As filed with the Securities and Exchange Commission on January 20, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FRANKS' EXPRESS, INC.
(Name of small business issuer in its charter)
COLORADO 6770 84-1170846
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
12146 East Amherst Circle
Aurora, Colorado, 80014
(303) 695-9554
(Address and telephone number of Registrant's principal executive offices)
Charles Burton
2903 South Uinta Street
Denver, Colorado 80231
(303) 696-7523
(Name, address, and telephone number of agent for service)
COPY TO:
David M. Summers, Esq.
5670 Greenwood Plaza Boulevard, Suite 422
Englewood, Colorado 80111
(303) 220-5420
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
THIS OFERING WILL BE SOLD BY
OFFICERS AND DIRECTORS OF THE COMPANY
(Cover Page Continues on Following Page)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of each Proposed maximum Proposed maximum
class of securities Amount to offering price aggregate offering Amount of
to be registered be registered per unit price registration
fee
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>
PROSPECTUS
Franks' Express, Inc.
(a Colorado Corporation)
12146 East Amherst Circle
Aurora, Colorado 80014
50,000 Shares Minimum/100,000 Shares Maximum of Common Stock
Franks' Express, Inc., a Colorado corporation (the "Company") is
offering for sale a minimum of 50,000 shares and a maximum of 100,000
shares of its $.0001 par value common stock ("Shares"). The Shares are
being offered and sold primarily by officers and directors of the Company.
Registered broker-dealers may also participate in the offering, but no such
broker-dealers have been identified as of the date of this Prospectus. If
less than the minimum amount of Shares are sold within four (4) months from
the effective date of this Prospectus, all funds received by the Company
from subscribers will be promptly returned without interest or deduction
for expenses. (SEE "PLAN OF DISTRIBUTION.")
The Company is conducting a blank check offering subject to the United
States Securities and Exchange commission's Rule 419 of Regulation C. The
net offering proceeds, after deduction for underwriting commissions and
offering expenses (estimated at $59,000 if the maximum number of shares are
sold and $14,000 if the minimum number of shares are sold) and the
securities to be issued to investors must be deposited in an escrow account
(the "DEPOSITED FUNDS" and the "DEPOSITED SECURITIES," respectively) While
held in the escrow account, the securities may not be traded or
transferred. Except for an amount up to 10% of the DEPOSITED FUNDS ($5,900
if the maximum number of shares are sold and $1,400 if the minimum number
of shares are sold) otherwise releasable under the rule, the DEPOSITED
FUNDS and the DEPOSITED SECURITIES may not be released until an acquisition
meeting certain specified criteria has been made and a sufficient number of
investors reconfirm their investment in accordance with the procedures set
forth in Rule 419. In addition, in this offering, the DEPOSITED FUNDS
and the DEPOSITED SECURITIES in this offering will not be released until
completion of a transaction or series of transactions in which at least 50%
of the gross proceeds derived from this offering are committed to a
specific line of business. Pursuant to these procedures, a new
prospectus, which describes an acquisition candidate and its business and
includes audited financial statements, will be delivered to all investors.
The Company must return the pro rata portion of the DEPOSITED FUNDS to any
investor who does not elect to remain an investor. Unless a sufficient
number of investor elect to remain investors, all investors will be
entitled to the return of a pro rata portion of the DEPOSITED FUNDS (and
any interest earned thereon) and none of the DEPOSITED SECURITIES will be
issued to investors. In the event an acquisition is not consummated within
18 months of the effective date, the DEPOSITED FUNDS will be returned on a
pro rata basis to all investors. (See "Investors' Rights and Substantive
Protection Under SEC Rule 419").
<PAGE>
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 OR OTHER STATES IN WHICH THE SHARES HAVE BEEN
REGISTERED FOR SALE OR WHERE AN EXEMPTION FROM REGISTRATION IS AVAILABLE,
AND TO THE EXTENT THAT A TRADING MARKET FOR THE COMPANY'S SECURITIES
DEVELOPS IN THE FUTURE, THE SECURITIES OFFERED BY THIS PROSPECTUS MAY BE
RESOLD ONLY TO RESIDENTS OF THOSE STATES. NO PUBLIC MARKET FOR SHARES
SOLD IN THIS OFFERING CAN DEVELOP UNTIL SUCH SHARES ARE RELEASED FROM
ESCROW PURSUANT TO THE PROVISIONS OF SEC RULE 419 IN CONJUNCTION WITH
SUCCESSFUL COMPLETION OF A BUSINESS COMBINATION. (SEE "RISK FACTORS --
State Blue Sky Registration; Restricted Resales of the Securities.)
In the event the minimum offering amount is raised prior to the end of
the four (4) month offering period, the Company may, at its discretion,
close the offering, or continue the offering until the expiration of the
four (4) month offering period, or until the maximum offering amount
($100,000) is raised, whichever occurs first. In the event the minimum
offering is sold, any monies held in escrow will be released to the Company
upon compliance with additional conditions specified in SEC Rule 419 in
connection with a transaction or series of transactions in which at least
50% of the gross proceeds of this offering are committed to a specific line
of business. (SEE "PLAN OF DISTRIBUTION.")
______________________________________________________________________________
PRICE TO PUBLIC COMMISSIONS(1) PROCEEDS TO COMPANY(2)
______________________________________________________________________________
Per Share $ 1.00 $.10 $.90
Minimum $ 50,000.00 $ 5,000.00 $45,000.00
Maximum $ 100,000.00 $ 10,000.00 $90,000.00
______________________________________________________________________________
The date of this Prospectus is January 20, 1998.
(1) The offering is being sold by officers and directors of the Company to
whom no commission or other offering remuneration will be paid. All
officers and directors of the Company are expected to participate in
selling efforts. Registered broker-dealers are also permitted to make
sales of Shares, but no such broker-dealers have been identified as of
the date of this Prospectus. The Company may pay commissions of up to
ten percent (10%) of any offering proceeds raised by one or more
registered broker-dealers or their representatives. The table has
been prepared using the assumption that the maximum commission will be
paid on all Shares sold.
<PAGE>
(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 $36,000 . Proceeds from the sale
of Shares will be deposited in escrow by noon of the business day
following receipt thereof with Corporate Stock Transfer, in Denver,
Colorado. In the event that 50,000 Shares, having a subscription
price of $50,000 are not sold within four (4) months from the
effective date of this Prospectus, all proceeds raised will be
promptly returned to investors without interest, and without deducting
any expenses incurred in connection with this offering.
Although the Company intends to seek to have its common stock
listed on the NASD Bulletin Board following this offering, there is no
market for the Company's common stock as of the date of this Prospectus,
and there can be no assurance that a public market for the Company's common
stock will develop, or if so developed, will be sustained to any extent,
given the small size of this offering and the Company's limited shareholder
base. Such a listing for shares offered by this Prospectus will not occur
until after a business combination has been effected and shares have been
released from escrow, pursuant to the Provisions of SEC Rule 419 and the
provisions of Section 11-51-302(6) of the Colorado Securities Act.
(SEE "RISK FACTORS" and "DESCRIPTION OF SECURITIES.")
The offering price of the Shares has been determined by the Company
without regard to any traditional established criteria of value. The price
was selected because the Company believes the Shares can best be sold at
this price.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY'S OFFICERS, DIRECTORS, AND EXISTING SHAREHOLDERS MAY
PURCHASE A PORTION OF THE SHARES OFFERED BY THIS PROSPECTUS UPON THE SAME
TERMS AND CONDITIONS AS OTHER INVESTORS IN THIS OFFERING. THE AGGREGATE
NUMBER OF SHARES WHICH MAY BE PURCHASED BY SUCH OFFICERS, DIRECTORS AND
EXISTING SHAREHOLDERS, HOWEVER, SHALL NOT EXCEED 50% OF THE NUMBER OF
SHARES SOLD IN THIS OFFERING TO OTHER INVESTORS.
The Shares are offered by the Company, subject to prior sale,
allotment, acceptance, withdrawal, cancellation or modification of the
offering. Any modification to the offering will be made by means of an
amendment to the Prospectus. The Company reserves the right to withdraw or
cancel the offering without notice, and to reject any orders, in whole or
in part, for the purchase of any of the offered Shares.
The Company will make available to its shareholders an Annual Report
on Form 10-K containing financial information audited and reported upon by
independent certified public accountants, and it may also provide unaudited
quarterly or other interim reports as it deems appropriate. The Company is
a "reporting company" under the Securities Exchange
<PAGE>
Act of 1934 and will comply with the periodic reporting requirements of the
Securities Exchange Act of 1934. When such reports, proxy statements and
other information are filed by the Company with the Securities and Exchange
Commission (the "Commission"), they will be available for inspection and
copying at the Public Reference section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
regional offices of the Commission at Citicorp Center 300 West Madison
Street, Suite 1400, Chicago, Illinois 10048, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The address of the Web site is
(http://www.sec.gov).
The Company will provide without charge to each person who receives
this Prospectus, upon written or oral request of such person, a copy of any
of the information that was incorporated by reference in the Prospectus
(excluding exhibits to the information that is incorporated by reference,
unless the exhibits are themselves specifically incorporated by reference),
by directing written requests to Mr. Charles Burton at 2903 South Uinta
Street, Denver, Colorado 80231, and oral requests to Mr. Burton at (303)
696-7523.
ADDITIONAL INFORMATION
A registration statement on Form SB-2, including amendments thereto,
relating to the Shares offered by this Prospectus has been filed by the
Company with the Securities and Exchange Commission in Washington, D.C.
This Prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to such registration
statement. For further information with respect to the Company and the
Shares offered by this Prospectus, reference is made to such registration
statement, exhibits and schedules. Statements contained in this Prospectus
as to the contents of any contract or other document referred to in this
Prospectus are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to
the registration statement, each such statement being qualified in all
respects by such reference. A copy of the registration statement may be
inspected without charge at the Commission's principal offices in
Washington, D.C., and copies of all or any part thereof may be obtained
from the Commission upon the payment of certain fees prescribed by the
Commission.
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..................................... 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......... 24
COMPARATIVE DATA ............................ 25
USE OF PROCEEDS.............................. 25
PLAN OF DISTRIBUTION ........................ 27
LEGAL PROCEEDINGS............................ 29
MANAGEMENT................................... 29
BUSINESS..................................... 31
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS..................... 39
DESCRIPTION OF SECURITIES ................... 40
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS............................... 42
EXECUTIVE COMPENSATION....................... 43
LEGAL MATTERS................................ 43
TRANSFER AGENT............................... 44
EXPERTS...................................... 44
INDEX TO FINANCIAL STATEMENTS................ F-1
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements (including the notes to the
same) appearing elsewhere in this Prospectus.
Each prospective investor is urged to read this Prospectus in its entirety.
THE COMPANY
BUSINESS OBJECTIVES
The Company was incorporated under the laws of the State of Colorado
on May 17, 1991, for the purpose of engaging in the retail food service
business. The Company closed its restaurants and a retail ice cream and
candy shop in November of 1993 and has not conducted any material business
activities since that time. The Company's current business objective is
to seek to effect a merger, exchange of capital stock, asset acquisition or
other similar business combination (a "Business Combination") with an
operating or development stage business (a "Target Business") which the
Company believes has significant growth and profit potential. The
implementation of the Company's business objective is contingent upon the
successful sale of the shares of Common Stock in this Offering. (SEE
"BUSINESS.") The Company will not engage in any substantive commercial
business immediately following this Offering and for an indefinite period
of time following this Offering.
This Offering is characterized as a "blank check" offering under the
provisions of SEC Rule 419. The merger by an operating company into a
"blank check" company as a method of financing may offer a number of
advantages to traditional financing alternatives such as an initial public
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 and evaluation. The Company intends to utilize the net
proceeds of this offering, equity securities, debt securities, bank and
other borrowing or a combination the same to effect a Business Combination.
The Company will not restrict its search to any particular business,
industry, or geographical location, and management reserves the right to
evaluate and enter into any type of business in any location. The Company
may participate in newly organized business venture or a more established
company entering a new phase of growth or in need of additional capital to
overcome existing financial problems. Most likely, the Target Business
will be primarily located in the United States, although the Company
reserves the right to acquire a Target Business primarily located outside
the United States.
While the Company may, under certain circumstances, seek to effect
Business Combinations with more than one Target Business, in all
likelihood, as a result of its limited resources, the Company will have the
ability to effect only a single Business Combination with a Target
Business. The Company will not expend less than 80% of the maximum
<PAGE>
proceeds derived from this Offering. The Company does not intend to
register as a broker-dealer, merge with or acquire a registered broker-
dealer, or otherwise become a member of the NASD. None of the Company's
officers, directors or promoters, and no other affiliate of the Company has
had any preliminary contact or discussions with any representative of any
other company regarding the possibility of an acquisition or merger between
the Company and such other company. The Company and its promoters know of
no outside person or group of persons who are likely to purchase,
beneficially own or control any portion of the securities offered by this
Prospectus, although officers, directors and existing shareholders may
purchase shares in this offering. There are no plans, proposals or
arrangements or understandings with respect to the sale of additional
securities to affiliates, current shareholders or others following this
offering prior to the identification of a business opportunity for a
Business Combination.
Although the Company will provide relevant information regarding any
selected Target Business in connection with a reconfirmation offer, the
Company does not intend to provide the Company's security holders with a
complete set of disclosure documents concerning the Target Business (which
would include audited financial statements) prior to the consummation of
any merger or acquisition transaction.
BUSINESS EXPERIENCE OF PRINCIPALS
The executive officers and the other directors of the Company have
business experience which has provided them with skills which the Company
believes will be helpful in evaluating potential Target Businesses and
negotiating a Business Combination.
POSSIBLE RETENTION OF INVESTMENT BANKER
The Company may retain an investment banking firm to aid in
identifying, evaluating, structuring, negotiating and consummating a
Business Combination.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER SEC RULE 419
GENERAL
The Securities and Exchange Commission ("SEC ") has adopted SEC Rule
419 relating to "blank check" issuers (companies that have no specific
business plan or have indicated that their plan is to engage in a merger or
acquisition with an unidentified company). This rule provides that upon
consummation of the offering there be deposited into an escrow or special
account all proceeds received, less underwriting commissions and certain
expenses, and all securities issued. The net offering proceeds (less 10%
which may be withdrawn for expenses) must remain in escrow until the
earlier of, an acquisition meeting certain criteria and affirmation of the
offering, or 18 months. During such escrow period no trading in the
securities offered by this Prospectus may take place. Inasmuch as
<PAGE>
the Company is planning to engage in a merger or acquisition with an
unidentified company, the Company will be subject to SEC Rule 419.
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
SEC Rule 419 requires that the net offering proceeds, after deduction
for underwriting compensation and offering expenses and all securities to
be issued be deposited into an escrow or trust account (the "Deposited
Funds" and "Deposited Securities," respectively) governed by an agreement
which contains certain terms and provisions specified by the rule. Under
SEC Rule 419, the Deposited Funds (less 10% otherwise releasable under the
rule) and the Deposited Securities will be released to the Company and to
investors, respectively, only after the Company has met the following three
conditions. First, the Company must execute an agreement for an
acquisitions(s) meeting certain prescribed criteria. Second, the Company
must successfully complete a reconfirmation offering which includes certain
prescribed terms and conditions. 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
<PAGE>
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 maximum offering proceeds, (excluding
underwriting commissions, underwriting expenses, and dealer allowances
payable to non-affiliates). For purpose of the offering, the estimated
fair value of the business or assets to be acquired must therefore be at
least $72,000 if the entire offering is sold entirely through broker-
dealers, or $36,000 if only the minimum offering is sold entirely through
broker-dealers. Once an acquisition agreement meeting the above criteria
has been executed, the Company must successfully complete the mandated
reconfirmation offering and consummate the acquisition. Any agreement
pertaining to an acquisition will include a condition precedent to the
effect that investors representing 80% of the offering proceeds must elect
to reconfirm their investment in the Shares, all as provided in SEC Rule
419.
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 maximum 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.
<PAGE>
Reconfirmation Offering
A reconfirmation offer must commence within five business days after
the effective date of the Amendment. Pursuant to SEC Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the Amendment will be sent to each
investor whose securities are held in escrow within five business days
after the effective date of the Amendment;
(2) Each investor will have not less than 20, nor more than 45,
business days from the effective date of the Amendment to notify the
Company in writing, that the investor elects to remain an investor;
(3) If the Company does not receive written notification from
investors representing 80% of the offering proceeds (estimated at
$72,000, if the entire offering is sold, or $36,000, if only the
minimum offering is sold), within 45 business days following the
effective date of their election to reconfirm their investments in the
Shares, the Deposited Funds (and any related interest or dividends)
held in escrow for all investors will be returned to them, on a pro
rata basis, within five business days by first class mail or other
equally prompt means;
(4) The acquisition will be consummated only if investors
representing 80% of the offering proceeds notify the Company in
writing of their election to reconfirm their investments in the Shares
within 45 business days following the effective date of the Amendment;
(5) If an acquisition is consummated, any investor who does not
reconfirm his or her investment in the Shares to the Company in
writing within 45 days following the effective date of the Amendment
will receive his or her pro rata portion of the Deposited Funds (and
any related interest or dividends) held in escrow for all investors
within five business days by first class mail or other equally prompt
means;
(6) If an acquisition is not consummated by July 20, 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
<PAGE>
market value of the business represents at least 80% of the maximum
offering proceeds which are derived from this offering and has filed the
required Amendment; the Amendment has been declared effective, the mandated
reconfirmation offer containing the conditions prescribed by SEC Rule 419
has been completed, and the Company has satisfied all of the prescribed
conditions of the reconfirmation offer; and, the acquisition of the
business with the fair market value of at least 80% of the maximum offering
proceeds which are derived from this offering is consummated. In
addition, the escrow requirements of Section 11-51-302(6) of the Colorado
Securities Act provide that the Deposited Funds and Deposited Securities
must be held until completion of a transaction or series of transactions in
which at least 50% of the gross proceeds are committed to a specific line
of business.
THE OFFERING
This Prospectus relates to the offering by the Company of a minimum of
50,000 and a maximum of 100,000 Common Shares (par value $.0001 per share)
at an offering price of $1.00 per Share (the "Shares"). This offering is
made on a "best efforts" basis.
Offering Price Per Share............................... $ 1.00
Minimum Number of Shares Offered....................... 50,000
Maximum Number of Shares Offered........................ 100,000
Common Shares Outstanding Prior to Offering ......... 1,000,000
Common Shares to be Outstanding After Minimum Offering. 1,050,000
Common Shares to be Outstanding After Maximum Offering 1,100,000
Minimum Gross Proceeds to the Company................... $50,000
Maximum Gross Proceeds to Company....................... $100,000
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock (par value $.0001 per share) and 10,000,000 shares of
Preferred Stock (par value $.0001 per share).
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;
<PAGE>
the Company's lack of recent profitable operating history and limited
resources; the small size of this offering, its small shareholder base, no
present source of revenues; intense competition in selecting a Target
Business and effecting a Business Combination; and, because of the
Company's limited resources, the possibility that the Company's due
diligence investigation of a potential Business Combination will be
restricted, especially in the case of a Target Business outside the United
States. The Company's independent auditors have stated in their opinion
that the Company's financial statements contemplate the Company's ability
to continue as a going concern, which will be dependent upon the Company's
ability to obtain financing. Investors will incur immediate substantial
dilution. (SEE "RISK FACTORS," "DILUTION" and "USE OF PROCEEDS.")
USE OF PROCEEDS
The net proceeds to be realized by the Company from this offering if
only the minimum amount being offered is sold will be approximately
$45,000, assuming the maximum commission is paid on all of the Shares
sold. In the event the entire offering is sold, the Company will receive
net proceeds of approximately $90,000, assuming the maximum commission is
paid on all of the Shares sold. The Company intends to use substantially
all of the net proceeds of the offering, together with the interest earned
thereon, to attempt to effect a Business Combination, including selecting
and evaluating potential Target Businesses and structuring, negotiating and
consummating a Business Combination (including possible payment of finder's
fees or other compensation to persons or entities which provide assistance
or services to the Company and payment of travel expenses). The
proceeds from this offering by the Company will be held in an escrow
account maintained by the Escrow Agent, until satisfaction of certain
required conditions specified in SEC Rule 419 and commitment of at least
50% of the gross proceeds to a specific line of business.
