As filed with the Securities and Exchange Commission on October 31, 1997
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FRANKS' EXPRESS, INC.
(Name of small business issuer in its charter)
COLORADO 6770 84-1170846
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
12146 East Amherst Circle
Aurora, Colorado, 80014
(303) 695-9554
(Address and telephone number of Registrant's principal executive offices)
Charles Burton
2903 South Uinta Street
Denver, Colorado 80231
(303) 696-7523
(Name, address, and telephone number of agent for service)
COPY TO:
David M. Summers, Esq.
5670 Greenwood Plaza Boulevard, Suite 422
Englewood, Colorado 80111
(303) 220-5420
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
(Cover Page Continues on Following Page)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Amount to Proposed maximum Proposed maximum Amount of
class of be registered offering price aggregate offering registration
securities per unit price fee
to be
registered
<S> <C> <C> <C> <C>
Common shares 100,000 $1.00 $100,000 $30.00
</TABLE>
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY PART 1 OF FORM SB-2
ITEM NUMBER AND CAPTION PROSPECTUS HEADING
1. Front of Registration Statement and Outside Front Cover Page of
Outside Front Cover of Prospectus Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover of Prospectus Cover of Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page of
Prospectus; Plan of Distribution
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover of Prospectus;
Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Security Ownership of
Beneficial Owners and Management and Principal
Management Shareholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters
14. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
15. Organization Within Last Five Years Not Applicable
<PAGE>
ITEM NUMBER AND CAPTION PROSPECTUS HEADING
16. Description of Business Business
17. Management's Discussion and Management's Discussion
Analysis or Plan of Operation Analysis or Plan of Operation
18. Description of Property Business
19. Certain Relationships and Related Certain Relationships and Related
Transactions Party Transactions
20. Market for Common Equity and Related Outside Front Cover Page of
Stockholder Matters Prospectus;
Risk Factors; Plan of Distribution;
Description of Securities
21. Executive Compensation Executive Compensation
22. Financial Statements Index to Financial Statements
23. Changes In and Disagreements With Not Applicable
Accountants on Accounting and
Financial Disclosure
<PAGE>
PROSPECTUS
Franks' Express, Inc.
(a Colorado Corporation)
12146 East Amherst Circle
Aurora, Colorado 80014
50,000 Shares Minimum/100,000 Shares Maximum of Common Stock
Franks' Express, Inc., a Colorado corporation (the "Company") is
offering for sale a minimum of 50,000 shares and a maximum of 100,000
shares of its $.0001 par value common stock ("Shares"). The Shares are
being offered and sold primarily by officers and directors of the Company.
Registered broker-dealers may also participate in the offering, but no such
broker-dealers have been identified as of the date of this Prospectus. If
less than the minimum amount of Shares are sold within four (4) months from
the effective date of this Prospectus, all funds received by the Company
from subscribers will be promptly returned without interest or deduction
for expenses. (SEE "PLAN OF DISTRIBUTION.")
The Company is conducting a blank check offering subject to the United
States Securities and Exchange commission's Rule 419 of Regulation C. The
net offering proceeds, after deduction for underwriting commissions and
offering expenses (estimated at $59,000 if the maximum number of shares are
sold and $14,000 if the minimum number of shares are sold) and the
securities to be issued to investors must be deposited in an escrow account
(the "DEPOSITED FUNDS" and the "DEPOSITED SECURITIES," respectively) While
held in the escrow account, the securities may not be traded or
transferred. Except for an amount up to 10% of the DEPOSITED FUNDS ($5,900
if the maximum number of shares are sold and $1,400 if the minimum number
of shares are sold) otherwise releasable under the rule, the DEPOSITED
FUNDS and the DEPOSITED SECURITIES may not be released until an acquisition
meeting certain specified criteria has been made and a sufficient number of
investors reconfirm their investment in accordance with the procedures set
forth in Rule 419. Pursuant to these procedures, a new prospectus, which
describes an acquisition candidate and its business and includes audited
financial statements, will be delivered to all investors. The Company must
return the pro rata portion of the DEPOSITED FUNDS to any investor who does
not elect to remain an investor. Unless a sufficient number of investor
elect to remain investors, all investors will be entitled to the return of
a pro rata portion of the DEPOSITED FUNDS (and any interest earned thereon)
and none of the DEPOSITED SECURITIES will be issued to investors. In the
event an acquisition is not consummated within 18 months of the effective
date, the DEPOSITED FUNDS will be returned on a pro rata basis to all
investors. (See "Investors' Rights and Substantive Protection Under SEC
Rule 419").
THESE ARE SPECULATIVE SECURITIES, INVOLVING A HIGH DEGREE OF RISK AND
IMMEDIATE AND SUBSTANTIAL DILUTION. THESE SECURITIES SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. (SEE
"RISK FACTORS.") PURCHASERS OF SECURITIES OFFERED BY THIS PROSPECTUS MUST
BE RESIDENTS OF COLORADO, CALIFORNIA, FLORIDA, ILLINOIS, NEVADA, ILLINOIS,
NEVADA, NEW YORK OR UTAH, AND TO THE EXTENT THAT A TRADING MARKET FOR THE
COMPANY'S SECURITIES DEVELOPS IN THE FUTURE, THE SECURITIES OFFERED BY THIS
PROSPECTUS MAY BE RESOLD ONLY TO RESIDENTS OF THOSE STATES. NO PUBLIC
MARKET FOR SHARES SOLD IN THIS OFFERING CAN DEVELOP UNTIL SUCH SHARES ARE
RELEASED FROM ESCROW PURSUANT TO THE PROVISIONS OF SEC RULE 419 IN
CONJUNCTION WITH
<PAGE>
SUCCESSFUL COMPLETION OF A BUSINESS COMBINATION. (SEE "RISK FACTORS --
State Blue Sky Registration; Restricted Resales of the Securities.)
In the event the minimum offering amount is raised prior to the end of
the four (4) month offering period, the Company may, at its discretion,
close the offering, or continue the offering until the expiration of the
four (4) month offering period, or until the maximum offering amount
($100,000) is raised, whichever occurs first. In the event the minimum
offering is sold, any monies held in escrow will be released to the Company
upon compliance with additional conditions specified in SEC Rule 419. (SEE
"PLAN OF DISTRIBUTION.")
<TABLE>
<CAPTION>
PRICE TO PUBLIC COMMISSIONS(1) PROCEEDS TO COMPANY(2)
<S> <C> <C> <C>
Per Share $1.00 $.10 $.90
Minimum $ 50,000.00 $ 5,000.00 $45,000.00
Maximum $100,000.00 $10,000.00 $90,000.00
The date of this Prospectus is October 31, 1997.
(1) The offering is being sold by officers and directors of the Company to
whom no commission or other offering remuneration will be paid. All
officers and directors of the Company are expected to participate in
selling efforts. Registered broker-dealers are also permitted to make
sales of Shares, but no such broker-dealers have been identified as of
the date of this Prospectus. The Company may pay commissions of up to
ten percent (10%) of any offering proceeds raised by one or more
registered broker-dealers or their representatives. The table has
been prepared using the assumption that the maximum commission will be
paid on all Shares sold.
(2) Proceeds to Company have been computed after deduction of the maximum
commissions, and prior to the deduction of other offering expenses
estimated to be approximately $31,000. Proceeds from the sale of
Shares will be deposited in escrow by noon of the business day
following receipt thereof with Corporate Stock Transfer, in Denver,
Colorado. In the event that 50,000 Shares, having a subscription
price of $50,000 are not sold within four (4) months from the
effective date of this Prospectus, all proceeds raised will be
promptly returned to investors without interest, and without deducting
any expenses incurred in connection with this offering.
Although the Company intends to seek to have its common stock listed
on the NASD Bulletin Board following this offering, there is no market for
the Company's common stock as of the date of this Prospectus, and there can
be no assurance that a public market for the Company's common stock will
develop, or if so developed, will be sustained to any extent, given the
small size of this offering and the Company's limited shareholder base.
Such a listing for shares offered by this Prospectus will not occur until
after a business combination has been effected and shares have been
released from escrow, pursuant to the Provisions of SEC Rule 419 (SEE "RISK
FACTORS" and "DESCRIPTION OF SECURITIES. ")
The offering price of the Shares has been determined by the Company
without regard to any traditional established criteria of value. The price
was selected because the Company believes the Shares can best be sold at
this price.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
THE COMPANY'S OFFICERS, DIRECTORS, AND EXISTING SHAREHOLDERS MAY
PURCHASE A PORTION OF THE SHARES OFFERED BY THIS PROSPECTUS UPON THE SAME
TERMS AND CONDITIONS AS OTHER INVESTORS IN THIS OFFERING. THE AGGREGATE
NUMBER OF SHARES WHICH MAY BE PURCHASED BY SUCH OFFICERS, DIRECTORS AND
EXISTING SHAREHOLDERS, HOWEVER, SHALL NOT EXCEED 50% OF THE NUMBER OF
SHARES SOLD IN THIS OFFERING TO OTHER INVESTORS.
The Shares are offered by the Company, subject to prior sale,
allotment, acceptance, withdrawal, cancellation or modification of the
offering. Any modification to the offering will be made by means of an
amendment to the Prospectus. The Company reserves the right to withdraw or
cancel the offering without notice, and to reject any orders, in whole or
in part, for the purchase of any of the offered Shares.
The Company will make available to its shareholders an Annual Report
on Form 10-K containing financial information audited and reported upon by
independent certified public accountants, and it may also provide unaudited
quarterly or other interim reports as it deems appropriate. The Company is
a "reporting company" under the Securities Exchange Act of 1934 and will
comply with the periodic reporting requirements of the Securities Exchange
Act of 1934. When such reports, proxy statements and other information are
filed by the Company with the Securities and Exchange Commission (the
"Commission"), they will be available for inspection and copying at the
Public Reference section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices
of the Commission at Citicorp Center 300 West Madison Street, Suite 1400,
Chicago, Illinois 10048, at prescribed rates. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission.
The address of the Web site is (http://www.sec.gov).
The Company will provide without charge to each person who receives
this Prospectus, upon written or oral request of such person, a copy of any
of the information that was incorporated by reference in the Prospectus
(excluding exhibits to the information that is incorporated by reference,
unless the exhibits are themselves specifically incorporated by reference),
by directing written requests to Mr. Charles Burton at 2903 South Uinta
Street, Denver, Colorado 80231, and oral requests to Mr. Burton at (303)
696-7523.
ADDITIONAL INFORMATION
A registration statement on Form SB-2, including amendments thereto,
relating to the Shares offered by this Prospectus has been filed by the
Company with the Securities and Exchange Commission in Washington, D.C.
This Prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to such registration
statement. For further information with respect to the Company and the
Shares offered by this Prospectus, reference is made to such registration
statement, exhibits and schedules. Statements contained in this Prospectus
as to the contents of any contract or other document referred to in this
Prospectus are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to
the registration statement, each such statement being qualified in all
respects by such reference. A copy of the registration statement may be
inspected without charge at the Commission's principal offices in
Washington, D.C., and copies of all or any part thereof may be obtained
from the Commission upon the payment of certain fees prescribed by the
Commission.
<PAGE>
REPORTS TO SHAREHOLDERS. Pursuant to the requirements of the
Securities Exchange Act of 1934, the Company will make available annual
reports to shareholders which will include audited financial statements
reported on by its certified public accountants. In addition, the Company
may make available quarterly or other interim reports to shareholders
containing unaudited financial statements or financial information.
<PAGE>
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY ............................... 1
RISK FACTORS...................................... 7
DILUTION.......................................... 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............... 23
COMPARATIVE DATA ................................. 24
USE OF PROCEEDS................................... 24
PLAN OF DISTRIBUTION ............................. 26
LEGAL PROCEEDINGS................................. 27
MANAGEMENT........................................ 28
BUSINESS.......................................... 29
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS.......................... 37
DESCRIPTION OF SECURITIES ........................ 38
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS............................................. 40
EXECUTIVE COMPENSATION............................ 40
LEGAL MATTERS..................................... 41
TRANSFER AGENT.................................... 41
EXPERTS.................................................... 42
INDEX TO FINANCIAL STATEMENTS..................... F-1
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements (including the notes to the
same) appearing elsewhere in this Prospectus.
Each prospective investor is urged to read this Prospectus in its entirety.
THE COMPANY
BUSINESS OBJECTIVES
The Company was incorporated under the laws of the State of Colorado
on May 17, 1991, for the purpose of engaging in the retail food service
business. The Company closed its restaurants and a retail ice cream and
candy shop in November of 1993 and has not conducted any material business
activities since that time. The Company's current business objective is
to seek to effect a merger, exchange of capital stock, asset acquisition or
other similar business combination (a "Business Combination") with an
operating or development stage business (a "Target Business") which the
Company believes has significant growth and profit potential. The
implementation of the Company's business objective is contingent upon the
successful sale of the shares of Common Stock in this Offering. (SEE
"BUSINESS.") The Company will not engage in any substantive commercial
business immediately following this Offering and for an indefinite period
of time following this Offering.
This Offering is characterized as a "blank check" offering under the
provisions of SEC Rule 419. The merger by an operating company into a
"blank check" company as a method of financing offers a number of
advantages to traditional financing alternatives such as an initial public
offering. These advantages include the speed with which capital is raised,
lower financing costs, and reduced risk related to commencing, but not
completing a financing.
The Company has no plan, proposal, agreement, understanding or
arrangement to acquire or merge with any specific business or company, and
the Company has not identified any specific business or company for
investigation and evaluation. The Company intends to utilize the net
proceeds of this offering, equity securities, debt securities, bank and
other borrowing or a combination the same to effect a Business Combination.
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 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. Most likely, the Target Business
will be primarily located in the United States, although the Company
reserves the right to acquire a Target Business primarily located outside
the United States.
While the Company may, under certain circumstances, seek to effect
Business Combinations with more than one Target Business, in all
likelihood, as a result of its limited resources, the Company will have the
ability to effect only a single Business Combination with a Target
Business. The Company will not expend less than 80% of the net proceeds
derived from this Offering. The Company does not intend to register as a
broker-dealer, merge with or acquire a registered broker-dealer, or
otherwise become a member of the NASD. None of the Company's officers,
directors or promoters, and no other affiliate of the Company has had any
preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger between the
Company and such other company. The Company and its promoters know of no
outside person or group of persons who are likely to purchase, beneficially
own or control any portion of the securities offered by this Prospectus,
although officers, directors and existing shareholders may purchase shares
in this offering. There
<PAGE>
are no plans, proposals or arrangements or understandings with respect to
the sale of additional securities to affiliates, current shareholders or
others following this offering prior to the identification of a business
opportunity for a Business Combination.
Although the Company will provide relevant information regarding any
selected Target Business in connection with a reconfirmation offer, the
Company does not intend to provide the Company's security holders with a
complete set of disclosure documents concerning the Target Business (which
would include audited financial statements) prior to the consummation of
any merger or acquisition transaction.
BUSINESS EXPERIENCE OF PRINCIPALS
The executive officers and the other directors of the Company have
business experience which has provided them with skills which the Company
believes will be helpful in evaluating potential Target Businesses and
negotiating a Business Combination.
POSSIBLE RETENTION OF INVESTMENT BANKER
The Company may retain an investment banking firm to aid in
identifying, evaluating, structuring, negotiating and consummating a
Business Combination.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER SEC RULE 419
GENERAL
The Securities and Exchange Commission ("SEC ") has adopted SEC Rule
419 relating to "blank check" issuers (companies that have no specific
business plan or have indicated that their plan is to engage in a merger or
acquisition with an unidentified company). This rule provides that upon
consummation of the offering there be deposited into an escrow or special
account all proceeds received, less underwriting commissions and certain
expenses, and all securities issued. The net offering proceeds (less 10%
which may be withdrawn for expenses) must remain in escrow until the
earlier of, an acquisition meeting certain criteria and affirmation of the
offering, or 18 months. During such escrow period no trading in the
securities offered by this Prospectus may take place. Inasmuch as the
Company is planning to engage in a merger or acquisition with an
unidentified company, the Company will be subject to SEC Rule 419.
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
SEC Rule 419 requires that the net offering proceeds, after deduction
for underwriting compensation and offering expenses and all securities to
be issued be deposited into an escrow or trust account (the "Deposited
Funds" and "Deposited Securities," respectively) governed by an agreement
which contains certain terms and provisions specified by the rule. Under
SEC Rule 419, the Deposited Funds (less 10% otherwise releasable under the
rule) and the Deposited Securities will be released to the Company and to
investors, respectively, only after the Company has met the following three
conditions. First, the Company must execute an agreement for an
acquisitions(s) meeting certain prescribed criteria. Second, the Company
must successfully complete a reconfirmation offering which includes certain
prescribed terms and conditions.
