U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the year ended December 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-21279
ALPHA RESOURCES, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 6770 59-3422883
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901 Chestnut Street, Suite A, Clearwater, FL 33756, (727)447-3620
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(Address, including zip code, and telephone number, including area code,
of small business issuer's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: NONE
Check Whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [ X ]
State issuer's revenues for its most recent reporting period (Fiscal
year)........$-0-.
Aggregate market value of the voting stock held by non-affiliates of the
registrant at December 31, 1999 was $-0-. There is presently no bid price for
the Company's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
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ALPHA RESOURCES, INC.
FORM 10-KSB - Index
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
PART I Page
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Item 1. Business 1.
Item 2. Properties 8.
Item 3. Legal Proceedings 8.
Item 4. Submission of Matters to a Vote of Security Holders 9.
PART II
Item 5. Market of the Registrant's Securities and Related Stockholder
Matters 9.
Item 6. Selected Financial Data 11.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11.
Item 8. Consolidated Financial Statements and Supplementary Data 15.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures 16.
PART III
Item 10. Directors and Executive Officers of the Registrant 16.
Item 11. Executive Compensation 16.
Item 12. Security Ownership of Certain Beneficial Owners
and Management 16.
Item 13. Certain Relationships and Related Transactions 16.
PART IV
Item 14. Exhibits, Consolidated Financial Statements, Schedules
and Reports on Form 8-K 17.
Signatures
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This Form 10-KSB contains forward looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, regarding future events and the future performance of the
Company involve risks and uncertainties which may cause our actual results in
future periods to be materially different from any future performance suggested
herein. We believe that its business strategy that includes focus on collectible
toy products and our internet initiative are unique. There can be no assurance
that our strategy will be successful. There can be no assurance that sufficient
capital can be obtained to market our products and internet services and our
performance and actual results could differ materially from those projected in
the forward looking statements contained herein.
ITEM 1. BUSINESS.
GENERAL
OVERVIEW
Alpha Resources, Inc. was incorporated in the State of Delaware on January 13,
1997. We do not have active business operations and intended to be a "Blank
Check" company.
The Company has previously registered its common stock on a Form 10-SB
registration statement filed pursuant to the Securities Exchange Act of 1934
(the "Exchange Act") and Rule 12(g) thereof. The Company files with the
Securities and Exchange Commission periodic and episodic reports under Rule
13(a) of the Exchange Act, including quarterly reports on Form 10-QSB and annual
reports Form 10-KSB. As a reporting company under the Exchange Act, the Company
may register additional securities on Form S-8 (provided that it is then in
compliance with the reporting requirements of the Exchange Act) and on Form S-3
(provided that is has during the prior 12 month period timely filed all reports
required under the Exchange Act), and its class of common stock registered under
the Exchange Act may be traded in the United States securities markets provided
that the Company is then in compliance with applicable laws, rules and
regulations, including compliance with its reporting requirements under the
Exchange Act.
The Company will attempt to locate and negotiate with a business entity for the
merger of that target business into the Company. In certain instances, a target
business may wish to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No assurances can be given
that the Company will be successful in locating or negotiating with any target
business.
Management believes that there are perceived benefits to being a reporting
company with a class of publicly-traded securities. These are commonly thought
to include (1) the ability to use registered securities to make acquisition of
assets or businesses; (2) increased visibility in the financial community; (3)
the facilitation of borrowing from financial institutions; (4) improved trading
efficiency; (5) shareholder liquidity; (6) greater ease in subsequently raising
capital; (7) compensation of key employees through options stock; (8) enhanced
corporate image; and (9) a presence in the United States capital market.
A business entity, if any, which may be interested in a business combination
with the Company may include (1) a company for which a primary purpose of
becoming public is the use of its securities for the acquisition of assets or
businesses; (2) a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities on terms acceptable
to it; (3) a company which wishes to become public with less dilution of its
common stock than would occur normally upon an underwriting; (4) a company which
believes that it will be able to obtain investment capital on more favorable
terms after it has become public; (5) a foreign company which may wish an
initial entry into the United States securities market; (6) a special situation
company, such as a company seeking a public market to satisfy redemption
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requirements under a qualified Employee Stock Option Plan; or (7) a company
seeking one or more of the other perceived benefits of becoming a public
company.