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 compensation
will be paid to any officer or director in their capacities as such until
after the consummation of the first Business Combination, other than
reimbursement for out-of-pocket expenses they incur on behalf of the
Company. 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
<PAGE>
DESCRIBED BELOW. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE BUSINESS OF THE
COMPANY AND THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION.
RISK FACTORS RELATING TO THE COMPANY'S BUSINESS
SEEKING TO ACHIEVE PUBLIC TRADING MARKET THROUGH BUSINESS COMBINATION
While a prospective Target Business may deem a consummation of a
Business Combination with the Company desirable for various reasons, a
Business Combination may involve the acquisition of, merger or
consolidation with, a company which does not need substantial additional
capital, but which desires to establish a public trading market for its
shares, while avoiding what it may deem to be adverse consequences of
undertaking a public offering itself, including time delays, significant
expense, loss of voting control, the time and expense incurred to comply
and compliance with various federal and state securities laws that regulate
initial public offerings. Nonetheless, there can be no assurance that
there will be an active trading market for the Company's securities
following the completion of a Business Combination or, if a market does
develop, no assurance as to the market price for the Company's securities.
No public market for shares sold in this Offering can develop until such
shares are released from escrow pursuant to the provisions of SEC Rule 419
and other provisions of applicable state statutes, in conjunction with
successful completion of a Business Combination. (See, "General Risks
Relating to an Investment in the Company -- Restriction on Sale of Shares
Held in SEC Rule 419 Escrow Account" below)
NO RECENT OPERATING HISTORY
The Company, which was originally incorporated on May 17, 1991, has
recently revised its business objectives and, as of the date of this
Prospectus, is attempting to seek a Business Combination. The Company has
limited resources and has had no revenues since November of 1993. The
Company has experienced operating losses during the past year. As of June
30, 1997, the Company had an accumulated deficit of $12,034. (SEE
Financial Statements of the Company included in this Prospectus.) In view
of the Company's lack of any operating history since November 1993, there
is only a limited basis upon which to evaluate the Company's prospects for
achieving its intended business objectives. The Company's independent
auditors have stated in their opinion that the Company's financial
statements contemplate the Company's ability to continue as a going
concern, which will be dependent upon the Company's ability to obtain
financing. The Company's officers and directors have no significant prior
experience relating to the identification, evaluation and acquisition of a
Target Business. Investors will be relying primarily on their ability to
attempt to select a Target Business which will be profitable.
<PAGE>
UNSPECIFIED INDUSTRY
The Company has not yet identified any business or product for
possible acquisition. Accordingly, there is no current basis for
prospective investors in this Offering to evaluate the possible merits or
risks of the Target Business or the particular industry in which the
Company may ultimately operate. The Company faces all of the risks
inherent in a new business and those risks specifically inherent in the
type of business in which the Company proposes to engage, namely, the
investigation and acquisition of an interest in a business. The purchase
of the securities offered by this Prospectus must be regarded as the
placing of funds at a high risk in a new or "start-up" venture with all of
the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject. (SEE "USE OF PROCEEDS" and "BUSINESS.")
NO CURRENT NEGOTIATIONS REGARDING AN ACQUISITION OR MERGER
None of the Company's officers, directors, or promoters, or their
affiliates and associates, have had any preliminary contact or discussion,
and there are no present plans, proposals, arrangements or understandings,
with any representatives of the owners of any business or company regarding
the possibility of an acquisition or merger transaction contemplated in
this Prospectus. Therefore, there is no assurance that the Company will be
successful in locating or negotiating any profitable acquisition or merger
transactions in the future. (SEE "BUSINESS.")
INCREASED RISKS FOR POTENTIAL BUSINESS COMBINATIONS
It is possible that in seeking to effect a Business Combination, the
Company may consider a candidate base of potential Target Business that may
have inherent riskier businesses than those which may be able to secure
financing from more traditional sources. Such candidate base may well have
sought to secure financing from banks or financial institutions, venture
capitalists, or private or institutional investors, and may have been
unable to procure such financing. Such rejection may have resulted from
the analysis by such parties that the Target Business does not fall within
parameters established by such persons or entities for investment or
financing including, without limitation, substantial risk of failure.
Additionally, a prospective Target Business may be a company which does or
does not need substantial additional capital, but which desires to
establish a public trading market for its shares and is unable to do so on
its own or wishes to avoid what it may deem to be adverse consequences of
undertaking a public offering itself, such as time delays, significant
expense, loss of voting control and compliance with various federal and
state securities laws enacted for the protection of investors.
<PAGE>
LACK OF DIVERSIFICATION
In view of the limited resources of the Company, even after this
offering is completed, it is likely that the Company will have the ability
to effect only a single Business Combination. Accordingly, the prospects
for the Company's success will be entirely dependent upon the future
performance of a single business. Unlike certain entities which have the
resources to consummate several business combinations of entities operating
in multiple industries or multiple areas of a single industry, it is highly
likely that the Company will not have the resources to diversify its
operations or benefit from the possible spreading of risks or offsetting of
losses. In addition, by consummating a Business Combination with only a
single entity, the prospects for the Company's success may become dependent
upon the development or market acceptance of a single or limited number of
products, processes or services. Consequently, there can be no assurances
that the Target Business selected by the Company will prove to be
commercially viable. (SEE "BUSINESS.")
ADDITIONAL FINANCING
There currently are no limitations on the Company's ability to borrow
funds to increase the amount of capital available to the Company to effect
a Business Combination. However, the Company's limited resources and lack
of operating history will make it difficult to borrow funds. The amount
and nature of any borrowings by the Company will depend on numerous
considerations, including the Company's capital requirements, the Company's
perceived ability to meet debt service on any such borrowings and the then
prevailing conditions in the financial markets, as well as general economic
conditions. There can be no assurance that debt financing, if required or
sought, would be available on terms deemed to be commercially acceptable by
and in the best interests of the Company. The inability of the Company to
borrow funds required to effect or facilitate a Business Combination, or to
provide funds for an additional infusion of capital into a Target Business,
may have a material adverse effect on the Company's financial condition and
future prospects. Additionally, to the extent that debt financing
ultimately proves to be available, any borrowings may subject the Company
to various risks traditionally associated with indebtedness, including the
risks of interest rate fluctuations and insufficiently of cash flow to pay
principal and interest. Furthermore, a Target Business may have already
incurred borrowings and, therefore, already be subject to such risks. (SEE
"USE OF PROCEEDS" and "BUSINESS.") No portion of the net proceeds derived
from this offering will be used to make loans to any person. In addition,
the Company will not borrow funds and use the proceeds therefrom to make
payments to the Company's officers, directors, or promoters, or their
affiliates or associates.
FAILURE OF SUFFICIENT NUMBER OF INVESTORS TO RECONFIRM INVESTMENT
A business combination with a Target Business cannot be consummated
unless, in connection with the reconfirmation offering required by SEC Rule
419, the Company can
<PAGE>
successfully convince a sufficient number of investors representing 80% of
the offering proceeds to elect to reconfirm their investment. If an
insufficient number of investors reconfirm their investment, none of the
Deposited Securities held in escrow will be issued and the Deposited Funds
will be returned to investors on a pro rata basis. Because it is likely
that the Company will have expended up to 10% of the proceeds derived from
this offering prior to that time, investors will only receive a portion of
the funds originally invested, if an insufficient number of investors
reconfirm their investment after a merger or acquisition candidate has been
identified.
USE OF BUSINESS ACQUISITION CONSULTANTS OR FINDERS
While the Company does not presently anticipate that will engage
unaffiliated professional firms specializing in business acquisitions on
reorganizations, such firms may be retained if management deems it in the
best interest of the Company. Compensation to a finder or business
acquisition firm may take various forms, including one-time cash payments
based on a percentage of revenues or product sales volume, payments
involving issuance of equity securities (including those of the Company),
or any combination of these or other compensation arrangements. The
Company estimates that any fees for such services will not exceed 10% of
the amount of the 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. The officers and directors
of the Company may promote or become involved in other acquisition funds or
"blank check" entities with activities similar to those to be undertaken by
the company. In the course of their other business activities, including
private investment activities, the Company's officers and directors may
become aware of investment and business opportunities which may be
appropriate for presentation to the Company as well as the other entities
with which they are affiliated. Such persons may have conflicts of
interest in determining to which entity a particular business opportunity
should be presented. In general, officers and directors of corporations
incorporated under the laws of the State of Colorado are required to
present certain business opportunities to such corporations. Accordingly,
as a result of multiple business affiliations, Messrs. Burton and Jones may
have similar legal obligations relating to presenting certain business
opportunities to the various entities upon which they serve as directors
now, or in the future. Therefore, there can be no assurance that they will
offer all suitable prospective business opportunities to the Company before
any other acquisition fund or "blank check" offering with which they may be
affiliated. In addition, conflicts of
<PAGE>
interest may arise in connection with evaluations of a particular business
opportunity by the Board of Directors with respect to the foregoing
criteria. All of the foregoing conflicts of interest will be resolved
through the exercise of their independent judgment, in light of all facts
and surrounding circumstances existing at the time, but there can be no
assurances that any of the foregoing conflicts will be resolved in favor of
the Company. Prior to their involvement with the Company, none of the
directors or officers of the Company has been involved in any "blind pool"
or "blank check" offerings. (SEE "MANAGEMENT -- Conflicts of Interest.")
POLICIES ADOPTED BY MANAGEMENT
The Company's Board of Directors has recently adopted policies by
resolution, which may be rescinded or amended only by majority vote of the
Company's shareholders who do not currently hold any of the Company's
outstanding capital stock (whether now held or hereafter acquired) and will
expire by its terms on the date an acquisition of a business venture is
consummated, (a) prohibiting the payment, either directly or indirectly, of
any finder's fee or similar compensation (including the issuance of debt)
to any person who has served as an officer or director of the Company prior
to the acquisition, or who is a promoter, (b) prohibiting any portion of
the net proceeds of the offering may be paid to officers, directors,
promoters, or their affiliates or associates, directly or indirectly, as
consultant fees, officer salaries, director fees, purchase of their shares,
or other payments. except for reimbursement of offering costs and expenses
incurred by officers and directors on Company matters, (c) prohibiting the
Company from acquiring or merging with a business or corporation in which
the Company's officers, directors, or promoters, or their affiliates or
associates, have any direct or indirect ownership interest and (d)
prohibiting the Company from engaging in the creation of subsidiary
entities which a view to distributing their securities to the shareholders
of the Company. These policies were adopted to minimize the possibility
that such matters would become factors in negotiations and present
conflicts of interest. While the Board of Directors may seek a change in
these policies prior to an acquisition, no change may be made except by the
vote specified.
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. In the event that such accountants, technical experts,
appraisers, attorneys, or other consultants or advisors are deemed
necessary or desirable, the Company's Board of Directors will consider,
among other factors, the experience, expertise, education, reputation,
specialized knowledge, and cost when selecting such persons or firms. The
Company has no arrangement or understanding to employ any of its officers
or directors as outside advisors. None of the Company's officers,
directors or promoters have used any particular consultants or advisors on
a regular basis in the past in connection with evaluation of possible
businesses acquisitions. To the extent that the Company employs
accountants, technical experts, appraisers, attorneys, or other consultants
or advisors, a portion of the proceeds derived from this Offering may be
used to pay such persons or firms. (SEE "BUSINESS" and "USE OF PROCEEDS")
LIMITATION ON ACQUISITIONS
The Company is subject to SEC Rule 419 and certain reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and will be required to furnish certain information about
significant acquisitions, including audited financial statements for the
company(s) acquired for one, two, or three years, depending on the relative
size of the acquisition. Consequently, the acquisition prospects available
to the Company would be limited to those that can provide the required
audited financial statements. (SEE "BUSINESS -- Selection of a
Business.")
POSSIBLE CONSEQUENCES OF BUSINESS REORGANIZATION
It is likely that the Company will issue additional shares of Common
Stock or Preferred Stock in connection with its potential merger,
consolidation, or other business reorganization, and that the proceeds of
this offering will be used in the business of the Target Business (the
Company will not make loans of the net proceeds of the offering). The
consequences may be a change of control of the Company; significant
dilution to the public shareholders' investment; and, a material decrease
in the public shareholders' equity interest in the Company. Any change in
control will most likely also result in the resignation or removal of the
Company's present officers and directors. Accordingly, investors will be
relying, in some significant respects, on the abilities of the management
and directors of the Target Business who are unidentifiable as of the date
of this Prospectus. If there is a change in management in connection with
a Business Combination, which is likely to occur, no assurances can be
given as to the experience or qualifications of the persons who replace
present management respecting either the operation of the Company's
activities or the operation of the business, assets or property being
acquired. Because the
<PAGE>
Company has not made any determination with respect to the acquisition of
any specific business, it cannot speculate on the form of any potential
business reorganization or the amount of securities which the Company may
issue in connection with the same. The Company's Board of Directors may
issue additional securities of the Company (including both Common Stock and
Preferred Stock) on terms and conditions which the Board of Directors, in
its sole discretion, determines to be in the best interest of the Company
and without seeking shareholder approval. (SEE "BUSINESS.")
ISSUANCE OF PREFERRED STOCK
The Company currently has authorized 10,000,000 shares of preferred
stock, par value $0.001 per share. No shares of preferred stock are issued
and outstanding. Although the Company's Board of Directors has no present
intention to do so, it has the authority, without action by the Company's
shareholders, to issue the authorized and unissued preferred stock in one
or more series and determine the voting rights, preferences as to dividends
and liquidation, conversion rights, and other rights of any such series.
Such shares may, if and when issued, have rights superior to those of the
Common Stock. (SEE "DESCRIPTION OF SECURITIES.")
POSSIBLE BUSINESS COMBINATION WITH A TARGET BUSINESS OUTSIDE THE UNITED
STATES
The Company may effectuate a Business Combination with a Target
Business located outside the United States. In such event, the Company may
face the additional risks of language barriers, different presentations of
financial information, different business practices, and other cultural
differences and barriers. Furthermore, due to the Company's limited
resources, it may be difficult to assess fully these additional risks.
Therefore, a Business Combination with a Target Business outside the United
States may increase the risk that the Company will not achieve its business
objectives.
LIMITED RIGHTS OF SHAREHOLDERS IN AN ACQUISITION
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by SEC Rule 419, the
Company's shareholders may not be afforded an opportunity specifically to
approve or disapprove any particular business reorganization or
acquisition. Except under certain circumstances, the Board of Directors of
the Company will be able to consummate an acquisition by or of the Company
without the approval of the shareholders of the Company. As a result,
investors will be entirely dependent on the broad discretion and judgment
of management in connection with the allocation of the proceeds of the
offering and the selection of a Target Business. There can be no assurance
that determinations ultimately made by the Company will permit the Company
to achieve its business objectives. (SEE "USE OF PROCEEDS" and
"BUSINESS.")
<PAGE>
LEVERAGE
A business acquired through a leveraged buy-out, i.e., financing the
acquisition of the business by borrowing on the assets of the business to
be acquired, will be profitable only if it generates enough revenues to
cover the related debt and expenses. Use of a leveraged buy-out could
increase the Company's exposure to larger losses. There can be no
assurance that any business acquired through a leveraged buy-out will
generate sufficient revenues to cover the related debt and expenses. The
use of leverage to consummate a business combination may reduce the ability
of the Company to incur additional debt, make other acquisitions, or
declare dividends, and may subject the Company's operations to strict
financial controls and significant interest expense. It is likely that the
Company will have few, if any, opportunities to utilize leverage in an
acquisition. Even if the Company is able to identify a business where
leverage may be used, there is no assurance that financing will be
available, or if it is available, that it will be available on terms
acceptable the Company. (SEE "BUSINESS -- Leverage.")
COMPETITION
The Company expects to encounter intense competition from other
entities having business objectives similar to those of the Company. Many
of these entities, including venture capital partnerships and corporations,
other "blank check" or "blind pool" companies, large industrial and
financial institutions, small business investment companies and wealthy
individuals, are well-established and have extensive experience in
connection with identifying and effecting Business Combinations, directly
or through affiliates. Many of these competitors possess greater
financial, technical, personnel and other resources than the Company and
there can be no assurance that the Company will have the ability to
complete successfully. The Company's financial resources will be limited
in comparison to those of many of its competitors. Further, such
competitors will generally not be required to seek the prior approval of
their own shareholders, which may enable them to close a Business
Combination more quickly than the Company, in view of the reconfirmation
offer which must be made by the Company. This inherent competitive
limitation may compel the Company to select certain less attractive
Business Combination prospects. There can be no assurance that such
prospects will permit the Company to achieve its stated business
objectives. (SEE "BUSINESS.")
TAX CONSIDERATIONS
As a general rule, federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The
Company will evaluate the possible tax consequences of any prospective
Business Combination and will endeavor to structure the Business
Combination so as to achieve the most favorable tax treatment to the
Company, the Target Business and their respective shareholders. There can
be no assurances, however, that the Internal Revenue Service (the "IRS") or
appropriate state tax authorities will ultimately assent to the Company's
tax treatment of a consummated Business
<PAGE>
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 its investments and the issuance of securities. In addition, the
Investment Company Act imposes certain requirements on companies deemed to
be within its regulatory scope, including registration as an investment
company, adoption of a specific form of corporate structure and compliance
with certain burdensome reporting, record keeping, voting, proxy,
disclosure and other rules and regulations. In the event of the
characterization of the Company as an investment company, the failure by
the Company to satisfy such regulatory requirements, whether on a timely
basis or at all, could, under certain circumstances, have a material
adverse effect on the Company. With regard to the application of the
Investment Company Act to the escrow account established by the Company
pursuant to Rule 419, however, the SEC has taken the position that, in
light of the regulatory requirement to establish such account, the limited
nature of the investments, and the limited duration of the account, the
escrow account need not be registered as in investment company, nor will
the Company be regulated as an investment company due to establishment of
such an escrow account, as long as it meets the requirements of SEC Rule
419.
<PAGE>
GENERAL RISKS RELATING TO AN INVESTMENT IN THE COMPANY
DEPENDENCE ON SUCCESSFUL COMPLETION OF OFFERING
The Company is dependent on successful completion of this offering to
implement its new business plan. Furthermore, if the offering is
unsuccessful, it is likely that existing shareholders of the Company will
lose their entire investment, because the Company will have no working
capital after paying certain expenses associated with this offering. (SEE
"BUSINESS.") The Company's independent auditors' report on the Company's
financial statements includes an explanatory paragraph stating that the
Company's ability to continue its operations is contingent upon obtaining
adequate financing. If the minimum number of Shares offered are not sold
in this offering, the Company may be unable to continue in its present
form. The financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that might result should the
Company be unable to continue as a going concern. (SEE "BUSINESS", and
Financial Statements of the Company included in this Prospectus.)
SUBSTANTIAL AND IMMEDIATE DILUTION TO PUBLIC
Persons purchasing Shares in this offering will suffer a substantial
and immediate dilution to the net tangible book value of their shares below
the public offering price. Giving effect to the sale of all offered
Shares, the Company would have a net tangible book value of approximately
$.0830 per share so that persons purchasing Shares in the offering would
suffer an immediate dilution of approximately $.91 per share or 91.0% from
the offering price of $1.00 per Share. Giving effect to the sale of the
minimum number of Shares, the net tangible book value of the Company would
be approximately $.0379 per share or dilution to the investors purchasing
in this offering of approximately $.9621 per share or 96.2% of the public
offering price. (SEE "DILUTION.")
DISPROPORTIONATE RISKS
After completion of the sale of all Shares offered by this Prospectus,
present shareholders of the Company would still own approximately 90.9% of
the then outstanding shares of the Company, for which they would have paid
$5,000 or approximately 4.76% of the then invested capital of the Company,
and the persons purchasing shares in this offering would then own 9.1% of
the then outstanding shares, for which they will have paid $100,000 or
approximately 95.24% of the then invested capital. If only the minimum
number of Shares are sold, existing shareholders would own approximately
95.24% of the stock outstanding for which they would have paid
approximately 9.1% of the total capital invested, as compared to public
shareholders who would own approximately 4.76% of the stock outstanding for
which they would have paid $50,000 or approximately 90.9% of the total
capital invested. Consequently, purchasers in this offering will bear a
disproportionately greater risk investing in the Company than its present
shareholders. (SEE "COMPARATIVE DATA.")