<PAGE>
Third, the acquisition(s) meeting the prescribed criteria must be
consummated (SEE "Prescribed Acquisition Criteria" and "Reconfirmation
Offering" within this section.) Accordingly, the Company has entered into
an escrow agreement with Corporate Stock Transfer, Denver, Colorado ( the
"Escrow Agent") which provides that:
(1) The net proceeds (gross proceeds after deduction of commissions)
will be deposited into an escrow account maintained by the Escrow
Agent promptly after the successful completion of the offering.
Except for the 10% of the Deposited Funds, which may be released to
the Company, the Deposited Funds and interest or dividends thereon, if
any, will be held for the sole benefit of the investors and can be
invested only in a bank savings account, a money market fund, or
federal government securities or securities guaranteed as to principal
and interest by the federal government.
(2) All securities issued in connection with the offering and any
other securities issued with respect to those securities, including
securities issued with respect to stock splits, stock dividends, or
similar rights, will be deposited directly into escrow with the Escrow
Agent promptly upon issuance. Certificates for the Deposited
Securities will be issued in the names of the investors. Accordingly,
the Deposited Securities are deemed to be issued and outstanding, and
are held by the Escrow Agent for the sole benefit of the investors who
retain voting rights with respect to the Deposited Securities. The
Deposited Securities held in escrow may not be transferred, disposed
of, nor any interest created therein, other than by will or the laws
of descent and distribution, or, pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986 or the
Employee Retirement Income Security Act.
(3) Warrants, convertible securities, or other derivative securities
relating to securities held in escrow, if any, may be exercised or
converted in accordance with their terms; provided, however, that the
securities received upon exercise or conversion together with any cash
or other consideration paid in connection with the exercise or
conversion, are to be promptly deposited into escrow.
PRESCRIBED ACQUISITION CRITERIA
SEC Rule 419 requires that before the Deposited Funds and the
Deposited Securities can be released, the Company must first execute one or
more agreements to acquire one or more acquisition candidates meeting
certain specified criteria. The agreement must provide the acquisition of
a business or assets for which the fair market value of the business
represents at least 80% of the offering proceeds, (excluding underwriting
commissions, underwriting expenses, and dealer allowances payable to non-
affiliates). For purpose of the offering, the estimated fair value of the
business or assets to be acquired must therefore be at least $72,000 if the
entire offering is sold entirely through broker-dealers, or $36,000 if only
the minimum offering is sold entirely through broker-dealers. Once an
acquisition agreement meeting the above criteria has been executed, the
Company must successfully complete the mandated reconfirmation offering and
consummate the acquisition. Any agreement pertaining to an acquisition
will include a condition precedent to the effect that investors
representing 80% of the offering proceeds must elect to reconfirm their
investment in the Shares, all as provided in SEC Rule 419.
<PAGE>
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 commenced or planned principal
operations have commenced, but there has been no significant revenue
therefrom. As described above, under SEC Rule 419 the Company must acquire
a business or assets for which the fair value of the business represents at
least 80% of the net offering proceeds. Therefore, the Company's ability
to acquire a business in the development stage may be limited to the extent
it cannot locate such businesses with a fair value high enough to satisfy
the requirements of SEC Rule 419.
POST EFFECTIVE AMENDMENT
Once the agreement governing the acquisition of a business meeting the
above criteria has been executed, SEC Rule 419 requires the Company to
update its registration statement with a post-effective amendment
("Amendment"). The Amendment must contain information describing (a) the
proposed acquisition candidate (or candidates, if more than one) and its
business, including audited financial statements, (b) the outcome of this
offering; and, (c) the use of the funds disbursed from escrow. The
Amendment must also include the terms of the reconfirmation offer mandated
by SEC Rule 419. The reconfirmation offer will include certain prescribed
conditions which must be satisfied before the Deposited Funds and Deposited
Securities can be released from escrow.
RECONFIRMATION OFFERING
A reconfirmation offer must commence within five business days after
the effective date of the Amendment. Pursuant to SEC Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the Amendment will be sent to each
investor whose securities are held in escrow within five business days
after the effective date of the Amendment;
(2) Each investor will have not less than 20, nor more than 45,
business days from the effective date of the Amendment to notify the
Company in writing, that the investor elects to remain an investor;
(3) If the Company does not receive written notification from
investors representing 80% of the offering proceeds (estimated at
$72,000, if the entire offering is sold, or $36,000, if only the
minimum offering is sold), within 45 business days following the
effective date of their election to reconfirm their investments in the
Shares, the Deposited Funds (and any related interest or dividends)
held in escrow for all investors will be returned to them, on a pro
rata basis, within five business days by first class mail or other
equally prompt means;
(4) The acquisition will be consummated only if investors
representing 80% of the offering proceeds notify the Company in
writing of their election to reconfirm their investments in the Shares
within 45 business days following the effective date of the Amendment;
<PAGE>
(5) If an acquisition is consummated, any investor who does not
reconfirm his or her investment in the Shares to the Company in
writing within 45 days following the effective date of the Amendment
will receive his or her pro rata portion of the Deposited Funds (and
any related interest or dividends) held in escrow for all investors
within five business days by first class mail or other equally prompt
means;
(6) If an acquisition is not consummated by February 12, 1999 (18
months from the date of this Prospectus), the Deposited Funds then
held in escrow shall be returned to all investors on a pro rata basis
within five business days by first class mail or other equally prompt
means.
RELEASE OF DEPOSITED SECURITIES AND DEPOSITED FUNDS
The Deposited Funds and Deposited Securities may be released to the
Company and the investors, respectively, after the Escrow Agent has
received a signed representation from the Company and any other evidence
acceptable to them that: the company has executed one or more agreements
for the acquisition of one or more business for which the fair market value
of the business represents at least 80% of the total offering proceeds
which are derived from this offering and has filed the required Amendment;
the Amendment has been declared effective, the mandated reconfirmation
offer containing the conditions prescribed by SEC Rule 419 has been
completed, and the Company has satisfied all of the prescribed conditions
of the reconfirmation offer; and, the acquisition of the business with the
fair market value of at least 80% of the offering proceeds is consummated.
THE OFFERING
This Prospectus relates to the offering by the Company of a minimum of
50,000 and a maximum of 100,000 Common Shares (par value $.0001 per share)
at an offering price of $1.00 per Share (the "Shares"). This offering is
made on a "best efforts" basis.
Offering Price Per Share ............................. $ 1.00
Minimum Number of Shares Offered ................. 50,000
Maximum Number of Shares Offered .................... 100,000
Common Shares Outstanding Prior to Offering .......1,000,000
Common Shares to be Outstanding After Minimum Offering 1,050,000
Common Shares to be Outstanding After Maximum Offering 1,100,000
Minimum Gross Proceeds to the Company ................. $50,000
Maximum Gross Proceeds to Company ..................... $100,000
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock (par value $.0001 per share) and 10,000,000 shares of
Preferred Stock (par value $.0001 per share).
<PAGE>
RISK FACTORS
The securities offered by this Prospectus involve a high degree of
risk and immediate substantial dilution and therefore should not be
purchased by investors who cannot afford the loss of their entire
investment. Prior to this offering there has been no public market for the
Shares and there can be no assurance that such a market will develop after
release of the Deposited Securities, especially in view of the small size
of this offering and the Company's limited shareholder base. Such risk
factors include, among others, the following; the Company's lack of recent
profitable operating history and limited resources; the small size of this
offering, its small shareholder base, no present source of revenues;
intense competition in selecting a Target Business and effecting a Business
Combination; and, because of the Company's limited resources, the
possibility that the Company's due diligence investigation of a potential
Business Combination will be restricted, especially in the case of a Target
Business outside the United States. The Company's independent auditors
have stated in their opinion that the Company's financial statements
contemplate the Company's ability to continue as a going concern, which
will be dependent upon the Company's ability to obtain financing.
Investors will incur immediate substantial dilution. (SEE "RISK FACTORS,"
"DILUTION" and "USE OF PROCEEDS.")
USE OF PROCEEDS
The net proceeds to be realized by the Company from this offering if
only the minimum amount being offered is sold will be approximately
$45,000, assuming the maximum commission is paid on all of the Shares
sold. In the event the entire offering is sold, the Company will receive
net proceeds of approximately $90,000, assuming the maximum commission is
paid on all of the Shares sold. The Company intends to use substantially
all of the net proceeds of the offering, together with the interest earned
thereon, to attempt to effect a Business Combination, including selecting
and evaluating potential Target Businesses and structuring, negotiating and
consummating a Business Combination (including possible payment of finder's
fees or other compensation to persons or entities which provide assistance
or services to the Company and payment of travel expenses). The proceeds
from this offering by the Company will be held in an escrow account
maintained by the Escrow Agent, until satisfaction of certain required
conditions specified in SEC Rule 419.
To the extent that the Company's securities are used as consideration
to effect a Business Combination, the balance of the net proceeds of this
offering not expended will be used to finance the operations (including the
possible repayment of debt) of the Target Business. No cash compensation
will be paid to any officer or director in their capacities as such until
after the consummation of the first Business Combination. Since the role
of the Company's current directors and executive officers after a
consummation of a Business Combination is uncertain, the Company has no
ability to determine what remuneration, if any, will be paid to such
persons after such consummation of a Business Combination.
<PAGE>
RISK FACTORS
THE COMMON STOCK OFFERED BY THIS PROSPECTUS IS SPECULATIVE, INVOLVES
IMMEDIATE SUBSTANTIAL DILUTION AND A HIGH DEGREE OF RISK, INCLUDING, BUT
NOT NECESSARILY LIMITED TO, THE SEVERAL FACTORS DESCRIBED BELOW. EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY AND THIS OFFERING
BEFORE MAKING AN INVESTMENT DECISION.
RISK FACTORS RELATING TO THE COMPANY'S BUSINESS
SEEKING TO ACHIEVE PUBLIC TRADING MARKET THROUGH BUSINESS COMBINATION
While a prospective Target Business may deem a consummation of a
Business Combination with the Company desirable for various reasons, a
Business Combination may involve the acquisition of, merger or
consolidation with, a company which does not need substantial additional
capital, but which desires to establish a public trading market for its
shares, while avoiding what it may deem to be adverse consequences of
undertaking a public offering itself, including time delays, significant
expense, loss of voting control, the time and expense incurred to comply
and compliance with various federal and state securities laws that regulate
initial public offerings. Nonetheless, there can be no assurance that
there will be an active trading market for the Company's securities
following the completion of a Business Combination or, if a market does
develop, no assurance as to the market price for the Company's securities.
No public market for shares sold in this Offering can develop until such
shares are released from escrow pursuant to the provisions of SEC Rule 419,
in conjunction with successful completion of a Business Combination. (See,
"General Risks Relating to an Investment in the Company -- Restriction on
Sale of Shares Held in SEC Rule 419 Escrow Account" below)
NO RECENT OPERATING HISTORY
The Company, which was originally incorporated on May 17, 1991, has
recently revised its business objectives and, as of the date of this
Prospectus, is attempting to seek a Business Combination. The Company has
limited resources and has had no revenues since November of 1993. The
Company has experienced operating losses during the past year. As of June
30, 1997, the Company had an accumulated deficit of $12,034. (SEE
Financial Statements of the Company included in this Prospectus.) In view
of the Company's lack of any operating history since November 1993, there
is only a limited basis upon which to evaluate the Company's prospects for
achieving its intended business objectives. The Company's independent
auditors have stated in their opinion that the Company's financial
statements contemplate the Company's ability to continue as a going
concern, which will be dependent upon the Company's ability to obtain
financing. The Company's officers and directors have no significant prior
experience relating to the identification, evaluation and acquisition of a
Target Business. Investors will be relying primarily on their ability to
attempt to select a Target Business which will be profitable.
<PAGE>
UNSPECIFIED INDUSTRY
The Company has not yet identified any business or product for
possible acquisition. Accordingly, there is no current basis for
prospective investors in this Offering to evaluate the possible merits or
risks of the Target Business or the particular industry in which the
Company may ultimately operate. The Company faces all of the risks
inherent in a new business and those risks specifically inherent in the
type of business in which the Company proposes to engage, namely, the
investigation and acquisition of an interest in a business. The purchase
of the securities offered by this Prospectus must be regarded as the
placing of funds at a high risk in a new or "start-up" venture with all of
the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject. (SEE "USE OF PROCEEDS" and "BUSINESS.")
NO CURRENT NEGOTIATIONS REGARDING AN ACQUISITION OR MERGER
None of the Company's officers, directors, or promoters, or their
affiliates and associates, have had any preliminary contact or discussion,
and there are no present plans, proposals, arrangements or understandings,
with any representatives of the owners of any business or company regarding
the possibility of an acquisition or merger transaction contemplated in
this Prospectus. Therefore, there is no assurance that the Company will be
successful in locating or negotiating any profitable acquisition or merger
transactions in the future. (SEE "BUSINESS.")
INCREASED RISKS FOR POTENTIAL BUSINESS COMBINATIONS
It is possible that in seeking to effect a Business Combination, the
Company may consider a candidate base of potential Target Business that may
have inherent riskier businesses than those which may be able to secure
financing from more traditional sources. Such candidate base may well have
sought to secure financing from banks or financial institutions, venture
capitalists, or private or institutional investors, and may have been
unable to procure such financing. Such rejection may have resulted from
the analysis by such parties that the Target Business does not fall within
parameters established by such persons or entities for investment or
financing including, without limitation, substantial risk of failure.
Additionally, a prospective Target Business may be a company which does or
does not need substantial additional capital, but which desires to
establish a public trading market for its shares and is unable to do so on
its own or wishes to avoid what it may deem to be adverse consequences of
undertaking a public offering itself, such as time delays, significant
expense, loss of voting control and compliance with various federal and
state securities laws enacted for the protection of investors.
LACK OF DIVERSIFICATION
In view of the limited resources of the Company, even after this
offering is completed, it is likely that the Company will have the ability
to effect only a single Business Combination. Accordingly, the prospects
for the Company's success will be entirely dependent upon the future
performance of a single business. Unlike certain entities which have the
resources to consummate several business combinations of entities operating
in multiple industries or multiple areas of a single industry, it is highly
likely that the Company will not have the resources to diversify its
operations or benefit from the possible spreading of risks or offsetting of
losses. In addition, by consummating a Business Combination with only a
single entity, the prospects for the Company's success may become dependent
upon the development or market acceptance of a single or limited number of
products, processes or services. Consequently, there can be no assurances
that the Target Business selected by the Company will prove to be
commercially viable. (SEE "BUSINESS.")
ADDITIONAL FINANCING
There currently are no limitations on the Company's ability to borrow
funds to increase the amount of capital available to the Company to effect
a Business Combination. However, the Company's limited resources and lack
of operating history will make it difficult to borrow funds. The amount
and nature of any borrowings by the Company will depend on numerous
considerations, including the Company's capital requirements, the Company's
perceived ability to meet debt service on any such borrowings and the then
prevailing conditions in the financial markets, as well as general economic
conditions. There can be no assurance that debt financing, if required or
sought, would be available on terms deemed to be commercially acceptable by
and in the best interests of the Company. The inability of the Company to
borrow funds required to effect or facilitate a Business Combination, or to
provide funds for an additional infusion of capital into a Target Business,
may have a material adverse effect on the Company's financial condition and
future prospects. Additionally, to the extent that debt financing
ultimately proves to be available, any borrowings may subject the Company
to various risks traditionally associated with indebtedness, including the
risks of interest rate fluctuations and insufficiently of cash flow to pay
principal and interest. Furthermore, a Target Business may have already
incurred borrowings and, therefore, already be subject to such risks. (SEE
"USE OF PROCEEDS" and "BUSINESS.") No portion of the net proceeds derived
from this offering will be used to make loans to any person. In addition,
the Company will not borrow funds and use the proceeds therefrom to make
payments to the Company's officers, directors, or promoters, or their
affiliates or associates.
FAILURE OF SUFFICIENT NUMBER OF INVESTORS TO RECONFIRM INVESTMENT
A business combination with a Target Business cannot be consummated
unless, in connection with the reconfirmation offering required by SEC Rule
419, the Company can successfully convince a sufficient number of investors
representing 80% of the offering proceeds to elect to reconfirm their
investment. If an insufficient number of investors reconfirm their
investment, none of the Deposited Securities held in escrow will be issued
and the Deposited Funds will be returned to investors on a pro rata basis.