Management will actively engaged in seeking a qualified company as a candidate
for a business combination. The Company may then enter into a definitive
agreement with a wide variety of businesses without limitation as to their
industry or revenues. It is not possible at this time to predict with which
company, if any, the Company will enter into a definitive agreement or what will
be the industry, operating history, revenues, future prospects or other
characteristics of that company.
The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly- owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
Management of the Company, which in all likelihood will not be experienced in
matters relating to the business of a target business, will rely upon its own
efforts in accomplishing the business purposes of the Company. Outside
consultants or advisors may be utilized by the Company to assist in the search
for qualified target companies. If the Company does retain such an outside
consultant or advisor, any cash fee earned by such person will need to be
assumed by the target business, as the Company has limited cash assets with
which to pay such obligation.
The analysis of new business opportunities will be undertaken by, or under the
supervision of an officer or director of the Company, who is not a professional
business analyst. In analyzing prospective business opportunities, management
may consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors.
Management does not have the capacity to conduct as extensive an investigation
of a target business as might be undertaken by a venture capital fund or similar
institution. As a result, management may elect to merge with a target business
which has one or more undiscovered shortcomings and may, if given the choice to
select among target businesses, fail to enter into an agreement with the most
investment-worthy target business.
Following a business combination the Company may benefit from the services of
others in regard to accounting, legal services, underwritings and corporate
public relations. If requested by a target business, management may recommend
one or more underwriters, financial advisors, accountants, public relations
firms or other consultants to provide such services.
A potential target business may have an agreement with a consultant or advisor
providing that services of the consultant or advisor be continued after any
business combination. Additionally, a target business may be presented to the
Company only on the condition that the services of a consultant or advisor be
continued after a merger or acquisition. Such preexisting agreements of target
businesses for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target business.
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In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is likely that the present management and stockholders of the Company will no
longer be in control of the Company. In addition, it is likely that the
Company's officer and director will, as part of the terms of the acquisition
transaction, resign and be replaced by one or more new officers and directors.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. The issuance of additional securities and their potential sale into any
trading market which may develop in the Company's securities may depress the
market value of the Company's securities in the future if such a market
develops, of which there is no assurance.
While the terms of a business transaction to which the Company may be a party
cannot be predicted, it is expected that the parties to the business transaction
will desire to avoid the creation of a taxable event and thereby structure the
acquisition in a tax-free reorganization under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended.
With respect to any merger or acquisition negotiations with a target business,
management expects to focus on the percentage of the Company which target
business stockholders would acquire in exchange for their shareholdings in the
target business. Depending upon, among other things, the target business's
assets and liabilities, the Company's stockholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares held
by the Company's stockholders at such time.
No assurances can be given that the Company will be able to enter into a
business combination, as to the terms of a business combination, or as to the
nature of the target business.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and without certainty of success. Management
believes (but has not conducted any research to confirm) that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, increasing the opportunity
to use securities for acquisitions, and providing liquidity for stockholders and
other factors. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000.
Many existing computer programs use only two digits to identify a year in such
program's date field. These programs were designed and developed without
consideration of the impact of the change in the century for which four digits
will be required to accurately report the date. If not corrected, many computer
applications could fail or create erroneous results by or following the year
2000 ("Year 2000 Problem"). Many of the computer programs containing such date
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language problems have not been corrected by the companies or governments
operating such programs. It is impossible to predict what computer programs will
be effected, the impact any such computer disruption will have on other
industries or commerce or the severity or duration of a computer disruption.
The Company does not have operations and does not maintain computer systems.
Before the Company enters into any business combination, it may inquire as to
the status of any target business's Year 2000 Problem if any, the steps such
target business has taken or intends to take to correct any such problem, and
the probable impact on such target business of any computer disruption. However,
there can be no assurance that the Company will not merge with a target business
that has an uncorrected Year 2000 Problem or that any planned Year 2000 Problem
corrections will be sufficient. The extent of the Year 2000 Problem of a target
business may be impossible to ascertain and any impact on the Company will
likely be impossible
ITEM 2. DESCRIPTION OF PROPERTY
The Company utilizes office space at 901 Chestnut Street, Suite A, Clearwater,
Florida 33756, provided by a private company owned by Gerald L. Couture, an
officer, director, and principal shareholder of the Company. The Company does
not pay rent for this office space. The Company will reimburse clerical and
office expenses, such as telephone charges, copy charges, overnight courier
service, travel expenses, and similar costs incurred by Gerald L. Couture on
Company matters, which is estimated will not exceed, on average, $1,000 per
month. There has been no charges assessed to date on this arrangement.
