SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-22785
TUNLAW INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 52-2031541
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization)
1504 R Street, N.W., Washington, D.C. 20009
(Address of principal executive offices) (zip code)
Issuer's Telephone Number: 202/387-5400
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value per share
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
last 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X
Check if there is no disclosure of delinquent files in
response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive prosy or information
statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year. $0.
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to
the price at which the common equity was sold, or the average
bid and asked price of such common equity, as of a specified
date within the past 60 days. $0.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at December 31, 1997
Common Stock, par value $0.0001 5,000,000
Documents incorporated by reference: Form 10-SB (File No. 9-
22919) filed on August 1, 1997
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Tunlaw International Corporation (the "Company"), was
incorporated on March 27, 1997 under the laws of the State of
Nevada to engage in a merger with or acquisition of an
unidentified foreign or domestic private company which desires
to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
The Company has been in the developmental stage since
inception and has no operations to date. Other than issuing
shares to its original shareholder, the Company has not
commenced any operational activities. The Company meets the
definition of a "blank check" company contained in Section
(7)(b)(3) of the Securities Act of 1933, as amended.
The Company registered its common stock on a Form 10-SB
registration statement filed pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 12(g)
thereof. The Company files with the Securities and Exchange
Commission periodic and episodic reports under Rule 13(a) of
the Exchange Act, including quarterly reports on Form 10-QSB
and annual reports Form 10-KSB. As a reporting company under
the Exchange Act, the Company may register additional
securities on Form S-8 (provided that it is then in compliance
with the reporting requirements of the Exchange Act) and on
Form S-3 (provided that is has during the prior 12 month
period timely filed all reports required under the Exchange
Act), and its class of common stock registered under the
Exchange Act may be traded in the United States securities
markets provided that the Company is then in compliance with
applicable laws, rules and regulations, including compliance
with its reporting requirements under the Exchange Act.
The Company will attempt to locate and negotiate with a
business entity for the merger of that target business into
the Company. In certain instances, a target business may wish
to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No
assurances can be given that the Company will be successful in
locating or negotiating with any target business.
Management believes that there are perceived benefits to
being a reporting company with a class of publicly-traded
securities which may be attractive to foreign and domestic
private companies. These benefits are commonly thought to
include (1) the ability to use registered securities to make
acquisition of assets or businesses; (2) increased visibility
in the financial community; (3) the facilitation of borrowing
from financial institutions; (4) improved trading efficiency;
(5) shareholder liquidity; (6) greater ease in subsequently
raising capital; (7) compensation of key employees through
options for stock for which there is a public market; (8)
enhanced corporate image; and, (9) a presence in the United
States capital market.
A private company which may be interested in a business
combination with the Company may include (1) a company for
which a primary purpose of becoming public is the use of its
securities for the acquisition of assets or businesses; (2) a
company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities
on terms acceptable to it; (3) a company which wishes to
become public with less dilution of its common stock than
would occur normally upon an underwriting; (4) a company which
believes that it will be able obtain investment capital on
more favorable terms after it has become public; (5) a foreign
company which may wish an initial entry into the United States
securities market; (6) a special situation company, such as a
company seeking a public market to satisfy redemption
requirements under a qualified Employee Stock Option Plan;
and, (7) a company seeking one or more of the other benefits
believed to attach to a public company.
Management is actively engaged in seeking a qualified
private company as a candidate for a business combination.
Management is in discussion with a number of both foreign and
domestic companies, and has received information and proposals
from several of those companies. The Company is authorized to
enter into a definitive agreement with a wide variety of
private businesses without limitation as to their industry or
revenues. It is not possible at this time to predict with
which private company, if any, the Company will enter into a
definitive agreement or what will be the industry, operating
history, revenues, future prospects or other characteristics
of that company.
The Company will not acquire or merge with any entity
which cannot provide audited financial statements at or within
a reasonable period of time after closing of the proposed
transaction. The Company is subject to all the reporting
requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited
financial statements as part of its Form 8-K to be filed with
the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited
financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with
the requirements of the Exchange Act, or if the audited
financial statements provided do not conform to the
representations made by the target company, the closing
documents may provide that the proposed transaction will be
voidable at the discretion of the present management of the
Company.
The Company will not restrict its search for any specific
kind of firms, but may acquire a venture which is in its
preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate life.
It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such
business may need to seek additional capital, may desire to
have its shares publicly traded, or may seek other perceived
advantages which the Company may offer. However, the Company
does not intend to obtain funds to finance the operation of
any acquired business opportunity until such time as the
Company has successfully consummated such a merger or
acquisition.
A business combination with a target business will
normally involve the transfer to the target business of the
majority of common stock of the Company, and the substitution
by the target business of its own management and board of
directors.