Because it is likely that the Company will have expended up to 10% of the
proceeds derived from this offering prior to that time, investors will only
receive a portion of the funds originally invested, if an insufficient
number of investors reconfirm their investment after a merger or
acquisition candidate has been identified.
USE OF BUSINESS ACQUISITION CONSULTANTS OR FINDERS
While the Company does not presently anticipate that will engage
unaffiliated professional firms specializing in business acquisitions on
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
based on a percentage of revenues or product sales volume, payments
involving issuance of equity securities (including those of the Company),
or any combination of these or other compensation arrangements. The
Company estimates that any fees for such services will not exceed 10% of
the amount of the
<PAGE>
securities issued or cash paid by the Company to acquire a business. The
Company will not have funds to pay a retainer in connection with any
consulting arrangement, and no fee will be paid unless and until an
acquisition is completed in accordance with SEC Rule 419. (SEE "USE OF
PROCEEDS," and "BUSINESS.")
NO ASSURANCE OF PROFITABILITY
There can be no assurance that the Company will be able to acquire a
favorable Target Business. In addition, even if the Company becomes
engaged in a new business, there can be no assurance that it will be able
to generate revenues or profits therefrom.
NO ASSURANCE OF CONVENTIONAL FINANCING FOR BUSINESS ACQUIRED OR MERGED
Although there are no specific business combination or other
transactions contemplated by management, it may be expected that any such
Target Business will present such a level of risk that conventional private
or public offerings of securities or conventional bank financing would not
be available to the Company once it acquires said business.
SUCCESS DEPENDENT ON MANAGEMENT
Success of the Company will depend on the active participation of its
officers and directors and their successful endeavors to further the
Company's business goals. If present management were to fail to diligently
pursue the goals of the Company, it would adversely affect development of
the Company's business and its likelihood of continuing operations. The
officers and directors of the Company currently are employed or engaged
full time in other positions or activities and will devote only that amount
of time to the affairs of the Company which they deem appropriate. The
amount of time devoted by management to the affairs of the Company will
depend on the number and type of businesses under consideration at any
given time. In view of competing demands for their time, investors should
anticipate that the Company's officers and directors will grant priority to
their full-time positions rather than the business affairs of the Company.
The Company estimates that each officer will contribute an average of 10
hours per month to Company matters. Nevertheless, the executive officers
and the other directors of the Company will devote such time as they deem
reasonably necessary to carry out the business and affairs of the Company,
including the evaluation of potential Target Businesses and the negotiation
and consummation of a Business Combination, and, as a result, the amount of
time devoted to the business and affairs of the Company may vary
significantly depending upon, among other things, whether the Company has
identified a Target Business or is engaged in active negotiation of a
Business Combination. (SEE "MANAGEMENT.")
CONFLICTS OF INTEREST
Certain conflicts of interest may exist between the Company and its
officers and directors, due to the fact that they are employed or engaged
full time in other endeavors. As a result, the consummation of a Business
Combination may require a greater period of time than if the Company's
management devoted their full time to the Company's affairs. In addition,
they may become, in their individual capacity, officers, directors,
controlling shareholders and/or partners of additional entities. Such
business interests may conflict with those of a Target Business. Mr.
Burton's independent consulting business presently focuses on meeting the
needs of individual investors and is therefore not expected to present
material conflicts of interest.
<PAGE>
Failure by management to conduct the Company's business in its best
interest, however, may subject management to claims by the Company and/or
its shareholders of breach of fiduciary duty. The officers and directors
of the Company may promote or become involved in other acquisition funds or
"blank check" entities with activities similar to those to be undertaken by
the company. In the course of their other business activities, including
private investment activities, the Company's officers and directors may
become aware of investment and business opportunities which may be
appropriate for presentation to the Company as well as the other entities
with which they are affiliated. Such persons may have conflicts of
interest in determining to which entity a particular business opportunity
should be presented. In general, officers and directors of corporations
incorporated under the laws of the State of Colorado are required to
present certain business opportunities to such corporations. Accordingly,
as a result of multiple business affiliations, Messrs. Burton and Jones may
have similar legal obligations relating to presenting certain business
opportunities to the various entities upon which they serve as directors
now, or in the future. Therefore, there can be no assurance that they will
offer all suitable prospective business opportunities to the Company before
any other acquisition fund or "blank check" offering with which they may be
affiliated. In addition, conflicts of interest may arise in connection
with evaluations of a particular business opportunity by the Board of
Directors with respect to the foregoing criteria. All of the foregoing
conflicts of interest will be resolved through the exercise of their
independent judgment, in light of all facts and surrounding circumstances
existing at the time, but there can be no assurances that any of the
foregoing conflicts will be resolved in favor of the Company. Prior to
their involvement with the Company, none of the directors or officers of
the Company has been involved in any "blind pool" or "blank check"
offerings. (SEE "MANAGEMENT -- Conflicts of Interest.")
POLICIES ADOPTED BY MANAGEMENT
The Company's Board of Directors has recently adopted policies by
resolution, which may be rescinded or amended only by majority vote of the
Company's shareholders who do not currently hold any of the Company's
outstanding capital stock (whether now held or hereafter acquired) and will
expire by its terms on the date an acquisition of a business venture is
consummated, (a) prohibiting the payment, either directly or indirectly, of
any finder's fee or similar compensation (including the issuance of debt)
to any person who has served as an officer or director of the Company prior
to the acquisition, or who is a promoter, (b) prohibiting any portion of
the net proceeds of the offering may be paid to officers, directors,
promoters, or their affiliates or associates, directly or indirectly, as
consultant fees, officer salaries, director fees, purchase of their shares,
or other payments. except for reimbursement of offering costs and expenses
incurred by officers and directors on Company matters, (c) prohibiting the
Company from acquiring or merging 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 and (d)
prohibiting the Company from engaging in the creation of subsidiary
entities which a view to distributing their securities to the shareholders
of the Company. These policies were adopted to minimize the possibility
that such matters would become factors in negotiations and present
conflicts of interest. While the Board of Directors may seek a change in
these policies prior to an acquisition, no change may be made except by the
vote specified.
<PAGE>
INABILITY TO FULLY EVALUATE INVESTMENTS
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exclusive
investigation and analysis of a Target Business. Therefore, management
decisions will likely be made without detailed feasibility studies,
independent analysis, market surveys, and the like which, if the Company
had more funds available, would be desirable. The Company will be
particularly dependent in making decisions on information provided by the
promoter, owner, sponsor, or others associated with the businesses seeking
the Company's participation, and which will have a direct economic interest
in completing a transaction with the Company. (SEE "BUSINESS.")
POSSIBLE DEPENDENCE ON OUTSIDE ADVISORS
In connection with its investigation of a possible business and in
order to supplement the business experience of management, the Company may
employ accountants, technical experts, appraisers, attorneys, or other
consultants or advisors. The selection of any such advisors will be made
on an independent basis without a continuing fiduciary or other obligation
to the Company. In the event that such accountants, technical experts,
appraisers, attorneys, or other consultants or advisors are deemed
necessary or desirable, the Company's Board of Directors will consider,
among other factors, the experience, expertise, education, reputation,
specialized knowledge, and cost when selecting such persons or firms. The
Company has no arrangement or understanding to employ any of its officers
or directors as outside advisors. None of the Company's officers,
directors or promoters have used any particular consultants or advisors on
a regular basis in the past in connection with evaluation of possible
businesses acquisitions. To the extent that the Company employs
accountants, technical experts, appraisers, attorneys, or other consultants
or advisors, a portion of the proceeds derived from this Offering may be
used to pay such persons or firms. (SEE "BUSINESS" and "USE OF PROCEEDS")
LIMITATION ON ACQUISITIONS
The Company is subject to SEC Rule 419 and certain reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and will be required to furnish certain information about
significant acquisitions, including audited financial statements for the
company(s) acquired for one, two, or three years, depending on the relative
size of the acquisition. Consequently, the acquisition prospects available
to the Company would be limited to those that can provide the required
audited financial statements. (SEE "BUSINESS -- Selection of a
Business.")
POSSIBLE CONSEQUENCES OF BUSINESS REORGANIZATION
It is likely that the Company will issue additional shares of Common
Stock or Preferred Stock in connection with its potential merger,
consolidation, or other business reorganization, and that the proceeds of
this offering will be used in the business of the Target Business (the
Company will not make loans of the net proceeds of the offering). The
consequences may be a change of control of the Company; significant
dilution to the public shareholders' investment; and, a material decrease
in the public shareholders' equity interest in the Company. Any change in
control will most likely also result in the resignation or removal of the
Company's present
<PAGE>
officers and directors. Accordingly, investors will be relying, in some
significant respects, on the abilities of the management and directors of
the Target Business who are unidentifiable as of the date of this
Prospectus. If there is a change in management in connection with a
Business Combination, which is likely to occur, no assurances can be given
as to the experience or qualifications of the persons who replace present
management respecting either the operation of the Company's activities or
the operation of the business, assets or property being acquired. Because
the Company has not made any determination with respect to the acquisition
of any specific business, it cannot speculate on the form of any potential
business reorganization or the amount of securities which the Company may
issue in connection with the same. The Company's Board of Directors may
issue additional securities of the Company (including both Common Stock and
Preferred Stock) on terms and conditions which the Board of Directors, in
its sole discretion, determines to be in the best interest of the Company
and without seeking shareholder approval. (SEE "BUSINESS.")
ISSUANCE OF PREFERRED STOCK
The Company currently has authorized 10,000,000 shares of preferred
stock, par value $0.001 per share. No shares of preferred stock are issued
and outstanding. Although the Company's Board of Directors has no present
intention to do so, it has the authority, without action by the Company's
shareholders, to issue the authorized and unissued preferred stock in one
or more series and determine the voting rights, preferences as to dividends
and liquidation, conversion rights, and other rights of any such series.
Such shares may, if and when issued, have rights superior to those of the
Common Stock. (SEE "DESCRIPTION OF SECURITIES.")
POSSIBLE BUSINESS COMBINATION WITH A TARGET BUSINESS OUTSIDE THE UNITED
STATES
The Company may effectuate a Business Combination with a Target
Business located outside the United States. In such event, the Company may
face the additional risks of language barriers, different presentations of
financial information, different business practices, and other cultural
differences and barriers. Furthermore, due to the Company's limited
resources, it may be difficult to assess fully these additional risks.
Therefore, a Business Combination with a Target Business outside the United
States may increase the risk that the Company will not achieve its business
objectives.
LIMITED RIGHTS OF SHAREHOLDERS IN AN ACQUISITION
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by SEC Rule 419, the
Company's shareholders may not be afforded an opportunity specifically to
approve or disapprove any particular business reorganization or
acquisition. Except under certain circumstances, the Board of Directors of
the Company will be able to consummate an acquisition by or of the Company
without the approval of the shareholders of the Company. As a result,
investors will be entirely dependent on the broad discretion and judgment
of management in connection with the allocation of the proceeds of the
offering and the selection of a Target Business. There can be no assurance
that determinations ultimately made by the Company will permit the Company
to achieve its business objectives. (SEE "USE OF PROCEEDS" and
"BUSINESS.")
<PAGE>
LEVERAGE
A business acquired through a leveraged buy-out, i.e., financing the
acquisition of the business by borrowing on the assets of the business to
be acquired, will be profitable only if it generates enough revenues to
cover the related debt and expenses. Use of a leveraged buy-out could
increase the Company's exposure to larger losses. There can be no
assurance that any business acquired through a leveraged buy-out will
generate sufficient revenues to cover the related debt and expenses. The
use of leverage to consummate a business combination may reduce the ability
of the Company to incur additional debt, make other acquisitions, or
declare dividends, and may subject the Company's operations to strict
financial controls and significant interest expense. It is likely that the
Company will have few, if any, opportunities to utilize leverage in an
acquisition. Even if the Company is able to identify a business where
leverage may be used, there is no assurance that financing will be
available, or if it is available, that it will be available on terms
acceptable the Company. (SEE "BUSINESS -- Leverage.")
COMPETITION
The Company expects to encounter intense competition from other
entities having business objectives similar to those of the Company. Many
of these entities, including venture capital partnerships and corporations,
other "blank check" or "blind pool" companies, large industrial and
financial institutions, small business investment companies and wealthy
individuals, are well-established and have extensive experience in
connection with identifying and effecting Business Combinations, directly
or through affiliates. Many of these competitors possess greater
financial, technical, personnel and other resources than the Company and
there can be no assurance that the Company will have the ability to
complete successfully. The Company's financial resources will be limited
in comparison to those of many of its competitors. Further, such
competitors will generally not be required to seek the prior approval of
their own shareholders, which may enable them to close a Business
Combination more quickly than the Company, in view of the reconfirmation
offer which must be made by the Company. This inherent competitive
limitation may compel the Company to select certain less attractive
Business Combination prospects. There can be no assurance that such
prospects will permit the Company to achieve its stated business
objectives. (SEE "BUSINESS.")
TAX CONSIDERATIONS
As a general rule, federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The
Company will evaluate the possible tax consequences of any prospective
Business Combination and will endeavor to structure the Business
Combination so as to achieve the most favorable tax treatment to the
Company, the Target Business and their respective shareholders. There can
be no assurances, however, that the Internal Revenue Service (the "IRS") or
appropriate state tax authorities will ultimately assent to the Company's
tax treatment of a consummated Business Combination. To the extent the IRS
or state tax authorities ultimately prevail in re-characterizing the tax
treatment of a Business Combination, there may be adverse tax consequences
to the Company, the Target Business and their respective shareholders.
<PAGE>
GOVERNMENTAL REGULATION
The Target Business which the Company may acquire could be subject to
governmental regulations, including environmental and taxation matters,
which regulations would have a materially adverse affect on the Company
after its acquisition of a Target Business. (SEE "BUSINESS.")
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which was enacted principally for the
purpose of regulating vehicles for pooled investments in securities,
extends generally to companies engaged primarily in the business of
investing, reinvesting, owning, holding or trading in securities. The
Investment Company Act may, however, also be deemed to be applicable to a
company which does not intend to be characterized as an investment company
but which, nevertheless, engages in activities which may be deemed to be
within the scope and definitions of certain provisions of the Investment
Company Act. The Company believes that its anticipated principal
activities, which will involve acquiring control of an operating company,
will not subject the Company to regulation under the Investment Company
Act. Nevertheless, there can be no assurance that the Company will not be
deemed to be an investment company, particularly during the period prior to
consummation of a Business Combination. If the Company is deemed to be an
investment company, the Company may become subject to certain restrictions
relating to the Company's activities, including restrictions on the nature
of its investments and the issuance of securities. In addition, the
Investment Company Act imposes certain requirements on companies deemed to
be within its regulatory scope, including registration as an investment
company, adoption of a specific form of corporate structure and compliance
with certain burdensome reporting, record keeping, voting, proxy,
disclosure and other rules and regulations. In the event of the
characterization of the Company as an investment company, the failure by
the Company to satisfy such regulatory requirements, whether on a timely
basis or at all, could, under certain circumstances, have a material
adverse effect on the Company. With regard to the application of the
Investment Company Act to the escrow account established by the Company
pursuant to Rule 419, however, the SEC has taken the position that, in
light of the regulatory requirement to establish such account, the limited
nature of the investments, and the limited duration of the account, the
escrow account need not be registered as in investment company, nor will
the Company be regulated as an investment company due to establishment of
such an escrow account, as long as it meets the requirements of SEC Rule
419.
GENERAL RISKS RELATING TO AN INVESTMENT IN THE COMPANY
DEPENDENCE ON SUCCESSFUL COMPLETION OF OFFERING
The Company is dependent on successful completion of this offering to
implement its new business plan. Furthermore, if the offering is
unsuccessful, it is likely that existing shareholders of the Company will
lose their entire investment, because the Company will have no working
capital after paying certain expenses associated with this offering. (SEE
"BUSINESS.") The Company's independent auditors' report on the Company's
financial statements includes an explanatory paragraph stating that the
Company's ability to continue its operations is contingent
upon obtaining adequate financing. If the minimum number of Shares offered
are not sold in this offering, the Company may be unable to continue in its
present form. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern. (SEE "BUSINESS", and
Financial Statements of the Company included in this Prospectus.)