ITEM 3. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of stockholders during the fourth quarter of
fiscal 1999.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is currently no public market for the securities of the Company.
The Company does not intend to trade its securities in the secondary market
until completion of a business combination or acquisition. It is anticipated
that following such occurrence the Company will cause its common stock to be
listed or admitted to quotation on the NASD OTC Bulletin Board or, if it then
meets the financial and other requirements thereof, on the Nasdaq SmallCap
Market, National Market System or regional or national exchange.
The proposed business activities described herein classify the Company as a
"blank check" company. The Securities and Exchange Commission and many states
have enacted statutes, rules, and regulations limiting the sale of securities of
blank check companies in their respective jurisdictions. Management does not
intend to undertake any efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully implemented its
business plan described herein
There are currently six stockholders of the outstanding common stock of the
Company. The Company has not issued any preferred stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Statement contains forward-looking statements. The words
"anticipated," "believe," "expect," "plan," "intend," "seek," "estimate,"
"project," "will," "could," "may" and similar expressions are intended to
identify forward-looking statements. These statements include, among others,
information regarding future operations, future capital expenditures and future
net cash flow. Such statements reflect our current views with respect to future
events and financial performance and involve risks and uncertainties, including,
without limitation, general economic and business conditions, changes in
foreign, political, social and economic conditions, regulatory initiatives and
compliance with governmental regulations, the ability to achieve further market
penetration and additional customers, and various other matters, many of which
are beyond our control, including, without limitation, the risks described under
the caption "Business." Should one or more of these risks or uncertainties
occur, or should underlying assumptions prove to be incorrect, actual results
may vary materially and adversely from those anticipated, believed, estimated,
or otherwise indicated. consequently, all of the forward-looking statements made
in this Registration Statement are qualified by these cautionary statements and
there can be no assurance of the actual results or developments.
PLAN OF OPERATION
The Company was organized for the purpose of seeking, investigating, and
ultimately acquiring an interest in business with long-term growth potential.
The Company currently has no commitment or arrangement to participate in a
business and cannot now predict what type of business it may enter into or
acquire. It is emphasized that the business objectives discussed herein are
extremely general and are not intended to be restrictive on the discretion of
the Company's management.
Management anticipates that it may be able to participate in only one potential
business venture, due primarily to the Company's limited financing. This lack of
diversification should be considered a substantial risk of investing in the
Company because it will not permit the Company to offset potential losses from
one venture against gains from another.
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Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will seek businesses from all known sources, but will rely principally
on personal contacts of its officers and directors and their affiliates, as well
as indirect associations between them and other business and professional
people. While it is not presently anticipated that the Company will engage
unaffiliated professional firms specializing in business acquisitions or
reorganizations, such firms may be retained if management deems it in the best
interest of the Company.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
The board of directors has adopted a policy, which may be rescinded or amended
only by majority vote of the Company's stockholders who do not hold any common
stock presently outstanding (whether now held or hereafter acquired) and will
expire by its terms on the date an acquisition of a business venture is
consummated, prohibiting the payment, either directly or indirectly, of any
finder's fee or similar compensation to any person who has served as an officer
or director of the Company prior to the acquisition, or who is a promoter. While
the board of directors may seek a change in this policy prior to an acquisition,
no change may be made except by the vote specified.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many instances management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will likely not be
established, and the profitability of the venture will be unproven and cannot be
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.
