As filed with the Securities and Exchange Commission on
August 14, 1997
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
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 Primary Standard (IRS Employer
of incorporation Industrial Identification
or organization) Classification Code No.)
Number)
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.
(Cover Page Continues on Following Page)
<PAGE>
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.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
________________________________________________________________________________
Title of each Amount to Proposed maximum Proposed maximum Amount of
class of be registered Offering price aggregate offering registration
securities to fee
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 Outside Front Cover Page of
Statement and Outside Front Prospectus
Cover of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover of Prospectus
3. Summary Information Prospectus Summary;
and Risk Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination Outside Front Cover
of Offering Page of Prospectus;
Price 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 Legal Matters
and Counsel
<PAGE>
Item Number and Caption Prospectus Heading
14. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
15. Organization Within Last Five Not Applicable
Years
16. Description of Business Business
17. Management's Discussion Not Applicable
and Analysis or Plan of
Operation
18. Description of Property Business
19. Certain Relationships and Certain Relationships and
Related Transactions Related Party Transactions
20. Market for Common Equity and Outside Front Cover Page of
Related 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 Not Applicable
With 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.")
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. (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
<PAGE>
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
</TABLE>
(See Footnotes to the table on the following page)
The date of this Prospectus is August 14, 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. 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 $25,000. 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
<PAGE>
any extent, given the small size of this offering and the
Company's limited shareholder base. (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
ROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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
<PAGE>
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
<PAGE>
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.
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 . . . . . . . . . . . 20
COMPARATIVE DATA . . . . . . . 22
USE OF PROCEEDS. . . . . . . . 22
PLAN OF DISTRIBUTION . . . . . . . 24
LEGAL PROCEEDINGS. . . . . . . 25
MANAGEMENT . . . . . . . . . . 26
BUSINESS . . . . . . . . . . . 27
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS. . 34
DESCRIPTION OF SECURITIES. . . . . 35
CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS. . . . . . . . 36
EXECUTIVE COMPENSATION . . . . 37
LEGAL MATTERS. . . . . . . . . 38
TRANSFER AGENT . . . . . . . . 38
EXPERTS. . . . . . . . . . . 38
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.
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
<PAGE>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
toevaluate and enter into any type of business in any
location. The Company may participate in newly organized
<PAGE>
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.
As a result, of among other things, management's
broad discretion with respect to the specific allocation of the
net proceeds of this Offering, this Offering is characterized
as a "blank check" offering. While the Company may, under
certain circumstances, seek to effect Business Combinations
with more than one Target Business, the Company will not
expend less than 80% of the net proceeds derived from this
Offering.
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 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 person or group of
persons who are likely to purchase, beneficially own or
control any portion of the securities offered by this
Prospectus. There 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
<PAGE>
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 to Reconfirm Investment 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
"blank check" issuer's securities 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.
<PAGE>
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. 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.
<PAGE>
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.
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:
<PAGE>
(1) The prospectus contained in the Amendment willbe 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;
(5) If an acquisition is consummated, any investorwho 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;
<PAGE>
(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 offering proceeds 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
<PAGE>
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).
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.
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
<PAGE>
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.
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.
<PAGE>
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 mayinvolve 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 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 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
<PAGE>
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
<PAGE>
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.")
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. In such event, 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. Since all funds not held in escrow may be expended
by the Company, if an acquisition is not consummated for
any reason, investors will only receive a portion of the funds
originally invested by them.
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
<PAGE>
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 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
<PAGE>
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.
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. In the course of
their other business activities, including private investment
<PAGE>
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. 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. 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.")
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.")
<PAGE>
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. The Company has no
arrangement or understanding to employ any of its officers
or directors as outside advisors. (See "BUSINESS.")
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
officers and directors. Accordingly, investors will be relying, in some
significant respects, on the abilities of the management and directors of
<PAGE>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
<PAGE>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.")
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
<PAGE>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
<PAGE>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.
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
<PAGE>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.
