As filed with the Securities and Exchange Commission on March 9, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
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
Charles Burton (President), Roger Jones (Secretary) and Sandra Steinberg
(Treasurer)
(Cover Page Continues on Following Page)
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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 March 9 , 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. Those officers and directors are Charles Burton,
President and Director, Sandra Steinberg, Treasurer and Director, and
Roger D. Jones, Secretary and Director. 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.......... 25
COMPARATIVE DATA ............................ 26
USE OF PROCEEDS.............................. 26
PLAN OF DISTRIBUTION ........................ 29
LEGAL PROCEEDINGS............................ 31
MANAGEMENT................................... 31
BUSINESS..................................... 33
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS..................... 41
DESCRIPTION OF SECURITIES ................... 43
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS............................... 44
EXECUTIVE COMPENSATION....................... 45
LEGAL MATTERS................................ 46
TRANSFER AGENT............................... 46
EXPERTS...................................... 46
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). The , the estimated fair value of the
business or assets to be acquired must therefore be at
least $72,000. 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. The Company
presently owes $12,000 for consulting services previously rendered to the
Company and such amount will be due in cash upon the consummation of a
merger or acquisition of a Target 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
December 31, 1997 , the Company had an accumulated deficit of
$14,794. (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. The Company plans to focus
its efforts on a Business Combination with a Target Business within the United
States, but to the extent that the Company learns of an opportunity to merge
with a Target Business outside the United States, the Company may explore
such an opportunity. The Company does not intend to focus its efforts in
any particular area outside of the United States, but a Target Business located
in Eastern Europe or Asia appears to be the most likely general areas from
which such opportunities may arise. 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 -- The Company would also factor additional risks which would
include, but not be limited to increased difficulties related to the
enforcement of civil liabilities against new management by investors, limited
or no assurance that foreign courts would enforce such judgments, either
predicated upon civil liability provisions of the United States Federal
Securities laws or otherwise. In addition, any transaction with a Target
Business outside of the United States may impose additional political or
economic risks not associated with a Target Business located in the United
States. -- 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
December 31, 1997 , the net tangible book value of the Company was
($31,370 ), or ($.0314) 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, the pro forma net tangible book value of the
Company at December 31, 1997 , would have been $18,630 or
$.0177 per share, representing an immediate increase in net
tangible book value of approximately $.0491 per share to the
Company's existing shareholders and an immediate dilution of at least
$.9823 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, the pro forma net tangible book value of the Company at
December 31, 1997 , would have been $68,630 or $.0624
per share, representing an immediate increase in net tangible book
value of approximately $.0938 per share to the Company's
existing shareholders and an immediate dilution of at least $.9376
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 December 31, 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 $(.0314) $(.0314)<R/>
Increase attributable to new
shareholders
$ .091 $ .0938
______ ______
Pro forma net tangible book value
after this Offering $.0177 $.0524
______ ______
Dilution to new shareholders $.9823 $.9376
Percent Dilution 98.23% 93.76%
</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
18 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.
Its business operations related to identification, evaluation and
selection of a suitable Target Business may, however, be hampered by its limited
resources. At the minimum offering level, only $5,000 will be immediately
available for use by the Company after application of the escrow provisions of
SEC Rule 419 and at the maximum offering level, annd only $10,000 will be
available for use by the Company after application of those escrow provisions
at the maximum offering level. The remaining funds derived from this offering
will remain in escrow until after a suitable Target Business is identified
and properly disclosed and the other conditions of SEC Rule 419 have been
satisfied. These amounts will not be sufficient to address the current
deficiency of working capital that exists, and will provide only limited
resources for the Company to use to search for a suitable Target Business.
Nevertheless, the Company's management believes that the Company can locate
and evaluate a suitable Target Business with minimal expenditure of funds
after completion of this offering, while deferring payment of other Compay debts
because of the commitment and resourcefulness of its present management team.
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 after
release of escrowed funds. 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
to pay for business, legal and accounting due diligence expenses incurred in
connection with evaluation of prospective Business Combinations, (b) second,
for general and administrative expenses (1) of the Company, including legal
and accounting fees and administrative support expenses incurred in connection
with the Company's reporting obligations to the SEC and (c) third, 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 (2)
which allowed the Company to pre-pay some of these offering expenses.
(1) The Company utilizes office space at 12146 East Amherst Circle,
Aurora, Colroado 80014, provided by the principal shareholder of the
Company, Ms. Sandra Steinberg.
(2) 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.