<PAGE>
SALE OF SHARES BY MANAGEMENT IN CONNECTION WITH AN ACQUISITION
The Company's Officers, Directors and Existing Shareholders may
actively negotiate or otherwise consent to the purchase of all or a portion
of their shares of the Company as a condition to or in connection with a
proposed merger or acquisition transaction. This activity may present
management with conflicts of interest, in light of the potential for
members management to consider their own personal pecuniary benefit rather
than the best interests of the Company's other shareholders. In order to
minimize this inherent potential conflict of interest, however, each of the
officers, directors and 10% or more beneficial shareholders of the Company
and the Company, have agreed that they will not (i) actively negotiate for
or otherwise consent to the disposition of any portion of their Common
Stock at a per share price different than that offered with respect to the
Shares sold in this offering as a condition to or in connection with a
Business Combination or (ii) cause any securities of the Company to be sold
by any officers, directors, greater than 10% shareholders or persons who
may be deemed promoters of the Company, except as may otherwise be made in
permitted market transactions, without affording all shareholders of the
Company a similar opportunity. (See "Plan of Distribution - Agreements of
Officers, Directors and 10% Beneficial Shareholders.")
PURCHASE OF SHARES BY OFFICERS, DIRECTORS AND EXISTING SHAREHOLDERS.
Officers, Directors and the Company's existing shareholders may
purchase shares in this offering on the same conditions as public
investors. Any of the individuals may, but are not obligated to, purchase
such shares for the purpose of facilitating a closing of the minimum
offering by the Company. Such persons, however, will not purchase more
than 50% of the shares actually purchased by public investors. Although
such purchases will be made for investment purposes only, and not with the
intent to resell, to the extent that shares are purchased by the Company's
Officers, Directors or existing shareholders, such purchases would result
in a reduction in the percentage ownership by public investors (often
referred to as the "public float"). Purchases of shares in this offering
by any Officers, Directors or existing shareholders could result in the
commitment of public investors in this offering in the absence of public
demand for the offering, especially where only the minimum amount of shares
being offered are sold.
NO ACCESS TO INVESTORS' FUNDS WHILE HELD IN ESCROW
The Shares are being offered on a "best efforts" basis, and no
individual, firm, or corporation, has agreed to purchase any of the offered
Shares. Consequently. there is no assurance that the required minimum
number of Shares (50,000), will be sold during the offering period, which
may las as long as four months. During this initial offering period,
subscribers have no right to the return or use of their funds.
Following sale of at least the minimum number of Shares within the
prescribed period, investors' funds (reduced to reflect payments for
underwriting compensation and other expenses otherwise released, as
permitted by SEC Rule 419) will remain in escrow as Deposited Funds. While
interest will accrue on the Deposited Funds after successful completion of
the offering, investors will have no right to the return of or the use of
their
<PAGE>
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 maximum
offering proceeds (after deduction of applicable commissions, if any). If
the Company is unable to locate a Target Business meeting the above
criteria, investors will have to wait the full 18-month period following
the date of this Prospectus before a pro rata portion of their funds (and
interest) is returned to them.
RESTRICTION ON SALE OF SHARES HELD IN SEC RULE 419 ESCROW ACCOUNT
Under SEC Rule 419, the Company must deposit in a special account
securities issued and funds received in its initial offering. According to
SEC Rule 15g-8 adopted under the Securities Exchange Act of 1934, it is
unlawful for any person to sell or offer to sell the Shares (or any
interest in or related to the Shares) held in SEC Rule 419 account other
than pursuant to a qualified domestic relations order. As a result,
contracts for sale to be satisfied by delivery of the Deposited Securities
(e.g. contracts for sale on a when, as, and if issued basis), and sales of
derivative securities to be settled by delivery of the Deposited Securities
(e.g. physically-settled option on the securities), are prohibited. SEC
Rule 15g-8 also prohibits sales of other interests based on the Shares,
whether or not physical delivery is required. Accordingly, investors will
not be able to liquidate their investment in the Shares unless and until
the Deposited Securities are released from escrow as provided in SEC Rule
419 and applicable state securities laws or regulations. Securities are
released from escrow only as provided in SEC Rule 419 and applicable
provisions of state law. Therefore, there will be no trading market
for the Shares following completion of the offering, even if the Deposited
Securities are released from escrow following a business combination
pursuant to SEC Rule 419, there can be no assurance that a public market
for the Company's securities will develop, especially in view of the small
size of this offering and the Company's limited shareholder base. As a
result, purchasers of the Shares offered may not be able to liquidate their
investment in the Shares, or may not be able to do so readily.
LACK OF REVENUE AND DIVIDENDS
The Company has had no earnings and cannot predict when, if ever, it
will realize any material revenue a profit from any operations it may
subsequently undertake. Upon sale of all Shares offered by this
Prospectus, present shareholders, including the present management of the
Company, will collectively own approximately 90.9 % of the then issued and
outstanding shares of Common Stock, approximately 77.27% of which will be
owned by the current officers and directors. In the election of directors,
shareholders are not entitled to cumulate their votes for nominees.
Accordingly, the current shareholders will essentially be able to elect all
of the Company's Directors and thereafter have a substantial impact upon
the operations of the Company. (SEE "PRINCIPAL SHAREHOLDERS," "CERTAIN
TRANSACTIONS," "BUSINESS -- 'Blank Check' Offering" and "DESCRIPTION OF
SECURITIES.")
<PAGE>
ARBITRARY OFFERING PRICE
The offering price of the Shares does not bear any relationship to the
assets, book value, or net worth of the Company or any other generally
accepted criteria of value, and should not be considered to be an
indication of the actual value of the Company. The offering price was
arbitrarily determined by the Company.
AUTHORIZATION OF ADDITIONAL SECURITIES
The Company's Articles of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock, par value $.0001 per share. Upon sale
of all Shares offered by this Prospectus there will be 98,900,000
authorized but unissued shares of Common Stock available for issuance.
Although the Company has no commitments as of the date of this Prospectus
to issue any shares of Common Stock other than as described in this
Prospectus, the Company will, in all likelihood, issue a substantial number
of additional shares of Common Stock in connection with a Business
Combination. To the extent that additional shares of Common Stock are
issued, dilution to the interests of the Company's shareholders will occur.
Additionally, if a substantial number of shares of Common Stock are issued
in connection with a Business Combination, a change in control of the
Company may occur which may impact, among other things, the utilization of
net operating losses, if any. Furthermore, the issuance of a substantial
number of shares of Common Stock may cause a dilution and adversely affect
prevailing market prices, if any, for the Common Stock, and could impair
the Company's ability to raise additional capital through the sale of its
equity securities. The Company will not issue additional capital stock to
any of its current shareholders prior to consummation of a merger or
acquisition with a Target Business, except to the extent that such
shareholders purchase Shares offered by this Prospectus.
The Company's Articles of Incorporation also authorizes the issuance
of 10,000,000 shares of preferred stock, with such designations, powers,
preferences, rights, qualifications, limitations and restrictions and in
such series as the Board of Directors, subject to the laws of the State of
Colorado, may determine from time to time. Accordingly, the Board of
Directors is empowered, without shareholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of
Common Stock. In addition, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing
a change in control of the Company. Although the Company does not
currently intend to issue any shares of Preferred Stock, there can be no
assurance that the Company will not do so in the future. As of the date of
this Prospectus, the Company has no outstanding shares of Preferred Stock.
(SEE "BUSINESS" and DESCRIPTION OF SECURITIES.")
POSSIBLE SALE OF COMMON STOCK PURSUANT TO SEC RULE 144 OR OTHERWISE
In the event a public market for the Common Stock develops in the
future, certain shares held by existing shareholders may be sold, and
certain shares owned by officers, directors and shareholders owning 10% or
more of the Company's outstanding capital stock may be sold in reliance on
SEC Rule 144 adopted under the Securities Act, if certain
<PAGE>
requirements are met. Investors should be aware that sales under SEC Rule
144 or otherwise may have a depressive effect on the price of the Company's
stock in any market which may develop. In general, under Rule 144, as
currently in effect, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company (or persons
whose shares are aggregated), who has owned restricted shares of Common
Stock beneficially for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of
1% of the total number of outstanding shares of the same class or, if the
Common Stock is quoted on an exchange or NASDAQ, the average weekly trading
volume during the four calendar weeks preceding the sale. A person who has
not been an affiliate of the Company for at least three months immediately
preceding the sale and who has beneficially owned the shares of Common
Stock to be sold for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
No prediction can be made as to the effect, if any, that sales of such
shares of Common Stock or the availability of such shares for sale will
have on the market prices for shares of Common Stock prevailing from time
to time. Nevertheless, the sale of substantial amounts of Common Stock in
the public market would likely depress the market price for the Company's
Common Stock and could impair the Company's ability to raise capital
through the sale of its equity securities. As of the date of this
Prospectus, the Company has been advised that 1,000,000 shares of the
Company's Common Stock (100%) are available for resale, subject to the
restrictions contained in SEC Rule 144, with 900,000 shares held by persons
who will be deemed affiliates of the Company and 100,000 shares held by
persons who are not affiliates of the Company. (SEE "DESCRIPTION OF
SECURITIES" and "SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL
SHAREHOLDERS")
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. The Company may register the Common Stock in
other jurisdictions or obtain an exemption from registration in other
states in the future. 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
<PAGE>
investors to resell the shares of Common Stock purchased in this Offering.
No resales of the Shares will be permitted while such shares remain in
Escrow.
NO ASSURANCE OF PUBLIC MARKET
Prior to this Offering, there has been no public market for the
Company's Common Stock, and no market is expected to develop for shares
sold in this Offering until after such shares are released from escrow
pursuant to the provisions of SEC Rule 419, in conjunction with a
successful Business Combination. There can be no assurances that a regular
trading market will develop for shares of the Company's Common Stock after
that time, or that, if developed, any such market will be sustained. No
prediction can be made as to the effect, if any, that market sales of
restricted shares of Common Stock or the availability of such shares for
sale will have on the market prices from time to time. As a result,
investors may not be able to liquidate their investment readily, or at all,
when they desire to sell. The initial offering price of the shares of
common Stock offered by this Prospectus has been arbitrarily determined by
management and bears no relation to any established valuation criteria.
The limited financial resources of the Company, the small size of this
offering and its limited shareholder base materially decrease the
likelihood that a regular trading market will develop. Any trading of the
Common Stock will likely be conducted through what is customarily known as
the "pink sheets" and on the Bulletin Board. Any market for the Common
Stock which may result will likely be less well developed than if the
Common Stock were traded on NASDAQ or an exchange.
The Company has had no discussions and there are no understandings
with any firm regarding the participation of such firm as a market maker in
the shares of the Company's Common Stock.
DILUTION
The difference between the public offering price per share of Common
Stock and the pro forma net tangible book value per share of common Stock
of the Company after this Offering constitutes the dilution to investors in
this Offering. Net tangible book value per share is determined by dividing
the net tangible book value of the Company (total tangible assets less
total liabilities) by the number of outstanding shares of Common Stock. At
June 30, 1997, the net tangible book value of the Company was ($7,034), or
($.0070) per share of Common Stock. After giving effect to the sale of
50,000 shares of Common Stock offered by this Prospectus, representing the
minimum amount of shares offered by this Prospectus (less estimated
expenses of this Offering), the pro forma net tangible book value of the
Company at June 30, 1997, would have been $37,966 or $.0379 per share,
representing an immediate increase in net tangible book value of
approximately $.0450 per share to the Company's existing shareholders and
an immediate dilution of at least $.9621 per share to shareholders
purchasing shares in this Offering. After giving effect to the sale of
100,000 shares of Common Stock offered by this Prospectus, representing the
maximum amount of shares offered by this Prospectus (less estimated
expenses of this Offering), the pro forma net tangible book value of the
Company at June 30, 1997, would have been
<PAGE>
$82,966 or $.0830 per share, representing an immediate increase in net
tangible book value of approximately $.0900 per share to the Company's
existing shareholders and an immediate dilution of at least $.91 per share
to shareholders purchasing shares in this Offering.
The following table illustrates the dilution per share to new
investors, on a per share basis, as of June 30, 1997:
<TABLE>
<CAPTION>
ASSUMES ASSUMES
MINIMUM MAXIMUM
OFFERING OFFERING
<S> <C> <C>
Initial public offering price per
Share $1.00 $1.00
Net tangible book value per Share
before this Offering $(.0070) $(.0070)
Increase attributable to new
shareholders $ .0450 $ .0830
______ ______
Pro forma net tangible book value
after this Offering $.0379 $.0900
______ ______
Dilution to new shareholders $.9621 $.9100
Percent Dilution 96.2% 91.0%
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company has not had any revenues from its operations during the
past two fiscal years. Its present objective is to acquire an interest in
an operating business as a "blank check" company described in SEC Rule 419.
At the present time, the Company's liabilities exceed its assets by a
substantial amount. (SEE Financial Statements of the Company included
in this Prospectus.) The Company has funded its recent business activities
primarily through loans received from its principal shareholder. The
Company's audited financial statements indicate that the Company's ability
to continue as a going concern is dependent upon the Company's ability to
obtain financing. The Company intends to mitigate the effect of these
financial difficulties by raising funds necessary for its continued
business operations through successful completion of this offering.
Thereafter, the Company anticipates further improvement of its financial
condition through the successful location of a suitable Target Business and
consummation of a Business Combination. If this offering is not
successful, however, there is substantial doubt as to whether the Company
can accomplish its business objectives or continue as a going concern.
Substantially all of the company's working capital needs subsequent
to this Offering will be attributable to the identification, evaluation and
selection of a suitable Target Business and, thereafter to structure,
negotiate and consummate a Business Combination with such Target
Business. Such working capital needs are expected to be satisfied from
the Company's current limited resources, the proceeds of this Offering
which are not deposited into the Escrow Account established pursuant to SEC
Rule 419, and possible
<PAGE>
additional advances from its existing principal shareholder. Such funds
are expected to satisfy the Company's cash requirements during the next 12
months. Its business operations related to identification, evaluation
and selection of a suitable Target Business may, however, behampered by its
limited resources. The Company does not expect to purchase or sell any
significant equipment, engage in product research or development, and does
not expect any significant changes in the number of its employees.
COMPARATIVE DATA
The following chart illustrates percentage ownership in the Company
held by the present shareholders and by the investors in this offering and
sets forth a comparison of the amounts paid by the present shareholders and
amounts paid by the investors in this offering.
<TABLE>
<CAPTION>
TOTAL
SHARES TOTAL AVERAGE PRICE
OWNED CONSIDERATION PER SHARE
NUMBER % AMOUNT %
MINIMUM
OFFERING
<S> <C> <C> <C> <C> <C>
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 $36,000 .
Ninety percent (90%) of the net proceeds, ($81,000 if the maximum
offering is sold and $40,500 if the minimum offering is sold) will be held
in the Escrow Account established pursuant to Rule 419, until an
acquisition meeting certain specified criteria has been made
<PAGE>
and a sufficient number of investors reconfirm their investment in
accordance with the procedures set forth in SEC Rule 419. The Escrow
Account will not be released until such time as the Company (a) has
entered into an agreement with respect to a Business Combination in which
at least 50% of the gross offering proceeds are committed to a specific
line of business, (b) the company has filed a post-effective amendment to
its registration statement which post-effective amendment has been declared
effective, (c) the prospectus contained in the post-effective amendment has
been sent to the Company's shareholders, (d) each purchaser of securities
in this Offering has been given no fewer than 20 and no more than 45
business days from the effective date of the prospectus, to elect whether
to remain an investor and (e) the Business Combination is consummated.
The proceeds not held in the Escrow Account established pursuant to
SEC Rule 419 will be used by the Company in the following order of
priority (a) first, for expenses related to this Offering (estimated to be
approximately $36,000) or to repay all or a portion of loans made by the
Company's principal shareholder(1) which allowed the Company to pre-pay
some of these offering expenses (b) second, to pay for business, legal and
accounting due diligence expenses incurred in connection with evaluation of
prospective Business Combinations and (c) third, for general and
administrative expenses(2) of the Company, including legal and accounting
fees and administrative support expenses incurred in connection with the
Company's reporting obligations to the SEC.
(1) The Company has borrowed an aggregate of $25,000 from its
principal shareholder for the purpose of pre-paying certain expenses
incurred by the Company in connection with this Offering. This
indebtedness is evidenced by promissory notes which bear interest at
the rate of 10% per annum from the date relevant funds were advanced.
No amounts are due under these promissory notes until consummation of
a merger or acquisition of a target business.
(2) The Company utilizes office space at 12146 East Amherst Circle,
Aurora, Colorado 80014, provided by the principal shareholder of the
Company, Mrs. Sandra Steinberg. The Company will not pay rent for
this office space. The Company will reimburse clerical and office
expenses, such as telephone charges, copy charges, overnight courier
service, travel expenses, and similar cost incurred by Mrs. Steinberg
on Company matters, which is estimated will not exceed, on average,
$250 per month.
There are no plans, proposals, arrangements, or understandings with
respect to the sale or issuance of additional securities of the Company
prior to the location of an Target Business. After the Company reaches an
agreement for acquisition of a business, it is required by SEC Rule 419 to
prepare and disseminate a prospectus contained in a post-effective
amendment to its registration statement to all investors, which will
describe the business to be acquired and provide more specific information
on the use of the net proceeds of the offering in connection with the
acquisition and in such business. Except for reimbursement of offering
costs and expenses incurred by officers and directors on Company matters
described above, no portion of the net proceeds of the offering may be paid
to officers, directors, promoters, or their affiliates or associates,
directly or indirectly, as consultant fees, officer salaries, director
fees, purchase of their shares, or other payments. The Company's Board of
Directors has adopted a policy by resolution to the foregoing effect, which
may be rescinded or amended only by majority vote of the Company's
shareholders who do not hold any common stock presently outstanding
(whether now held or hereafter acquired) and will expire by its terms on
the date an acquisition of business venture is consummated. While the
Company's Board of Directors may seek a change in
<PAGE>
this policy prior to an acquisition, no change may be made except by the
vote specified. No portion of the net proceeds will be used to make loans
to any person. In addition, the Company will not borrow funds and use the
proceeds therefrom to make payments to the Company's officers, directors,
or promoters, or their affiliates or associates.
The Company has no agreement or understanding with any consultant or
advisor to provide services in connection with any future business
acquisition. At the present time, the Company does not anticipate that it
will engage consultants or advisors specializing in business acquisitions
or reorganizations, although the possibility exists that management may
find it to be beneficial to the Company to retain the services of such a
consultant. Under no circumstances will the Company retain the services of
any consultant who is also an officer, director, or promoter of the Target
Business, or their affiliates or associates. Compensation to a consultant
may take various forms, including one time cash payments, payments based on
a percentage of revenues or product sales volume, payments involving
issuance of securities (including those of the Company) or any combination
of these or other compensation arrangements. The Company estimates that
any fees for such services paid in cash will not exceed 10% of the amount
of the securities issued by the Company to acquire a business. The Company
will not have funds to pay a retainer in connection with any consulting
arrangement, and no such fee will be paid unless and until an acquisition
is completed in accordance with SEC Rule 419. To the extent that the
Company utilizes the services of an independent consultant advisor, some
portion of the proceeds derived from this Offering, however, may ultimately
be directly or indirectly used to pay such persons or firms.
PLAN OF DISTRIBUTION
SELLING THE SHARES OF THE OFFERING. The officers and directors of the
Company have been authorized by the Company to sell the Shares of the
Company's common stock pursuant to this Prospectus to any and all suitable
investors of age in any state in which these securities have been
registered, and shall take no commission or other offering remuneration of
any kind for doing so. To the extent that Shares are sold by registered
broker-dealers, however, the Company will pay a 10% commission to such
registered broker-dealers. Investors may purchase Shares by completing a
subscription agreement and delivering to the selling officer or director a
check payable to Franks' Express, Inc. Escrow Account, for the amount of
the purchase price.
The Company has not entered into an underwriting agreement with any
broker-dealer. However, broker-dealers who desire to participate in the
sale of the Shares may do so by 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.