In seeking a business venture, the decision of management will not be controlled
by an attempt to take advantage of any anticipated or perceived appeal of a
specific industry, management group, product, or industry, but will be based on
the business objective of seeking long-term capital appreciation in the real
value of the Company. The Company will not acquire or merge with a business or
corporation in which the Company's officers, directors, or promoters, or their
affiliates or associates, have any direct or indirect ownership interest. The
board of directors has adopted a policy, which may be rescinded or amended only
by majority vote of the Company's stockholders who do not hold any common stock
presently outstanding (whether now held or hereafter acquired) and will expire
by its terms on the date and acquisition of a business venture is consummated,
prohibiting the acquisition of any business in which a promoter or any person
who has served as an officer or director of the Company, or any of their
affiliates or associates, held, directly or indirectly, any ownership interest
or maintain any control other than through ownership interests prior to the
acquisition. While the board of directors may seek a change in this policy prior
to an acquisition, no change may be made except by the vote specified.
The analysis of new businesses will be undertaken by or under the supervision of
officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources, working capital and other prospects for the future, the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors.
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It is possible that the Company may propose to acquire a business in the
development stage. A business is in the development stage if it is devoting
substantially all of its efforts to establishing a new business, and either
planned principal operations have not commenced or planned principal operations
have commenced but there has been not significant revenue there from. Under Rule
419 the Company must acquire a business or assets for which the fair value of
the business represents at least 80% of the Offering proceeds,including funds
received or to be received from the exercise of warrants, less certain
underwriting expenses. Accordingly, the Company's ability to acquire a business
in the development stage may be limited to the extent it cannot locate such
businesses with fair value high enough to satisfy the requirements of Rule 419.
The Company will be subject to requirements of Rule 419 and certain reporting
requirements under the Exchange Act and will, therefore, be required to furnish
certain information about significant acquisitions, including audited financial
statements for the company(s) acquired, covering one, two, or three years,
depending on the relative size of the acquisition. Consequently, acquisition
prospects that do not have or are unable to obtain the required audited
statements which meet the requirements of Rule 419 and the Exchange Act will not
be appropriate for acquisition. The Company anticipates that it will voluntarily
prepare and file periodic reports under the Exchange Act, notwithstanding the
fact that such obligation may be suspended under sections 15(d) of the Exchange
Act.
The decision to participate in a specific business may be based on management's
analysis of the quality of the other firm's management and personnel, the
anticipated acceptability of new products or marketing concepts, the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results of
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business on completion of
its offering cannot be predicted and will depend on circumstances beyond the
Company's control, including the availability of businesses, the time required
for the Company to complete its investigation and analysis of prospective
businesses, the time required to prepare appropriate documents and agreements
providing for the Company's participation, and other circumstances. It is
anticipated that the analysis of specific proposals and the selection of a
business could take several months. Even after the Company has located a
prospective acquisition target, it will still have to comply with the
reconfirmation mandate of Rule 419, which may take months.
Acquisition of Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without vote of
the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company would acquire a
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higher percentage of equity ownership in the Company. Although the Company's
present shareholders did not acquire their shares of Common Stock with a view
towards any subsequent sale in connection with a business reorganization, it is
not unusual for affiliates of the entity participating in the reorganization to
negotiate to purchase shares held by the present shareholders in order to reduce
the number of "restricted securities" held by persons no longer affiliated with
the Company and thereby reduce the potential adverse impact on the public market
in the Company's Common Stock that could result from substantial sales of such
shares after the restrictions no longer apply. Public investors will not receive
any portion of the premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to structure the acquisition as a so-called
"tax-free" event under sections 351 or 368(a) of the Internal Revenue Code of
1986, (the "Code"). In order to obtain tax-free treatment under section 351 of
the Code, it would be necessary for the owners of the acquired business to own
80% or more of the stock of the surviving entity. In such event, the
shareholders of the Company, would retain less than 20% of the issued and
outstanding shares of the surviving entity. Section 368(a)(1) of the Code
provides for tax-free treatment of certain business reorganization between
corporate entities where on corporation is merged with or acquires the
securities or assets of another corporation. Generally, the Company will be the
acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities. It is not uncommon, however, that as a negotiated
element of a transaction completed in reliance on section 368, the acquiring
corporation issue securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of the surviving
entity. Consequently, there is a substantial possibility that the shareholders
of the Company immediately prior to the transaction would retain less than 50%
of the issued and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be anticipated that
the investors in an offering will experience a significant reduction in their
percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles will
ordinarily require that such transaction be accounted for as if the Company had
been acquired by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
It is possible that the Company will not have sufficient funds from the proceeds
of an offering to fully undertake such development, marketing, and manufacturing
of products which may be acquired. Accordingly, following the acquisition of any
such product rights, the Company may be required to either seek additional debt
or equity financing or obtain funding from third parties, in exchange for which
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the Company would probably be required to give up a portion of its interest in
any acquired product. There is no assurance that the Company will be able either
to obtain additional financing or interest third parties in providing funding
for the further development, marketing, and manufacturing of any products
acquired.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally, such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by each of the parties prior to such closing, will
outline the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms. It should
be expected that one of the conditions will be compliance with Rule 419, and
reconfirmation by investors representing at least 80% of the gross proceeds of
the offering.