SUBSTANTIAL AND IMMEDIATE DILUTION TO PUBLIC
Persons purchasing Shares in this offering will suffer a substantial
and immediate dilution to the net tangible book value of their shares below
the public offering price. Giving effect to the sale of all offered
Shares, the Company would have a net tangible book value of approximately
$.0830 per share so that persons purchasing Shares in the offering would
suffer an immediate dilution of approximately $.91 per share or 91.0% from
the offering price of $1.00 per Share. Giving effect to the sale of the
minimum number of Shares, the net tangible book value of the Company would
be approximately $.0379 per share or dilution to the investors purchasing
in this offering of approximately $.9621 per share or 96.2% of the public
offering price. (SEE "DILUTION. ")
DISPROPORTIONATE RISKS
After completion of the sale of all Shares offered by this Prospectus,
present shareholders of the Company would still own approximately 90.9% of
the then outstanding shares of the Company, for which they would have paid
$5,000 or approximately 4.76% of the then invested capital of the Company,
and the persons purchasing shares in this offering would then own 9.1% of
the then outstanding shares, for which they will have paid $100,000 or
approximately 95.24% of the then invested capital. If only the minimum
number of Shares are sold, existing shareholders would own approximately
95.24% of the stock outstanding for which they would have paid
approximately 9.1% of the total capital invested, as compared to public
shareholders who would own approximately 4.76% of the stock outstanding for
which they would have paid $50,000 or approximately 90.9% of the total
capital invested. Consequently, purchasers in this offering will bear a
disproportionately greater risk investing in the Company than its present
shareholders. (SEE "COMPARATIVE DATA.")
SALE OF SHARES BY MANAGEMENT IN CONNECTION WITH AN ACQUISITION
The Company's Officers, Directors and Existing Shareholders may
actively negotiate or otherwise consent to the purchase of all or a portion
of their shares of the Company as a condition to or in connection with a
proposed merger or acquisition transaction. This activity may present
management with conflicts of interest, in light of the potential for
members management to consider their own personal pecuniary benefit rather
than the best interests of the Company's other shareholders. In order to
minimize this inherent potential conflict of interest, however, each of the
officers, directors and 10% or more beneficial shareholders of the Company
and the Company, have agreed that they will not (i) actively negotiate for
or otherwise consent to the disposition of any portion of their Common
Stock at a per share price different than that offered with respect to the
Shares sold in this offering as a condition to or in connection with a
Business Combination or (ii) cause any securities of the Company to be sold
by any officers, directors, greater than 10% shareholders or persons who
may be deemed promoters of the
<PAGE>
Company, except as may otherwise be made in permitted market transactions,
without affording all shareholders of the Company a similar opportunity.
(See "Plan of Distribution - Agreements of Officers, Directors and 10%
Beneficial Shareholders.")
PURCHASE OF SHARES BY OFFICERS, DIRECTORS AND EXISTING SHAREHOLDERS.
Officers, Directors and the Company's existing shareholders may
purchase shares in this offering on the same conditions as public
investors. Any of the individuals may, but are not obligated to, purchase
such shares for the purpose of facilitating a closing of the minimum
offering by the Company. Such persons, however, will not purchase more
than 50% of the shares actually purchased by public investors. To the
extent that shares are purchased by the Company's Officers, Directors or
existing shareholders, such purchases would result in a reduction in the
percentage ownership by public investors (often referred to as the "public
float"). Purchases of shares in this offering by any Officers, Directors
or existing shareholders could result in the commitment of public investors
in this offering in the absence of public demand for the offering,
especially where only the minimum amount of shares being offered are sold.
NO ACCESS TO INVESTORS' FUNDS WHILE HELD IN ESCROW
The Shares are being offered on a "best efforts" basis, and no
individual, firm, or corporation, has agreed to purchase any of the offered
Shares. Consequently. there is no assurance that the required minimum
number of Shares (50,000), will be sold during the offering period, which
may las as long as four months. During this initial offering period,
subscribers have no right to the return or use of their funds.
Following sale of at least the minimum number of Shares within the
prescribed period, investors' funds (reduced to reflect payments for
underwriting compensation and other expenses otherwise released, as
permitted by SEC Rule 419) will remain in escrow as Deposited Funds. While
interest will accrue on the Deposited Funds after successful completion of
the offering, investors will have no right to the return of or the use of
their funds for a period of up to 18 months from the date of this
Prospectus. Prior to the expiration of the 18-month period following the
date of this Prospectus, investors will be offered return of their pro rata
portion of the Deposited Funds held in escrow (and interest), only in
connection with the reconfirmation offering required to be conducted upon
execution of an agreement to acquire a Target Business which represents 80%
of the offering proceeds (after deduction of applicable commissions, if
any). If the Company is unable to locate a Target Business meeting the
above criteria, investors will have to wait the full 18-month period
following the date of this Prospectus before a pro rata portion of their
funds (and interest) is returned to them.
RESTRICTION ON SALE OF SHARES HELD IN SEC RULE 419 ESCROW ACCOUNT
Under SEC Rule 419, the Company must deposit in a special account
securities issued and funds received in its initial offering. According to
SEC Rule 15g-8 adopted under the Securities Exchange Act of 1934, it is
unlawful for any person to sell or offer to sell the Shares (or any
interest in or related to the Shares) held in SEC Rule 419 account other
than pursuant to a qualified domestic relations order. As a result,
contracts for sale to be satisfied by delivery of the Deposited Securities
(e.g. contracts for sale on a when, as, and if issued basis), and sales of
derivative securities to be settled by delivery of the Deposited Securities
(e.g. physically-settled option on the securities), are prohibited. SEC
Rule 15g-8 also prohibits sales of other interests based on the Shares,
whether or not physical delivery is required. Accordingly, investors will
not be able to liquidate their investment in the Shares unless and until
the Deposited Securities are released from escrow as provided in SEC Rule
419. Securities are released from escrow only as provided in SEC Rule 419.
Therefore, there will be no trading market for the Shares following
completion of the offering, even if the Deposited Securities are released
from escrow following a business combination pursuant to SEC Rule 419,
there can be no assurance that a public market for the Company's securities
will develop, especially in view of the small size of this offering and the
Company's limited shareholder base. As a result, purchasers of the Shares
offered may not be able to liquidate their investment in the Shares, or may
not be able to do so readily.
LACK OF REVENUE AND DIVIDENDS
The Company has had no earnings and cannot predict when, if ever, it
will realize any material revenue a profit from any operations it may
subsequently undertake. Upon sale of all Shares offered by this
Prospectus, present shareholders, including the present management of the
Company, will collectively own approximately 90.9 % of the then issued and
outstanding shares of Common Stock, approximately 77.27% of which will be
owned by the current officers and directors. In the election of directors,
shareholders are not entitled to cumulate their votes for nominees.
Accordingly, the current shareholders will essentially be able to elect all
of the Company's Directors and thereafter have a substantial impact upon
the operations of the Company. (SEE "PRINCIPAL SHAREHOLDERS," "CERTAIN
TRANSACTIONS," "BUSINESS -- 'Blank Check' Offering" and "DESCRIPTION OF
SECURITIES.")
ARBITRARY OFFERING PRICE
The offering price of the Shares does not bear any relationship to the
assets, book value, or net worth of the Company or any other generally
accepted criteria of value, and should not be considered to be an
indication of the actual value of the Company. The offering price was
arbitrarily determined by the Company.
AUTHORIZATION OF ADDITIONAL SECURITIES
The Company's Articles of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, par value $.0001 per share. Upon sale
of all Shares offered by this Prospectus there will be 98,900,000
authorized but unissued shares of Common Stock available for issuance.
Although the Company has no commitments as of the date of this Prospectus
to issue any shares of Common Stock other than as described in this
Prospectus, the Company will, in all likelihood, issue a substantial number
of additional shares of Common Stock in connection with a Business
Combination. To the extent that additional shares of Common Stock are
issued, dilution to the interests of the Company's shareholders will occur.
Additionally, if a substantial number of shares of Common Stock are issued
in connection with a Business Combination, a change in control of the
Company may occur which may impact, among other things, the
<PAGE>
utilization of net operating losses, if any. Furthermore, the issuance of
a substantial number of shares of Common Stock may cause a dilution and
adversely affect prevailing market prices, if any, for the Common Stock,
and could impair the Company's ability to raise additional capital through
the sale of its equity securities. The Company will not issue additional
capital stock to any of its current shareholders prior to consummation of a
merger or acquisition with a Target Business, except to the extent that
such shareholders purchase Shares offered by this Prospectus.
The Company's Articles of Incorporation also authorizes the issuance
of 10,000,000 shares of preferred stock, with such designations, powers,
preferences, rights, qualifications, limitations and restrictions and in
such series as the Board of Directors, subject to the laws of the State of
Colorado, may determine from time to time. Accordingly, the Board of
Directors is empowered, without shareholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of
Common Stock. In addition, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. Although the Company does not
currently intend to issue any shares of Preferred Stock, there can be no
assurance that the Company will not do so in the future. As of the date of
this Prospectus, the Company has no outstanding shares of Preferred Stock.
(SEE "BUSINESS" and DESCRIPTION OF SECURITIES.")
POSSIBLE SALE OF COMMON STOCK PURSUANT TO SEC RULE 144 OR OTHERWISE
In the event a public market for the Common Stock develops in the
future, certain shares held by existing shareholders may be sold, and
certain shares owned by officers, directors and shareholders owning 10% or
more of the Company's outstanding capital stock may be sold in reliance on
SEC Rule 144 adopted under the Securities Act, if certain requirements are
met. Investors should be aware that sales under SEC Rule 144 or otherwise
may have a depressive effect on the price of the Company's stock in any
market which may develop. In general, under Rule 144, as currently in
effect, subject to the satisfaction of certain other conditions, a person,
including an affiliate of the Company (or persons whose shares are
aggregated), who has owned restricted shares of Common Stock beneficially
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of 1% of the total number
of outstanding shares of the same class or, if the Common Stock is quoted
on an exchange or NASDAQ, the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate
of the Company for at least three months immediately preceding the sale and
who has beneficially owned the shares of Common Stock to be sold for at
least two years is entitled to sell such shares under Rule 144 without
regard to any of the limitations described above. No prediction can be
made as to the effect, if any, that sales of such shares of Common Stock or
the availability of such shares for sale will have on the market prices for
shares of Common Stock prevailing from time to time. Nevertheless, the
sale of substantial amounts of Common Stock in the public market would
likely depress the market price for the Company's Common Stock and could
impair the Company's ability to raise capital through the sale of its
equity securities. As of the date of this Prospectus, the Company has been
advised that 1,000,000 shares of the Company's Common Stock (100%) are
available for resale, subject to the restrictions contained in SEC Rule
144, with 900,000 shares held by persons who will be deemed affiliates of
the Company and 100,000 shares held by persons who are not affiliates of
the Company. (SEE "DESCRIPTION OF SECURITIES" and "SECURITY OWNERSHIP BY
MANAGEMENT AND PRINCIPAL SHAREHOLDERS")
<PAGE>
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES
The ability to register or qualify for sale of the Shares for both
initial sale and secondary trading will be limited because a significant
number of states have enacted regulations pursuant to their securities or
so-called "blue sky" laws restricting or, in many instances, prohibiting,
the sale of securities of "blank check" or "blind pool" issuers, such as
the Company, within that state. In addition, many states, while not
specifically prohibiting or restricting "blank check" or "blind pool"
companies, generally do not register the securities to be offered in this
offering for sale in their states. The Company has made application to
register or has or will seek to obtain an exemption from registration to
offer the Common Stock, and presently intends to conduct its selling
efforts in Colorado, California, Florida, Illinois, Nevada, New York, and
Utah. Purchasers of the Common Stock in the Offering must be residents of
such jurisdictions. In order to prevent resale transactions in violation
of state securities laws, shareholders may only engage in resale
transactions in the states listed above and such other jurisdictions in
which an applicable exemption is available or a "blue sky" application has
been filed and accepted. If the Company does not sell its Common Stock in
some of the jurisdictions listed above, it may not be possible for
investors to resell their shares in those states in the future. The Common
Stock certificates issued by the Company shall contain information with
respect to resale of the Common Stock. Furthermore, the Company will
advise its market maker, if any, of such restriction on resale. Such
restriction on resale may limit the ability of investors to resell the
shares of Common Stock purchased in this Offering. No resales of the
Shares will be permitted while such shares remain in Escrow.
NO ASSURANCE OF PUBLIC MARKET
Prior to this Offering, there has been no public market for the
Company's Common Stock, and no market is expected to develop for shares
sold in this Offering until after such shares are released from escrow
pursuant to the provisions of SEC Rule 419, in conjunction with a
successful Business Combination. There can be no assurances that a regular
trading market will develop for shares of the Company's Common Stock after
that time, or that, if developed, any such market will be sustained. No
prediction can be made as to the effect, if any, that market sales of
restricted shares of Common Stock or the availability of such shares for
sale will have on the market prices from time to time. As a result, an
investment in the shares of Common Stock offered by this Prospectus may the
completely illiquid and investors may not be able to liquidate their
investment readily or at all when they desire to sell. The initial
offering price of the shares of common Stock offered by this Prospectus has
been arbitrarily determined by management and bears no relation to any
established valuation criteria.
The limited financial resources of the Company, the small size of this
offering and its limited shareholder base materially decrease the
likelihood that a regular trading market will develop. Any trading of the
Common Stock will likely be conducted through what is customarily known as
the "pink sheets" and on the Bulletin Board. Any market for the Common
Stock which may result will likely be less well developed than if the
Common Stock were traded on NASDAQ or an exchange.
<PAGE>
The Company has had no discussions and there are no understandings
with any firm regarding the participation of such firm as a market maker in
the shares of the Company's Common Stock.
DILUTION
The difference between the public offering price per share of Common
Stock and the pro forma net tangible book value per share of common Stock
of the Company after this Offering constitutes the dilution to investors in
this Offering. Net tangible book value per share is determined by dividing
the net tangible book value of the Company (total tangible assets less
total liabilities) by the number of outstanding shares of Common Stock. At
June 30, 1997, the net tangible book value of the Company was
($7,034), or ($.0070) per share of Common Stock. After giving effect to the
sale of 50,000 shares of Common Stock offered by this Prospectus,
representing the minimum amount of shares offered by this Prospectus
(less estimated expenses of this Offering), the pro forma net tangible book
value of the Company at June 30, 1997, would have been $37,966 or $.0379
per share, representing an immediate increase in net tangible book
value of approximately $.0450 per share to the Company's existing
shareholders and an immediate dilution of at least $.9621 per share to
shareholders purchasing shares in this Offering. After giving effect to the
sale of 100,000 shares of Common Stock offered by this Prospectus,
representing the maximum amount of shares offered by this Prospectus
(less estimated expenses of this Offering), the pro forma net tangible book
value of the Company at June 30, 1997, would have been $82,966 or $.0830
per share, representing an immediate increase in net tangible book
value of approximately $.0900 per share to the Company's existing
shareholders and an immediate dilution of at least $.91 per share to
shareholders purchasing shares in this Offering.
The following table illustrates the dilution per share to new
investors, on a per share basis, as of June 30, 1997:
</TABLE>
<TABLE>
<CAPTION>
ASSUMES ASSUMES
MINIMUM MAXIMUM
OFFERING OFFERING
<S> <C> <C>
Initial public offering price per Share $1.00 $1.00
Net tangible book value per Share before
this Offering $(.0070) $(.0070)
Increase attributable to new shareholders $ .0450 $ .0830
______ ______
Pro forma net tangible book value after
this Offering $ .0379 $ .0900
______ ______
Dilution to new shareholders $.9621 $ .9100
Percent Dilution 96.2% 91.0%
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company has not had any revenues from its operations during the
past two fiscal years. Its present objective is to acquire an interest in
an operating business as a "blank check" company described in SEC Rule 419.
Substantially all of the company's working capital needs subsequent to
this Offering will be attributable to the identification, evaluation and
selection of a suitable Target Business and, thereafter to structure,
negotiate and consummate a Business Combination with such Target Business.
Such working capital needs are expected to be satisfied from the Company's
current resources, the proceeds of this Offering not deposited into the
Escrow Account established pursuant to SEC Rule 419, and possible advances
from its existing principal shareholder. Such funds are expected to
satisfy the Company's cash requirements during the next 12 months. The
Company does not expect to purchase or sell any significant equipment,
engage in product research or development, and does not expect any
significant changes in the number of its employees.
COMPARATIVE DATA
The following chart illustrates percentage ownership in the Company
held by the present shareholders and by the investors in this offering and
sets forth a comparison of the amounts paid by the present shareholders and
amounts paid by the investors in this offering.