<PAGE>
To the extent that the Company elects to use broker-dealers to
assist the officers and directors of the Company in selling Shares, such
broker-dealers will be members of the NASD. The Company will amend its
Registration Statement by post-effective amendment to identify a selected
broker-dealer at such time as such broker-dealer sells Shares in this
offering. In the view of the SEC's Division of Corporation Finance, any
selected broker-dealer that sells securities in this offering will be
deemed an underwriter as defined in Section 2(11) of the Securities Act of
1933, as amended. Prior to the involvement of any broker-dealer in this
offering, the Company must obtain a no objection position from the NASD
regarding the contemplated underwriting compensation and arrangements.
The Company reserves the right to withdraw, cancel or modify such
offer and any offer, in whole or in part. Delivery of the Shares will be
made to investors promptly upon acceptance and the satisfaction of escrow
conditions relating to completion of the minimum offering amount.
AGREEMENTS OF OFFICERS, DIRECTORS AND 10% BENEFICIAL SHAREHOLDERS
Pursuant to a written agreement among each of the officers, directors
and 10% or more beneficial shareholders of the Company and the Company,
such persons will not (i) actively negotiate for or otherwise consent to
the disposition of any portion of their Common Stock at a per share price
different than that offered with respect to the Shares sold in this
offering as a condition to or in connection with a Business Combination or
(ii) cause any securities of the Company to be sold by any officers,
directors, greater than 10% shareholders or persons who may be deemed
promoters of the Company, except as may otherwise be made in permitted
market transactions without affording all shareholders of the Company a
similar opportunity. Further, the Company shall not borrow funds to be
used directly or indirectly to (i) purchase any shares of the Company's
Common Stock owned by management of the Company; or (ii) make payments to
the Company's promoters, management or their affiliates or associates. No
member of management, promoter or anyone acting at their direction is
expected to recommend, encourage or advise investors to open brokerage
accounts with any broker-dealer that is obtained to make a market in the
Company's securities, if any. Information regarding any broker-dealers
that make a market in the Company's securities in the future, if any, will
be disseminated to the Company's shareholders as part of ongoing
communication between the Company's management and its shareholders.
DETERMINATION OF THE OFFERING PRICE. As of the date of this
Prospectus, there is no public market for the Company's common stock. The
offering price of the Shares was determined by the Company without regard
to any traditional or established criteria of value. In determining the
offering price and the number of shares to be offered, the Company
considered such factors as the financial condition of the Company, its net
tangible book value, its business prospects, and the general condition of
the securities market. The offering price of $1.00 per Share was
established by the Company, in part because the Company believes that the
price of $1.00 would be the easiest price at which to sell the
<PAGE>
Shares. Accordingly, the offering price set forth on the cover page of
this Prospectus should not be considered an indication of the actual value
of the Company. The price bears no relation to the Company's assets, book
value, earnings or net worth or any other traditional valuation criteria.
There is also no assurance that an active trading market for the Company's
securities will develop or, if developed, will continue, such that
subscribers will be able to resell their Shares following this offering.
The Company's common stock has never been traded on any exchange or market
prior to this offering, and has been privately held.
SHAREHOLDERS OF RECORD. On June 30, 1997, there were six holders of
record of the Company's common stock.
DIVIDENDS. The Company has never paid dividends on the Company's
common stock. The Board of Directors of the Company presently intends to
pursue a policy of retaining earnings, if any, for use in the Company's
operations and to finance expansion of its business activities. With
respect to the Company's common stock, the declaration and payment of
dividends in the future, of which there can be no assurance, will be
determined by the Company's Board of Directors in light of conditions then
existing, including the Company's earnings, financial condition, capital
requirements and other factors. There are presently no dividends which are
accrued or owing with respect to any of the Company's outstanding capital
stock and none are expected to be paid in the forseeable future.
LEGAL PROCEEDINGS
There are no legal proceedings or pending litigation to which the
Company is a party or against any of its officers or directors as a result
of their activities associated with the business of the Company.
MANAGEMENT
The Company has no knowledge of any arrangement or understanding in
existence between any officer named below or any other person pursuant to
which any such officer was or is to be elected to such office or offices.
All officers of the Company serve at the pleasure of the Company's Board of
Directors. All officers of the Company will hold office until the next
annual meeting of the Board of Directors of the Company. There is no
person who is not a designated officer or director who is expected to make
any significant contribution to the business of the Company, except
independent contractors as are, or may be engaged by the Company to provide
consulting services.
Officers and Directors of the Company currently serve without
compensation, other than reimbursement of actual out-of-pocket expenses
they incur on behalf of the Company, and prior to a Business Combination,
none of the Company's Officers or Directors will receive any additional
compensation (including cash consideration or Company securities). Prior
to the consummation of a Business Combination, no additional securities
will be issued to the Company's management, promoters or their affiliates
or associates, except that such persons may purchase shares of the
Company's Common Stock in this Offering on the same
<PAGE>
conditions as public investors, provided that they may not purchase more
than 50% of the shares actually purchased by public investors.
The following sets forth biographical information for at least the
past five years as to the business experience of each officer and director
of the Company and their age and positions with the Company:
PRESIDENT AND DIRECTOR. Charles Burton, age 47, currently serves as
President and Director of the Company, a position he has held since April
15, 1997. Mr. Burton served as Secretary and a Director of the Company
from January 2, 1997 until April 15, 1997, when he was elected President.
Mr. Burton is a graduate of Kenyon College where he obtained a
bachelors degree in Political Science in 1971. From 1972 to 1976, Mr.
Burton served as a special assistant to George Clark Martin, President of
the National Association of Home Builders in Louisville, Kentucky. From
1977 to 1985, Mr. Burton was employed as a licensed securities broker with
S. W. Devanney and Co., Inc. in Denver, Colorado. He was employed with
Kober Financial Inc. from 1985 to 1988 as a wholesale securities trader.
Thereafter, Mr. Burton was employed by Fitzgerald, Talman, Inc. as a
wholesale securities trader for the remainder of 1988. In 1989, Mr. Burton
became self-employed as a financial consultant. His consulting experience
included rendering advice with respect to mergers and acquisitions, and
assisting various companies in developing public trading abilities. During
this time, Mr. Burton also served as President of Wild Creek Oil Company,
Inc. From 1992 to 1993, he was employed by Paramount Investments
International, Inc. as a wholesale trader. In 1993 he left Paramount to
devote his efforts to development of LPR Cybertek, Inc., an internet
financial services company located in Denver, Colorado, where he was co-
owner and Vice-President. In May of 1996, he assisted with the merger of
Wild Creek Holding Company, Inc., a publicly traded company, with TNB, an
international trading and export concern. Mr. Burton continues to operate
his independent financial consulting service business, but presently
concentrates his efforts on assisting individuals in making financial
decisions.
SECRETARY AND DIRECTOR. Roger D. Jones, age 31, currently serves as
Secretary and a Director of the Company. Mr. Jones has served as a
Director of the Company since January 2, 1997 and prior to taking over
duties as Secretary of the Company, Mr. Jones served as its interim Company
President from January 2, 1997 until April 15, 1997.
Mr. Jones graduated from Lake Forest College Lake Forest, Illinois in
1987 with a bachelors degree in history. Since that time, Mr. Jones has
been employed by the McDonald's Corporation in various capacities. Mr.
Jones relocated to Aurora, Colorado in April of 1988. Mr. Jones attended
the highly regarded Hamburger University sponsored by the McDonald's
Corporation in 1992, where course work included studies in advertising,
marketing, restaurant profit and loss statements, restaurant layout and
maintenance. In December of 1992, Mr. Jones became the Restaurant Manager
for McDonald's in Aurora, Colorado. Mr. Jones has also assisted McDonald's
Corporation's Regional Training Department, training assistant managers
from the seven-state Rocky Mountain Region.
<PAGE>
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.
Mrs. Steinberg obtained her securities broker's license in 1985 and
was employed for a period of two months by Tri-Securities, a brokerage firm
located in Englewood, Colorado that specialized in sale of stocks and
bonds. Thereafter, Mrs. Steinberg became a registered representative with
J. W. Gant, a position she held until October of 1986. She was associated
with Guildcor Financial Inc. from October of 1986 until January of 1988,
where she also sold securities. Mrs. Steinberg was then employed by
Capital Securities for approximately 11 months in 1988. She left that
position to become President and Chairman of the Board and Directors of
Franks for the Memories, Inc., a food service business retailing hot dogs.
Franks' Express, Inc. was formed in 1991 to engage in the restaurant and
food service business and Mrs. Steinberg supervised its active business
operations until November, 1993.
Although it is possible that Officers and Directors of the Company may
become involved in other blank check or blind pool Companies in the future,
none of such other companies will join the Company in a Business
Combination.
BUSINESS
GENERAL
The Company recently changed its business objective from restaurant
consulting to seeking, investigating, and ultimately acquiring an interest
in business with long-term growth potential. Persons should not purchase
Shares in the offering for short-term earnings or short-term appreciation
in the value of the Company. The Company currently has no commitment or
arrangement to participate in a business, and cannot now predict what type
of business it may enter into or acquire. At this point, the Company's
business objectives are extremely general and are not intended to be
restrictive on the discretion of the Company's management.
Earlier this year, the Company engaged Mr. Richard Steinberg, spouse
of the Company's principal shareholder, to provide the Company with
financial planning advice with respect to its proposed restaurant
consulting business and supplement its available restaurant consulting
expertise. Mr. Steinberg provided consulting services to the Company
during the period from January 1, 1997 through August 9, 1997, pursuant
to a written consulting agreement. Under the consulting agreement, Mr.
Steinberg assisted the Company with evaluation, development and execution
of the Company's business plan at the time and was to provide, on an as
needed basis, food service and financial consulting to customers of the
Company. In addition, Mr. Steinberg assisted the Company with analysis of
sources of available capital to be used for pursuit of the Company's
business plan and activities. After the final decision was made to focus
the Company's efforts away from restaurant consulting
<PAGE>
and concentrate exclusively on seeking a Business Combination, Mr.
Steinberg's services were no longer needed or desired by the Company. As a
result, the two year consulting agreement was prematurely terminated at the
Company's request. The Company has no present plans to utilize the
services of Mr. Steinberg in the future.
Persons purchasing Shares in the offering will be entrusting their
funds to the Company's management, subject to the requirements of SEC Rule
419. The net proceeds of the offering are not specifically allocated to
identified purposes or allocated to the acquisition of any specific type of
business venture. Decisions concerning these matters may be made by
management without involvement by any public shareholders, except for the
right of each investor to recover his or her pro rata portion of the
Deposited Funds in accordance with SEC Rule 419. (SEE "USE OF PROCEEDS.")
Management anticipates that it will be able to participate in only one
transaction with a single Target Business, due primarily to the Company's
limited financing. This lack of diversification should be considered a
substantial risk of investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from
another, or otherwise diversify its business.
SELECTION OF A TARGET BUSINESS
The Company anticipates that businesses for possible acquisition may
come from responses to advertising, or will be referred by various sources,
including its officers and directors, professional advisors, securities
broker-dealers, venture capitalists, members of the financial community,
and others who may present unsolicited proposals. The Company will seek
businesses from all known sources, but will rely principally on personal
contacts of its officers and directors and their affiliates, as well as
indirect associations between them and other business and professional
persons.
While it is not presently anticipated that the Company will engage
unaffiliated professional firms specializing in business acquisitions or
reorganizations, such firms may be retained if management deems it to be in
the best interest of the Company. Compensation to a finder or business
acquisition firm may take various forms, including one-time cash payments,
payments based on percentage of revenues or product sales volume, payments
involving issuance of securities (including those of the Company), or any
combination of these or other compensation arrangements. Consequently, the
Company is currently unable to predict the cost of utilizing such services,
but estimates that any fees for such services paid in cash will not exceed
10% of the gross proceeds derived from this offering and/or equity
securities (not debt) equal to 10% of the amount of the securities issued
by the Company to acquire a Target Business. If a finder or business
acquisition firm is utilized by the Company, the cost may be paid out of
the net proceeds of this offering. (SEE "USE OF PROCEEDS.") The Company's
Board of Directors has recently adopted a policy by resolution, which may
be rescinded or amended only by majority vote of the Company's shareholders
who do not currently hold any of the Company's outstanding capital stock
(whether now held or hereafter acquired) and will expire by its terms on
the date an acquisition of a business venture is consummated, prohibiting
the payment, either directly or indirectly, of any finder's fee or similar
compensation (including the issuance of debt) to
<PAGE>
any person who has served as an officer or director of the Company prior to
the acquisition, or who is a promoter. This policy was adopted to minimize
the possibility that such fees would become a factor in negotiations and
present conflicts of interest. While the Board of Directors may seek a
change in this policy prior to an acquisition, no change may be made except
by the vote specified.
The Company will not restrict its search to any particular business,
industry, or geographical location, and management reserves the right to
evaluate and enter into any type of business in any location. The Company
may participate in newly organized business venture or a more established
company entering a new phase of growth or in need of additional capital to
overcome existing financial problems. Participation in a new business
venture entails greater risks since in many instances management of such a
venture will not have proved its ability, the eventual market of such
venture's product or services will likely not be established, and the
profitability of the venture will be unproven and cannot be predicted
accurately. If the Company participates in a more established firm with
existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or
remedy the circumstances leading to such financial problems.
In seeking a business venture, the decision of management will not be
controlled by an attempt to take advantage of any anticipated or perceived
appeal of a specific industry, management group, product, or industry, but
will be based on the business objective of seeking long-term capital
appreciation in the genuine value of the Company. The Company will not
acquire or merge with a business or corporation in which the Company's
officers, directors, or promoters, or their affiliates or associates, have
any direct or indirect ownership interest. The Company does not intend to
engage in the creation of subsidiary entities with a view to distributing
their securities to shareholders of the Company. The Company's Board of
Directors has adopted a policy by resolution, which may be rescinded or
amended only by majority vote of the Company's shareholders who do not
presently hold any common stock presently outstanding (whether now held or
hereafter acquired) and will expire by its terms on the date an acquisition
of a business venture is consummated, prohibiting the acquisition of any
business in which a promoter or any person who has served as an officer or
director of the Company, or any of their affiliates or associates, held,
directly or indirectly, any ownership interest prior to the acquisition
While the Company's Board of Directors may seek a change in this policy
prior to an acquisition, no change may be made except by the vote
specified.
The decision to participate in a specific business may be based on
management's analysis of the quality of the other firm's management and
personnel, the anticipated acceptability of new products or marketing
concepts, the merit of technological innovations, and other factors which
are difficult, if not impossible, to analyze through any objective
criteria. The results of operations of a specific acquisition candidate
may not necessarily be indicative of the potential for the future, due to a
required substantial shift in marketing approaches, the need to expand
significantly, a proposed change product emphasis, a proposed change to
management, and other factors.
<PAGE>
Analysis of Target Businesses will be undertaken by or under the
supervision of the officers and directors (SEE "MANAGEMENT.") In analyzing
prospective businesses, management will consider, to the extent applicable,
the available technical, financial, and managerial resources, working
capital and other prospects for the future, the nature of present and
expected competition; the quality and experience of management services
which may be available and the depth of that management; the potential for
further research, development, or exploration; the potential for growth and
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trade or service marks; name
identification; and other relevant factors.
It is possible that the Company may propose to acquire a business in
the development stage. A business is in its development stage if it is
devoting substantially all of its efforts to establishing a new business,
and either planned principal operations have commenced, but there has been
not significant revenue derived from such operations. Under SEC Rule
419, the Company must acquire a business or assets for which the fair value
of the business represents at least 80% of the maximum offering proceeds,
less certain underwriting 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 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.
<PAGE>
As previously discussed, the Company's Board of Directors has recently
adopted a policy by resolution, which may be rescinded or amended only by
majority vote of the Company's shareholders who do not currently hold any
of the Company's outstanding capital stock (whether now held or hereafter
acquired) and will expire by its terms on the date an acquisition of a
business venture is consummated prohibiting the Company from acquiring or
merging with a business or corporation in which the Company's officers,
directors, or promoters, or their affiliates or associates, have any direct
or indirect ownership interest. This policy was adopted to minimize the
possibility that such matters would become factors in negotiations and
present conflicts of interest. While the Board of Directors may seek a
change in these policies prior to an acquisition, no change may be made
except by the vote specified.
COMPETITION
In connection with its search for an appropriate Target Business, the
Company expects intense competition with other business entities, many of
which will have greater financial resources and prior experience in
business, which could give such business entities a competitive edge.
There is no assurance that the Company will be successful in locating
suitable Target Businesses.
ACQUISITION OF A TARGET BUSINESS
To implement a particular business acquisition, the Company may become
a party to a merger, consolidation, or other reorganization with another
corporation or entity; joint venture; license; purchase and sale of assets;
or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the foregoing, the Company does not presently
intend to participate in a business through the purchase of minority stock
positions. After consummation of an acquisition or merger transaction,
however, it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, the majority
or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without
vote of the Company's shareholders.
In connection with the Company's acquisition of a business, the
present shareholders of the Company, including officers and directors, as a
negotiated element of the acquisition, are likely to sell a portion or all
of the Company's outstanding Common Stock held by them at a significant
premium over their original investment in the Company. As a result of such
sales, affiliates of the entity participating in the business
reorganization with the Company would acquire a higher percentage of equity
ownership in the Company. Although the Company's present shareholders did
not acquire their shares of Common Stock with a view towards any subsequent
sale in connection with a business reorganization, it is not unusual for
affiliates of the entity participating in the reorganization to negotiate
to purchase shares held by the present shareholders in order to reduce the
number of "restricted securities" held by persons no longer expected to be
affiliated with the Company and thereby reduce the potential adverse impact
on the public market in the Company's Common Stock that could result from
substantial sales of such shares after the restrictions no longer apply.
<PAGE>
Investors who purchase Shares in this offering, will not receive any
portion of the premium that may be paid in the foregoing circumstances.
Furthermore, the Company's shareholders may not be afforded an opportunity
to approve or consent to any particular stock buy-out transaction. (SEE
"MANAGEMENT.")
The Company expects that any securities issued in any reorganization
or acquisition transaction would be issued in reliance on exemptions from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the
Company may agree to register such securities either at the time the
transaction is consummated, under certain conditions, or at specified times
thereafter. Although the terms of such registration rights and the number
of securities, if any, which may be registered cannot be predicted at this
time, registration of securities by the Company in these circumstances
would likely entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on such market.
While the actual terms and conditions of a transaction to which the
Company may be a party cannot be predicted, the parties to the business
transaction are likely to find it desirable to structure the acquisition as
a "tax-free" event under sections 351 or 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). In order to obtain tax-free
treatment under Section 351 of the Code, the owners of the acquired
business would be required to own 80% or more of the outstanding capital
stock of the surviving entity. In such event, the shareholders of the
Company, including investors in this offering, would retain less than 20%
of the issued and outstanding shares of the surviving entity. Section
368(a)(1) of the Code provides for tax-free treatment of certain business
reorganizations between corporate entities where an corporation is merged
with or acquires the securities or assets of another corporation.
Generally, the Company will be the acquiring corporation in such a business
reorganization, and the tax-free status of the transaction will not depend
on the issuance of any specific amount of the Company's voting securities.
In such circumstances, however, it is likely that, as a negotiated element
of a transaction completed in reliance on section 368, the acquiring
corporation would issue securities in such an amount that the shareholders
of the acquired corporation will hold 50% or more of the voting stock of
the surviving entity. Therefore, there is a good chance that the
shareholders of the Company immediately prior to the transaction would
retain less than 50% of the issued and outstanding shares of the surviving
entity. Consequently, regardless of the form of the 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
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.
<PAGE>
Leveraging a transaction would involve additional significant risks
because the borrowing involved in a leverage transaction will ordinarily be
secured by the combined assets of the Company and the business to be
acquired. If the combined enterprises are unable to generate sufficient
revenues to make payments on the debt incurred to acquire the business, the
lender would be able to exercise the remedies provided by law or by
contract and foreclose on substantially all of the assets of the Company.
Consequently, the Company's participation in a leveraged transaction may
significantly increase the risk of loss to the Company. During periods
when interest rates are relatively high, the benefits of leveraging are not
as great as during periods of lower interest rates, because the investment
in the business held on a leveraged basis will only be profitable if it
generates sufficient revenues to offset the related debt and other costs of
the financing.
The likelihood of the Company obtaining a conventional bank loan for a
leveraged transaction would depend largely on the business being acquired
and the business's perceived ability to generate sufficient revenues to
repay the debt. Generally, businesses suitable for leveraging transactions
are limited to those with income-producing assets that are either in
operation or can be placed in operation quickly. The Company cannot
predict whether it will be able to locate any such business. In general,
the Company will have few, if any, opportunities to examine business where
leveraging would be appropriate.