It is anticipated that the investigation of specific businesses and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business, the costs
theretofore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business, the failure to consummate that transaction may result in the loss to
the Company of the related costs incurred which could materially adversely
affect subsequent attempts to locate and participate in additional businesses.
Operation of Business After an Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks to
investors. The specific risks of a given business cannot be predicted at the
present time.
Leverage
The Company may be able to participate in a business involving the use of
leverage. Leveraging a transaction involves the acquisition of a business
through incurring indebtedness for a portion of the purchase price of that
business, which is secured by the assets of the business acquired.
One method by which leverage may be used is that the Company would locate an
operating business available for sale and arrange for the financing necessary to
purchase such business. Acquisition of a business in this fashion would enable
the Company to participate in a larger venture that its limited funds would
permit, or use less of its funds to acquire a business and thereby commit its
remaining funds to the operations of the business acquired.
Leveraging a transaction would involve significant risks due to the fact that
the borrowing involved in a leveraged transaction will ordinarily be secured by
the combined assets of the Company and the business to be acquired. If the
combined enterprises are not able to generate sufficient revenues to make
payments on the debt incurred to acquire the business, the lender would be able
to exercise the remedies provided by law or by contract and foreclose on
substantially all of the assets of the Company. Consequently, the Company's
participation in a leveraged transaction may significantly increase the risk of
loss to the Company. During periods when interest rates are relatively high, the
benefits of leveraging are not as great as during periods of lower interest
rates because the investment in the business held on a leveraged basis will only
be profitable if it generates sufficient revenues to cover the related debt and
other costs of the financing.
9
<PAGE>
The likelihood of the Company obtaining a conventional bank loan for a leveraged
transaction would depend largely on the business being acquired and its
perceived ability to generate sufficient revenues to repay the debt. Generally,
businesses suitable for leveraging are limited to those with income-producing
assets that are either in operation or can be placed in operation relatively
quickly. The Company cannot predict whether it will be able to locate any such
business. As a general matter it may be expected that the Company will have few,
if any, opportunities to examine businesses where leveraging would be
appropriate.
Even if the Company is able to locate a business where leveraging techniques may
be used, there is no assurance that financing for the acquisition will be
available or, if available, on terms acceptable to the Company. Lenders from
which the Company may obtain funds for purposes of a leveraged buy-out may
impose restrictions of the future borrowing, dividend, and operating policies of
the Company. It is not possible at this time to predict the restrictions, if
any, which lenders may impose or the impact thereof on the Company.
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Item 8 appears at page F-1, which appears after this
page.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock. and each person known by the
Company to beneficially own more than five percent of the The following table
sets forth the aggregate number of shares of Common Stock of the Company owned
of record or beneficially by each person who owned of record, or is known by the
Company to own beneficially, more than 5% of the Company's Common Stock, and the
name and shareholdings of Common Stock, (ii) each officer and director and all
officers and directors as a group, and (iii) all directors and executive
officers of the Company as a group. See "Management."