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
<PAGE>effect to the sale of all offered Shares, the Company would
have a net tangible book value of approximately $.0564 per
share so that persons purchasing Shares in the offering
would suffer an immediate dilution of $.9436 per share or
94.3% 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
$.0162 per share or similar dilution to the investors
purchasing in this offering of $.9852 per share or 98.5% 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.")
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
<PAGE>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
<PAGE>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 acquisition 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.
<PAGE>
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 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
<PAGE>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
<PAGE>
could impair the Company's ability to raise capital through
the sale of its equity securities. (See "DESCRIPTION OF
SECURITIES.")
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.
<PAGE>
No Assurance of Public Market
There can be no assurances that a regular trading
market will develop for the shares of Common Stock after
this Offering or that, if developed, any such market will be
sustained. 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. 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 in
NASDAQ or an exchange.
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 following table summarizes, as of June 30, 1997,
the comparative ownership of existing shareholders to
potential new investors. Although the present shareholders
paid an aggregate of $5,000 for the currently outstanding
shares, operating losses and expenses incurred have reduced
their current equity to an accumulated deficit of $12,034.
Therefore, the dilution calculations below illustrate the effect
of investments in the Company by new investors in light of
this existing accumulated deficit.
<TABLE>
<CAPTION>
Current Equity or Average Price
Shares Owned Total Consideration per
Share
Number % Amount %
<S> <C> <C <C> <C> <C>
Present Shareholders(2)
Minimum Offering 1,000,000 100 $(12,034) (1) 95.2 ($.012)
Maximum Offering 1,000,000 100 $(12,034) (1) 90.9 ($.012)
<PAGE>
New Investors(2)
Minimum Offering 50,000 0 $ 50,000 4.8 $1.00
Maximum Offering 100,000 0 $100,000 9.1 $1.00
</TABLE>
(1) Shareholder equity as of June 30, 1997, which is expected to
continue to decline to some extent as additional expenses for this
offering are incurred.
(2) Assumes that none of the present shareholders purchase any
additional shares in this offering.
The pro forma net tangible book value of the
Company as of June 30, 1997 was ($27,951) or
approximately ($.028) per share. Pro forma net tangible
book value per share represents the Company's total tangible
assets less its total liabilities divided by the number of shares
of its common stock outstanding.
Pro forma net tangible book value dilution per share
represents the difference between the amount paid per share
by purchasers of common stock in this offering and the pro
forma net tangible book value per share of common stock as
adjusted to give effect to this offering. After giving effect to
the sale of the minimum (50,000) Shares of common stock offered by
the Company at an assumed public offering price of $1.00, the adjusted
pro forma net tangible book value of the Company as of June 30, 1997
would have been approximately $17,049 or $.0162 per share of common
stock. This represents an immediate increase in pro forma
net tangible book value of $.0428 per share to existing
shareholders and an immediate dilution of $.9852 per share
to new investors in this offering. After giving effect to the
sale of the maximum (100,000) Shares of Common Stock
offered by the Company in this offering at an assumed
public offering price of $1.00 per Share, the adjusted pro
forma net tangible book value of the Company as of June
30, 1997 would have been approximately $62,049 or $.0564
per Share of common stock. This represents an immediate
increase in pro forma net tangible book value of $.0844 per
<PAGE>
share to existing shareholders and an immediate dilution of
$.9436 per Share to new investors in this offering. The
following table illustrates the dilution per share to new
investors as of June 30, 1997:
<TABLE>
<CAPTION>
Assumes Assumes
Minimum Maximum
Offering Offering
<S> <C> <C>
Assumed initial public
offering price per Share $1.00 $1.00
Pro forma net tangible book
value per Share
as of June 30, 1997 $(.028) $(.028)
Increase in pro forma net
tangible book value
per Share attributable
to new shareholders $.0428 $.0844
As adjusted net tangible
book value per Share
after offering $.0162 $.0564
Dilution per Share to
new shareholders $.9852 $.9436
Percent Dilution 98.5% 94.3%
</TABLE>
(See "DESCRIPTION OF SECURITIES.")