Even if the Company is able to locate a business where leveraging
techniques appear desirable, there is no assurance that financing for the
acquisition will be available or, that if it is available, that it will be
available on terms advantageous to the Company. Lenders from which the
Company may obtain funds for purposes of a leveraged buy-out may also
impose restrictions of the future borrowing, dividend, and operating
policies of the Company. It is not possible at this time to predict the
restrictions, if any which lenders may impose, or the impact of such
restrictions on the Company.
OPERATION OF BUSINESS AFTER ACQUISITION
The Company's participation in the operation of a Target Business
after its acquisition will be dependent on the nature of the business and
the interest acquired. The Company is unable to predict whether the
Company will be in control of the business or whether present management
will be in control of the Company following the acquisition. Any business
acquired will involve a variety of risks to investors in this offering,
certain of which risk factors have been generally summarized in the "RISK
FACTORS" portion of this Prospectus. The specific risks associated with
any given business cannot be predicted at the present time.
GOVERNMENTAL REGULATION
It is impossible to predict the effect that government regulation will
have on the Company until it has acquired an interest in a business. The
use of assets or conduct of businesses which 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
<PAGE>
endeavor to ascertain, in light of the limited resources of the Company,
the effects of such government regulation on the prospective business of
the Company. In certain circumstances, however, such as the acquisition of
an interest in a new or start-up business activity, it may not be possible
to predict with any degree of certainty the impact of government
regulation. The inability to ascertain the effect of government regulation
on a prospective business activity will increase the risks associated with
the acquisition of an interest in such business.
OFFICES
The Company utilizes office space at 12146 East Amherst Circle,
Aurora, Colorado 80014, which is being provided by the Company's principal
shareholder. The Company does not and will not pay rent for this office
space. The Company, however, will reimburse clerical and office expenses,
such as telephone charges, copy charges, overnight courier charges, travel
expenses, and similar costs incurred on Company matters, which is estimated
will not exceed, on average, $250 per month.
EMPLOYEES AND ADVISORS
The Company currently has no employees. Executive officers, who are
not compensated for their time contributed to the Company, will devote only
such time to the affairs of the Company as they deem appropriate. (SEE
"MANAGEMENT.") Management of the Company may use consultants, attorneys,
and accountants as necessary, and does not anticipate a need to engage any
full-time employees so long as it is seeking and evaluating business
opportunities related to a Target Business. David M. Summers, legal
counsel to the Company, is a shareholder of the Company. It is expected
that the Company will continue to retain the services of Mr. Summers
following completion of this offering. The need for employees and their
availability will be addressed in connection with a decision whether or not
to acquire or participate in a specific business industry.
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
As of the date of this Prospectus there are 1,000,000 shares of the
Company's common stock issued and outstanding. After successful completion
of this offering, the Company will have 1,050,000 shares outstanding if the
minimum number of Shares are sold and 1,100,000 shares outstanding if the
maximum number of Shares are sold. The following table sets forth, as
of June 30, 1997, the common stock ownership of each person known by the
Company to be an officer, director or beneficial owner of five percent or
more of the Company's outstanding capital stock. Each person has sole
voting and investment power with respect to the shares shown.
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING SHARES
AFTER AFTER
NO. OF DATE BEFORE MINIMUM MAXIMUM
SHARES(1) ACQUIRED OFFERING OFFERING OFFERING
<S> <C> <C> <C> <C> <C>
Charles Burton . . . . 100,000 4/15/97 10.00% 9.52% 9.09%
2903 South Uinta Street
Denver, Colorado 80231
Roger D. Jones . . . . 5,000 4/15/97 0.50% 0.48% 0.45%
1519 South Telluride Street
Aurora, Colorado 80017
Sandra S. Steinberg . . .745,000(2) 6/15/91 74.50% 70.95% 67.73%
12146 East Amherst Circle
Aurora, Colorado 80014
Daniel C. Steinberg.. . . 50,000 2/20/94 5.00% 4.76% 4.55%
747 East First Street #210
Denver, Colorado 80203
Jamie L. Steinberg. . . . 50,000 2/20/94 5.00% 4.76% 4.55%
432 East Wellington #305
Chicago, Illinois 60657
David M. Summers. . . . . 50,000 4/15/97 5.00% 4.76% 4.55%
5670 Greenwood Plaza Blvd.
Suite 422
Englewood, Colorado 80111
________ ______ ______ _____
1,000,000 100% 100% 100%
========= ==== ===== =====
*******************************************************************************
Total ownership by all
persons listed
above who are also
officers and directors
of the Company .. . . . 850,000 85.00% 80.95% 77.27%
********************************************************************************
</TABLE>
(1) Rule 13d-3, promulgated under the 1934 Act which concerns the
determination of beneficial owners of securities, includes as beneficial
owners of securities, among others, any person who directly or indirectly,
through any contract, arrangement, understanding relationship or otherwise
has, or shares, voting power and/or investment power with respect to such
securities; and, any person who has the right to acquire beneficial
ownership of such security within 60 days through means, including, but not
limited to, the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such
options, warrants or conversion privileges are deemed to be outstanding for
the purpose of computing the percentage of outstanding securities of the
class owned by such person, but shall not be deemed to be outstanding for
the purpose of computing the percentage of the class by any other person.
<PAGE>
(2) Excludes an aggregate of 100,000 shares owned by Mrs. Steinberg's
children, Daniel C. Steinberg (50,000 shares) and Jamie L. Steinberg
(50,000 shares), for which Mrs. Steinberg disclaims any beneficial
ownership interest. All common shares owned by the officers, directors and
principal shareholders listed above are "restricted or control securities"
and, as such, are subject to limitations on resale. Such shares may be
sold pursuant to SEC Rule 144 under certain circumstances. These are no
contractual arrangements or pledges of the Company's securities, known to
the Company, which may at a subsequent date result in a change of control
of the Company.
DESCRIPTION OF SECURITIES
CAPITALIZATION. The Company's authorized capital stock consists of
100,000,000 shares of $.0001 par value common stock and 10,000,000 shares
of .0001 par value preferred stock. No preferred stock has been issued by
the Company.
COMMON STOCK. All shares of common stock have equal voting rights and
are not assessable. Voting rights are not cumulative, and, therefore, the
holders of more than 50% of the common stock of the Company would be able
to elect all of the directors of the Company.
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities and after the
satisfaction of all priority claims by holders of the Company's preferred
stock (assuming preferred stock is issued in the future), will be
distributed pro rata to the holders of the common stock. The holders of
the common stock do not have preemptive rights to subscribe for any
securities of the Company, and have no right to require the Company to
redeem or purchase their shares. The shares of common stock presently
outstanding are, and the shares of common stock to be sold pursuant to this
offering will be, upon issuance, fully paid and nonassessable.
Holders of common stock are entitled to share equally in dividends
when, as, and if declared by the Board of Directors of the Company, out of
funds legally available therefor, after payment of any dividends then owing
to the holders of the Company's preferred stock, if any is outstanding.
The Company has not paid any cash dividends on its common stock, and it is
unlikely that any such dividends will be declared or paid in the
foreseeable future.
PREFERRED STOCK. The Company is authorized to issue 10,000,000 shares
of preferred stock, $.0001 par value. The preferred stock may be issued in
series from time to time with such designation, rights, preferences and
limitations as the Board of Directors of the Company may determine by
resolution. The rights, preferences and limitations of separate series of
preferred stock may differ with respect to such matters as may be
determined by the Board of Directors, including, without limitation, the
rate of dividends, amounts payable on liquidation, sinking fund provisions
(if any), conversion rights (if any), and voting rights. It is therefore
possible that preferred stock might be issued which would grant dividend
preferences and liquidation preferences to preferred shareholders superior
to those of the holders of common stock.
<PAGE>
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. Mrs. Steinberg transferred as gifts
50,000 shares to each of her two children, Jamie L. Steinberg and Daniel C.
Steinberg in February, 1994. Mr. Charles Burton and Mr. Roger Jones
acquired their shares from Mrs. Steinberg in January of 1997. Mr. Burton
paid $2,500 for his shares (100,000) and Mr. Jones paid $125 for his shares
(5,000). Mr. Summers acquired 50,000 shares from Mrs. Sandra Steinberg
for $1,250 on April 15, 1997. (SEE "SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS and EXECUTIVE COMPENSATION.")
Earlier this year, the Company engaged Mr. Richard Steinberg, spouse
of the Company's principal shareholder, to provide the Company with
financial planning advice with respect to its proposed restaurant
consulting business and supplement the Company's available restaurant
consulting expertise. Mr. Steinberg provided consulting services to the
Company during the period from January 1, 1997 through August 9, 1997.
After the final decision was made to focus the Company's efforts away from
restaurant consulting and concentrate exclusively on seeking a Business
Combination, Mr. Steinberg's services were no longer needed or desired by
the Company. As a result, the two year consulting agreement was
prematurely terminated at the Company's request. The Company presently
owes Mr. Steinberg $12,000 as payment for services previously rendered
under the consulting agreement and an early termination fee. Pursuant to
an agreement with Mr. Steinberg, no amounts due to him are payable by
the Company until consummation of a merger or acquisition of a Target
Business. At that time, the Company presently expects to pay Mr.
Steinberg amounts then due under the terminated consulting agreement in
cash.
<PAGE>
As of the date of this Prospectus, the Company's principal
shareholder, Mrs. Sandra Steinberg, has loaned the Company in the aggregate
amount of $25,000 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.)
In addition, management of the Company has agreed among themselves that the
repayment of any loans made on behalf of the Company will not impede, or be
made conditional in any manner, to the consummation of a proposed Business
Combination.
RESOLVING CONFLICTS OF INTEREST. The Board of Directors (the "Board")
has determined that the directors of the Company are required to disclose
all conflicts of interest and all corporate opportunities to the entire
Board of Directors. Any transaction involving a conflict of interest
engaged in by the Company shall be on terms not less favorable that could
be obtained from an unrelated third party. A director will only be allowed
to pursue a corporate opportunity in the event it is first disclosed to the
Board and the Board determines that it is not in the Company's best
interest to pursue the particular corporate opportunity. (SEE "RISK
FACTORS - Conflicts of Interest.")
EXECUTIVE COMPENSATION
As of the date of this Prospectus, none of the Company's executive
officers or directors have received any form of monetary compensation from
the Company since November of 1993 other than minimal reimbursements for
actual expenses incurred on behalf of the Company. Prior to the
consummation of a Business Combination, if any, non of the Company's
offices or directors will receive any compensation, except for
reimbursements for actual expenses incurred on behalf of the Company.
However, after satisfaction of the requirements of SEC Rule 419 and
acquisition of a Target Business, it is anticipated that the Company will
fairly compensate its officers and directors for their time and efforts
thereafter, based on rates that are competitive in the industry, after due
consideration of the financial condition and future prospectus of the
Company and their participation in the Company's business operations after
a Business Combination.
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.
<PAGE>
PURCHASES BY OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS.
Officers, directors, and principal shareholders of the Company and persons
associated with them may purchase up to fifty percent (50%) of the Shares
being offered pursuant to this Prospectus, in a manner consistent with the
public offering of the Company's Shares. It is not intended, however, for
the proceeds from this offering to be utilized, directly or indirectly, by
anyone, including the Company's officers and directors, to purchase any of
the Shares offered. To the extent such persons purchase Shares in the
offering, the minimum number of Shares required to be purchased by the
general public will be reduced by like amount. Purchase of Shares in this
offering by officers and directors will result in the Company's current
management increasing its control of the Company. Consequently, this
offering could close with a substantially greater percentage of shares
being held by present shareholders and with lesser participation by the
general public than would otherwise be the case. (SEE "PROSPECTUS SUMMARY"
and "SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS.")
LEGAL MATTERS
ATTORNEYS. The legality of the securities of the Company offered
hereby will be passed on for the Company by David M. Summers, Esq., 5670
Greenwood Plaza Boulevard, Suite 422, Englewood, Colorado 80111. Mr.
Summers presently owns 50,000 shares of the Company's outstanding capital
stock, representing 5% of its current outstanding capital stock, which was
acquired from Mrs. Sandra Steinberg for $1,250 on April 15, 1997.
TRANSFER AGENT
The Company has retained Corporate Stock Transfer, 370 17th Street,
Suite 2350, Denver, Colorado 80202, as transfer agent for the Company's
common stock.
EXPERTS
The financial statements of the Company, as of June 30, 1997, and for
the period then ended, included in this Prospectus have been audited by
Janet Loss, C.P.A., P.C., 9101 East Kenyon Avenue, Suite 2000, Denver,
Colorado 80237, independent public accountants, as stated in their report
appearing herein and elsewhere in the Company's Registration Statement, and
have been so included in reliance upon such report given upon the authority
of that firm as experts in accounting and auditing.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Condensed Balance Sheets (Unaudited) F-2
Condensed Statement of Operations
(Unaudited) F-3
Condensed Statements of Stockholders
Equity (Unaudited) F-4
Condensed statement of Cash Flows
(Unaudited) F-5
Notes to Condensed Financial Statements F-6
Audit Report (Cover) F-7
Audit Report F-8
Table of Contents F-9
Financial Statements
Balance Sheets F-10
Statements of Operations F-12
Statement of Stockholders Equity F-13
Statements of Cash Flows F-14
Notes to Financial Statements F-15
F-1
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1997 1996
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,602 $ 1
OTHER ASSETS:
Deferred Offering
Costs 21,181 $ 0
TOTAL ASSETS 24,783 1
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 2,000 $ 0
Accrued Interest 909 0
Accrued Expenses 6,000 0
Stockholder's Loan 25,000 0
Total Current
Liabilities 33,909 0
STOCKHOLDERS' EQUITY
(DEFICIT):
Common stock, $.0001
par value
100,000,000 and 50,000
shares authorized
1,000,000 and 1,000
shares issued and
outstanding 5,000 5,000
(Deficit) (14,126) (4,999)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ( 9,126) 1
<PAGE>
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT) $24,783 1
</TABLE>
See notes to condensed financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES:
Bank charges 0 0 27 0
Consulting Fees 0 0 6,000 0
Filing Fees 0 0 100 0
Office Expenses
and Supplies 1,489 0 1,490 0
Legal and
Accounting 0 0 600 0
Total Operating
Expense: $ 1,489 $ 0 8,217 0
NET INCOME
(LOSS):
before other
income and
expenses (1,489) 0 (8,217) 0
OTHER INCOME AND
EXPENSES:
Interest
Expenses 601 0 910 0
NET INCOME
(LOSS) $(2,090) 0 9,127 0
NET INCOME
(LOSS) PER
SHARE OF
COMMON STOCK $( .002) N/A ( .01) $ N/A
</TABLE>
See notes to condensed financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
Common stock Stockholders
Number of Common stock Retained Equity
SHARES AMOUNT CAPITAL (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) nine
months ended
September 30, 1997 0 0 (9,127) (9,127)
Balance,
September 30, 1997 $1,000,000 $ 5,000 $(14,126) $ (9,126)
</TABLE>
See notes to condensed financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
1997 1996
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net (Loss) $ (9,127) $ 0
Changes in Assets and
liabilities:
Increase in current
liabilities 33,909 0
Net cash provided by
operating activities 24,782 0
Cash flows from (to)
Financing activities:
Deferred offering costs 21,181 0
Net Increase in Cash 3,601 0
Cash beginning of period 1 1
Cash end of period $ 3,602 $ 1
</TABLE>
See notes to condensed financial statements.
F-5
<PAGE>
FRANKS' EXPRESS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF OPERATION:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. The accompanying statements should be read
in conjunction with the audited financial statements for the six months
ended June 30, 1997 and 1996. In the opinion of management, all
adjustments (consisting only of normal occurring accruals) considered
necessary in order to make the financial statements not misleading, have
been included. Operating results for the nine months ended September 30,
1997, are not necessarily indications of the results that may be expected
for the full calendar year ended December 31, 1997. The financial
statements are presented on the accrual basis.
F-6
<PAGE>
FRANKS' EXPRESS, INC.
AUDIT REPORT
For the six months ended
June 30, 1997 and 1996
and for the Years ended
December 31, 1996 and 1995
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
F-7
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
Board of Directors
Franks' Express, Inc.
12146 East Amherst
Aurora, Colorado 80014
I have audited the Balance sheets of Franks' Express, Inc. as of June 30,
1997 and 1996 and December 31, 1996 and 1995, and the statements of
Operations, Stockholders Equity and Cash Flows for the six months ended
June 30, 1997 and 1996 and for the years ended December 31, 1996 and 1995.
I conducted my audit in accordance with generally accepted auditing
standards. These standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit also includes assessing the accounting
principals used and significant estimates made by management as well as
evaluating the overall financial statement presentation.
As shown in the financial statements, the company has a deficit of
$(12,034), as of June 30, 1997. Also as of June 30, 1997, the company's
current liabilities exceeded its current assets by $27,951. These factors
and also as discussed in Note 4, indicate that the company may be unable to
continue in existence.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Franks' Express, Inc.
as of June 30, 1997 and 1996 and December 31, 1996 and 1995, and the
results of its operations and its cash flow for the six months ended June
30, 1997 and 1996 and for the years ended December 31, 1996 and 1995.
Janet Loss, C.P.A., P.C.
October 27, 1997
F-8
<PAGE>
FRANKS' EXPRESS, INC.
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant ....................1
Balance Sheets, June 30, 1997 and 1996
December 31, 1996 and 1995 ..............................2
Statements of Operations, for the six months ended
June 30, 1997 and 1996 and for years ended
December 31, 1996 and 1995 ..............................3
Statements of Stockholders' Equity, for the six months
ended June 30, 1997 and for years ended
December 31, 1996 and 1995 ..............................4
Statements of Cash Flows, for the six months ended
June 30, 1997 and 1996 and for the years ended
December 31, 1996 and 1995 ..............................5
Notes to Financial Statements ......................... 6-7
F-9
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
BALANCE SHEETS
June 30, June 30, December 31,
1997 1996 1996 1995
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 5,357 $ 0 $ 1 $ 1
OTHER ASSETS:
Deferred Offering
Costs 20,917 $ 0 $ 0 $ 0
TOTAL ASSETS $26,274 $ 0 $ 1 $ 1
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 7,000 $ 0 $ 0 $ 0
Accrued Interest
(Note 3) 308 0 0 0
Accrued Expenses
(Note 3) 6,000 0 0 0
Stockholder's Loan
(Note 3) 20,000 0 0 0
Total Current
Liabilities 33,308 0 0 0
STOCKHOLDERS' EQUITY
(DEFICIT):
Common stock, $.0001
par value
100,000,000 and 50,000
shares authorized
1,000,000 and 1,000
shares issued and
outstanding 5,000 5,000 5,000 5,000
F-10
<PAGE>
(Deficit) (12,034) (4,999) (4,999) (4,999)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ( 7,034) 1 1 1
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT) $26,274 $ 1 $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-11
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997 and 1996
and for the years ended December 31, 1996 and 1995
June 30, June 30, December 31,
1997 1996 1996 1995
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES:
Bank charges 27 0 0 0
Consulting Fees 6,000 0 0 0
Filing Fees 100 0 0 0
Legal and
Accounting 600 0 0 0
Total Operating
Expense: $ 6,727 $ 0 0 0
NET INCOME
(LOSS):
before other
income and
expenses (6,727) 0 0 0
OTHER INCOME AND
EXPENSES:
Interest
(Expenses) ( 308) 0 0 0
NET INCOME
(LOSS) $(7,035) 0 0 0
NET INCOME
(LOSS) PER
SHARE OF
COMMON STOCK $( .01) 0 0 0
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-12
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Common
stock Common Stockholders
Number of stock Equity
shares Amount (Deficit) (Deficit)
<S> <C> <C> <C> <C>
Balance,
January 1, 1995 $ 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1995 - - - -
Balance,
December 31,
1995 $ 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1996 - - - -
Balance,
December 31,
1996 $ 1,000 $ 5,000 $(4,999) $ 1
April 30, 1997
1,000 to 1 forward
stock split of
common stock 999,000 - - -
Net (Loss) six
months ended
June 30, 1997 0 0 (7,035) (7,035)
Balance,
June 30,
1997 $1,000,000 $ 5,000 $(12,034) $ (7,034)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-13
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENT OF CASH FLOWS
For the six months ended June 30, 1997 and 1996
and for the years ended December 31, 1996 and 1995
June 30, June 30, December 31,
1997 1996 1996 1995
<S> <C> <C> <C> <C>
Net (Loss) $ (7,035) $ 0 $ 0 $ 0
Changes in
Operating
assets and
liabilities
Increase in
current
liabilities 33,308 0 0 0
Net cash provided
by operating
activities 26,273 0 0 0
Cash flows from (to)
Financing activities:
Deferred offering
costs (20,917) 0 0 0
Net Increase in
Cash 5,356 0 0 0
Cash beginning of
period 1 1 1 1
Cash end of period $ 5,357 $ 1 $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-14
<PAGE>
FRANKS' EXPRESS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Franks' Express, Inc. a Colorado Corporation, was
incorporated May 17, 1991 for the purpose of engaging
in the restaurant business. The Company ceased its
restaurant operations in November of 1993 and has
been 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 2 - CAPITAL STOCK
On April 30, 1997 the Company issued a 1,000 to 1
forward stock split for common stock. Thus, the
total common stock authorized changed from 50,000 to
100,000,000, and from no par value to $.0001 par
value.