<TABLE>
<CAPTION>
TOTAL
SHARES TOTAL AVERAGE PRICE
OWNED CONSIDERATION PER SHARE
NUMBER % AMOUNT %
<S> <C> <C> <C> <C> <C>
MINIMUM
OFFERING
Present
Shareholders 1,000,000 95.24% $ 5,000 9.1% $0.005
New Investors 50,000 4.76% $ 50,000 90.9% $ 1.00
MAXIMUM
OFFERING
Present
Shareholders 1,000,000 90.91% $ 5,000 4.76% $0.005
New Investors 100,000 9.09% $100,000 95.24 $ 1.00
</TABLE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of all
100,000 Shares is estimated at approximately $90,000, after deducting
commissions. If only the minimum offering is sold, the Company will
receive net proceeds of approximately $45,000, after deducting commissions.
In both cases, expenses associated with this offering are expected to be
approximately $31,000.
Ninety percent (90%) of the net proceeds, ($81,000 if the maximum
offering is sold and $40,500 if the minimum offering is sold) will be held
in the Escrow Account established pursuant to Rule 419, until an
acquisition meeting certain specified criteria has been made and a
sufficient number of investors reconfirm their investment in accordance
with the procedures set forth in SEC Rule 419. The Escrow Account will not
be released until such time as the Company (a) has entered into an
agreement with respect to a Business Combination, (b) the company has filed
a post-effective amendment to its registration statement which post-
effective amendment has been declared effective, (c) the prospectus
contained in the post-effective amendment has been sent to the Company's
shareholders, (d) each purchaser of securities in this Offering has been
given no fewer than 20 and no more than 45 business days from the effective
date of the prospectus, to elect whether to remain an investor and (e) the
Business Combination is consummated.
The proceeds not held in the Escrow Account established pursuant to
SEC Rule 419 will be used by the Company (a) for expenses related to this
Offering (estimated to be approximately $31,000) or to repay all or a
portion of loans made by the Company's principal shareholder(1) which
allowed the Company to pre-pay some of these offering expenses (b) to pay
for business, legal and accounting due diligence expenses incurred in
connection with evaluation of prospective Business Combinations and (c) for
general and administrative expenses(2) of the Company, including legal and
accounting fees and administrative support expenses incurred in connection
with the Company's reporting obligations to the SEC.
(1) The Company has borrowed an aggregate of $20,000 from its
principal shareholder for the purpose of pre-paying certain expenses
incurred by the Company in connection with this Offering. This
indebtedness is evidenced by promissory notes which bear interest at
the rate of 10% per annum from the date relevant funds were advanced.
No amounts are due under these promissory notes until consummation of
a merger or acquisition of a target business.
(2) The Company utilizes office space at 12146 East Amherst Circle,
Aurora, Colorado 80014, provided by the principal shareholder of the
Company, Mrs. Sandra Steinberg. The Company will 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 cost incurred by Mrs. Steinberg
on Company matters, which is estimated will not exceed, on average,
$250 per month.
There are no plans, proposals, arrangements, or understandings with
respect to the sale or issuance of additional securities of the Company
prior to the location of an Target Business.
<PAGE>
After the Company reaches an agreement for acquisition of a business, it is
required by SEC Rule 419 to prepare and disseminate a prospectus contained
in a post-effective amendment to its registration statement to all
investors, which will describe the business to be acquired and provide more
specific information on the use of the net proceeds of the offering in
connection with the acquisition and in such business. Except for
reimbursement of offering costs and expenses incurred by officers and
directors on Company matters described above, no portion of the net
proceeds of the offering may be paid to officers, directors, promoters, or
their affiliates or associates, directly or indirectly, as consultant fees,
officer salaries, director fees, purchase of their shares, or other
payments. The Company's Board of Directors has adopted a policy by
resolution to the foregoing effect, which may be rescinded or amended only
by majority vote of the Company's shareholders 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 business venture is
consummated. While the Company's Board of Directors may seek a change in
this policy prior to an acquisition, no change may be made except by the
vote specified. No portion of the net proceeds will be used to make loans
to any person. In addition, the Company will not borrow funds and use the
proceeds therefrom to make payments to the Company's officers, directors,
or promoters, or their affiliates or associates.
The Company has no agreement or understanding with any consultant or
advisor to provide services in connection with any future business
acquisition. At the present time, the Company does not anticipate that it
will engage consultants or advisors specializing in business acquisitions
or reorganizations, although the possibility exists that management may
find it to be beneficial to the Company to retain the services of such a
consultant. Under no circumstances will the Company retain the services of
any consultant who is also an officer, director, or promoter of the Target
Business, or their affiliates or associates. Compensation to a consultant
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 Company estimates that
any fees for such services paid in cash will not exceed 10% of the amount
of the securities issued by the Company to acquire a business. The Company
will not have funds to pay a retainer in connection with any consulting
arrangement, and no such fee will be paid unless and until an acquisition
is completed in accordance with SEC Rule 419. To the extent that the
Company utilizes the services of an independent consultant advisor, some
portion of the proceeds derived from this Offering, however, may ultimately
be directly or indirectly used to pay such persons or firms.
PLAN OF DISTRIBUTION
SELLING THE SHARES OF THE OFFERING. The officers and directors of the
Company have been authorized by the Company to sell the Shares of the
Company's common stock pursuant to this Prospectus to any and all suitable
investors of age in any state in which these securities have been
registered, and shall take no commission or other offering remuneration of
any kind for doing so. To the extent that Shares are sold by registered
broker-dealers, however, the Company will pay a 10% commission to such
registered broker-dealers. Investors may purchase Shares by completing a
subscription agreement and delivering to the selling officer or director a
check payable to Franks' Express, Inc. Escrow Account, for the amount of
the purchase price.
The Company has not entered into an underwriting agreement with any
broker-dealer. However, broker-dealers who desire to participate in the
sale of the Shares may do so by
<PAGE>
notifying the National Association of Securities Dealers (NASD) of their
intent to do so, and entering into a Selected Dealers Agreement with the
Company. The Selected Dealers Agreement includes provisions for mutual
indemnification against certain civil liabilities arising under the
Securities Act of 1933, as amended. For any Shares sold by participating
broker-dealers, the Company will pay a sales commission of ten percent
(10%) of the sales price. The Shares are offered by the Company subject to
prior sale, when, as and if delivered to and accepted by the Company, and
subject to approval of certain matters by legal counsel. The Company
reserves the right to withdraw, cancel or modify such offer and any offer,
in whole or in part. Delivery of the Shares will be made to investors
promptly upon acceptance and the satisfaction of escrow conditions relating
to completion of the minimum offering amount.
AGREEMENTS OF OFFICERS, DIRECTORS AND 10% BENEFICIAL SHAREHOLDERS
Pursuant to a written agreement among each of the officers, directors
and 10% or more beneficial shareholders of the Company and the Company,
such persons will not (i) actively negotiate for or otherwise consent to
the disposition of any portion of their Common Stock at a per share price
different than that offered with respect to the Shares sold in this
offering as a condition to or in connection with a Business Combination or
(ii) cause any securities of the Company to be sold by any officers,
directors, greater than 10% shareholders or persons who may be deemed
promoters of the Company, except as may otherwise be made in permitted
market transactions without affording all shareholders of the Company a
similar opportunity. Further, the Company shall not borrow funds to be
used directly or indirectly to (i) purchase any shares of the Company's
Common Stock owned by management of the Company; or (ii) make payments to
the Company's promoters, management or their affiliates or associates. No
member of management, promoter or anyone acting at their direction is
expected to recommend, encourage or advise investors to open brokerage
accounts with any broker-dealer that is obtained to make a market in the
Company's securities, if any. Information regarding any broker-dealers
that make a market in the Company's securities in the future, if any, will
be disseminated to the Company's shareholders as part of ongoing
communication between the Company's management and its shareholders.
DETERMINATION OF THE OFFERING PRICE. As of the date of this
Prospectus, there is no public market for the Company's common stock. The
offering price of the Shares was determined by the Company without regard
to any traditional or established criteria of value. In determining the
offering price and the number of shares to be offered, the Company
considered such factors as the financial condition of the Company, its net
tangible book value, its business prospects, and the general condition of
the securities market. The offering price of $1.00 per Share was
established by the Company, in part because the Company believes that the
price of $1.00 would be the easiest price at which to sell the Shares.
Accordingly, the offering price set forth on the cover page of this
Prospectus should not be considered an indication of the actual value of
the Company. The price bears no relation to the Company's assets, book
value, earnings or net worth or any other traditional valuation criteria.
There is also no assurance that an active trading market for the Company's
securities will develop or, if developed, will continue, such that
subscribers will be able to resell their Shares following this offering.
The Company's common stock has never been traded on any exchange or market
prior to this offering, and has been privately held.
SHAREHOLDERS OF RECORD. On June 30, 1997, there were six holders of
record of the Company's common stock.
<PAGE>
DIVIDENDS. The Company has never paid dividends on the Company's
common stock. The Board of Directors of the Company presently intends to
pursue a policy of retaining earnings, if any, for use in the Company's
operations and to finance expansion of its business activities. With
respect to the Company's common stock, the declaration and payment of
dividends in the future, of which there can be no assurance, will be
determined by the Company's Board of Directors in light of conditions then
existing, including the Company's earnings, financial condition, capital
requirements and other factors. There are presently no dividends which are
accrued or owing with respect to any of the Company's outstanding capital
stock and none are expected to be paid in the forseeable future.
LEGAL PROCEEDINGS
There are no legal proceedings or pending litigation to which the
Company is a party or against any of its officers or directors as a result
of their activities associated with the business of the Company.
MANAGEMENT
The Company has no knowledge of any arrangement or understanding in
existence between any officer named below or any other person pursuant to
which any such officer was or is to be elected to such office or offices.
All officers of the Company serve at the pleasure of the Company's Board of
Directors. All officers of the Company will hold office until the next
annual meeting of the Board of Directors of the Company. There is no
person who is not a designated officer or director who is expected to make
any significant contribution to the business of the Company, except
independent contractors as are, or may be engaged by the Company to provide
consulting services.
Officers and Directors of the Company currently serve without
compensation, other than reimbursement of actual out-of-pocket expenses
they incur on behalf of the Company, and prior to a Business Combination,
none of the Company's Officers or Directors will receive any additional
compensation (including cash consideration or Company securities). Prior
to the consummation of a Business Combination, no additional securities
will be issued to the Company's management, promoters or their affiliates
or associates, except that such persons may purchase shares of the
Company's Common Stock in this Offering on the same conditions as public
investors, provided that they may not purchase more than 50% of the shares
actually purchased by public investors.
The following sets forth biographical information for at least the
past five years as to the business experience of each officer and director
of the Company and their age and positions with the Company:
<PAGE>
PRESIDENT AND DIRECTOR. Charles Burton, age 47, currently serves as
President and Director of the Company, a position he has held since April
15, 1997. Mr. Burton served as Secretary and a Director of the Company
from January 2, 1997 until April 15, 1997, when he was elected President.
Mr. Burton is a graduate of Kenyon College where he obtained a
bachelors degree in Political Science in 1971. From 1972 to 1976, Mr.
Burton served as a special assistant to George Clark Martin, President of
the National Association of Home Builders in Louisville, Kentucky. From
1977 to 1985, Mr. Burton was employed as a licensed securities broker with
S. W. Devanney and Co., Inc. in Denver, Colorado. He was employed with
Kober Financial Inc. from 1985 to 1988 as a wholesale securities trader.
Thereafter, Mr. Burton was employed by Fitzgerald, Talman, Inc. as a
wholesale securities trader for the remainder of 1988. In 1989, Mr. Burton
became self-employed as a financial consultant. His consulting experience
included rendering advice with respect to mergers and acquisitions, and
assisting various companies in developing public trading abilities. During
this time, Mr. Burton also served as President of Wild Creek Oil Company,
Inc. From 1992 to 1993, he was employed by Paramount Investments
International, Inc. as a wholesale trader. In 1993 he left Paramount to
devote his efforts to development of LPR Cybertek, Inc., an internet
financial services company located in Denver, Colorado, where he was co-
owner and Vice-President. In May of 1996, he assisted with the merger of
Wild Creek Holding Company, Inc., a publicly traded company, with TNB, an
international trading and export concern. Mr. Burton continues to operate
his independent financial consulting service business, but presently
concentrates his efforts on assisting individuals in making financial
decisions.
SECRETARY AND DIRECTOR. Roger D. Jones, age 31, currently serves as
Secretary and a Director of the Company. Mr. Jones has served as a
Director of the Company since January 2, 1997 and prior to taking over
duties as Secretary of the Company, Mr. Jones served as its interim Company
President from January 2, 1997 until April 15, 1997.
Mr. Jones graduated from Lake Forest College Lake Forest, Illinois in
1987 with a bachelors degree in history. Since that time, Mr. Jones has
been employed by the McDonald's Corporation in various capacities. Mr.
Jones relocated to Aurora, Colorado in April of 1988. Mr. Jones attended
the highly regarded Hamburger University sponsored by the McDonald's
Corporation in 1992, where course work included studies in advertising,
marketing, restaurant profit and loss statements, restaurant layout and
maintenance. In December of 1992, Mr. Jones became the Restaurant Manager
for McDonald's in Aurora, Colorado. Mr. Jones has also assisted McDonald's
Corporation's Regional Training Department, training assistant managers
from the seven-state Rocky Mountain Region.
TREASURER AND DIRECTOR: Sandra S. Steinberg, age 46, has been a
Director of the Company since its inception in 1991. She currently serves
as the Treasurer of the Company, a position she has held since January 2,
1997. Mrs. Steinberg served as the President of the Company from 1991
until January 2, 1997, which included the period when the Company operated
retail food eateries which sold primarily hot dogs and related items and
ice cream, and a significant period where the Company did not actively
conduct business activities.
<PAGE>
Mrs. Steinberg obtained her securities broker's license in 1985 and
was employed for a period of two months by Tri-Securities, a brokerage firm
located in Englewood, Colorado that specialized in sale of stocks and
bonds. Thereafter, Mrs. Steinberg became a registered representative with
J. W. Gant, a position she held until October of 1986. She was associated
with Guildcor Financial Inc. from October of 1986 until January of 1988,
where she also sold securities. Mrs. Steinberg was then employed by
Capital Securities for approximately 11 months in 1988. She left that
position to become President and Chairman of the Board and Directors of
Franks for the Memories, Inc., a food service business retailing hot dogs.
Franks' Express, Inc. was formed in 1991 to engage in the restaurant and
food service business and Mrs. Steinberg supervised its active business
operations until November, 1993.
Although it is possible that Officers and Directors of the Company may
become involved in other blank check or blind pool Companies in the future,
none of such other companies will join the Company in a Business
Combination.
BUSINESS
GENERAL
The Company recently changed its business objective from restaurant
consulting to seeking, investigating, and ultimately acquiring an interest
in business with long-term growth potential. Persons should not purchase
Shares in the offering for short-term earnings or short-term appreciation
in the value of the Company. 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. At this point, the Company's
business objectives are extremely general and are not intended to be
restrictive on the discretion of the Company's management.
Earlier this year, the Company engaged Mr. Richard Steinberg, spouse
of the Company's principal shareholder, to provide the Company with
financial planning advice with respect to its proposed restaurant
consulting business and supplement its available restaurant consulting
expertise. Mr. Steinberg provided consulting services to the Company
during the period from January 1, 1997 through August 9, 1997. After the
final decision was made to focus the Company's efforts away from restaurant
consulting and concentrate exclusively on seeking a Business Combination,
Mr. Steinberg's services were no longer needed or desired by the Company.
As a result, the two year consulting agreement was prematurely terminated
at the Company's request.
Persons purchasing Shares in the offering will be entrusting their
funds to the Company's management, subject to the requirements of SEC Rule
419. The net proceeds of the offering are not specifically allocated to
identified purposes or allocated to the acquisition of any specific type of
business venture. Decisions concerning these matters may be made by
management without involvement by any public shareholders, except for the
right of each investor to recover his or her pro rata portion of the
Deposited Funds in accordance with SEC Rule 419. (SEE "USE OF PROCEEDS.")
Management anticipates that it will be able to participate in only one
transaction with a single Target Business, 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
<PAGE>
not permit the Company to offset potential losses from one venture against
gains from another, or otherwise diversify its business.
SELECTION OF A TARGET BUSINESS
The Company anticipates that businesses for possible acquisition may
come from responses to advertising, or 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
persons.
