outstanding - - -
Common stock authorized: 100,000,000
common shares at $0.001 par value;
at October 31, 1996 and June 30,
1996 and 1995; 5,027,563, 27,563
and 12,633 shares issued and
outstanding, respectively 5,027 27 10
Capital in excess of par value 356,038 344,438 332,455
Deficit accumulated during the
development stage (362,225) (344,465) (332,465)
------------- ----------- ---------
Total Stockholders'
Equity (Deficit) (1,160) - -
------------- ----------- ---------
TOTAL LIABILITIES, AND
STOCKHOLDERS EQUITY (DEFICIT) $ 12,540 $ - $ -
============= =========== =========
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From Inception
For the Four on August 26,
Months Ended For the Years Ended June 30, 1987 through
October 31, ---------------------------- October 31,
1996 1996 1995 1994 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
------ ------ ------ ----- -------
EXPENSES
General and
administrative (17,726) - - - (17,726)
-------- ------ ------ ----- --------
OTHER INCOME
(EXPENSES)
Interest expenses (34) - - - (34)
---- ------ ------ ----- --------
Total Other Income
Income (Expenses) (34) - - - (34)
---- ------ ------ ----- --------
Income (Loss) From
Continuing Operations
(17,760) - - - (17,760)
-------- ------- ------ ----- --------
Income (Loss) From
Discontinued
Operations - (12,000) - - (344,465)
-------- -------- ------ ----- ---------
NET LOSS $(17,760) $(12,000) $ - $ - $(362,225)
========= ========= ====== ===== =========
LOSS PER SHARE $ (0.01) $ (0.53) $ (0.00) $(0.00)
========= ======== ======== =======
WEIGHTED AVERAGE
NUMBER OF SHARES 1,515,368 22,859 12,633 12,633
========= ====== ====== ======
The accompanying notes are an integral part of these financial statements.
</TABLE>
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Deficit
Accumulated
Common Stock Capital in During the
------------------- Excess of Development
Shares Amount Par Value Stage
-------- --------- ------------ -----------
Balance at inception on
August 26, 1987 - $ - $ - $ -
Issuance of 12 shares of common
stock to an officer for cash
valued at approximately $83.33
per share 12 - 1,000 -
Net loss from inception on
August 26, 1987 through
June 30, 1988 - - - (914)
--------- --------- ------------ ----------
Balance, June 30, 1988 12 - 1,000 (914)
Net loss for the year ended
June 30, 1988 - - - (2,299)
--------- ---------- ------------- ----------
Balance, June 30, 1989 12 - 1,000 (3,213)
Issuance of 65 shares of common
stock for cash, valued at
approximately $48.46 per share 65 - 3,150 -
Issuance of 125 shares of
common stock to shareholder
for office equipment and stock
of Alco Investment Corporation
and cash of $750 125 - 7,840 -
Net loss for the year ended
June 30, 1990 - - - (3,245)
----------- --------- ---------- -----------
Balance, June 30, 1990 202 $ - $ 11,990 $ (6,458)
----------- --------- ---------- -----------
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Capital in During the
--------------------- Excess of Development
Shares Amount Par Value Stage
---------- ---------- ---------- ----------
Balance, June 30, 1990 202 $ - $ 11,990 $ (6,458)
Contribution of non-marketable
securities by officer - - 750 -
Contribution and cancellation of
shares by officer (106) - - -
Issuance of 6 shares for cash
valued at approximately $333.33
per share 6 - 2,000 -
Issuance of 246 shares of
common stock to shareholder
and 500 shares of common
stock to QBC Holding Corp.