NOTE 3 - RELATED PARTIES
The Company maintains its office in space provided by
the Company's treasurer pursuant to an oral agreement
on a rent free basis with reimbursement for out of
pocket expenses, such as telephone.
The spouse of the Company's principal shareholder has
provided consulting services to the Company during
the period January 1, 1997 through August 9, 1997
pursuant to terms and conditions of a two (2) year
consulting agreement which was prematurely terminated
at the Company's request. As of June 30, 1997, the
Company owes the consultant $6,000 as payment for
services rendered.
As of August 9, 1997 the agreement increased to
$12,000 based on an agreement to pay $1,000 per month
and an early termination fee of $5,000. Pursuant to
agreements with the Company's principal shareholders
no amounts due to him are payable by the Company
until consummation of the merger or acquisition of a
target business.
F-15
<PAGE>
The Company's principal shareholder has loaned the
Company in the aggregate amount of $20,000 for the
purpose of paying costs associated with this
offering. This indebtedness is endorsed by
promissory notes which bear interest at the rate of
10% per annum from the date relevant funds were
advanced by the principal shareholder. Pursuant to
an agreement with the principal shareholder, no
amounts due under these promissory notes are payable
by the Company until consummation of a merger or
acquisition of a target business.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been
prepared in conformity with generally accepted
accounting principles, which contemplate continuation
of the Company's ability to continue as a going
concern is dependent upon the Company's ability to
obtain financing.
F-16
<PAGE>
No dealer, salesperson or any other person has
been authorized to give any information or to make
any representations in connection with this offering
other than those contained in this Prospectus and, if
given or made, such information or representations
must not be relied on as having been authorized by
the Company. This Prospectus does not constitute an
offer to sell or solicitation of an offer to buy any
security other than the securities offered by this
Prospectus, or an offer to sell or a solicitation of
an offer to buy any securities by any person in any
jurisdiction in which such offer or solicitation is
not authorized or is unlawful. The delivery of this
Prospectus shall not under any circumstances create
any implication that the information herein is
correct as of any time subsequent to the date of this
Prospectus.
TABLE OF CONTENTS
PAGE
Prospectus Summary ..........1
Risk Factors ............... 7
Dilution................... 23
Management's Discussion and
Analysis of Financial Condition
and Plan of Operation ..... 24
Comparative Data ...........25
Use of Proceeds ............25
Plan of Distribution ......27
Legal Proceedings ......... 29
Management ................ 29
Business................... 31
Security Ownership of Management and
Principal Shareholders ..39
Description of Securities ..40
Certain Relationships and Related
Party Transactions .......42
Executive Compensation .... 43
Legal Matters.............. 43
Transfer Agent............. 44
Experts.................... 44
Index to Financial Statements F-1
Until , 1998 (25 days
after the date of this Prospectus) or 90 after the
release of funds and securities from the SEC Rule 419
Escrow Account established in connection with this
offering, whichever occurs later, all dealers
effecting transactions in the registered securities,
whether or not participating in this distribution,
may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
<PAGE>
$100,000
FRANKS' EXPRESS, INC.
100,000 Shares
PROSPECTUS
________, 1998
<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 .... 25,000*
Auditors' fees and expenses . 2,500*
Transfer agent and
registrar fees............ 1,200*
NASDAQ listing fee .......... . 6,100*
Miscellaneous expenses ..... 270*
Total .................... $36,000
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable
II-1
<PAGE>
ITEM 27. EXHIBITS
Exhibit
NUMBER DESCRIPTION OF EXHIBITS
1.1 Form of Selected Dealers Agreement
1.2* Form of Escrow Agreement
3.1 Restated and Amended Articles of
Incorporation
3.2 By-Laws
3.3 Agreement Among Officers, Directors
and 10% Shareholders
5.1* Opinion of David M. Summers, Esq.
regarding legality
23.1* Consent of David M. Summers, Esq
23.2* Consent of Janet Loss, C.P.A., P.C.
99.1 Subscription Agreement
99.2* Promissory Notes to Principal
Shareholder
99.3* Consulting Agreement and related
Termination Agreement
* Filed herewith
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities
arising under the Securities Act of 1993 (the "Act")
may be permitted to directors, officers and
controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the small business issuer of expenses
incurred or paid by a director, officer or
controlling person of the small business issuer in
the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the small business issuer will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
II-2
<PAGE>
The small business issuer will:
(1) For determining any liability under the
Securities Act, treat the information omitted from
the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the small
business issuer under the Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this
registration statement as of the time the Commission
declared it effective.
(2) File, during any period in which the Company
offers or sells securities, a post-effective
amendment to the registration statement to:
(i) Include any prospectus required by
section 10(a)(3) of the Securities Act.
(ii) Reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration statement;
and
(iii) Include any additional or changed
material information on the plan of
distribution.
(3) For determining any liability under the
Securities Act, treat each post-effective amendment
as a new registration statement of the securities
offered, and the offering of the securities at that
time to be the initial bona fide offering.
(4) File a post-effective amendment to remove
from registration any of the securities that remain
unsold at the end of the offering.
(5) For determining any liability under the
Securities Act, treat the information omitted from
the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497
(h) under the Securities Act (Sections 230.424(b)(1),
(4) or 230.497(h)) as part of this registration
statement as of the time it was declared effective.
(6) For the purpose of determining any
liability under the Securities Act, treat each post-
effective amendment that contains a form of
prospectus as a new registration statement for the
securities offered in the registration statement, and
that offering of the securities at that time as the
initial bona fide offering of those securities.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
Amendment No. 3 to its Registration Statement to be signed on its behalf of
the undersigned, in the City of Englewood, State of Colorado on January 20,
1998.
FRANKS' EXPRESS, INC.
By: /S/ CHARLES BURTON
Charles Burton, President
In accordance with the requirements of the Securities Act of 1933,
this Amendment No. 3 to Form SB-2 Registration Statement was signed by the
following persons in the capacities and on the dates indicated.
Date: January 20, 1998 /S/ CHARLES BURTON
Charles Burton, President, Chief Executive
Officer, Principal Financial
Officer and Director
Date: January 20, 1998 /S/ ROGER D. JONES
Roger D. Jones, Secretary and Director
Date: January 20, 1998 /S/ SANDRA S. STEINBERG
Sandra S. Steinberg, Treasurer, Principal
Accounting Officer and Director
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE PAGE
1.1 Selected Dealers Agreement ..................
1.2 Escrow Agreement ............................
3.1 Restated and Amended Articles of Incorporation
3.2 By-Laws ......................................
3.3 Agreement Among Officers, Directors
and 10% Shareholders ............................
5.0 Opinion of David M. Summers, Esq. regarding legality
23.1 Consent of David M. Summers, Esq. ................
23.2 Consent of Janet Loss, C.P.A., P.C. .............
99.1 Subscription Agreement ...........................
99.2 Promissory Notes to Principal Shareholder .......
99.3 Consulting Agreement and related Termination Agreement
<PAGE>
EXHIBIT 1.2
<PAGE>
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") dated as of this th day
of January __, 1998 by and between Franks' Express, Inc., a Colorado
corporation (the "Company"), and Corporate Stock Transfer, Inc., a Colorado
corporation, in its capacity as escrow agent only (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company intends to consummate the initial public offering
(the "Offering") of up to an aggregate of 100,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock") as more fully
described in the Company's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended (File No. ), as declared
effective by the Securities and Exchange Commission on ,
1998 (the "Registration Statement");
WHEREAS, in accordance with the terms of the offering as set forth in
the Registration Statement, the gross proceeds from the sale of the Shares
are required to be placed directly in an escrow account; and
WHEREAS, the Company desires to appoint the Escrow Agent as the escrow
agent for such account, on the terms and conditions set forth below in
order to comply with the requirements of Rule 419 of Regulation C of the
Rules and Regulations established by the Securities and Exchange Commission
and the requirements of Section 11-51-302(6) of the Colorado Securities
Act;
NOW, THEREFORE, in consideration of the mutual promises and
obligations set forth below, and for other valuable consideration the
sufficiency and receipt of which are hereby acknowledge, the parties to
this Agreement hereby agree as follows:
SECTION 1. APPOINTMENT OF ESCROW AGENT AND CREATION OF ACCOUNT. The
Company hereby appoints the Escrow Agent as escrow agent under this
Agreement and directs it to hold those assets described in Exhibit A
attached hereto, together with any additional assets which may be deposited
with the Escrow Agent from time to time to be held pursuant to this
Agreement and all income earned from investment of the assets described in
Exhibit A and any additions thereto (collectively, the "Escrow Assets"), in
a separate interest bearing account in the name of "Franks' Express,
Inc. - Escrow Account" (the "Escrow Account") at the depository
institution specified in Exhibit E. The Escrow Account shall be
invested, administered and distributed in accordance with the terms set
forth below. Contemporaneously with the closing of the Offering, the
Company shall deposit with the Escrow Agent those assets listed on Exhibit
A.
SECTION 2. INVESTMENT FUNDING OF ESCROW ACCOUNT. The Escrow Account
shall be initially funded with the proceeds from the sale of Shares by the
Company. All funds from
<PAGE>
the initial sale of Shares by the Company shall be deposited directly in
the Escrow Account by wire transfer, check or money order.
SECTION 3. INVESTMENT OF ESCROW ASSETS. The Escrow Assets shall be
invested in accordance with the instructions set forth in Exhibit B
attached hereto. Such instructions may be modified only by a written
certificate executed by an authorized officer of the Company and delivered
to the Escrow Agent; however, this Escrow Agreement may not be altered by
the Board of Directors of the Company in terms of the investment
instructions, except as may be required by the Board of Directors to
fulfill their fiduciary obligations. Escrow Agent shall make monthly
accounting of such investments, the income received therefrom, and the then
existing balance of the Escrow Account to the Company.
SECTION 4. DISTRIBUTION FROM ESCROW ACCOUNT. The Escrow Agent shall
make distributions from the Escrow Account in accordance with the
requirements set forth in Exhibit C attached to this Agreement. Such
instructions may be modified only by a written certificate executed by
authorized officers of the Company, and delivered to the Escrow Agent. In
addition, this Escrow Agreement may not be altered by the Board of
Directors of the Company in terms of its distribution instructions, except
as may be required by the Board of Directors to fulfill their fiduciary
obligations. The Escrow Agent is authorized to make distributions in
reliance on the instructions it receives. Written notice of each
disbursement from the Escrow Agent shall be provided to the Company within
ten (10) days of each such disbursement. Upon the final distribution of
all of the Escrow Assets, this Agreement shall terminate and the Escrow
Agent shall have no further obligations or liabilities under this
Agreement. All interest earned on funds held in escrow shall be
distributed to the Company in accordance with the requirements set forth in
Exhibit C.
SECTION 5. COMPENSATION OF ESCROW AGENT. The Escrow Agent shall
receive fees determined in accordance with, and payable as specified in,
the Schedule of Fees attached hereto as Exhibit D (the "Fee Schedule").
The Escrow Agent shall have no duties or liabilities under this Agreement
unless and until full payment of the fee set forth in Exhibit D. The
Escrow Agent shall be reimbursed by the Company for all expenses,
disbursements and advances incurred or made by the Escrow Agent in
preparation, administration and enforcement of this Agreement, including,
but not limited to, reasonable legal fees and expenses. The Company shall
be liable for all payments due to the Escrow Agent under this Agreement.
SECTION 6. RESPONSIBILITIES AND RIGHTS OF THE ESCROW AGENT. To
induce the Escrow Agent to act under this Agreement, it is further agreed
by the undersigned that:
(a) The Escrow Agent undertakes to perform only such duties as
are expressly set forth in this Agreement. Without limiting the generality
of the foregoing, the Escrow Agent shall have no duty or responsibility as
regards any: (i) security as to which a default in the payment of
principal or interest has occurred, to give notice of default,
<PAGE>
make demand for payment or take any other action with respect to such
default; and (ii) loss occasioned by delay in the actual receipt of notice
of any payment, redemption or other transaction regarding any item in the
Escrow Assets as to which it is authorized to take action hereunder. The
Escrow Agent may consult with counsel and shall be fully protected with
respect to any action taken in good faith in accordance with such advice.
The Escrow Agent shall have no liability or responsibility for any
misstatement in, or omission from, the prospectus describing the Company's
offering.
(b) The Escrow Agent shall not be under any duty to give the
Escrowed Assets held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any
funds held hereunder except as directed pursuant to this Escrow Agreement.
In the event that there is a change in the investment instructions
resulting in uninvested funds, such uninvested funds held under this
Agreement shall not earn or accrue interest.
(c) The Escrow Agent does not make any representation or
warranty with regard to the creation or perfection, under this Agreement or
otherwise, of a security interest in the Escrow Assets or regarding the
negotiability or transferability of, or existence of other interests in the
Escrow Assets. The Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security interest exists in the Escrow
Assets or any part thereof or to file any financing statement under the
Uniform Commercial Code of any state with respect to the Escrow Assets or
any part thereof.
(d) The Escrow Agent is hereby authorized to comply with any
judicial order or legal process which stays, enjoins, directs or otherwise
affects the transfer or delivery of the Escrow Assets or any party to this
Agreement and shall incur no liability for any delay or loss which may
occur as a result of such compliance.
(e) The Escrow Agent shall have no duty or responsibility with
regard to any loss resulting from the investment, reinvestment, sale or
liquidation of the Escrow Assets in accordance with the terms of this
Agreement. The Escrow Agent need not maintain any insurance with respect
to the Escrow Assets.
(f) The Escrow Agent shall in no event be liable in connection
with its investment or reinvestment of any cash held by it hereunder in
good faith, in accordance with the terms hereof, including, without
limitation, any liability for any delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrowed Assets, or any loss of interest incident to any such delays.
(g) Except as otherwise expressly provided herein, the Escrow
Agent is authorized to execute instructions and take other actions pursuant
to this Agreement in accordance with its customary processing practices for
similar customers and, in accordance with such practices the Escrow Agent
may retain agents, including its own subsidiaries or affiliates, to perform
certain of such functions. The Escrow Agent shall have no liability
<PAGE>
under this Agreement for any loss or expense other than those occasioned by
the Escrow Agent's gross negligence or willful misconduct and in any event
its liability shall be limited to direct damages and shall not include any
special or consequential damages. All collection and receipt of funds or
securities and all payment and delivery of funds or securities under this
Agreement shall be made by the Escrow Agent as agent, at the risk of the
other parties hereto with respect to their actions or omissions and those
of any person other than the Escrow Agent. In no event shall the Escrow
Agent be responsible or liable for any loss due to force beyond its
control, including, but not limited to, acts of God, flood, fire, nuclear
accident, war (declared or undeclared), terrorism, insurrection,
revolution, riot, strikes or work stoppages for any reason, embargo,
government action, including any laws, ordinances, regulations or the like
which restrict or prohibit the providing of the services contemplated by
this Agreement, inability to obtain equipment or communications facilities,
or the failure of equipment or interruption of communications facilities,
and other causes whether or not of the same class or kind as specifically
named above. In the event that the Escrow Agent is unable substantially to
perform for any of the reasons described in the immediately preceding
sentence, it shall so notify the other parties hereto as soon as reasonably
practicable following its actual knowledge of the same.
(h) This Escrow Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Agreement against the
Escrow Agent. Notwithstanding any provisions of this Agreement to the
contrary, the Escrow Agent shall not be bound by, or have any
responsibility with respect to, any other agreement or contract by the
Company (whether or not the Escrow Agent has knowledge thereof).
(i) It is understood and agreed that should any dispute arise
with respect to the payment and/or ownership or right of possession of the
Escrow Assets, or should the Escrow Agent in good faith be in doubt as to
what action it should take under this Agreement the Escrow Agent is
authorized and directed to retain in its possession, without liability to
anyone, all or any part of the Escrow Assets until such dispute shall have
been settled either by mutual agreement by the parties concerned or by the
final order, decree or judgment of any court or other tribunal of competent
jurisdiction in the United States of America and time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be
under no duty whatsoever to institute or defend any such proceedings. Any
such court order shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to the Escrow Agent to the effect that said
court order is final and nonappealable.
(j) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety
or validity of the service thereof. Without limiting the foregoing, in the
event of any alteration of investment or distribution instructions, the
Escrow Agent shall have no responsibility to determine whether the
requested alteration was required by the Board of
<PAGE>
Directors of the Company to fulfill its fiduciary obligations. The Escrow
Agent may act in reliance upon any instrument or signature believed by it
to be genuine and may assume that any person purporting to give receipt or
advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so.
(k) The Company shall hold the Escrow Agent and its agents
harmless from, and indemnify and reimburse the Escrow Agent and its agents
for all claims, liability, loss and expense (including reasonable out-of-
pocket and incidental expenses and legal fees), incurred by the Escrow
Agent or them in connection with the Escrow Agent or their acting under
this Agreement, provided that the Escrow Agent or they, as the case may be,
have not acted with gross negligence or willful misconduct with respect to
the events resulting in such claims, liability, loss, and expense.
(l) The Company acknowledges and agree that, except as otherwise
provided in this Section 6(1), the Escrow Agent shall not be responsible
for taking any steps, including without limitation, the filing of forms or
reports, or withholding of any amounts in connection with any tax
obligations of the Company or any other party in connection with the Escrow
Assets; provided, however, that the Escrow Agent shall be entitled to take
any action such as withholding, that it deems appropriate to ensure
compliance with its obligations under any applicable tax laws.
(m) The Escrow Agent does not have any interest in the Escrow
Assets deposited under this Agreement but is serving as escrow holder only
and having only possession thereof. The Company shall pay or reimburse the
Escrow Agent upon request for any transfer taxes or other taxes relating to
the Escrow Assets incurred in connection herewith and shall indemnify and
hold harmless the Escrow Agent from any amounts that it is obligated to pay
in the way of such taxes. This paragraph shall survive notwithstanding any
termination of this Escrow Agreement or the resignation of the Escrow
Agent.
(n) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document
or instrument held by or delivered to it.
(o) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from
any action with respect to any securities or other property deposited under
this Agreement.
(p) No printed or other matter in any language (including
without limitation prospectuses, notices, reports and promotional material)
which mentions the Bank's name or the rights, powers, or duties of the
Escrow Agent shall be issued by the other parties hereto or on such
parties, behalf unless the Escrow Agent shall first have given its specific
written consent thereto. Notwithstanding the foregoing sentence, the
Escrow Agent hereby specifically consents to the use of its name as Escrow
Agent as necessary to effectuate the Company's public offering and a
business combination of the Company.
<PAGE>
(q) The Company authorizes the Escrow Agent, for any securities
held hereunder, to use the services of any United States central securities
depository it deems appropriate, including, but not limited to, the
Depositary Trust Company and the Federal Reserve Book Entry System.
SECTION 7. INSTRUCTIONS: FUND TRANSFERS.