The following table illustrates the unexpected use of proceeds at
minimum and maximum offering levels, assuming all shares are sold by officers
and directors of the Company.
<TABLE>
<CAPTION>
Minimum Offering Maximum Offering
<S> <C> <C>
Funds Immediately
Available $5,000 $10,000
Priority of Use 1. Evaluation of business 1. Evaluation of business
opportunities opportunities
2. General & Administrative 2. General & Administrative
expenses expenses
3. Repayment of 3. Repayment of
Shareholder Advances Shareholder Advances
Funds Available $45,000 $90,000
After Identification
& Disclosure of
Anticipated Business
Opportunities
Priority of Use: 1. Consummation of 1. Consummation of
Business Combination Business Combination
2. General & Administrative 2. General and Administrative
Expenses Expenses
3. Repayment ooof 3. Repayment of
Shareholder Advances Shareholder Advances
4. Consulting Fee Debt 4. Consulting Fee Debt
Repayment Repayment
5. Working Capital 5. Working Capital
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 offering is being sold by
officers and directors of the Company to whom no commission or other offering
renumeration will be paid. All officers and directors of the Company are
expected to participate in selling efforts. Those officers and directors
are Charles Burton, President and Director, Sandra Steinberg, Treasurer and
Director and Roger D.Jones, Secretary and Director. 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 December 31, 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 December 31, 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>
<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 ($7,000) and an early termination
fee ($5,000). The early termination fee was negotiated between the
parties to minimize the potential liability of the Company under the
agreement which had a remaining term of 17 months payable at the rate of
$1,000 per month. 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 for the six months ended
June 30, 1997 and 1996, and the years ended December 31, 1997, 1996 and 1995
, 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
Audit Report (Cover)
Years Ended
December 31, 1997, 1996 and 1995 F-2
Audit Report F-3
Financial Statements
Balance Sheets F-4
Statement of Stockholders Equity F-7
Statements of Operations F-6
Statements of Cash Flows F-8
Notes to Financial Statements F-10
Audit Report (Cover)
Six Months Ended
June 30, 1997 and 1996 F-12
Audit Report F-13
Financial Statements
Balance Sheets F-14
Statements of Operations F-15
Statements of Stockholder Equity F-16
Statements of Cash Flows F-17
Notes to Financial Statements F-18
F-1
<PAGE>
FRANKS' EXPRESS, INC.
AUDIT REPORT
For the Years Ended
December 31, 1997, 1996 and 1995
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
<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 accompanying balance sheets of Franks'
Express, Inc. as of December 31, 1997 and 1996, and the related
statements of operations, changes in stockholders' equity and
cash flows for the years ended December 31, 1997, 1996 and 1995.
My responsibility is to express an opinion on the financial
statements based on my audits.
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 misstatements. An
audit includes examining, or a test basis, evidence supporting
the amounts and disclosure in its financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Franks' Express, Inc. as of December 31, 1997 and 1996, and
the results of its operations and its cash flow for the years
ended December 31, 1997, 1996 and 1995.
The accompanying financial statements have been prepared
assuming the Company will continue a going concern. As
discussed in Note 4 to the financial statements, the Company has
suffered recurring losses and since inception and has limited
capital that raises substantial doubt about the entitys' ability
to continue as a going concern. Management plans in this regard
are described in Note 4. The financial statements do not
include any adjustments which might result from the outcome of
this uncertainty.
\S\ Janet Loss, C.P.A., P.C.