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 Total Average Price
Shares Consideration Per Share
Owned
Number % Amount %
<S> <C> <C> <C> <C> <C>
Minimum
Offering
<PAGE>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 $25,000. All of
the net proceeds must be deposited in Escrow pursuant to
SEC Rule 419. Except for an amount up to 10% of the
Deposited Funds, which is otherwise releasable under the
rule, the Deposited Funds 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
SEC Rule 419. Accordingly, the net proceeds of the
offering may be applied as follows:
<TABLE>
<CAPTION>
Items Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
<S> <C> <C>
Company Offering
Expenses(1) $25,000 $25,000
<PAGE>
Funds available for
investigation and evaluation
of prospective business(2) $20,000 $65,000
Total $45,000 $90,000
</TABLE>
(1) These expenses represent legal, accounting, printing, and
other costs incurred by the Company in connection with the
offering. A portion of these expenses have been paid by the
Company with advances from the current officers and
directors.
(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. Additional funds
may also be used to cover the expense of legal and
accounting services related to investigation and evaluation of
businesses. A portion or all of the funds required to pay
these expenses may not be released until after the acquisition
of a business is completed in accordance with SEC Rule
419. A portion of the funds available for a business may be
used to pay a fee or other compensation to a non-affiliated
person or entity, other than an officer, director, promoter or
principal shareholder of the Company, which refers a Target
Business. (See "BUSINESS.")
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. After the Company reaches an
agreement for acquisition of a business, it is required by
SEC Rule 419 to prepare and disseminate the Amendment 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
<PAGE>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
<PAGE>arrangement, and no such fee will be paid unless and until
an acquisition is completed in accordance with SEC Rule
419.
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 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.
<PAGE>
Agreements of Officers, Directors and 10% Beneficial
Shareholders
Pursuant to an 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,
<PAGE>
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.
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
<PAGE>
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.
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:
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
<PAGE>
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.
BUSINESS
General
The Company recently changed its business objective
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.
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
<PAGE>
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
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
<PAGE>
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 to any person who has
served as an officer or director of the Company prior to the
acquisition, or who is a promoter. While the Board of
Directors may seek a change in this policy prior to an
acquisition, no change may be made except by the vote
specified.
The Company will not restrict its search to any
particular business, industry, or geographical location, and
management reserves the right to evaluate and enter into any
type of business in any location. The Company may
participate in 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.
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'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
<PAGE>
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 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
<PAGE>
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.
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 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
<PAGE>
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.
<PAGE>
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 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.
<PAGE>
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
<PAGE>
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. 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.
<PAGE>
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
<PAGE>
businesses which 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
<PAGE>
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.
<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
<PAGE>
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 . . 850,000 85.00% 82.92% 77.27%
group (3 persons)
</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.
<PAGE>
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.
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
<PAGE>
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.
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. Mr. Charles Burton and Mr. Roger
Jones acquired their shares from Mrs. Steinberg in January
of 1997. Mr. Burton paid $2500 for his shares and Mr.
Jones paid $125 for his shares. (See "SECURITY
<PAGE>
OWNERSHIP OF MANAGEMENT AND PRINCIPAL
SHAREHOLDERS and EXECUTIVE COMPENSATION.")
Mr. Richard Steinberg, spouse of the Company's
principal shareholder, provided consulting services to the
Company during the period from January 1, 1997 through
August 9, 1997 pursuant to terms and conditions of a two
year consulting agreement which was prematurely terminated
at the Company's request. The Company presently owes Mr.
Steinberg $12,000 as payment for services previously
rendered under the consulting agreement and an early
termination fee. Pursuant to agreements with Mr. Steinberg,
no amounts due to him are payable by the Company until
consummation of the 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.")
<PAGE>
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 other than minimal 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
<PAGE>
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.