10
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------- ----------------------------- ----------------------------------------
Number of Shares Owned(1) Percent of Common Stock Outstanding
---------------------------------------- ----------------------------- ----------------------------------------
Name and Address(2)
---------------------------------------- ----------------------------- ----------------------------------------
<S> <C> <C>
Gerald Couture 901 Chestnut Street, 40,000 16.66%
Suite A Clearwater, FL 33756
---------------------------------------- ----------------------------- ----------------------------------------
Michael T. Cronin 911 Chestnut Street 40,000 16.66%
Clearwater, FL 33756
---------------------------------------- ----------------------------- ----------------------------------------
Lawrence Steinberg 2 Lincoln Centre 40,000 16.66%
5420 LBJ Freeway, Suite 540, LB 56
Dallas, TX 75240
---------------------------------------- ----------------------------- ----------------------------------------
Renee Morris 14 Verdmont Valley View 40,000 16.66%
Smith's FL02, Bermuda
---------------------------------------- ----------------------------- ----------------------------------------
Khiatana Gibbons 15 Limehouse Lane 40,000 16.66%
Hamilton Parish CR03, Bermuda
---------------------------------------- ----------------------------- ----------------------------------------
Peter Leighton 6 Cedarhurst Place 40,000 16.66%
Southampton SB 04, Bermuda
---------------------------------------- ----------------------------- ----------------------------------------
All Officers and Directors As a Group 120,000 50%
(3 persons)
---------------------------------------- ----------------------------- ----------------------------------------
</TABLE>
(1) All shares are held beneficially and of record, and each record shareholder
has sole voting, investment and dispositive power.
(2) The persons listed are all of the officers, directors and promoters of the
Company.
Officers and Directors
The following table sets forth the names, age, and position of each
director and executive officer of the Company.
<TABLE>
<CAPTION>
--------------------------------------- -------------------------------------- --------------------------------------
Name Age Position and Office Held
--------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Gerald Couture 54 Chief Executive Officer,
--------------------------------------- -------------------------------------- --------------------------------------
Michael T. Cronin 44 Secretary, Director
--------------------------------------- -------------------------------------- --------------------------------------
Lawrence Steinberg 64 Vice President, Director
--------------------------------------- -------------------------------------- --------------------------------------
The above individuals are the persons responsible for founding and organizing
the business of the Company, and each became an officer and director of the
Company in connection with its organization in January 1997. The term of office
of each officer and director is one year and until his successor is elected and
qualified.
</TABLE>
11
<PAGE>
Officers and directors will not be compensated for the time they devote to the
Company's affairs. Each officer and director will devote only such time to the
business affairs of the Company as he deems appropriate.
Biographical Information
Set forth below is biographical information for each of the Company's
officers and directors. No person other than the Company's officers and
directors will perform any management functions for the Company. Consequently,
investors will be relying on the general business acumen and experience of the
Company's management and should critically assess the information set forth
below.
Gerald Couture is a principal in Couture & Company, Inc., a corporate
financial consulting firm he founded in 1980. Mr. Couture has been director
and/or officer of several corporations over the past ten years. These include
Medical Technology Systems, Inc. from August, 1987 to October 15, 1996; which
completed a Chapter 11 Bankruptcy reorganization proceeding in 1996; Cinema
North Corporation and affiliates from June, 1983 to date; Smith & Wesson Knives,
Inc., from March, 1988 to December, 1992; Prime Container Corp., June, 1985 to
December, 1992; Vermont Manufacturing Corporation from March, 1975 to December,
1992.
Michael T. Cronin, has been a practicing attorney with the law firm of
Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., in Clearwater, Florida
since 1983. Mr. Cronin concentrates his practice in securities and corporate
law.
Lawrence Steinberg, has been a practicing attorney for over 35
years. From April 1994 to January 1998, he was "Of Counsel" with Jenkens &
Gilchrist, P.C., Dallas, Texas. Thereafter, he has remained affiliated with
Jenkens & Gilchrist, P.C. on an informal basis. Prior to his association with
Jenkens & Gilchrist, P.C., for over 20 years, he was either a shareholder or
partner with Johnson & Steinberg, P.C. and its predecessor partnership. Also,
Mr. Steinberg has been an active investor in real estate and venture capital
investments. He currently is Chairman and Chief Operating Officer of Eagle
Equity, Inc. which manages real estate and other investments for various
entities, most of which are majority owned by Mr. Steinberg. From July 1992 to
January 1997, he was Chief Executive Officer and Principal Shareholder of a
corporation, which has owned and operated a television station in Charleston,
South Carolina.
ITEM 10: EXECUTIVE COMPENSATION
No compensation has been paid to any officer of the Company since its inception.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See Item 9 above.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has received $30,000 of loans from the six shareholders of the
Company. These loans are due on demand and bear interest at 8% per annum and are
unsecured. Three of these shareholders are also officers and directors of the
Company. The Company accrued $4,401 of interest on these notes at March 31, 2000
ITEM 13. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K.