March 3, 1998
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
BALANCE SHEETS
December 31,
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash in checking $1,696 $ 1
OTHER ASSETS:
Deferred Offering Costs 21,576 $ 0
TOTAL ASSETS $23,272 $ 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
December 31,
1997 1996
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 494 $ 0
Accrued Interest 1,572 0
Accrued Expenses 6,000 0
Stockholder's Loan 25,000 0
TOTAL CURRENT LIABILITIES 33,066 0
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.0001 par value
100,000,000 and 50,000 shares
issued and outstanding 5,000 5,000
(DEFICIT) (14,794) (4,999)
TOTAL STOCKHOLDERS' EQUITY
(DEFICIT) ( 9,794) ( 1)
TOTAL STOCKHOLDERS' EQUITY
(DEFICIT) $23,272 $ 1
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1997, AND 1996
Common Stock Stockholders'
Number of Common Stock Equity
SHARES AMOUNT (DEFICIT) (DEFICIT)
<S> <C> <C> <C> <C>
Balance,
January 31,
1996 1,000 $5,000 $(4,999) $ 1
Net (loss)
for the year
ended December
31, 1996 0 0
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)
for the year
ended December
21, 1997 - - ( 9,795) (9,795)
Balance,
December 31,
1997 1,000,000 $5,000 $(14,794) $(9,794)
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
REVENUES:
Sales $ 0 $ 0 $ 0
OPERATING EXPENSES:
Bank Charges $ 34 $ 0 $ 0
Consulting Fees 6,000 0 0
Filing Fees 100 0 0
Office Expenses and
supplies 1,490 0 0
Legal and Accounting 600 0 0
TOTAL OPERATING EXPENSES 8,224 0 0
NET INCOME (LOSS)
BEFORE OTHER INCOME
AND EXPENSES: (8,224) 0 0
OTHER INCOME AND EXPENSES:
Interest (Expenses) 1,571 0 0
NET (LOSS) $(9,795) $ 0 $ 0
NET (LOSS) PER SHARE
OF COMMON STOCK $( .01) N/A N/A
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
DECEMBER 31,
1997 1996 1995
<S> <C> <C> <C>
NET (LOSS) $(9,795) 0 0
CHANGES IN OPERATING
ASSETS AND LIABILITIES:
Increase in current
liabilities 8,066 0 0
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES $(1,729) 0 0
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES:
Deferred offering costs (21,576) 0 0
Increase in stockholders'
loan 25,000 0 0
Cash provided by
financing activities 3,424 0 0
NET INCREASE IN CASH 1,695 0 0
CASH, BEGINNING OF
PERIOD 1 1 1
CASH, END OF PERIOD $1,696 $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
CONDENSED STATEMENTS 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 8,909 $ 0
Net cash provided (used) by
operating activities ( 218) $ 0
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES:
Deferred offering costs (21,181) 0
Cash provided by
financing activities 25,000 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"
<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 December 31, 1997,
the following is a schedule of the related consulting services.
January 1997 through July 31, 1997
Monthly expense $7,000.00
Early Termination Fee
for August 1997 Agreement 5,000.00
TOTAL CONSULTING FEES $12,000.00
As of December 31, 1997 the Company has not paid nor accrued the
July consulting fee of $1,000.00 and early termination fee of
$5,000.00. Pursuant to agreements with the Company's principle
shareholders no amounts due to him are payable by the Company
until consummation of the merger or acquisition of a target
business.
The original consulting agreement stated that the consulting
agreement could not be terminated for twenty-four months.
Because of the above non-cancellation clause, the Company agreed
to pay the consultant $5,000.00 for one early termination fee.
The Company's principal shareholder has loaned the Company in
the aggregate amount of $25,000 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 consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. The Company has a negative equity
deficit of $(14,794) at December 31, 1997.
The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flows to meet its
obligations on a timely basis and to obtain financing as may be
required in the next twelve months.
<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
<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 accompanying 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. My
responsibility is to express an opinion on the financial
statements based on my audits.
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 misstatements. An
audit also includes examining, or a test basis, evidence
supporting the amounts and disclosure in its financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my
opinion.
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.
The accompanying financial statements have been prepared
assuming the Company will continue a going concern. As
discussed in Note 4 to the financial statements, the Company has
suffered recurring losses and since inception and has limited
capital that raises substantial doubt about the entitys' ability
to continue as a going concern. Management plans in this regard
are described in Note 4. The financial statements do not
include any adjustments which might result from the outcome of
this uncertainty.
\S\ Janet Loss, C.P.A., P.C.
October 27, 1997
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
BALANCE SHEETS
June 30, June 30, December 31,
1997 1996 1996 1995
<S> <C> <C> <C> <C>
ASSETS
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
(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.
<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) N/A N/A N/A
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<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 Stockholders
Number of Common stock Equity
SHARES AMOUNT (DEFICIT) (DEFICIT)
<S> <C> <C> <C> <C>
Balance,
January 1, 1995 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1995 - - - -
Balance,
December 31, 1995 1,000 $ 5,000 $(4,999) $ 1
Net (Loss) for
the year ended
December 31, 1996 - - - -
Balance,
December 31, 1996 1,000 $ 5,000 $(4,999) $ 1
April 30, 1997
1,000 to 1 forward
stock split of
common stock 999,000 - - -
Net (Loss) six
months ended
June 30, 1997 0 0 (7,035) (7,035)
Balance,
June 30, 1997 1,000,000 $ 5,000 $(12,034) $ (7,034)
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<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 8,308 0 0 0
Net cash provided by
operating activities 1,273 0 0 0
Cash flows from (to)
Financing activities:
Deferred offering costs (20,917) 0 0 0
Cash provided by
financing activities 25,000 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.