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>
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. 1 to its
Registration Statement to be signed on its behalf of the
undersigned, in the City of Englewood, State of Colorado on
August 14, 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. 1 to Form SB-2
Registration Statement was signed by the following persons
in the capacities and on the dates indicated.
Date: August 14, 1997 /s/ Charles Burton
Charles Burton, President, Chief Executive Officer,
Principal Financial Officer and Director
Date: August 14, 1997 /s/ Roger D. Jones
Roger D. Jones, Secretary and Director
Date: August 14, 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. . . . . . . . . . . . . . . .
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>
. . . . . . . . . . . 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
<PAGE>
II-1
Item 27. Exhibits
Exhibit
Number Description of Exhibits
1.1 Form of Selected Dealers Agreement
1.2* Escrow Agreement
3.1 Restated and Amended Articles of
Incorporation
3.2 By-Laws
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.
99.1* Subscription Agreement
* 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, 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.
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
<PAGE>
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.
II-2
(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.
II-3
<PAGE>
FRANKS' EXPRESS, INC.
AUDIT REPORT
June 30, 1997
Index to Financial Statements
Page
Independent Auditor's Report . . . . F-2
Balance Sheet. . . . . . . . . . . . F-3
Statement of Operations. . . . . . . F-4
Statement of Stockholders' Equity. . F-5
Statement of Cash Flows. . . . . . . F-6
Notes to Financial Statements. . . .F-7
Janet Loss, C.P.A., P.C.
Certified Public Accountant
9101 East Kenyon Avenue, Suite 2000
Denver, Colorado 80237
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
9101 East Kenyon Avenue, Suite 2000
Denver, Colorado 80237
303-220-0227
Board of Directors
Franks' Express, Inc.
I have audited the accompanying balance
sheet of Franks' Express, Inc., as of
June 30, 1997, and the related statements
of operations, stockholders' equity
(deficit) and cash flow for the three
months ended June 30, 1997. These
financial statements are the
responsibility of the Company's
management. My responsibility is to
express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with
generally accepted accounting 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 principles used
and significant estimates made by
management, as well as evaluating the
overall financial statement presentation.
I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements
referred to alone present fairly, in all
material respects, the financial position
of Franks' Express, Inc. as of June 30,
1997, and the results of its operations
and its cash flows for the three months
ended June 30, 1997.
The accompanying financial statements
have been prepared assuming that the
Company will continue as a going concern.
As discussed in Note V to the financial
statements, the Company has suffered
recurring losses and has limited capital
that raises substantial doubt about the
<PAGE>
entity's ability to continue as a going
concern.
/S/ JANET LOSS, C.P.A., P.C.
Janet Loss, C.P.A., P.C.
August 5, 1997
<PAGE>
FRANKS' EXPRESS, INC.
Form 10-Q5B Quarterly Report
Table of Contents
Part I - Financial Statements
Item 1 - Financial Statements
Condensed Balance Sheets as June 30,
1997 and December 31, 1996
Condensed Statements of Operations for
the three and six months ended June 30,
1997 and 1996
Condensed Statements of Stockholders'
Equity (Deficit)
Condensed Statements of Cash Flows for the
six months ended June 30, 1997 and 1996
Notes to Condensed Financial Statements
Item 2 - Management's Discussion and Analysis
or Plan of Operations
Part II - Other Information (Not Applicable)
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
Condensed Balance Sheets (Unaudited)
<S> <C> <C>
June 30, December 31,
1997 1996
ASSETS
CURRENT ASSETS:
Cash in Checking $ 5,357 $ 1
OTHER ASSETS:
IPO Assets 20,917 $ 0
TOTAL ASSETS $26,274 $ 1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 7,000 $ ---
Accrued Interest 308 ---
Accrued Expenses 6,000 ---
Stockholder's Loan 20,000 $ ---
TOTAL CURRENT
LIABILITIES $33,308 $ ---
STOCKHOLDERS' EQUITY
(DEFICIT):
Common Stock, no par
value 100,000,000
shares authorized
1,000,000 shares
issued and
outstanding $ 5,000 $ 5,000
Deficit (12,034) ( 4,999)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ( 7,034) 1
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $26,274 $ 1
</TABLE>
<PAGE>
The accompanying notes are an integral part
of the financial statements.