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 to be 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 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. Consequently, the
Company is currently unable to predict the cost of utilizing such services,
but estimates that any fees for such services paid in cash will not exceed
10% of the gross proceeds derived from this offering and/or equity
securities (not debt) equal to 10% of the amount of the securities issued
by the Company to acquire a Target Business. If a finder or business
acquisition firm is utilized by the Company, the cost may be paid out of
the net proceeds of this offering. (SEE "USE OF PROCEEDS.") The Company's
Board of Directors has recently adopted a policy by resolution, which may
be rescinded or amended only by majority vote of the Company's shareholders
who do not currently hold any of the Company's outstanding capital stock
(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 (including</>R the
issuance of debt) to any person who has
served as an officer or director of the Company prior to the acquisition,
or who is a promoter. This policy was adopted to minimize the possibility
that such fees would become a factor in negotiations and present conflicts of
interest. 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 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
remedy the circumstances leading to such financial problems.
<PAGE>
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 genuine 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 Company does not intend to
engage in the creation of subsidiary entities with a view to distributing
their securities to shareholders of the Company. The Company's Board of
Directors has adopted a policy by resolution, which may be rescinded or
amended only by majority vote of the Company's shareholders who do not
presently 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 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 prior to the acquisition
While the Company's 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 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 innovations, and other factors which
are difficult, if not impossible, to analyze through any objective
criteria. The results of operations of a specific acquisition candidate
may not necessarily be indicative of the potential for the future, due to a
required substantial shift in marketing approaches, the need to expand
significantly, a proposed change product emphasis, a proposed change to
management, and other factors.
Analysis of Target Businesses will be undertaken by or under the
supervision of the officers and directors (SEE "MANAGEMENT.") 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.
It is possible that the Company may propose to acquire a business in
the development stage. A business is in its development stage if it is
devoting substantially all of its efforts to establishing a new business,
and either planned principal operations have commenced, but there has been
not significant revenue derived from such operations. Under SEC 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, less certain
commissions and 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 SEC Rule 419.
The Company will be subject to requirements of SEC Rule 419 and
certain reporting requirements under the Securities and Exchange Act of
1934 (the "Exchange Act") and will, therefore, be required to furnish
certain information about significant acquisitions, including
<PAGE>
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 possess, or are unable to
obtain the required audited statements which meet the requirements of SEC
Rule 419 and the Exchange Act will not be appropriate for acquisition by
the Company. 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 section 15(d) of the Exchange Act.
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 this offering cannot be predicted and will
depend on circumstances beyond the Company's control, including the
availability of appropriate business candidates, 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 will take several months. Even after the
Company has located a prospective Target Business, however, the Company
will still have to comply with the reconfirmation provisions of SEC Rule
419, which may take several months. Persons should not purchase Shares in
this offering if they desire short-term appreciation in the value of the
Company or its securities.
As previously discussed, the Company's Board of Directors has recently
adopted a policy by resolution, which may be rescinded or amended only by
majority vote of the Company's shareholders who do not currently hold any
of the Company's outstanding capital stock (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 Company from acquiring or
merging 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. This policy was adopted to minimize the
possibility that such matters would become factors in negotiations and
present conflicts of interest. While the Board of Directors may seek a
change in these policies prior to an acquisition, no change may be made
except by the vote specified.
COMPETITION
In connection with its search for an appropriate Target Business, the
Company expects intense competition with other business entities, many of
which will have greater financial resources and prior experience in
business, which could give such business entities a competitive edge.
There is no assurance that the Company will be successful in locating
suitable Target Businesses.
ACQUISITION OF A TARGET BUSINESS
To implement 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 foregoing, the Company does not presently
intend to participate in a business through the purchase of minority stock
positions. After consummation of an acquisition or merger transaction,
however, it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, the majority
<PAGE>
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, as a
negotiated element of the acquisition, are likely to sell a portion or all
of the Company's outstanding 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 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 expected to be
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.
Investors who purchase Shares in this offering, 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. (SEE
"MANAGEMENT.")
The Company expects that any securities issued in any reorganization
or acquisition transaction 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 at this
time, registration of securities by the Company in these circumstances
would likely 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 and conditions of a transaction to which the
Company may be a party cannot be predicted, the parties to the business
transaction are likely to find it desirable to structure the acquisition as
a "tax-free" event under sections 351 or 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). In order to obtain tax-free
treatment under Section 351 of the Code, the owners of the acquired
business would be required to own 80% or more of the outstanding capital
stock of the surviving entity. In such event, the shareholders of the
Company, including investors in this offering, 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
reorganizations between corporate entities where an 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.
In such circumstances, however, it is likely that, as a negotiated element
of a transaction completed in reliance on section 368, the acquiring
corporation would 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. Therefore, there is a good chance 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. Consequently, regardless of the form of the
<PAGE>
business acquisition, it is likely that the investors in this offering will
experience a significant reduction in their percentage of ownership in the
Company in connection with such transactions.
Notwithstanding the fact 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
has 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 participating in the transaction.
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 position of the Company and such other management.
In light of the limited financial resources available to the Company,
it is unlikely that the Company will have sufficient funds from the
proceeds of this offering to fully undertake any substantial 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, the Company
may 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 convince third parties in providing funding
for the further development, marketing, and manufacturing of any products
acquired.
The Company will participate in a Target Business only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, in general, such agreements
require specific representations and warranties by all of the parties to
such agreements, specify certain events of default, detail the terms of
closing and the conditions which must be satisfied by each of the parties
prior to such closing, outline the manner of bearing costs if the
transaction is not closed, set forth remedies on default, and include
miscellaneous other terms. One of the conditions contained in such a
written agreement executed by the Company would be compliance with SEC Rule
419, and reconfirmation by investors representing at least 80% of the
proceeds derived from this 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, attorney's, and
others. Thereafter, if a decision is made not to participate in a specific
business, the costs previously 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
particular transaction could 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.
LEVERAGE
The Company may decide to acquire a business by incurring indebtedness
for a portion of the purchase price of that business, which is secured by
the assets of the business acquired.
<PAGE>
This practice is commonly known as leveraging. 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 manner 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 additional significant risks
because the borrowing involved in a leverage transaction will ordinarily be
secured by the combined assets of the Company and the business to be
acquired. If the combined enterprises are unable 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 offset the related debt and other costs of
the financing.
The likelihood of the Company obtaining a conventional bank loan for a
leveraged transaction would depend largely on the business being acquired
and the business's perceived ability to generate sufficient revenues to
repay the debt. Generally, businesses suitable for leveraging transactions
are limited to those with income-producing assets that are either in
operation or can be placed in operation quickly. The Company cannot
predict whether it will be able to locate any such business. In general,
the Company will have few, if any, opportunities to examine business where
leveraging would be appropriate.
Even if the Company is able to locate a business where leveraging
techniques appear desirable, there is no assurance that financing for the
acquisition will be available or, that if it is available, that it will be
available on terms advantageous to the Company. Lenders from which the
Company may obtain funds for purposes of a leveraged buy-out may also
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 of such
restrictions on the Company.
OPERATION OF BUSINESS AFTER ACQUISITION
The Company's participation in the operation of a Target Business
after its acquisition 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. Any business
acquired will involve a variety of risks to investors in this offering,
certain of which risk factors have been generally summarized in the "RISK
FACTORS" portion of this Prospectus. The specific risks associated with
any given business cannot be predicted at the present time.
GOVERNMENTAL REGULATION
It is impossible to predict the effect that government regulation will
have on the Company until it has acquired an interest in a business. The
use of assets or conduct of businesses which
<PAGE>
the Company may acquire could subject the Company to environmental, public
health and safety, land use, trade, or other governmental regulations and
new state or local taxation. In selecting a business in which to acquire
an interest, management will endeavor to ascertain, in light of the limited
resources of the Company, the effects of such government regulation on the
prospective business of the Company. In certain circumstances, however,
such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of certainty
the impact of government regulation. The inability to ascertain the effect
of government regulation on a prospective business activity will increase
the risks associated with the acquisition of an interest in such business.
OFFICES
The Company utilizes office space at 12146 East Amherst Circle,
Aurora, Colorado 80014, which is being provided by the Company's principal
shareholder. The Company does not and will not pay rent for this office
space. The Company, however, will reimburse clerical and office expenses,
such as telephone charges, copy charges, overnight courier charges, travel
expenses, and similar costs incurred on Company matters, which is estimated
will not exceed, on average, $250 per month.
EMPLOYEES AND ADVISORS
The Company currently has no employees. Executive officers, who are
not compensated for their time contributed to the Company, will devote only
such time to the affairs of the Company as they deem appropriate. (SEE
"MANAGEMENT.") Management of the Company may use consultants, attorneys,
and accountants as necessary, and does not anticipate a need to engage any
full-time employees so long as it is seeking and evaluating business
opportunities related to a Target Business. David M. Summers, legal
counsel to the Company, is a shareholder of the Company. It is expected
that the Company will continue to retain the services of Mr. Summers
following completion of this offering. The need for employees and their
availability will be addressed in connection with a decision whether or not
to acquire or participate in a specific business industry.
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
As of June 30, 1997 there were 1,000,000 shares of the Company's
common stock issued and outstanding. The following table sets forth, as of
June 30, 1997, the common stock ownership of each person known by the
Company to be the beneficial owner of five percent or more of the Company's
outstanding capital stock. It also sets forth, as of June 30, 1997, the
share ownership of each director and executive officer of the Company, and
all of its officers and directors as a group. Each person has sole voting
and investment power with respect to the shares shown.
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
AFTER AFTER
NO. OF DATE BEFORE MINIMUM MAXIMUM
SHARES(1) ACQUIRED OFFERING OFFERING OFFERING
<S> <C> <C> <C> <C> <C>
Charles Burton .. . . . . 100,000 4/15/97 10.00% 9.75% 9.09%
2903 South Uinta Street
Denver, Colorado 80231
Roger D. Jones . . . . . 5,000 4/15/97 0.50% 0.49% 0.45%
1519 South Telluride
Street
Aurora, Colorado 80017
Sandra S. Steinberg. . . 745,000(2) 6/15/91 74.50% 72.68% 67.72%
12146 East Amherst Circle
Aurora, Colorado 80014
Daniel C. Steinberg. . . 50,000 2/20/94 5.00% 4.76% 4.55%
747 East First Street #210
Denver, Colorado 80203
Jamie L. Steinberg. . . . 50,000 2/20/94 5.00% 4.76% 4.55%
432 East Wellington #305
Chicago, Illinois 60657
David M. Summers. . . . . 50,000 4/15/97 5.00% 4.76% 4.55%
5670 Greenwood Plaza Blvd. Suite 422
Englewood, Colorado 80111
All officers and directors
as a group (3 persons) . 850,000 85.00% 82.92% 77.27%
</TABLE>
(1) Rule 13d-3, promulgated under the 1934 Act which concerns the
determination of beneficial owners of securities, includes as beneficial
owners of securities, among others, any person who directly or indirectly,
through any contract, arrangement, understanding relationship or otherwise
has, or shares, voting power and/or investment power with respect to such
securities; and, any person who has the right to acquire beneficial
ownership of such security within 60 days through means, including, but not
limited to, the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such
options, warrants or conversion privileges are deemed to be outstanding for
the purpose of computing the percentage of outstanding securities of the
class owned by such person, but shall not be deemed to be outstanding for
the purpose of computing the percentage of the class by any other person.
(2) Excludes an aggregate of 100,000 shares owned by Mrs. Steinberg's
children, Daniel C. Steinberg (50,000 shares) and Jamie L. Steinberg
(50,000 shares), for which Mrs. Steinberg disclaims any beneficial
ownership interest. All common shares owned by the officers, directors and
principal shareholders listed above are "restricted or control securities"
and, as such, are subject to limitations on resale. Such shares may be
sold pursuant to SEC Rule 144 under certain circumstances. These are no
contractual arrangements or pledges of the Company's securities, known to
the Company, which may at a subsequent date result in a change of control
of the Company.
DESCRIPTION OF SECURITIES
CAPITALIZATION. The Company's authorized capital stock consists of
100,000,000 shares of $.0001 par value common stock and 10,000,000 shares
of .0001 par value preferred stock. No preferred stock has been issued by
the Company.
<PAGE>
COMMON STOCK. All shares of common stock have equal voting rights and
are not assessable. Voting rights are not cumulative, and, therefore, the
holders of more than 50% of the common stock of the Company would be able
to elect all of the directors of the Company.
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities and after the
satisfaction of all priority claims by holders of the Company's preferred
stock (assuming preferred stock is issued in the future), will be
distributed pro rata to the holders of the common stock. The holders of
the common stock do not have preemptive rights to subscribe for any
securities of the Company, and have no right to require the Company to
redeem or purchase their shares. The shares of common stock presently
outstanding are, and the shares of common stock to be sold pursuant to this
offering will be, upon issuance, fully paid and nonassessable.
Holders of common stock are entitled to share equally in dividends
when, as, and if declared by the Board of Directors of the Company, out of
funds legally available therefor, after payment of any dividends then owing
to the holders of the Company's preferred stock, if any is outstanding.
The Company has not paid any cash dividends on its common stock, and it is
unlikely that any such dividends will be declared or paid in the
foreseeable future.
PREFERRED STOCK. The Company is authorized to issue 10,000,000 shares
of preferred stock, $.0001 par value. The preferred stock may be issued in
series from time to time with such designation, rights, preferences and
limitations as the Board of Directors of the Company may determine by
resolution. The rights, preferences and limitations of separate series of
preferred stock may differ with respect to such matters as may be
determined by the Board of Directors, including, without limitation, the
rate of dividends, amounts payable on liquidation, sinking fund provisions
(if any), conversion rights (if any), and voting rights. It is therefore
possible that preferred stock might be issued which would grant dividend
preferences and liquidation preferences to preferred shareholders superior
to those of the holders of common stock.
Unless the nature of a particular transaction and applicable statutes
require such approval, the Board of Directors has the authority to issue
preferred shares without shareholder approval. The issuance of preferred
stock may have the effect of delaying or preventing a change in control of
the Company.
DIVIDENDS
The Company does not expect to pay dividends prior to the consummation
of a Business Combination. Future dividends, if any, will be contingent
upon the Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to the consummation of a Business
Combination. The payment of dividends subsequent to the consummation of a
Business Combination will be within the discretion of the Company's board
of directors existing at that time. The Company presently intends to
retain all earnings, if any, for use in the Company's business operations
and accordingly, the Board does not anticipate declaring any dividends in
the foreseeable future.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS. Upon formation of the Company in 1991,
Sandra Steinberg acquired 100% of its outstanding capital stock in exchange
for an initial contribution of $5,000. Mrs. Steinberg transferred as gifts
50,000 shares to each of her two children, Jamie L. Steinberg and Daniel C.
Steinberg in February, 1994. Mr. Charles Burton and Mr. Roger Jones
acquired their shares from Mrs. Steinberg in January of 1997. Mr. Burton
paid $2,500 for his shares (100,000) and Mr. Jones paid $125
for his shares (5,000). Mr. Summers acquired 50,000 shares from Mrs. Sandra
Steinberg for $1,250 on April 15, 1997. (SEE "SECURITY OWNERSHIP OF
MANAGEMENT AND PRINCIPAL SHAREHOLDERS and EXECUTIVE COMPENSATION.")
Earlier this year, the Company engaged Mr. Richard Steinberg,
spouse of the Company's principal shareholder, to provide the Company
with financial planning advice with respect to its proposed restaurant
consulting business and supplement the Company's available restaurant
consulting expertise. Mr. Steinberg provided consulting services to the
Company during the period from January 1, 1997 through August 9, 1997.
After the final decision was made to focus the Company's efforts away from
restaurant consulting and concentrate exclusively on seeking a Business
Combination, Mr. Steinberg's services were no longer needed or desired by
the Company. As a result, the two year consulting agreement was
prematurely terminated at the Company's request. The Company presently
owes Mr. Steinberg</RR> $12,000 as payment for services previously rendered
under the consulting agreement and an early termination fee. Pursuant to
an agreement with Mr. Steinberg, no amounts due to him are payable by the
Company until consummation of a merger or acquisition of a Target Business.
As of the date of this Prospectus, the Company's principal
shareholder, Mrs. Sandra Steinberg, has loaned the Company in the aggregate
amount of $20,000 for the purpose of paying costs associated with this
offering. This indebtedness is evidenced by promissory notes which bear
interest at the rate of 10% per anum from the date relevant funds were
advanced by Mrs. Steinberg. Pursuant to an agreement with Mrs. Steinberg,
no amounts due under these promissory notes are payable by the Company
until consummation of a merger or acquisition of a Target Business. (SEE
Financial Statements of the Company included in this Prospectus.)