(a) The Escrow Agent is authorized to rely and act upon all
instructions given or purported to be given by one or more officers,
employees or agents of the Company (i) authorized by or in accordance with
a corporate resolution delivered to the Escrow Agent or (ii) described as
authorized in a certificate delivered to the Escrow Agent by the
appropriate Secretary or Assistant Secretary or similar officer (each such
officer, employee or agent or combination of officers, employees and agents
authorized pursuant to clause (i) or described pursuant to clause (ii) of
this Section 7(a) is hereinafter referred to as an "Authorized Officer").
(The term "instructions" includes, without limitation, instructions to
sell, assign, transfer, deliver, purchase or receive for the Escrow Account
any and all stocks, bonds and other securities or to transfer all or any
portion of the Escrow Assets). The Escrow Agent may also rely and act upon
instructions when bearing or purporting to bear the signature or facsimile
signature of any of the individuals designated by an Authorized Officer
regardless of by whom or by what means the actual or purported facsimile
signature or signatures thereon may have been affixed thereto if such
facsimile signature or signatures resemble the facsimile specimen or
specimens from time to time furnished to the Escrow Agent by any of such
Authorized Officers, Secretary or an Assistant Secretary or similar
officer). In addition, and subject to subsection 6(b) hereof, the Escrow
Agent may rely and act upon instructions received by telephone, facsimile
transmission, bank wire or other teleprocess acceptable to it which the
Escrow Agent believes in good faith to have been given by an Authorized
Officer or which are transmitted with proper testing or authentication
pursuant to terms and conditions which the Escrow Agent may specify. The
Escrow Agent shall incur no liability to the Company or otherwise for
having acted in accordance with instructions on which it is authorized to
rely pursuant to the provisions hereof. Any instructions delivered to the
Escrow Agent by telephone shall promptly thereafter be confirmed in writing
by an Authorized Officer but the Escrow Agent shall incur no liability for
a failure to send such confirmation in writing, the failure of any such
written confirmation to conform to the telephone instruction which it
received, the failure of any such written confirmation to be signed or
properly signed, or its failure to produce such confirmation at any
subsequent time. The Escrow Agent shall incur no liability for refraining
from acting upon any instructions which for any reason it, in good faith,
is unable to verify to its own satisfaction. Unless otherwise expressly
provided, all authorizations and instructions shall continue in full force
and effect until canceled or superseded by subsequent authorizations or
instructions received by the Escrow Agent's safekeeping account
administrator. The Escrow Agent's authorization to rely and act upon
instructions pursuant to this paragraph shall be in addition to, and shall
not limit, any other authorization which the Company may give to it
hereunder.
<PAGE>
(b) With respect to written or telephonic instructions or
instructions sent by facsimile transmission to transfer funds from the
Escrow Account in accordance herewith (such instructions hereinafter
referred to as "Transfer Instructions"), the security procedure agreed upon
for verifying the authenticity of Transfer Instructions is a callback by
the Escrow Agent to any of the persons designated below, whether or not any
such person has issued such Transfer Instruction. (It is recommended that
the persons designated below not be persons who generally issue Transfer
Instructions; whenever possible, the Escrow Agent will endeavor to call
someone other than the issuer of the Transfer Instructions). With respect
to Transfer Instructions given by the Company Pursuant to its authority
under this Agreement:
Name/Title Telephone No.
Charles Burton, President (303) 750-7439
Sandra Steinberg, Secretary (303) 364-3353
Alternatively, at the Escrow Agent's option, the callback
may be made to any person designated in the certified resolutions or other
certifications or documentation furnished to it by a party in connection
with the Escrow Account as authorized to issue Transfer Instructions or
otherwise transact business with respect to the Escrow Account for that
party. The Company shall implement any other authentication method or
procedure or security device required by the Escrow Agent at any time or
from time to time.
SECTION 8. STOCKHOLDER REDEMPTION. In the event a shareholder
exercises his or her redemption right upon the Business Combination of the
Company, the funds to repay said shareholder shall be distributed directly
from the Escrow Account. As soon as practicable after the Company receives
notice from a shareholder that the shareholder is exercising its redemption
rights, the Company shall instruct the Escrow Agent to transfer, and (so
long as the Escrow Agent has received an Internal Revenue Service Form W-8
or Form W-9) the Escrow Agent shall so transfer, the funds owed to the
shareholder; such instructions to include the amount to be transferred and
delivery instructions. These instructions shall comply with Section 6 of
this Escrow Agreement.
SECTION 9. RESIGNATION OR REMOVAL OF ESCROW AGENT.
(a) The Escrow Agent may resign at any time by giving written
notice to the Company. The Company may remove the Escrow Agent upon
written notice to the Escrow Agent. Such registration or removal shall
take effect upon delivery of the Escrow Assets to a successor escrow agent
designated in writing by the Company, and the Escrow Agent shall thereupon
be discharged from all obligations under this Agreement, and shall have no
further duties or responsibilities in connection herewith. The obligations
of the Company to the Escrow Agent and the rights of the Escrow Agent under
Sections 6, 7(c), and 7(h) hereof shall survive termination of this
Agreement or the resignation or removal of the Escrow Agent.
<PAGE>
(b) In the event that the Escrow Agent submits a notice of
resignation, its only duty, until a successor Escrow Agent shall have been
appointed and shall have accepted such appointment, shall be to safekeep
the Escrow Assets, and hold, invest and dispose of the Escrow Assets in
accordance with this Agreement, until receipt of a designation of successor
Escrow Agent or a joint written disposition instrument by the other parties
hereto or a Final Order of a court of competent jurisdiction, but without
regard to any notices, requests, instructions, demands or the like received
by it from the other parties hereto after such notice shall have been
given, unless the same is a direction that the Escrow Assets be paid or
delivered in its entirety out of the Escrow Account. The Escrow Agent,
upon submission of its resignation in accordance with this subparagraph (b)
may deposit the Escrow Assets with a court of competent jurisdiction if the
Escrow Agent deems such action advisable. The resignation of the Escrow
Agent will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day which is 30
days after the date of delivery of its written notice of resignation to the
other parties hereto. If, at the time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole
responsibility after that time shall be to safe-keep the Escrow Assets
until receipt of a designation of a successor Escrow Agent or a joint
written disposition instrument by the other parties to this Agreement or a
final order of a court of competent jurisdiction.
SECTION 10. NOTICES. Unless expressly provided herein to the
contrary, notices hereunder shall be in writing, and delivered by
telecopier, overnight express mail, first-class postage prepaid, delivered
personally or by receipted courier service. All such notices which are
mailed shall be deemed delivered upon mailing if otherwise, all such
notices shall be addressed as follows (or to such other address as any
party hereto may from time to time designate by notice duly given in
accordance with this paragraph):
(a) If to the Company, to:
Franks' Express, Inc.
2903 South Uinta Street
Denver, Colorado 80231
Attention: Charles Burton, President
If to the Escrow Agent, to:
Corporate Stock Transfer, Inc.
370 17, Suite 2350
Denver, Colorado 80203
SECTION 11. CHOICE OF LAW AND JURISDICTION. This Agreement shall be
governed by and construed in accordance with the law of the State of
Colorado as applied to agreements made and to be performed entirely in
Colorado. The parties to this Agreement hereby agree that jurisdiction
over such parties and over the subject matter of any action or proceeding
arising under this Agreement may be exercised by a competent Court of the
state of Colorado or by a United States Court sitting in Denver, Colorado
exclusively. The parties agree that delivery or mailing of any process or
other papers in the manner provided herein, or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
<PAGE>
SECTION 12. BENEFITS AND ASSIGNMENTS. Nothing in this Agreement,
expressed or implied, shall give or be construed to give any person, firm
or corporation, other than the parties hereto and their successors and
assigns, any legal claim under any covenant, condition or provision of this
Agreement all the covenants, conditions, and provisions contained in this
Agreement being for the sole benefit of the parties hereto and their
successors and assigns. No party may assign any of its rights or
obligations under this Agreement without (i) the written consent of all the
other parties, which consent may be withheld in the sole discretion of the
party whose consent is sought and (ii) the written agreement of the
transferee that it will be bound by the provisions of this Agreement.
SECTION 13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument.
SECTION 14. AMENDMENT AND WAIVER. This Agreement may be modified only
by a written amendment signed by all the parties hereto, and no waiver of
any provision hereof shall be effective unless expressed in a writing
signed by the party to be charged.
SECTION 15. HEADINGS. The headings of the sections hereof are
included for convenience of reference only and do not form part of this
Agreement.
SECTION 16. ENTIRE AGREEMENT. This Agreement contains the complete
agreement of the parties with respect to its subject matter and supersedes
and replaces any previously made proposals, representations, warranties or
agreements with respect thereto by any of the parties hereto.
SECTION 17. SEVERABILITY. Any provisions of this Agreement which may
be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or enforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 18. ADDITIONAL DOCUMENTATION. This Agreement shall not become
effective (and the Escrow Agent shall have not responsibility hereunder
except to return the Escrow Assets to the Company) until the Escrow Agent
shall have received from the Company the following:
(a) Certified resolutions of its board of directors authorizing
the making and performance of this Agreement; and
(b) A certificate as to the names and specimen signatures of its
officers or representatives authorized to sign the Agreement and notices,
instructions and other communications under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
Franks' Express, Inc.
By:
Name: Charles Burton
Title: President
Agreed and accepted:
Corporate Stock Transfer, Inc.
as Escrow Agent
By:
Name:
Title:
<PAGE>
EXHIBIT A TO ESCROW AGREEMENT
ESCROW ASSETS
One Hundred Thousand Dollars U.S. ($100,000)
<PAGE>
EXHIBIT B TO ESCROW AGREEMENT
INVESTMENT INSTRUCTIONS
The Escrow Agent shall invest the Escrow Assets in an "unaffiliated
depository," as that term is defined in Section 11-51-302(6) of the
Colorado Securities Act.
<PAGE>
EXHIBIT C TO ESCROW AGREEMENT
DISBURSEMENT INSTRUCTION
1. Release of Escrow Assets to the Company. The Escrow Agent shall
release the Escrow Assets to the Company upon receipt by the Escrow
Agent of:
(i) Written notice from the Company that the Company has completed a
transaction or series of transactions in which the Company has
entered into a specific line of business, and a written
certification that the fair market value (as determined by the
Company, based upon standards generally accepted by the financial
community, including revenues, earnings, cash flow, and book
value) of the target exceeds eighty percent of the offering
proceeds described in Exhibit A, as required by the Registration
Statement and in which at least 50% of the gross offering
proceeds is committed to a specific line of business (as defined
in Section 11-51-302(6) and Rule 51-3.4 promulgated
thereunder); and
(ii) More than twenty percent of the shareholders of the Company have
not elected to redeem their Common Stock, as required by the
Registration Statement; and
(iii)All other actions required to be performed by the Company for the
release of the Escrow Assets have been met, including all
provisions of Section 11-51-302(6) of the Colorado Securities
Act, including the expiration of more than nine(9) days after the
receipt by the Colorado Commissioner of Securities of a notice of
the proposed release of funds or upon the authorization of the
Commissioner of any earlier release.
2. Distribution of Escrow Assets as to Stockholders. The Escrow Agent
shall disburse the Escrow Assets to the purchasers of record of the
Company's Common Stock in the Offering if:
(a) The Company has not met the conditions for release of the Escrow
Assets to the Company within 18 months from the effective date of
the Registration Statement; or
(b) The Company delivers written notice to the Escrow Agent that part
of the Escrow Assets should be distributed to those holders of
record of the Company's Common Stock sold in the Offering
electing to have their shares redeemed in accordance with the
terms set forth in the Registration Statement, as set forth in
such notice.
<PAGE>
3. Method of Release of Escrow Assets to the Company. Upon the
occurrence of receipt by the Escrow Agent of the written notice
required paragraph 1 above, the Escrow Agent shall wire transfer the
Escrow Assets to the Company in accordance with the wire transfer
instructions of the Company set forth in such notice.
4. Method of Distribution of Escrow Assets to Stockholders. Upon the
occurrence of either of the events specified in Section 2(a) or 2(b)
above, the Escrow Agent shall distribute the Escrow Assets to the
holders of the record of the Company Common Stock sold in the Offering
by mail in accordance with and to the address specified in the books
and records of the Company. The written notice required by Section
2(a) or 2(b), as the case may be, shall include the name and address
of each such holder, together with the percentage of the Escrow Assets
to be distributed thereto.
<PAGE>
EXHIBIT D TO ESCROW AGREEMENT
FEE SCHEDULE
One Thousand ($1,000.00) Dollars Escrow Agent fee to Corporate Stock
Transfer, Inc. to be paid at Closing.
<PAGE>
EXHIBIT E TO ESCROW AGREEMENT
NAME OF DEPOSITORY INSTITUTION
The depository institution at which the Escrow Agent shall maintain the
Escrow Account shall be:
Norwest Bank of Denver, N.A.
1740 Broadway
Denver, Colorado 80202</R/>
<PAGE>
EXHIBIT 5.0
<PAGE>
DAVID M. SUMMERS. ESQ.
ATTORNEY AT LAW
5670 GREENWOOD PLAZA BLVD., SUITE 422
ENGLEWOOD, COLORADO 80111
(303) 220-5420
TELEFAX (303) 220-7755
January 20, 1998
Securities and Exchange Commission
450 Fifty Street, N.W.
Washington, D.C. 20549
RE: REGISTRATION AND ISSUANCE OF COMMON STOCK BY FRANKS' EXPRESS
Ladies and Gentlemen:
I have acted as corporate and securities law counsel to Franks'
Express, Inc., a Colorado corporation (the "Company") in connection with
the proposed issuance of a minimum of 50,000 and a maximum of 100,000
shares of the Company's common stock (the "Shares"), pursuant to the terms
and conditions described in Amendment No. 3 to the Company's Registration
Statement dated January 20, 1998 filed on Form SB-2.
In connection with this representation, I have examined and
relied upon such records and documents as I have deemed necessary as a
basis for the opinions expressed below. In such examination, I have
assumed, without undertaking to verify the same by independent
investigation, (i) as to questions of fact, the accuracy of all
representations and certifications of all person in documents examined by
me, (ii) the genuineness of all signatures, (iii) the duly authorized
execution and delivery of all documents on behalf of all person, (iv) the
authenticity of all documents submitted to me as originals, (v) the
conformity to originals of all documents submitted to me as copies, (vi)
the authenticity of such copied originals, and (vii) the accuracy of all
official records. I have also relied, as to certain matters of fact, upon
representations made to me by officers and agents of the Company.
Based upon and subject to the foregoing, I am of the opinion
that:
(1) The Company is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of Colorado,
with full power to own its properties and carry on its businesses as now
being conducted.
(2) The Shares will be, when issued, in accordance with the
terms and conditions described in the Company's Registration Statement
(which contains the relevant
<PAGE>
Securities and Exchange Commission
January 20, 1998
Page 2
Prospectus) duly and validly issued, fully paid and non-assessable under
applicable provisions
of the Colorado Business Corporation Act, and the Company's shareholders
have no preemptive rights to acquire additional shares of the Company's
common stock on account of issuance of the Shares.
Yours truly,
/s/ David M. Summers
David M. Summers
DMS/ldh
cc: Mr. Charles Burton
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF DAVID M. SUMMERS, ESQ.
I consent to the reference to my name under the caption "Legal
Matters" in the Registration Statement (Form SB-2) and related Prospectus
of Franks' Express, Inc. for the registration of shares of its common
stock.
Englewood, Colorado
January 20, 1998
/S/ DAVID M. SUMMERS
David M. Summers
Attorney At Law
<PAGE>
EXHIBIT 23.2
<PAGE>
CONSENT OF JANET LOSS, C.P.A., P.C.
We consent to the reference of our firm under the caption "Experts"
and to the use of our report on the consolidated financial statements of
Franks' Express, Inc., dated June 30, 1997 in the Registration Statement
(Form SB-2) and related Prospectus of Franks' Express, Inc. for the
registration of shares of its common stock.
Denver, Colorado
January 20, 1998
JANET LOSS, C.P.A., P.C.
By:/S/ JANET LOSS
Janet Loss
Certified Public Accountant
<PAGE>
EXHIBIT 99.2
<PAGE>
PROMISSORY NOTE
U.S. $5,000 Aurora, Colorado
March 17, 1997
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay SANDRA
S. STEINBERG or order, (Note Holder) the principal sum of Five Thousand and
no/100 U.S. Dollars with interest on the unpaid principal balance from
March 17, 1997, until paid, at the rate of ten (10) percent per annum.
Principal and interest shall be payable at 12146 East Amherst Circle,
Aurora Colorado 80014, or such other place as the Note Holder may
designate, in one payment of all outstanding principal and accrued interest
due upon breaking of escrow in the Borrower's expected public offering.
2. Borrower shall pay to the Note Holder a late charge of N/A% of any
payment not received by the Note Holder within days after the payment
is due.
3. Payments received for application to this Note shall be applied first
to the payment of late charges, if any, second to the payment of accrued
interest at the rate specified below, if any, third, to accrued interest
first specified above, and the balance applied in reduction of the
principal amount hereof.
4. If any payment required by this Note is not paid when due, or if any
default under any Deed of Trust securing this Note occurs, the entire
principal amount outstanding and accrued interest thereon shall at once
become due and payable at the option of the Note Holder (Acceleration); and
the indebtedness shall bear interest at the rate of N/A percent per annum
from the date of default. The Note Holder shall be entitled to collect all
reasonable costs and expense of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without penalty.
Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent payments
or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and endorsers
hereby waive presentment, notice of dishonor and protest, and they hereby
agree to any extensions of time of payment and partial payments before, at,
or after maturity. This Note shall be the joint and several obligation of
Borrower and all other makers, sureties, guarantors and endorsers, and
their successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in writing
and shall be given and be effective upon (1) delivery to Borrower or (2)
mailing such notice by first-class U.S. mail, addressed to Borrower at the
Borrower's address stated below, or to such other
<PAGE>
address as Borrower may designate by notice to the Note Holder. Any notice
to the Note Holder shall be in writing and shall be given and be effective
upon (1) delivery to Note Holder or (2) by mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the first
paragraph of this Note, or to such other address as Note Holder may
designate by notice to Borrower.
Property address:
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
IF BORROWER IS CORPORATION:
ATTEST FRANKS' EXPRESS, INC., a Colorado corporation
/s/Charles Burton, Secretary /s/Roger D. Jones, President
Borrower's address:
KEEP THIS NOTE IN A SAFE PLACE.
<PAGE>
PROMISSORY NOTE
U.S. $5,000 Aurora, Colorado
April 28, 1997
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay SANDRA
S. STEINBERG or order, (Note Holder) the principal sum of Five Thousand and
no/100 U.S. Dollars with interest on the unpaid principal balance from
April 28, 1997, until paid, at the rate of ten (10) percent per annum.
Principal and interest shall be payable at 12146 East Amherst Circle,
Aurora Colorado 80014, or such other place as the Note Holder may
designate, in one payment of all outstanding principal and accrued interest
due upon breaking of escrow in the Borrower's expected public offering.
2. Borrower shall pay to the Note Holder a late charge of N/A% of any
payment not received by the Note Holder within days after the payment
is due.
3. Payments received for application to this Note shall be applied first
to the payment of late charges, if any, second to the payment of accrued
interest at the rate specified below, if any, third, to accrued interest
first specified above, and the balance applied in reduction of the
principal amount hereof.
4. If any payment required by this Note is not paid when due, or if any
default under any Deed of Trust securing this Note occurs, the entire
principal amount outstanding and accrued interest thereon shall at once
become due and payable at the option of the Note Holder (Acceleration); and
the indebtedness shall bear interest at the rate of N/A percent per annum
from the date of default. The Note Holder shall be entitled to collect all
reasonable costs and expense of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without penalty.
Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent payments
or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and endorsers
hereby waive presentment, notice of dishonor and protest, and they hereby
agree to any extensions of time of payment and partial payments before, at,
or after maturity. This Note shall be the joint and several obligation of
Borrower and all other makers, sureties, guarantors and endorsers, and
their successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in writing
and shall be given and be effective upon (1) delivery to Borrower or (2)
mailing such notice by first-class U.S. mail, addressed to Borrower at the
Borrower's address stated below, or to such other
<PAGE>
address as Borrower may designate by notice to the Note Holder. Any notice
to the Note Holder shall be in writing and shall be given and be effective
upon (1) delivery to Note Holder or (2) by mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the first
paragraph of this Note, or to such other address as Note Holder may
designate by notice to Borrower.