12
<PAGE>
The following documents are filed as part of this report:
(1)(2) CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
A list of the Consolidated Financial Statements filed as part of this Report is
set forth in Item 8 and appears at Page F-1 of this Report; which list is
incorporated herein by reference. he Financial Statement Schedules and the
Report of Independent Auditors as to Schedules follow the Exhibits.
(a)(3) EXHIBITS.
All of the items below are incorporated by reference to the Registrant's General
Form 10SB and amendments for Registration of Securities as previously filed.
EXHIBITS AND SEC REFERENCE NUMBERS
Reports on Form 8-K
Item 27. Exhibits and Financial Statement Schedule.
10.1 Intentionally Left Blank.
10.2 Intentionally Left Blank.
10.3 Intentionally Left Blank.
10.4 Form of Proceeds Escrow Agreement (*)
10.5 Certificate of Incorporation (*)
10.6 By-Laws (*)
10.7 Opinion re: Legality and Consent of Counsel (*)
10.8 Consent of Pender, Newkirk & Co, CPA (*)
-------------------
(*) Previously filed.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: June 23, 2000 By: /s/ Gerald Couture
---------------------------
Gerald Couture
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/Gerald Couture Chairman of the Board, June 23, 2000
------------------ President, Chief Executive Officer,
Gerald Couture Financial Officer, Chief
Accounting Officer,
Treasurer
/s/ Michael T. Cronin Director, Secretary June 23, 2000
---------------------
Michael T. Cronin
/s/ Lawrence Steinberg Director June 23, 2000
----------------------
Lawrence Steinberg
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Index
Page
----
Independent Auditor's Report...................................... F-1
Balance Sheet -
December 31, 1999...................................... F-2
Operating Statements -
For the years ended December 31, 1999
and December 31, 1998 and the period January 13, 1997
(Date of Inception) to December 31, 1999................ F-3
Statements of Changes in Stockholders' Deficit -
For the Period January 13, 1997 (Date of Inception)
to December 31, 1999..................................... F-4
Statements of Cash Flows -
For the years ended December 31, 1999
and December 31, 1998 and the period January 13, 1997
(Date of Inception) to December 31, 1999................ F-5
Notes to Financial Statements..................................... F-6
i
<PAGE>
Independent Auditors' Report
Board of Directors
Alpha Resources, Inc.
(A Development Stage Company)
Clearwater, Florida
We have audited the accompanying balance sheet of Alpha Resources, Inc. (a
development stage company) as of December 31, 1999 and the related statements of
operations, changes in stockholders' deficit, and cash flows for the years ended
December 31, 1999 and 1998 and the period January 13, 1997 (date of inception)
to December 31, 1999. These financial statements are the responsibility of the
management of Alpha Resources, Inc. 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. These standards require that we plan and perform the audits 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 Alpha Resources, Inc. (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998 and
the period January 13, 1997 (date of inception) to December 31, 1999 in
conformity with generally accepted accounting principles.