<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 December 31, 1997,
the following is a schedule of the related consulting services.
January 1997 thru July 30, 1997
Monthly expense $6,000.00
Early Termination Fee
for August 1997 Agreement 5,000.00
TOTAL CONSULTING FEES $12,000.00
As of December 31, 1997 the Company has not paid nor accrued the
July consulting fee of $1,000.00 and early termination fee of
$5,000.00. These consulting fees will not be accrued until the
Company obtains financing and an acquisition or merger
candidate. This is Pursuant to agreements with the Company's
principle shareholders, no amounts due to him are payable by the
Company until consummation of the merger or acquisition of a
target business.
The original consulting agreement stated that the consulting
agreement could not be terminated for twenty-four months.
Because of the above non-cancellation clause, the Company agreed
to pay the consultant $5,000.00 for an early termination fee.
The Company's principal shareholder has loaned the Company in
the aggregate amount of $25,000 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 consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. The Company has a negative equity
deficit of $(14,794) at December 31, 1997.
The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flows to meet its
obligations on a timely basis and to obtain financing as may be
required in the next twelve months.
<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 Results of Operations ................ 25
Comparative Data ......................... 26
Use of Porceeds .......................... 26
Plan of Distribution ..................... 29
Legal Proceedings ........................ 31
Management ............................... 31
Business ................................. 33
Security Ownership of Management and
Prinicpal Shareholders ................... 41
Description of Securities ................ 43
Certain Relationships and Related
Party Transactions ...................... 44
Executive Compensation ................... 45
Legal Matters ............................ 46
Transfer Agent ........................... 46
Experts .................................. 46
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
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
liabile 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 provides indemnification to
officers, directors, employees and agents to the fullest extent provided
by Colorado law.
The Form of Sselected 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
Natioanl 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.
<PAGE>
Item 27. Exhibits
Exhibit
Number Decription 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
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,
uneforceable. 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 oof 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.
<PAGE>
The small business issuer will:
(1) For determining any liability under the Securities Act, treat the
informaiton 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 Comission 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 proospectus 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 infomration on
the plan of distribution.
(3) For dterminging 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 propectus
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 fied offering of those securities.
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. 4
to its Registration Statement to be signed on its behalf of the undersigned,
in the City of Englewood, State of Colroado, on March 9, 1998.
Franks' Express, Inc.
By/Charles Burton
Charles Burton, President
In accordance with the requirements of the Securities Act of 1933,
this Amendment No. 4 to Form SB-2 Registration Statement was signed
by the following persons in the capacities and on the dates indicated.
Date: March 9, 1998 /s/Charles Burton
Charles Burton, President, Chief Executive
Officer, Prinicipal Financial Officer and
Director
Date: March 9, 1998 /s/Roger D. Jones
Roger D. Jones, Secretary and Director
Date: March 9, 1998 /s/Sandra S. Steinberg
Sandra S. Steinberg, Treasurer, Principal
Accounting Officer and Director
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>
David M. Summers
Attorney at Law
5670 Greenwood Plaza Blvd., Suite 422
Englewood, Colorado 80111
(303) 220-5420
Telefax (303) 220-7755
March 9, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Registration and Issuance of Common Stock by
Franks' Express, Inc.
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 maximum of 100,000
shares of the Company's common stock (the "Shares"), pursuant to the
terms and conditions described in Amendment No. 4 to the Company's
Registration Statement dated March 9, 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 persons 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 persons, (iv) the authenticity of all documents
submitted to me as originals, (v) the conformity to originals of all
documents submitted to me as copies, (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.
<PAGE>
Securities and Exchange Commission
March 9, 1998
Page 2
(2) The Shares will be, when issued in accordance with terms
and conditions described in the Company's Registration Statement (which
contains the relevant 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.
Very truly,
/s/ David M. Summers
David M. Summers
DMS/ldh
cc: Mr. Charles Burton
<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
March 9, 1998
/s/David M. Summers
David M. Summers
Attorney at Law
<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 reports on the financial statements of Franks' Express,
Inc. for the six months ended June 30, 1997 and 1996, and the years ended
December 31, 1997, 1996 and 1995 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
March 9,1998
JANET LOSS, C.P.A., P.C.
By: /s/ Janet Loss
Janet Loss
Certified Public Accountant