Property address:
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
IF BORROWER IS CORPORATION:
ATTEST FRANKS' EXPRESS, INC., a Colorado corporation
/s/Charles Burton, Secretary /s/Roger D. Jones, President
Borrower's address:
KEEP THIS NOTE IN A SAFE PLACE.
<PAGE>
PROMISSORY NOTE
U.S. $5,000 Aurora, Colorado
May 10, 1997
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay SANDRA
S. STEINBERG or order, (Note Holder) the principal sum of Five Thousand and
no/100 U.S. Dollars with interest on the unpaid principal balance from May
10, 1997, until paid, at the rate of ten (10) percent per annum. Principal
and interest shall be payable at 12146 East Amherst Circle, Aurora Colorado
80014, or such other place as the Note Holder may designate, in one payment
of all outstanding principal and accrued interest due upon breaking of
escrow in the Borrower's expected public offering.
2. Borrower shall pay to the Note Holder a late charge of N/A% of any
payment not received by the Note Holder within days after the payment
is due.
3. Payments received for application to this Note shall be applied first
to the payment of late charges, if any, second to the payment of accrued
interest at the rate specified below, if any, third, to accrued interest
first specified above, and the balance applied in reduction of the
principal amount hereof.
4. If any payment required by this Note is not paid when due, or if any
default under any Deed of Trust securing this Note occurs, the entire
principal amount outstanding and accrued interest thereon shall at once
become due and payable at the option of the Note Holder (Acceleration); and
the indebtedness shall bear interest at the rate of N/A percent per annum
from the date of default. The Note Holder shall be entitled to collect all
reasonable costs and expense of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without penalty.
Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent payments
or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and endorsers
hereby waive presentment, notice of dishonor and protest, and they hereby
agree to any extensions of time of payment and partial payments before, at,
or after maturity. This Note shall be the joint and several obligation of
Borrower and all other makers, sureties, guarantors and endorsers, and
their successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in writing
and shall be given and be effective upon (1) delivery to Borrower or (2)
mailing such notice by first-class U.S. mail, addressed to Borrower at the
Borrower's address stated below, or to such other
<PAGE>
address as Borrower may designate by notice to the Note Holder. Any notice
to the Note Holder shall be in writing and shall be given and be effective
upon (1) delivery to Note Holder or (2) by mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the first
paragraph of this Note, or to such other address as Note Holder may
designate by notice to Borrower.
Property address:
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
IF BORROWER IS CORPORATION:
ATTEST FRANKS' EXPRESS, INC., a Colorado corporation
/s/Charles Burton, Secretary /s/Roger D. Jones, President
Borrower's address:
KEEP THIS NOTE IN A SAFE PLACE.
<PAGE>
PROMISSORY NOTE
U.S. $5,000 Aurora, Colorado
June 12, 1997
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay SANDRA
S. STEINBERG or order, (Note Holder) the principal sum of Five Thousand and
no/100 U.S. Dollars with interest on the unpaid principal balance from June
12, 1997, until paid, at the rate of ten (10) percent per annum. Principal
and interest shall be payable at 12146 East Amherst Circle, Aurora Colorado
80014, or such other place as the Note Holder may designate, in one payment
of all outstanding principal and accrued interest due upon breaking of
escrow in the Borrower's expected public offering.
2. Borrower shall pay to the Note Holder a late charge of N/A% of any
payment not received by the Note Holder within days after the payment
is due.
3. Payments received for application to this Note shall be applied first
to the payment of late charges, if any, second to the payment of accrued
interest at the rate specified below, if any, third, to accrued interest
first specified above, and the balance applied in reduction of the
principal amount hereof.
4. If any payment required by this Note is not paid when due, or if any
default under any Deed of Trust securing this Note occurs, the entire
principal amount outstanding and accrued interest thereon shall at once
become due and payable at the option of the Note Holder (Acceleration); and
the indebtedness shall bear interest at the rate of N/A percent per annum
from the date of default. The Note Holder shall be entitled to collect all
reasonable costs and expense of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without penalty.
Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent payments
or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and endorsers
hereby waive presentment, notice of dishonor and protest, and they hereby
agree to any extensions of time of payment and partial payments before, at,
or after maturity. This Note shall be the joint and several obligation of
Borrower and all other makers, sureties, guarantors and endorsers, and
their successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in writing
and shall be given and be effective upon (1) delivery to Borrower or (2)
mailing such notice by first-class U.S. mail, addressed to Borrower at the
Borrower's address stated below, or to such other
<PAGE>
address as Borrower may designate by notice to the Note Holder. Any notice
to the Note Holder shall be in writing and shall be given and be effective
upon (1) delivery to Note Holder or (2) by mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the first
paragraph of this Note, or to such other address as Note Holder may
designate by notice to Borrower.
Property address:
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
IF BORROWER IS CORPORATION:
ATTEST FRANKS' EXPRESS, INC., a Colorado corporation
/s/Charles Burton, Secretary /s/Roger D. Jones, President
Borrower's address:
KEEP THIS NOTE IN A SAFE PLACE.
<PAGE>
PROMISSORY NOTE
U.S. $5,000 Aurora, Colorado
July 10, 1997
1. FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay SANDRA
S. STEINBERG or order, (Note Holder) the principal sum of Five Thousand and
no/100 U.S. Dollars with interest on the unpaid principal balance from July
10, 1997, until paid, at the rate of ten (10) percent per annum. Principal
and interest shall be payable at 12146 East Amherst Circle, Aurora Colorado
80014, or such other place as the Note Holder may designate, in one payment
of all outstanding principal and accrued interest due upon breaking of
escrow in the Borrower's expected public offering.
2. Borrower shall pay to the Note Holder a late charge of N/A% of any
payment not received by the Note Holder within days after the payment
is due.
3. Payments received for application to this Note shall be applied first
to the payment of late charges, if any, second to the payment of accrued
interest at the rate specified below, if any, third, to accrued interest
first specified above, and the balance applied in reduction of the
principal amount hereof.
4. If any payment required by this Note is not paid when due, or if any
default under any Deed of Trust securing this Note occurs, the entire
principal amount outstanding and accrued interest thereon shall at once
become due and payable at the option of the Note Holder (Acceleration); and
the indebtedness shall bear interest at the rate of N/A percent per annum
from the date of default. The Note Holder shall be entitled to collect all
reasonable costs and expense of collection and/or suit, including, but not
limited to reasonable attorneys' fees.
5. Borrower may prepay the principal amount outstanding under this Note,
in whole or in part, at any time without penalty.
Any partial prepayment shall be applied against the principal amount
outstanding and shall not postpone the due date of any subsequent payments
or change the amount of such payments.
6. Borrower and all other makers, sureties, guarantors, and endorsers
hereby waive presentment, notice of dishonor and protest, and they hereby
agree to any extensions of time of payment and partial payments before, at,
or after maturity. This Note shall be the joint and several obligation of
Borrower and all other makers, sureties, guarantors and endorsers, and
their successors and assigns.
7. Any notice to Borrower provided for in this Note shall be in writing
and shall be given and be effective upon (1) delivery to Borrower or (2)
mailing such notice by first-class U.S. mail, addressed to Borrower at the
Borrower's address stated below, or to such other
<PAGE>
address as Borrower may designate by notice to the Note Holder. Any notice
to the Note Holder shall be in writing and shall be given and be effective
upon (1) delivery to Note Holder or (2) by mailing such notice by first-
class U.S. mail, to the Note Holder at the address stated in the first
paragraph of this Note, or to such other address as Note Holder may
designate by notice to Borrower.
Property address:
(CAUTION: SIGN ORIGINAL NOTE ONLY/RETAIN COPY)
IF BORROWER IS CORPORATION:
ATTEST FRANKS' EXPRESS, INC., a Colorado corporation
/s/Charles Burton, Secretary /s/Roger D. Jones, President
Borrower's address:
KEEP THIS NOTE IN A SAFE PLACE.
<PAGE>
EXHIBIT 99.3
<PAGE>
CONSULTING SERVICES AGREEMENT
THIS CONSULTING SERVICES AGREEMENT (this "Agreement"), dated as of
January 2, 1997, is between FRANKS' EXPRESS, INC., a Colorado
corporation ("Franks' Express") and Richard H. Steinberg (the
"Contractor").
RECITALS
A. The Contractor is in the business of providing services of
benefit to Franks' Express and Franks' Express desires to engage the
services of the Contractor under terms and conditions specified in this
Agreement.
B. Franks' Express and the Contractor intend that their
relationship NOT be considered an employer-employee relationship and
desire to set forth the basic terms of the understandings between them
in this Agreement.
AGREEMENT
IN CONSIDERATION of the foregoing recitals, other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and the mutual covenants set forth below, Franks' Express
and the Contractor agree as follows:
ARTICLE I
NATURE AND SCOPE OF SERVICES
Section 1.1 ENGAGEMENT. Franks' Express hereby agrees to engage
the services of the Contractor and the Contractor hereby agrees to
provide services to Franks' Express on the terms and conditions set
forth in this Agreement.
Section 1.2 NATURE OF SERVICES. The Contractor shall provide
services to Franks' Express, as more fully described in Exhibit A,
attached to and made a part of this Agreement by this reference, as
that Exhibit may be amended from time to time by written agreement
signed on behalf of Franks' Express and by the Contractor.
Section 1.3 COMMENCEMENT. The consulting services rendered by
the Contractor under the terms and conditions of this Agreement shall
commence on January 2, 1997.
Section 1.4 COMPLIANCE WITH APPLICABLE LAWS. In performing
services under this Agreement, the Contractor shall comply with any and
all applicable laws, rules, orders,
<PAGE>
and regulations of any governmental or quasi-governmental agency having
jurisdiction over the activities of the Contractor or the business
activities of Franks' Express.
ARTICLE II
RELATION OF THE PARTIES
Section 2.1 INDEPENDENT CONTRACTOR STATUS. At all times the
Contractor shall be considered for all purposes to be an independent
contractor. The Contractor shall not be considered an agent or
employee of Franks' Express for any purpose.
Section 2.2 CONTRACTOR RESPONSIBLE FOR OWN TAXES. The Contractor
shall not be entitled to participate in any plans, arrangements or
distributions by Franks' Express pertaining to or in connection with
any benefits for regular employees of Franks' Express, including, but
not limited to, FICA contributions and income tax withholdings. The
Contractor shall be responsible for the payment of all applicable taxes
and the filing of all applicable tax reports and returns with the
appropriate government entities with respect to any income derived by
the Contractor pursuant to this Agreement.
Section 2.3 CONTRACTOR RESPONSIBLE FOR OWN INSURANCE. The
Contractor shall be responsible for providing his or her own insurance,
including, without limitation, liability insurance and workman's
compensation.
Section 2.4 INDEPENDENT DISCRETION. The Contractor shall use
independent discretion as to the means by which the duties described in
Exhibit A are accomplished. The methods and procedures for performing
the services pursuant to this Agreement are within the exclusive
control of the Contractor.
Section 2.5 NO JOINT VENTURE. Franks' Express and the Contractor
acknowledge that nothing in this Agreement shall constitute them as
partners or joint venturers in the performance of any activities
contemplated by this Agreement.
Section 2.6 NO WARRANTIES AUTHORIZED. In connection with
performance of Contractor's obligations under this Agreement, the
Contractor shall make no warranties, oral or written, concerning any
aspect of the business operations of Franks' Express which are not
provided to the Contractor, in writing, by Franks' Express.
ARTICLE III
COMPENSATION FOR SERVICES
Section 3.1 SERVICE FEE. As compensation for the performance of
the Contractor's services under this Agreement, Franks' Express shall
pay to the Contractor a service fee of One Thousand and no/100 Dollars
($1,000) per month.
<PAGE>
Section 3.2 PRE-APPROVED EXPENSE REIMBURSEMENT. Franks' Express
shall pay for all customary, reasonable and PRE-APPROVED business
expenses related to performance of the Contractor's obligations under
this Agreement. The Contractor shall keep good and sufficient records
of all expenses for which reimbursement is requested. Payments for
such reimbursements shall be made by Franks' Express on a monthly
basis. All single item expenses exceeding $100.00 and all aggregate
expenses exceeding $500.00 incurred in any given month must be PRE-
APPROVED IN WRITING by Franks' Express.
ARTICLE IV
TERM AND TERMINATION
Section 4.1 TERM. The term of this Agreement shall commence on
January 2, 1997 and shall continue for a term of two years, unless
terminated pursuant to other provisions of this Agreement.
Section 4.2 TERMINATION FOR CAUSE. Franks' Express may terminate
this Agreement for "cause" without prior written notice delivered to
the Contractor. For purposes of this Agreement, the term "cause" shall
include, without limitation: the Contractor's fraud, dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform duties assigned under
this Agreement, willful violation of any rule, law, regulation (other
than traffic violations or similar offenses) or a material breach of
any term or condition of this Agreement.
Section 4.3 TERMINATION FOR DISABILITY. Franks' Express may, by
a decision of the President of Franks' Express, with the concurrence of
the Board of Directors of Franks' Express, terminate this Agreement on
account of the Contractor's disability, provided that Franks' Express
shall have the absolute obligation to continue to pay to the Contractor
(or his or her estate or personal representative, as the case may be)
an amount equal to the compensation previously earned by the Contractor
prior to the date of termination, on the condition that the Contractor
or the Contractor's representative sign an agreement releasing Franks'
Express from all further liability under this Agreement, and Franks'
Express shall have no further obligations under this Agreement.
Section 4.4 TERMINATION UPON DEATH. This Agreement shall
terminate upon the Contractor's death, and Franks' Express shall have
no further obligations under this Agreement, provided that Franks'
Express shall have the absolute obligation to continue to pay to the
Contractor (or his or her estate or personal representative, as the
case may be) an amount equal to the compensation previously earned by
the Contractor prior to the date of termination, and Franks' Express
shall have no further obligations under this Agreement.
<PAGE>
Section 4.5 TERMINATION BY THE CONTRACTOR. The Contractor may
terminate the Contractor's obligations under this Agreement as follows:
(a) upon the expiration of 10 days after the Contractor has given
written notice to Franks' Express that the Contractor has
determined that Franks' Express has breached any material term or
condition of this Agreement, unless Franks' Express shall have
cured such breach to the satisfaction of the Contractor within the
10 day period; or
(b) upon the expiration of 20 days after Franks' Express has been
given written notice by the Contractor that the Contractor has
elected to terminate this Agreement for any other reason.
ARTICLE V
CONFIDENTIALITY
Section 5.1 CONFIDENTIAL INFORMATION. During the term of this
Agreement, the Contractor may have access to and become familiar with
various trade secrets, techniques, inventions, processes, and
compilations of information and records which are owned, in whole or in
part, by Franks' Express and which are regularly used in the operation
of its business, as well as various other types of confidential
information concerning Franks' Express' business and operations. The
Contractor shall not disclose any such trade secrets or other
confidential information, nor use any of such trade secrets or other
confidential information, during the term of this Agreement or
thereafter, except as required in the course of performing Contractor's
duties under this Agreement. All files, records, documents, equipment,
and similar items relating to Franks' Express' business, whether
prepared by the Contractor or otherwise coming into his or her
possession, shall remain the exclusive property of Franks' Express and,
except as may be required during the course of performance of
Contractor's duties under this Agreement, shall not be removed by the
Contractor from the premises of Franks' Express without the prior
written consent of the President of Franks' Express.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 NO ASSIGNMENT. This Agreement and all rights,
benefits, duties and obligations under this Agreement shall not be
subject to execution, attachment or similar process and, in the absence
of written permission from Franks' Express, may not be assigned,
delegated, transferred, pledged or hypothecated. Any such assignment,
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delegation, transfer, pledge, hypothecation, execution, attachment or
similar process, to the extent permitted by law, shall be null, void
and of no effect whatsoever, unless the written consent of Franks'
Express and the Contractor shall have first been obtained.
Section 6.2 ARBITRATION. If any controversy arises out of events
or provisions relating to or included within this Agreement other than
violation of the provisions of Article V, the same shall be arbitrated
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time of the dispute. Judgment
on such arbitration award may be entered in any court having
jurisdiction.
Section 6.3 SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be valid and
effective under applicable law, but if any provision of this Agreement
is found to be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 6.4 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if mailed by
United States certified or registered mail, prepaid, to a party at the
address for such party contained in this Agreement or such other
address as shall be provided in writing by either party to the other.
Section 6.5 SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of the Contractor, his or her heirs, personal
representatives and assigns (if any) or its successors and assigns (if
any), as the case may be, and Franks' Express, its successors and
assigns.
Section 6.6 GOVERNING LAW. This Agreement is made under, shall
be construed in accordance with, and shall be governed by the laws of
the State of Colorado as applied to contracts made and performed solely
within the State of Colorado.
Section 6.7 WAIVER AND MODIFICATION. Any waiver, alteration or
modification of any of the provisions of this Agreement shall be valid
only if made in writing and signed by the parties to this Agreement.
The failure of either party to enforce at any time, or for any period
of time, any of the provisions of this Agreement shall not be construed
as a waiver of such provisions or of the right of such party to enforce
each and every provision of this Agreement in the future.
Section 6.8 INDEMNIFICATION. The Contractor agrees to indemnify
and hold harmless Franks' Express from any and all claims, losses or
damage (including any amount paid in reasonable settlement of
litigation, either threatened or pending) and all costs and expenses
(including legal fees and other expenses reasonable incurred in
investigating or defending against litigation, either threatened or
pending) incurred by
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Franks' Express arising out of the Contractor's performance of duties
under this Agreement.
Section 6.9 HEADINGS. The headings and captions contained in
this Agreement are for convenience only and are not to be construed as
a part of this Agreement.
Section 6.10 ENTIRE AGREEMENT. This Agreement constitutes and
embodies the entire understanding and agreement of the parties to this
Agreement and, except as otherwise provided in this Agreement, there
are no other agreements or understandings, written or oral, in effect
between the Contractor and Franks' Express (or any other person or
entity) specifically relating to the substance of this Agreement.
Section 6.11 COUNTERPARTS. This instrument may be executed in
counterparts, each of which shall be deemed an original, but both of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Franks' Express and the Contractor have
executed this Agreement as of the day and year first above written.
FRANKS' EXPRESS, INC.
By:/S/ ROGER D. JONES
Roger D. Jones, President
THE CONTRACTOR
/S/ RICHARD H. STEINBERG
Richard H. Steinberg
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EXHIBIT A
NATURE OF SERVICES
DUTIES AND OBLIGATIONS
The Contractor shall perform the following services for Franks'
Express:
1. Evaluate, advise and assist the Company with development and
execution of the Company's business plan.
2. Provide, on an as needed basis, food service and financial
consulting to customers of the Company.
3. Analyze sources of available capital to be used for pursuit of
the Company's business plan and expansion activities.
<PAGE>
TERMINATION OF CONSULTING SERVICES AGREEMENT
THIS TERMINATION OF CONSULTING SERVICES AGREEMENT (this
"Agreement"), dated as of August 9, 1997, is between FRANKS' EXPRESS,
INC., a Colorado corporation ("Franks' Express") and Richard H.
Steinberg (the "Contractor").
RECITALS
A. Franks' Express and the Contractor executed a Consulting
Services Agreement dated January 2, 1997 (the "Consulting Agreement")
and now desire to terminate that agreement.
AGREEMENT
IN CONSIDERATION of the foregoing recitals, other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and the mutual covenants set forth below, Franks' Express
and the Contractor agree as follows:
1. The Consulting Agreement is hereby terminated.
2. Franks' Express shall pay the Contractor all amounts due under
the Consulting Agreement through the date of this Agreement, which is
agreed to be Seven Thousand and no/100 Dollars ($7,000.00), plus an
early termination fee equal to Five Thousand and no/100 Dollars
($5,000).
3. Franks' Express's obligation to make payments due to Franks'
Express shall be deferred until such time as Franks' Express
consummates a Business Combination, as that term is defined in the
Registration Statement of Franks' Express related to the sale of shares
of its capital stock, as and when declared effective by the U.S.
Securities and Exchange Commission.
IN WITNESS WHEREOF, Franks' Express and the Contractor have
executed this Agreement as of the day and year first above written.
FRANKS' EXPRESS, INC.
By:/S/ CHARLES BURTON
Charles Burton, President
THE CONTRACTOR
/S/ RICHARD H. STEINBERG
Richard H. Steinberg