for $600 in cash 747 1 599 -
Expenses paid on behalf of
the Company by shareholder - - 1,636 -
Net loss for the year ended
June 30, 1991 - - - (10,518)
---------- ---------- ---------- ----------
Balance, June 30, 1991 849 1 16,975 (16,976)
Shares contributed to the
Company and canceled by
the shareholders (788) (1) 1 -
Purchase of subsidiary for the
issuance of 12,569 shares of
common stock valued at
approximately $25.10 per share 12,569 10 315,479 -
Net loss for the year ended
June 30, 1992 - - - (276,103)
---------- ---------- ---------- ----------
Balance, June 30, 1992 12,630 $ 10 $ 332,455 $(293,079)
---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Capital in During the
---------------------- Excess of Development
Shares Amount Par Value Stage
---------- ---------- ---------- -----------
Balance, June 30, 1992 12,630 $ 10 $ 332,455 $ (293,079)
Net loss for the year ended
June 30, 1993 - - - (39,386)
---------- ---------- ---------- -----------
Balance, June 30, 1993 12,630 10 332,455 (332,465)
Net loss for the year ended
June 30, 1994 - - - -
---------- ---------- ---------- -----------
Balance, June 30, 1994 12,630 10 332,455 (332,465)
Net loss for the year ended
June 30, 1995 - - - -
---------- ---------- ---------- -----------
Balance, June 30, 1995 12,630 10 332,455 (332,465)
Issuance of 14,933 shares of
common stock for services
rendered valued at approximately
$0.80 per share 14,933 17 11,983 -
Net loss for the year ended
June 30, 1996 - - - (12,000)
----------- ---------- ---------- ----------
Balance, June 30, 1996 27,563 $ 27 $344,438 $(344,465)
----------- ---------- --------- ----------
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Capital in During the
----------------------- Excess of Development
Shares Amount Par Value Stage
----------- ---------- ---------- -----------
Balance, June 30, 1996 27,563 $ 27 $ 344,438 $ (344,465)
Issuance of 3,000,000 shares
of common stock for cash
valued at approximately
$0.0033 per share 3,000,000 3,000 7,000 -
Issuance of 2,000,000 shares of
common stock for services
rendered valued at $0.0033
per share 2,000,000 2,000 4,600 -
Net loss for the four
months ended
October 31, 1996 - - - (17,760)
---------- ---------- ---------- ------------
Balance, October 31, 1996 5,027,563 $ 5,027 $ 356,038 $ (362,225)
========== ========== ========== ============
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
From Inception
For the Four on August 26,
Months Ended For the Years Ended June 30, 1987 Through
October 31, ---------------------------- October 31,
1996 1995 1994 1996 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $(17,760) $(12,000) $ - $ - $(362,225)
Depreciation - - - - 59,907
Stock issued for
services 6,600 12,000 - - 18,600
Loss on disposition
of assets - - - - 9,352
(Increase) decrease in
prepaid expenses and
other assets (656) - - - (656)
Increase (decrease) in
accounts payable 3,666 - - - 3,666
Increase (decrease) in
accrued interest 34 - - - 34
-- ----- ----- ----- ---
Cash Provided (Used)
by Operating
Activities (8,116) - - - (271,322)
------- ----- ----- ----- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of equipment - - - - (13,368)
Sale of equipment - - - - 7,090
----- ----- ----- ------ -----
Cash Provided (Used)
by Investing
Activities - - - - (6,278)
----- ------ ----- ----- -------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from notes
payable 10,000 - - - 160,000
Payment on notes
payable - - - - (43,764)
Payment of loan from
officer - - - - (61,884)
Issuance of common
stock 10,000 - - - 158,382
Proceeds of loan from
officer - - - - 76,750
----- ----- ----- ----- ------
Cash Provided (Used)
by Financing
Activities $20,000 $ - $ - $ - $289,484
------- ----- ----- ----- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From Inception
For the Four on August 26,
Months Ended For the Years Ended June 30, 1987 Through
October 31, ---------------------------- October 31,
1996 1996 1995 1994 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET INCREASE (DECREASE)
IN CASH $ 11,884 $ - $ - $ - $ 11,884
CASH AT BEGINNING OF
PERIOD - - - - -
----- ----- ------ ----- -----
CASH AT END OF
PERIOD $ 11,884 $ - $ - $ - $ 11,884
======== ===== ===== ===== ========
Cash Payments For:
Income taxes $ - $ - $ - $ - $ -
Interest $ - $ - $ - $ - $ -
Non Cash Financing
Activities:
Stock issued for
services $ 6,600 $ 12,000 $ - $ - $ 18,600
Stock issued for
equipment $ - $ - $ - $ - $ 7,214
Stock issued for
subsidiary $ - $ - $ - $ - $315,489
</TABLE>
The accompanying notes are an integral part of these financial statements.
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Notes to the Financial Statements
October 31, 1996, June 30, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Icon Systems, Inc. (formerly
Tompkins Environmental Corporation). The Company was incorporated as Loki
Holding Corporation under the laws of the State of Utah on August 26, 1987 and
on August 4, 1988 changed its name to Quazon Investment Corporation. On April
15, 1988 the Company became a wholly-owned subsidiary of Loki Holding
Corporation (formerly Dynamic Video, Inc.). On May 25, 1990 the Company was
"spun off" in a partial liquidating dividend. In June of 1990 the Company
acquired Alco Investment Corporation. On January 7, 1991 the Company sold
Alco Investment Corporation to a company owned by a major shareholder. On
September 24, 1996, the Company changed its name to Icon Systems, Inc. and
changed its State of incorporation to Nevada.