/s/ Pender Newkirk & Company, CPAs
---------------------------------
Certified Public Accountants
Tampa, Florida
January 28, 2000
F-1
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Balance Sheet
December 31,
1999
-----------------
Assets
Current assets
Cash $ 15,075
-----------------
Total current assets 15,075
-----------------
Other assets
Offering costs 4,206
-----------------
Total assets $ 19,281
=================
Liabilities and Stockholders' Deficit
Current liabilities
Accrued expenses $ 9,191
Loans payable - stockholders 30,000
-----------------
Total current liabilities 39,191
-----------------
Stockholders' deficit
Preferred stock, $.001 par value:
Authorized - 5,000,000
Issued or outstanding - none
Common stock, $.001 par value:
Authorized - 10,000,000
Issued and outstanding - 240,000 240
Additional paid-in capital 960
Deficit accumulated during the development stage (21,110)
-----------------
Total stockholders' (deficit) (19,910)
-----------------
Total liabilities and stockholders' equity $ 19,281
=================
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-2
<PAGE>
<TABLE>
<CAPTION>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Operating Statements
For the Years Cumulative During
Ended December 31, Development Stage
------------------------------- January 13, 1997( Date of
1999 1998 Inception) to December 31, 1999
-------------- -------------- --------------------------------
<S> <C> <C> <C>
Development stage expenses
General & Administrative Expense $ 2,780 $ 3,600 $ 16,709
Interest Expense 2,001 1,200 4,401
-------------- -------------- -----------------------
Net Loss Before Income Taxes (4,781) (4,800) (21,110)
Income Taxes - - -
-------------- -------------- -----------------------
Net Loss $ (4,781) $ (4,800) $ (21,110)
============== ============== =======================
Basic Loss Per Share $ (0.02) $ (0.04) $ (0.14)
============== ============== =======================
Weighted average number of
common shares outstanding 209,096 120,000 150,055
============== ============== =======================
</TABLE>
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-3
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Changes in Stockholders' Deficit
For the Period January 13, 1997 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
Common Stock Deficit
------------------------------ Accumulated
Shares $ 0.001 Additional During the Total
Issued and Par Paid-in Development Stockholders'
Outstandng Value Capital Stage Equity (Deficit)
--------------- ----------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (11,529) (11,529)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1997 120,000 $ 120 $ 480 $ (11,529) $ (10,929)
--------------- ----------- ------------- --------------- ----------------
Net loss for period - - - (4,800) (4,800)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1998 120,000 $ 120 $ 480 $ (16,329) $ (15,729)
--------------- ----------- ------------- --------------- ----------------
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (4,781) (4,781)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1999 240,000 $ 240 $ 960 $ (21,110) $ (19,910)
=============== =========== ============= =============== ================
</TABLE>
Read Independent Auditors' Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-4
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Cumulative During
Ended December 31, Development Stage
--------------------------------- January 13, 1997( Date of
1999 1998 Inception) to December 31, 1999
--------------- --------------- -------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,781) $ (4,800) $ (21,110)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase (Decrease) in accrued expenses (659) 4,279 9,191
--------------- --------------- ------------------
Net cash used by operating activities (5,440) (521) (11,919)
--------------- --------------- ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 600 - 1,200
Proceeds from loans payable - stockholders 15,000 - 30,000
Offering costs - - (4,206)
--------------- --------------- ------------------
Net cash provided by financing activities 15,600 - 26,994
--------------- --------------- ------------------
Net increase (decrease) in cash 10,160 (521) 15,075
Cash beginning 4,915 5,436 -
--------------- --------------- ------------------
Cash ending $ 15,075 $ 4,915 $ 15,075
=============== =============== ==================
</TABLE>
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-5
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended December 31, 1999
Note 1 - Background
----------
Alpha Resources, Inc. (the "Company") was incorporated January 13, 1997 in the
State of Delaware, and has been in the development stage since its formation.
The Company intends to effect a merger, exchange of capital stock, asset
acquisition, or other similar business combination or acquisition with a
business entity. The Company has not identified any specific business or company
to fulfill it intentions.
The Company has registered its securities with the Securities and Exchange
Commission and plans on offering certain securities in a "blank check" offering
subject to Rule 419 of the Securities Act of 1933. On August 12, 1999, the
Company's Registration Statement on Form SB-2 was declared effective by the U.S.
Securities and Exchange Commission.
Note 2 - Summary of Significant Accounting Policies
------------------------------------------
Accounting Estimates
--------------------
The preparation of financial statements requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Organizational Costs
--------------------
Costs incurred in the organization of the Company were expensed as incurred
under the provision of SOP 98-5, "reporting on the costs of start up
activities."
Income Taxes
------------
Deferred income taxes are provided for when transactions are reflected in income
for financial reporting purposes in a year other than the year of their
inclusion in taxable income. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Concentration of Credit Risk
----------------------------
The Company maintains cash balances at a bank. The account is insured by the
Federal Deposit Insurance Corporation up to $100,000.
Loss Per Share
--------------
Loss per share is computed by dividing income available to common shareholders
by the weighted average number of shares outstanding for the period.
Note 3 - Related Party Transactions
--------------------------
The Company has received $30,000 of loans from the six shareholders of the
Company. These loans are due on demand and bear interest at 8% per annum and are
unsecured. Three of these shareholders are also officers and directors of the
Company. The Company accrued $3,801 of interest on these notes at December 31,
1999.
Read Independent Auditors Report.
F-6