RESOLVING CONFLICTS OF INTEREST. The Board of Directors (the "Board")
has determined that the directors of the Company are required to disclose
all conflicts of interest and all corporate opportunities to the entire
Board of Directors. Any transaction involving a conflict of interest
engaged in by the Company shall be on terms not less favorable that could
be obtained from an unrelated third party. A director will only be allowed
to pursue a corporate opportunity in the event it is first disclosed to the
Board and the Board determines that it is not in the Company's best
interest to pursue the particular corporate opportunity. (SEE "RISK
FACTORS - Conflicts of Interest.")
EXECUTIVE COMPENSATION
As of the date of this Prospectus, none of the Company's executive
officers or directors have received any form of monetary compensation from
the Company since November of 1993
<PAGE>
other than minimal reimbursements for actual expenses incurred on behalf of
the Company. Prior to the consummation of a Business Combination, if any,
non of the Company's offices or directors will receive any compensation,
except for reimbursements for actual expenses incurred on behalf of the
Company.
However, after satisfaction of the requirements of SEC Rule 419
and acquisition of a Target Business, it is anticipated that the Company
will fairly compensate its officers and directors for their time and
efforts, based on rates that are competitive in the industry, after due
consideration of the financial condition and future prospectus of the
Company.
NO STOCK OPTION PLANS. There are no stock awards, restricted stock
awards, stock options, stock appreciation rights, long-term incentive plan
compensation or similar rights which have been granted to any of the
Company's executive officers or directors. The Company has no retirement,
pension profit sharing, stock option, or other plans covering any of its
officers and directors. The Company may adopt one or more stock options
plans in the future.
EMPLOYMENT CONTRACTS. The Company presently has no employment
contracts with any of its officers and directors.
PURCHASES BY OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS.
Officers, directors, and principal shareholders of the Company and persons
associated with them may purchase up to fifty percent (50%) of the Shares
being offered pursuant to this Prospectus, in a manner consistent with the
public offering of the Company's Shares. It is not intended, however, for
the proceeds from this offering to be utilized, directly or indirectly, by
anyone, including the Company's officers and directors, to purchase any of
the Shares offered. To the extent such persons purchase Shares in the
offering, the minimum number of Shares required to be purchased by the
general public will be reduced by like amount. Purchase of Shares in this
offering by officers and directors will result in the Company's current
management increasing its control of the Company. Consequently, this
offering could close with a substantially greater percentage of shares
being held by present shareholders and with lesser participation by the
general public than would otherwise be the case. (SEE "PROSPECTUS SUMMARY"
and "SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS.")
LEGAL MATTERS
ATTORNEYS. The legality of the securities of the Company offered
hereby will be passed on for the Company by David M. Summers, Esq., 5670
Greenwood Plaza Boulevard, Suite 422, Englewood, Colorado 80111. Mr.
Summers presently owns 50,000 shares of the Company's outstanding capital
stock, representing 5% of its current outstanding capital stock, which was
acquired from Mrs. Sandra Steinberg for $1,250 on April 15, 1997.
TRANSFER AGENT
The Company has retained Corporate Stock Transfer, 370 17th Street,
Suite 2350, Denver, Colorado 80202, as transfer agent for the Company's
common stock.
<PAGE>
EXPERTS
The financial statements of the Company, as of June 30, 1997, and for
the period then ended, included in this Prospectus have been audited by
Janet Loss, C.P.A., P.C., 9101 East Kenyon Avenue, Suite 2000, Denver,
Colorado 80237, independent public accountants, as stated in their report
appearing herein and elsewhere in the Company's Registration Statement, and
have been so included in reliance upon such report given upon the authority
of that firm as experts in accounting and auditing.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Accountants Report F-3
Financial Statements
Balance Sheets F-5
Statements of Operations F-7
Statement of Stockholders Equity F-8
Statements of Cash Flows F-10
Notes to Financial Statements F-11
F-1
<PAGE>
FRANKS' EXPRESS, INC.
AUDIT REPORT
For the six months ended
June 30, 1997 and 1996
and for the Years ended
December 31, 1996 and 1995
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
F-2
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
Board of Directors
Franks' Express, Inc.
12146 East Amherst
Aurora, Colorado 80014
I have audited the Balance sheets of Franks' Express, Inc. as of June 30,
1997 and 1996 and December 31, 1996 and 1995, and the statements of
Operations, Stockholders Equity and Cash Flows for the six months ended
June 30, 1997 and 1996 and for the years ended December 31, 1996 and 1995.
I conducted my audit in accordance with generally accepted auditing
standards. These standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit also includes assessing the accounting
principals used and significant estimates made by management as well as
evaluating the overall financial statement presentation.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Franks' Express, Inc.
as of June 30, 1997 and 1996 and December 31, 1996 and 1995, and the
results of its operations and its cash flow for the six months ended June
30, 1997 and 1996 and for the years ended December 31, 1996 and 1995.
Janet Loss, C.P.A., P.C.
October 27, 1997
F-3
<PAGE>
FRANKS' EXPRESS, INC.
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant...........................1
Balance Sheets, June 30, 1997 and 1996
December 31, 1996 and 1995....................................2
Statements of Operations, for the six months ended
June 30, 1997 and 1996 and for years ended
December 31, 1996 and 1995....................................3
Statements of Stockholders' Equity, for the six months
ended June 30, 1997 and for years ended
December 31, 1996 and 1995....................................4
Statements of Cash Flows, for the six months ended
June 30, 1997 and 1996 and for the years ended
December 31, 1996 and 1995....................................5
Notes to Financial Statements .............................6-7
F-4
<PAGE>
FRANKS' EXPRESS, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
June 30, June 30, December 31,
1997 1996 1996 1995
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash $ 5,357 $ 0 $ 1 $ 1
OTHER ASSETS:
Deferred Offering
Costs 20,917 $ 0 $ 0 $ 0
TOTAL ASSETS $26,274 $ 0 $ 1 $ 1
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 7,000 $ 0 $ 0 $ 0
Accrued Interest
(Note 3) 308 0 0 0
Accrued Expenses
(Note 3) 6,000 0 0 0
Stockholder's Loan
(Note 3) 20,000 0 0 0
Total Current
Liabilities 33,308 0 0 0
STOCKHOLDERS' EQUITY
(DEFICIT):
Common stock, $.0001
par value
100,000,000 and 50,000
shares authorized
1,000,000 and 1,000
shares issued and
outstanding 5,000 5,000 5,000 5,000
(Deficit) (12,034) (4,999) (4,999)(4,999)
F-5
<PAGE>
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ( 7,034) 1 1 1
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT) $26,274 $ 1 $ 1 $ 1
The accompanying notes are an integral part of these
financial statements.
F-6
<PAGE>
FRANKS' EXPRESS, INC.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997 and 1996
and for the years ended December 31, 1996 and 1995
June 30, June 30, December 31,
1997 1996 1996 1995
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES:
Bank charges 27 0 0 0
Consulting Fees 6,000 0 0 0
Filing Fees 100 0 0 0
Legal and
Accounting 600 0 0 0
Total Operating
Expense: $ 6,727 $ 0 0 0
NET INCOME
(LOSS):
before other
income and
expenses (6,727) 0 0 0
OTHER INCOME AND
EXPENSES:
Interest
(Expenses) ( 308) 0 0 0
NET INCOME
(LOSS) $(7,035) 0 0 0
NET INCOME
(LOSS) PER
SHARE OF
COMMON STOCK $( .01) N/A N/A N/A
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-7
<PAGE>
FRANKS' EXPRESS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Common stock Stockholders
Number of Common stock Equity
SHARES AMOUNT (DEFICIT) (DEFICIT)
<S> <C> <C> <C> <C>
Balance,
January 1, 1995 $ 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1995 - - - -
Balance,
December 31, 1995 $ 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1996 - - - -
Balance,
December 31, 1996 $ 1,000 $ 5,000 $(4,999) $ 1
April 30, 1997
1,000 to 1 forward
stock split of
common stock 999,000 - - -
Net (Loss) six
months ended
June 30, 1997 0 0 (7,035) (7,035)
Balance,
June 30, 1997 $1,000,000 $ 5,000 $(12,034) $ (7,034)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-8
<PAGE>
FRANKS' EXPRESS, INC.
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the six months ended June 30, 1997 and 1996
and for the years ended December 31, 1996 and 1995
June 30, June 30, December 31,
1997 1996 1996 1995
<S> <C> <C> <C> <C>
Net (Loss) $ (7,035) $ 0 $ 0 $ 0
Changes in Operating
assets and liabilities
Increase in current
liabilities 33,308 0 0 0
Net cash provided by
operating activities 26,273 0 0 0
Cash flows from (to)
Financing activities:
Deferred offering costs (20,917) 0 0 0
Net Increase in Cash 5,356 0 0 0
Cash beginning of period 1 1 1 1
Cash end of period $ 5,357 $ 1 $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-10
<PAGE>
FRANKS' EXPRESS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Franks' Express, Inc. a Colorado Corporation, was
incorporated May 17, 1991 for the purpose of engaging
in the restaurant business. The Company ceased its
restaurant operations in November of 1993 and has
been in active until 1997. In 1997, the Company is
in the process of beginning operations in the
consulting business with medium sized businesses.
YEAR END
The Company has elected a calendar year-end.
ACCOUNTING METHOD
The Company records income and expenses on the
accrual method.
NOTE 2 - CAPITAL STOCK
On April 30, 1997 the Company issued a 1,000 to 1
forward stock split for common stock. Thus, the
total common stock authorized changed from 50,000 to
100,000,000, and from no par value to $.0001 par
value.
NOTE 3 - RELATED PARTIES
The Company maintains its office in space provided by
the Company's treasurer pursuant to an oral agreement
on a rent free basis with reimbursement for out of
pocket expenses, such as telephone.
The spouse of the Company's principal shareholder has
provided consulting services to the Company during
the period January 1, 1997 through August 9, 1997
pursuant to terms and conditions of a two (2) year
consulting agreement which was prematurely terminated
at the Company's request. As of June 30, 1997, the
Company owes the consultant $6,000 as payment for
services rendered.
F-11
<PAGE>
As of August 9, 1997 the agreement increased to
$12,000 based on an agreement to pay $1,000 per month
and an early termination fee. Pursuant to agreements
with the Company's principal shareholders no amounts
due to him are payable by the Company until
consummation of the merger or acquisition of a target
business.
The Company's principal shareholder has loaned the
Company in the aggregate amount of $20,000 for the
purpose of paying costs associated with this
offering. This indebtedness is endorsed by
promissory notes which bear interest at the rate of
10% per annum from the date relevant funds were
advanced by the principal shareholder. Pursuant to
an agreement with the principal shareholder, no
amounts due under these promissory notes are payable
by the Company until consummation of a merger or
acquisition of a target business.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been
prepared in conformity with generally accepted
accounting principles, which contemplate continuation
of the Company's ability to continue as a going
concern is dependent upon the Company's ability to
obtain financing.
F-12
<PAGE>
No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations in connection with this offering
other than those contained in this Prospectus and, if
given or made, such information or representations
must not be relied on as having been authorized by
the Company. This Prospectus does not constitute an
offer to sell or solicitation of an offer to buy any
security other than the securities offered by this
Prospectus, or an offer to sell or a solicitation of
an offer to buy any securities by any person in any
jurisdiction in which such offer or solicitation is
not authorized or is unlawful. The delivery of this
Prospectus shall not under any circumstances create
any implication that the information herein is
correct as of any time subsequent to the date of this
Prospectus.
TABLE OF CONTENTS
PAGE
Prospectus Summary ..........1
Risk Factors ............... 7
Dilution................... 22
Management's Discussion and
Analysis of Financial Condition
and Plan of Operation ..... 23
Comparative Data ...........24
Use of Proceeds ............24
Plan of Distribution ......26
Legal Proceedings ......... 27
Management ................ 28
Business................... 29
Security Ownership of Management and
Principal Shareholders ..37
Description of Securities 38
Certain Relationships and Related
Party Transactions ............40
Executive Compensation .... 40
Legal Matters.............. 41
Transfer Agent............. 41
Experts.................... 42
Index to Financial Statements F-1
Until , 1997 (25 days
after the date of this Prospectus) or 90 after the
release of funds and securities from the SEC Rule 419
Escrow Account established in connection with this
offering, whichever occurs later, all dealers
effecting transactions in the registered securities,
whether or not participating in this distribution,
may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
<PAGE>
$100,000
FRANKS' EXPRESS, INC.
100,000 Shares
PROSPECTUS
________, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-3-101.5 of the Colorado Revised
Statutes enables a Colorado corporation to indemnify
its officers, directors, employees and agents
liabilities, damages, costs and expenses for which
they are liable in their Official Capacities (as
defined by this statute) if they acted in good faith
and had no reasonable basis to believe their conduct
was not in the best interest of the Registrant or was
illegal.
Article IX of Registrant's Articles of
Incorporation limits the liability of directors to
the fullest extent provided by Colorado law.
Article V of the Registrant's Bylaws provide
indemnification to officers, directors, employees and
agents to the fullest extent provided by Colorado
law.
The Form of Selected Dealers Agreement attached
hereto as Exhibit 1.1 provides indemnification to
officers and directors of the Registrant under
certain conditions.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION.
SEC Registration Fee ........ $ 30
National Association of Securities
Dealers, Inc. Fee ........ 100
State qualification expenses
(including legal fees) .. 500*
Printing expenses ........... 300*
Legal fees and expenses ...... 20,000*
Auditors' fees and expenses . 2,500*
Transfer agent and
registrar fees.............. 1,200*
NASDAQ listing fee .......... 6,100*
Miscellaneous expenses ...... 270*
Total ...................... $31,000
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable
II-1
<PAGE>
ITEM 27. EXHIBITS
Exhibit
NUMBER DESCRIPTION OF EXHIBITS
1.1 Form of Selected Dealers Agreement
1.2* Form of Escrow Agreement
3.1 Restated and Amended Articles of
Incorporation
3.2 By-Laws
3.3* Agreement Among Officers, Directors
and 10%
Shareholders
5.1** Opinion of David M. Summers, Esq.
regarding
legality
23.1** Consent of David M. Summers, Esq
23.2** Consent of Janet Loss, C.P.A., P.C.
* Filed herewith
** To be filed by Amendment
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities
arising under the Securities Act of 1993 (the "Act")
may be permitted to directors, officers and
controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the small business issuer of expenses
incurred or paid by a director, officer or
controlling person of the small business issuer in
the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the small business issuer will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
II-2
<PAGE>
The small business issuer will:
(1) For determining any liability under the
Securities Act, treat the information omitted from
the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the small
business issuer under the Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this
registration statement as of the time the Commission
declared it effective.
(2) File, during any period in which the Company
offers or sells securities, a post-effective
amendment to the registration statement to:
(i) Include any prospectus required by
section 10(a)(3) of the Securities Act.
(ii) Reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration statement;
and
(iii) Include any additional or changed
material information on the plan of
distribution.
(3) For determining any liability under the
Securities Act, treat each post-effective amendment
as a new registration statement of the securities
offered, and the offering of the securities at that
time to be the initial bona fide offering.
(4) File a post-effective amendment to remove
from registration any of the securities that remain
unsold at the end of the offering.
(5) For determining any liability under the
Securities Act, treat the information omitted from
the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497
(h) under the Securities Act (Sections 230.424(b)(1),
(4) or 230.497(h)) as part of this registration
statement as of the time it was declared effective.
(6) For the purpose of determining any
liability under the Securities Act, treat each post-
effective amendment that contains a form of
prospectus as a new registration statement for the
securities offered in the registration statement, and
that offering of the securities at that time as the
initial bona fide offering of those securities.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of
the requirements of filing on Form SB-2 and
authorized this Amendment No. 2 to its Registration
Statement to be signed on its behalf of the
undersigned, in the City of Englewood, State of
Colorado on October 31, 1997.
FRANKS' EXPRESS, INC.
By: /S/ CHARLES BURTON
Charles Burton,
President
In accordance with the requirements of the
Securities Act of 1933, this Amendment No. 2 to Form
SB-2 Registration Statement was signed by the
following persons in the capacities and on the dates
indicated.