On August 15, 1991 the Company acquired all of the shares of Tompkins
Environmental Corporation (Tompkins) in exchange for 10,000,000 pre-split
shares of the Company's authorized but previously unissued common stock (See
Note 2). The Company's name was changed to Tompkins Environmental
Corporation. The Company was engaged in disaster cleanup operations. On
October 25, 1995, Tompkins was involuntarily dissolved and abandoned. All
operations associated with Tompkins have been accounted for as discontinued
operations.
Currently the Company is seeking new business opportunities believed to hold a
potential profit or to merge with an existing company.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has adopted a June 30 year end.
c. Income (Loss) Per Share
The computations of income (loss) per share of common stock are based on the
weighted average number of shares issued and outstanding at the date of the
financial statements.
d. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statement and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
e. Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
<PAGE>
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Notes to the Financial Statements
October 31, 1996, June 30, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Provision for Taxes
At October 31, 1996, the Company had a net operating loss carryforward
totaling approximately $358,000 that may be offset against future taxable
income through 2011. No tax benefit has been reported in the financial
statements, because the potential tax benefits of the net operating loss
carryforwards are offset by a valuation allowance of the same amount.
NOTE 2 - RELATED PARTY TRANSACTIONS
In October, 1996, a shareholder loaned the Company $10,000 to cover operating
expenses. The note payable is due on demand and accrues interest at 10%
annually. The amount due to the shareholder at October 31, 1996 was $10,000
with accrued interest of $34.
On October 24, 1995, the Company issued 12,442 to officers and directors of
the Company for services rendered valued at $0.0033 per share (See Note 5).
On September 14, 1996, the Company issued 3,000,000 post-split shares of
restricted common stock for cash to a company owned by an officer for total
consideration of $10,000.
On October 10, 1996, the Company issued 2,000,000 post-split shares of
restricted common stock to officers and directors of the Company for services
valued at $0.0033 per share.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to seek a merger with an existing, operating
company. In the interim, shareholders of the Company have committed to
meeting its minimal operating expenses.
NOTE 4 - REVERSE STOCK SPLIT
On September 14, 1996, the shareholders of the Company approved a 1-for-1,000
reverse stock split while retaining the authorized shares at 100,000,000 and
retaining the par value at $0.001. This change has been applied to the
financial statements on a retroactive basis back to inception. The Company
provided that no shareholder would be reduced below 50 shares, accordingly,
5,413 post-split fractional shares were issued. These shares have been
allocated pro-rata to previous stock issuances.
<PAGE>
ICON SYSTEMS, INC.
(Formerly Tompkins Environmental Corporation)
(A Development Stage Company)
Notes to the Financial Statements
October 31, 1996, June 30, 1996 and 1995
NOTE 5 - ISSUANCES OF COMMON STOCK
At the Company's inception, the Board of Directors authorized the issuance of
12 restricted shares of its common stock to an executive officer who may be
deemed to have been a promoter or founder of the Company for the total
consideration of $1,000.
On September 27, 1989, the Company became authorized to do business in the
State of Utah as Quazon International Corporation and changed its business
purpose to consulting in mergers and acquisitions. On September 28, 1989 the
Company issued 65 shares of restricted common stock to Loki Holding
Corporation (formerly Dynamic Video, Inc.) for $3,150 cash.
In June of 1990 the Company issued 125 shares of common stock to an officer
for equipment recorded at its depreciated cost of $7,090 and cash of $750. On
September 28, 1990 the officer contributed back to the Company 106 shares.
In September of 1990 the Company issued 6 shares of restricted common stock to
a shareholder for $2,000 in cash.
In January of 1991 the Company issued 747 shares of restricted common stock to
a shareholder for $600 in cash, and 500 shares of restricted common stock to
QBC Holding Corp. recorded at predecessor cost of $-0-.
In the year ended 1992 a shareholder contributed back to the Company 788
shares of restricted common stock.
On August 15, 1991 the Company issued 12,569 shares of restricted common stock
valued at predecessor cost of $25.10 per share for the purchase of Tompkins
Environmental Corporation.
On October 24, 1995, the Company issued 14,933 shares of restricted common
stock for services rendered valued at $0.80 per share.
On September 14, 1996, the Company issued 3,000,000 shares of restricted
common stock for cash of $0.0033 per share or total consideration of $10,000.
On October 10, 1996, the Company issued 2,000,000 shares of restricted common
stock for services rendered valued at $0.0033 per share.
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