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
Condensed Statements of Operations (Unaudited)
For the Three For the Six
Months Ended: Months Ended:
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Sales $ --- $ --- $ --- $ ---
OPERATING
EXPENSES:
Bank Charges 6 --- $ 27 ---
Consulting
Fees 3,000 --- 6,000 ---
Filing Fees 100 --- 100 ---
Legal and
Accounting --- 600 ---
TOTAL OPERATING
EXPENSES $ 3,106 --- 6,727 ---
NET INCOME (LOSS)
BEFORE
OTHER INCOME &
EXPENSES (3,106) $ --- $(6,727) ---
OTHER INCOME &
(EXPENSES):
Interest
(Expense) ( 289) --- ( 308) ---
NET INCOME
(LOSS) $(3,395) $ --- $(7,035) $ ---
NET INCOME
(LOSS) PER
SHARE OF COMMON
STOCK ( .003) $ N/A $( .007) $ N/A
</TABLE>
<PAGE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
Condensed Statement of Stockholders' Equity (Deficit)
For the Six Months Ended June, 30, 1997
Total
Common Common Stockholders'
Stock Stock Equity
Number of Amount (Deficit) (Deficit)
<S> <C> <C> <C> <C>
Balance,
January 1,
1997 1,000 $ 5,000 $( 4,999) $ 1
April 30,
1997
1,000 to
1 forward
stock
split of
common
stock 999,000
Net Loss
for Six
Months
Ended
June 30,
1997 ( 7,035) ( 7,035)
Balance,
June 30,
1997 1,000,000 $ 5,000 $(12,034) $(7,034)
<PAGE>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
Condensed Statements of Cash Flows (Unaudited)
For the Three For the Six
Months Ended: Months Ended:
June 30, 1997 June 30, 1996
<S> <C> <C>
Net (Loss) $(7,035) $ ---
Changes in Operating
assets and liabilities
Increase in Current
Liabilities 33,308 ---
Net cash provided
by Operating
Activities 26,273 $ ---
Cash Flows From (To)
Investing Activities:
IPO Expenditures 20,917 ---
Net Increase in
Cash 5,356 ---
Cash, January 1,
1997 and 1996 1 1
Cash, June 30,
1997 and 1996 $ 5,357 $ 1
</TABLE>
<PAGE>
The accompanying notes are an integral part of the financial statements.
FRANKS' EXPRESS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - 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 inactive 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 II - COMMITMENTS
The Company has a consulting service agreement
commencing January 2, 1997. The Company has agreed
to pay $1,000 per month for consulting services as
well as all customary and reasonable pre-approved
business expenses related to performance of the
Contractor's obligations under this agreement.
NOTE III - SUBSEQUENT EVENT
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 IV - 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.
NOTE V - GOING CONCERN
The accompanying financial statements have been
prepared in conformity with generally accepted
accounting principles, which contemplate
<PAGE>
continuation of the Company as a going concern. The
Company's ability to continue as a going concern is
dependent upon the Company's ability to obtain
financing.
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 . . . . . . . . 20
Comparative Data . . . . 22
Use of Proceeds. . . . . 22
Plan of Distribution . . 24
Legal Proceedings. . . . 25
Management . . . . . . . 26
Business . . . . . . . . 27
Security Ownership of
Management and
Principal Shareholders. .34
Description of
Securities . . . . . . . 35
Certain Relationships
and Related Party
Transactions . . . . . . 36
Executive Compensation. 37
Legal Matters. . . . . . 38
Transfer Agent . . . . . 38
Experts. . . . . . . . . 38
Index to Financial
Statements. . . . . . .F-1
Until , 1997 (25 days after the date of this Prospectus),
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.
$100,000
FRANKS' EXPRESS, INC.
100,000 Shares
PROSPECTUS
, 1997