Date: October 31, 1997 /S/ CHARLES BURTON
Charles Burton, President,
Chief Executive
Officer, Principal Financial
Officer and Director
Date: October 31, 1997 /S/ ROGER D. JONES
Roger D. Jones,
Secretary and
Director
Date: October 31, 1997 /S/ SANDRA S. STEINBERG
Sandra S. Steinberg,
Treasurer, Principal
Accounting Officer and
Director
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE
PAGE
1.1 Selected Dealers Agreement ........
1.2 Escrow Agreement .............
3.1 Restated and Amended Articles of
Incorporation................................
3.2 By-Laws .......................
3.3 Agreement Among Officers, Directors
and 10% Shareholders
5.0 Opinion of David M. Summers, Esq. regarding
legality
23.1 Consent of David M. Summers, Esq. .
23.2 Consent of Janet Loss, C.P.A., P.C. ...
99.1 Subscription Agreement ............
<PAGE>
ESCROW AGREEMENT
AGREEMENT made this day of October, 1997,
by and among the Company whose name and address
appear on the Information Sheet (as defined herein)
attached to this Agreement and Corporate Stock
Transfer, Inc., a Colorado corporation (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Company, will offer the sale (the
"Offering") certain securities of the Company in the
form of shares of Common Stock (the "Shares"),
Pursuant to Rule 419 ("Rule "419") of the Securities
Act of 1933, as amended the "Securities Act"), as set
forth in the Company's Prospectus dated October ___,
1997. The offer and sale of the Shares are being
registered under the Securities Act. The purchase
price per Share is $1.00.
WHEREAS, the Company desires to establish an
escrow account (the "Escrow Account"), to which the
net proceeds of the Offering and the Certificates
representing the Shares issued in connection with the
Offering (the "Share Certificates") (the net proceeds
and the Share Certificates are collectively referred
to as the "Fund"), are to be credited and held, and
the Escrow Agent is willing to establish the Escrow
Account on the terms and subject to the conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises
and mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. INFORMATION SHEET. Each capitalized term
not otherwise defined in this Agreement shall have
the meaning set forth for such term on the
information sheet which is attached to this Agreement
as Exhibit A and is incorporated by reference herein
and made a part of this Agreement (the "Information
Sheet").
2. ESTABLISHMENT OF THE BANK ACCOUNT.
2.1 The Escrow Agent shall establish an
interest bearing escrow account at the branch of
Norwest Bank of Denver, N.A. selected by the Escrow
Agent, and bearing the designation set forth on the
Information Sheet (heretofore defined as the "Bank
Account"). The purpose of the Bank Account is for
the deposit of the net proceeds to be derived by the
Company from the sale of the Shares and for the
deposit of the Share Certificates representing the
Shares issued in connection with the Offering.
3. DEPOSITS TO THE BANK ACCOUNT.
3.1 DEPOSIT OF NET OFFERING PROCEEDS. Subject
to Rule 419, upon the Company's receipt and
acceptance of subscriptions and Offering proceeds,
the Company shall promptly deliver to the Escrow
Agent a
<PAGE>
certified or bank check in the amount of 90% of the
Offering proceeds drawn to the order of the Escrow
Agent or, alternatively, drawn to the order of the
Company but endorsed by the Company for collection by
the Escrow Agent and credited to the Escrow Account.
3.2 DEPOSIT OF SHARE CERTIFICATES. All share
certificates representing the Shares issued in
connection with the Offering shall be deposited by
the Company directly into the Escrow Account promptly
upon issuance. The identity of the purchasers of the
securities shall be included on the stock
certificates or other documents evidencing such
securities. Securities held in the Escrow Account
are to remain as issued and deposited and shall be
held for the sole benefit of the purchasers, who
shall have voting rights with respect to Securities
held in their names, as provided by applicable state
law. No transfer or other disposition of securities
held in the Escrow Account or any interest related to
such securities shall be permitted other than by will
or the laws of descent and distribution, or pursuant
to a qualified domestic relations order.
4. DISBURSEMENT FROM THE BANK ACCOUNT.
4.1 Upon the earlier of (i) receipt by the
Escrow Agent of a signed representation from the
Company to the Escrow Agent, attached to this
Agreement as Exhibit B and is incorporated by
reference herein and made a part of this Agreement,
that the requirements of Rule 419 (e)(1) and (e)(2)
have been met, and consummation of an acquisition(s)
meeting the requirements of Rule 419 (e)(1).
4.2 Notwithstanding the foregoing, if an
acquisition meeting the requirements of Rule 419
(e)(1) has not occurred by a date within 18 months
after the effective date of the Registration
Statement, funds held in the Escrow Account shall be
returned by first class mail or equally prompt means
to the purchasers within five business days following
that date.
4.3 Upon disbursement of the Fund pursuant to
the terms of this Paragraph, the Escrow Agent shall
be relieved of all further obligations and released
from all liability under this Agreement. It is
expressly agreed and understood that in no event
shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the fund.
5. RIGHTS, DUTIES AND RESPONSIBILITIES OF
ESCROW AGENT. It
is understood and agreed that the duties of the
Escrow Agent are purely ministerial in nature, and
that:
5.1 The Escrow Agent shall be entitled to rely
upon the accuracy, act in reliance upon the contents,
and assume the genuineness of any notice,
instruction, certificate, signature, instrument or
other document which is given to the Escrow Agent
pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy
thereof. The Escrow Agent shall not be obligated to
make any inquiry as to the
<PAGE>
authority, capacity, existence or identity of any
person purporting to give any such notice or
instructions or to execute any such certificate,
instrument or other document.
5.2 If the Escrow Agent is uncertain as to its
duties or rights under this Agreement or shall
receive instructions with respect to the Bank
Account, the Escrow Amounts or the Fund which, in its
sole determination, are in conflict either with other
instructions received by it or with any provision of
this Agreement, it shall be entitled to hold the
Escrow Amounts, the Fund, or a portion thereof, in
the Bank Account pending the resolution of such
uncertainty to the Escrow Agent's sole satisfaction,
by final judgment of a court or courts of competent
jurisdiction or otherwise; or the Escrow Agent, at
its sole discretion, may deposit the Fund (and any
other Escrow Amounts that thereafter become part of
the Fund) with the clerk of a court of competent
jurisdiction in proceeding to which all parties in
interest are joined. Upon the deposit by the Escrow
Agent of the Fund with the clerk of any court, the
Escrow Agent shall be relieved of all further
obligations and released from all liability under
this Agreement.
5.3 The Escrow Agent shall not be liable for
any action taken or omitted under this Agreement, or
for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful
misconduct or gross negligence. The Escrow Agent
shall be entitled to consult with counsel of its own
choosing and shall not be liable for any action
taken, suffered or omitted by it in accordance with
the advice of such counsel.
5.4 The Escrow Agent shall have no
responsibility at any time to ascertain whether or
not any security interest exists in the Escrow
Amounts, the Fund or any part thereof or to file any
financing statement under the Uniform Commercial Code
with respect to the Fund or any part thereof.
6. AMENDMENT; RESIGNATION. The Agreement may
be altered or amended only with the written consent
of the Company and the Escrow Agent. The Escrow
Agent may resign for any reason upon three (3)
business days' prior written notice to the Company.
Should the Escrow Agent resign as herein provided, it
shall turn over to a successor escrow agent appointed
by the Company, all monies and property, including
the Share Certificates, held under this Agreement
upon presentation of the documentation appointing the
new escrow agent and its acceptance thereof; or b) if
the resigning Escrow Agent shall not have received
written notice signed by the Company and a successor
escrow agent, then the resigning Escrow Agent shall
deposit the Escrow Account with any court it deems
appropriate; whereupon, in either case, the Escrow
Agent shall be relieved of all further obligations
and released from all liability under this Agreement.
Without limiting the provisions of Paragraph 8 of
this Agreement, the resigning Escrow Agent shall be
entitled to be reimbursed by the Company for any
reasonable expenses incurred in connection with
<PAGE>
its resignation, transfer of the Fund to a successor
escrow agent or distribution of the Fund pursuant to
this Paragraph.
7. REPRESENTATIONS AND WARRANTIES. The Company
hereby represents and warrants to the Escrow Agent
that, to its knowledge:
7.1 No party other than the parties to this
Agreement and the Company's Shareholders have, or
shall have, any lien, claim or security interest in
the Escrow Amounts or the Fund or any part thereof.
7.2 No financing statement under the Uniform
Commercial Code is on file in any jurisdiction
claiming a security interest in or describing
(whether specifically or generally) the Escrow
Amounts or the Fund or any part thereof.
7.3 All of the information contained in the
Information Sheet is, as of the date of this
Agreement, and will be, at the time of any
disbursement of the fund, true and correct in all
material respects. .
8. FEES AND EXPENSES. The Escrow Agent shall
be entitled to the Escrow Agent Fees set forth on the
Information Sheet, payable as and when stated in this
Agreement. In addition, the Company agrees to
reimburse the Escrow Agent for any reasonable
expenses incurred in connection with the Escrow
Agent's performance under this Agreement, including,
but not limited to, reasonable counsel fees. The
Escrow Agent shall have a lien upon the Fund to the
extent of its fees for services as Escrow Agent.
9. INDEMNIFICATION AND CONTRIBUTION.
9.1 The Company agrees to indemnify the Escrow
Agent and its officers, Directors, employees, agents
and shareholders (collectively referred to as the
"Indemnitees") against, and hold them harmless of and
from, any and all loss, liability, cost, damage and
expense, including, without limitation, reasonable
counsel fees, which the Indemnitees may suffer or
incur by reason of any action, claim or proceeding
brought against the Indemnitees arising out of or
relating in any way to this Agreement or any
transaction to which this Agreement relates, unless
such action, claim or proceeding is the result of the
willful misconduct or gross negligence of the
Indemnitees.
9.2 If the indemnification provided for in
Paragraph 9.1 is applicable, but for any reason is
held to be unavailable, the Indemnitors shall
contribute such amounts as are just and equitable to
pay, or to reimburse the Indemnitees for, the
aggregate of any and all losses, liabilities, costs,
damages and expenses, including, without limitation,
reasonable counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and
any amount paid in settlement of, any action,
<PAGE>
claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitors.
9.3 The provisions of this Paragraph shall
survive any termination of this Agreement, whether by
disbursement of the Fund, resignation of the Escrow
Agent or otherwise.
10. GOVERNING LAW AND ASSIGNMENT. This
Agreement shall be construed in accordance with and
governed by the laws of the State of Colorado and
shall be binding upon the parties to this Agreement
and their respective successors and assigns;
provided, however, that any assignment or transfer by
any party of its rights under this Agreement or with
respect to the Escrow Amounts or the Fund shall be
not be valid as against the Escrow Agent unless: (a)
written notice thereof shall be given to the Escrow
Agent; and (b) the Escrow Agent shall have consented
in writing to such assignment or transfer.
11. NOTICES. All notices required to be given
in connection with this Agreement shall be sent by
registered or certified mail, return receipt
requested, or by hand delivery with receipt
acknowledged, by overnight courier, such as Federal
Express, or by the Express Mail Service offered by
the United States Post Office, and addressed, if to
the Company, at its respective address set forth on
the Information Sheet, and if to the Escrow Agent, at
its address set forth above.
12. SEVERABILITY. If any provision of this
Agreement or the application thereof to any person or
circumstances shall be determined to be invalid or
unenforceable, the remaining provisions of this
Agreement or the application of such provision to
persons or circumstances other than those to which it
is held invalid or unenforceable shall not be
affected thereby and shall be valid and enforceable
to the fullest extent permitted by law.
13. EXECUTION IN SEVERAL COUNTERPARTS. This
Agreement may be executed in several counterparts or
by separate instruments, and all of such counterparts
and instruments shall constitute one agreement,
binding on all of the parties hereto.
14. ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement between the parties
hereto with respect to the subject matter of this
Agreement and supersedes all prior agreements and
understandings (written or oral) of the parties in
connection therewith.
IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the day and year first
above written.
<PAGE>
FRANKS' EXPRESS, INC. CORPORATE STOCK
TRANSFER, INC.
the Company as Escrow Agent
By: By:
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
ESCROW AGREEMENT INFORMATION SHEET
THE COMPANY
Name: FRANKS' EXPRESS, INC.
Address: 12146 East Amherst Circle
Aurora, Colorado 80014
Jurisdiction of incorporation or organization:
Colorado
THE SHARES
Description of the Shares to be offered: One Hundred
Thousand (100,000) Shares of Common Stock, no par
value. The purchase price per Share is $1.00.
TERM OF ESCROW AGREEMENT
The earlier of (i) the liquidation of the Company or
(ii) the receipt by the Escrow Agent of a signed
representation from the Company to the escrow agent
that the Company has consummated a Business
Combination and satisfied the requirements of Rule
419.
TITLE OF ESCROW ACCOUNT:
FRANKS' EXPRESS, INC. ESCROW ACCOUNT
ESCROW AGENT FEES
Amount due on execution of the Escrow Agreement $750
and $750 upon completion of the escrow, which fee
includes one closing.
<PAGE>
EXHIBIT B
RULE 419 REPRESENTATION
Franks' Express, Inc. (the "Company") hereby
represents and warrants that (i) the Company has
entered into an agreement with respect to a Business
Combination: (ii) the Company has filed a post-
effective amendment to its registration statement on
Form SB-2, Registration No. ;
(iii) the prospectus contained in the post-effective
amendment has been sent to the Company's
shareholders; (iv) each purchaser of securities in
the Offering has been given no fewer than 20 and no
more than 45 business days from the effective date of
the prospectus to elect whether to remain as an
investor; and (v) the Business Combination has been
consummated. The occurrence of such events evidences
the Company's compliance with the requirements of
Rule 419 (e)(1) and Rule 419 (e)(2).
FRANKS' EXPRESS,
INC.
By:
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF AUTHORIZATION
CORPORATE STOCK TRANSFER
TO WHOM IT MAY CONCERN:
The undersigned hereby direct you to issue
checks or wire funds upon representation of wire
instructions from the Corporate Stock Transfer, Inc.
f/b/o Franks' Express, Inc. Escrow Account as
follows:
NAME AMOUNT
FRANKS' EXPRESS, INC. $
Date: , 1997
By:
Name:
Title:
<PAGE>
AGREEMENT
This Agreement (this "Agreement") dated as of May 1, 1997, is among
each of the officers, directors and owners of 10% or more of the outstanding
capital stock of Franks' Express, Inc., a Colorado corporation (the "Company).
WHEREAS, in connection with the offering of shares of common stock
("Common Stock") by the Company pursuant to a Registration Statement (the
"Registration Statement") filed with the United States Securities and Exchange
Commission (the "Offering"), and
WHEREAS, capitalized terms appearing in this Agreement shall have the
meanings ascribed to them in the Registration Statement,
NOW, THEREFORE,
The parties to this Agreement hereby agree that none of the undersigned
shall:
1. Actively negotiate for or otherwise consent to the disposition of
any portion of their Common Stock at a per share price different than that
offered with respect to the Shares sold in this offering as a condition to or
in connection with a with a Business Combination.
2. CAuse any securities of the Company to be sold by any officers,
directors, greater than 10% shareholders or persons who may be deemed
promoters of the Company, except as may otherwise be made in permitted
market transactions without affording all shareholders of the Company a
similar opportunity, until after the Company has consummated a Business
Combination in accordance with the provisions of SEC Rule 419.
3. Allow the Company to borrow funds to be used directly or
indirectly to (a) purchase any shares of the Company's Common Stock owned
by management of the Company, or (b) make payments to the Company's promoters,
management or their affiliates or associates, until after the Company has
consummated a Business Combinationnn in accordance with the provisions of
SEC Rule 419.
EXECUTED, to be effective as of May 1, 1997.
__________________________ ____________________________
Charles Burton Roger Jones
__________________________
Sandra Steinberg
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
Board of Directors
Franks' Express, Inc.
12146 East Amherst
Aurora, Colorado 80014
I have audited the Balance sheets of Franks' Express, Inc., as
of June 30, 1997 and 1996 and December 31, 1996 and 1995, and
the statements of Operations, Stockholders Equity and Cash
Flows for the sic months ended June 30,1 997 and 1996 and for
the years ended December 31, 1996 and 1995.
I conducted my audit in accordance witha generally accepted
auditing standards. These standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements.
An audit also includes assessing the accounting principals used
and significant estimates made by management as well as
evaluating the overall financial statement presentation.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Franks' Express, Inc. as of June 30, 1997 and 1996
and December 31, 1996 and 1995, and the results of its
operations and its cash flow for the six months ended June 30,
1997 and 1996 and for the years ended Decemger 31, 1996 and
1995.
\S\ Janet Loss, C.P.A., P.C.
October 27, 1997