The Company may seek a business opportunity with entities
which have recently commenced operations, or which wish to
utilize the public marketplace in order to raise additional
capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate
purposes. The Company may acquire assets and establish
wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
The Company has, and will continue to have, no capital
with which to provide the owners of business opportunities
with any cash or other assets. However, management believes
the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring
the cost and time required to conduct an initial public
offering. The officer and director of the Company has not
conducted market research and is not aware of statistical data
to support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The analysis of new business opportunities will be
undertaken by, or under the supervision of, the officer and
director of the Company, who is not a professional business
analyst. In analyzing prospective business opportunities,
management will consider such matters as the available
technical, financial and managerial resources; working capital
and other financial requirements; history of operations, if
any; prospects for the future; nature of present and expected
competition; the quality and experience of management services
which may be available and the depth of that management; the
potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may
be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential
for profit; the perceived public recognition or acceptance of
products, services, or trades; name identification; and other
relevant factors. Management will meet personally with
management and key personnel of the business opportunity as
part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Exchange Act
requires that any merger or acquisition candidate comply with
certain reporting requirements, which include providing
audited financial statements to be included in the reporting
filings made under the Exchange Act. The Company will not
acquire or merge with any company for which audited financial
statements cannot be obtained at or within a reasonable period
of time after closing of the proposed transaction.
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the
consummation of a transaction, it is probable that the present
Management and shareholder of the Company will no longer be in
control of the Company. In addition, the Company's director
may, as part of the terms of an acquisition or merger
transaction, resign and be replaced by new directors or may
sell his stock in the Company.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities
laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a
part of such securities immediately after the transaction is
consummated or at specified times thereafter. If such
registration occurs, of which there can be no assurance, it
will be undertaken by the surviving entity after the Company
has entered into an agreement for a business combination or
has consummated a business combination and the Company is no
longer considered a blank check company. Until such time as
this occurs, the Company will not attempt to register any
additional securities. 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 the market value of the Company's
securities in the future, if such a market develops, of which
there is no assurance.
While the actual terms of a transaction to which the
Company may be a party cannot be predicted, it may be expected
that the parties to the business transaction will find it
desirable to avoid the creation of a taxable event and thereby
structure the acquisition in a "tax-free" reorganization under
Sections 351 or 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
With respect to any merger or acquisition negotiations
with a Target Business, Management expects to focus on the
percentage of the Company which such Target Business
shareholders would acquire in exchange for their shareholdings
in the Target Business. Depending upon, among other things,
the Target Business's assets and liabilities, the Company's
shareholder will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject
to significant reduction in the event the Company acquires a
Target Business with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held
by the Company's shareholders at such time.
No assurances can be given that the Company will be able
to enter into a business combination, as to the terms of a
business combination, or as to the nature of the target
business.
As of the date hereof, management has not made any final
decision concerning or entered into any agreements for a
business combination. When any such agreement is reached or
other material fact occurs, the Company will file notice of
such agreement or fact with the Securities and Exchange
Commission on Form 8-K. Persons reading this Form 10-KSB are
advised to determine if the Company has subsequently filed a
Form 8-K.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and
without certainty of success. Management believes (but has
not conducted any research to confirm) that there are numerous
firms seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating
or improving the terms on which additional equity financing
may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, increasing the
opportunity to use securities for acquisitions, and providing
liquidity for shareholders and other factors. Business
opportunities may be available in many different industries
and at various stages of development, all of which will make
the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
RISK FACTORS. The Company's business is subject to
numerous risk factors, including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The
Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant
assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net
operating loss which will increase continuously until the
Company can consummate a business combination with a target
company. There is no assurance that the Company can identify
such a target company and consummate such a business
combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The
success of the Company's proposed plan of operation will
depend to a great extent on the operations, financial
condition and management of the identified target company.
While management intends to seek business combinations with
entities having established operating histories, there can be
no assurance that the Company will be successful in locating
candidates meeting such criteria. In the event the Company
completes a business combination, of which there can be no
assurance, the success of the Company's operations may be
dependent upon management of the target company and numerous
other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES
AND COMBINATIONS. The Company is and will continue to be an
insignificant participant in the business of seeking mergers
with and acquisitions of business entities. A large number of
established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of
companies which may be merger or acquisition target candidates
for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently,
the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully
completing a business combination. Moreover, the Company will
also compete with numerous other small public companies in
seeking merger or acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER
TRANSACTION - NO STANDARDS FOR BUSINESS COMBINATION. The
Company has no arrangement, agreement or understanding with
respect to engaging in a merger with or acquisition of a
business entity. There can be no assurance the Company will
be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination.
Management has not identified any particular industry or
specific business within an industry for evaluation by the
Company. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the
Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target
business opportunity to have achieved, or without which the
Company would not consider a business combination with such
business entity. Accordingly, the Company may enter into a
business combination with a business entity having no
significant operating history, losses, limited or no potential
for earnings, limited assets, negative net worth or other
negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY.
While seeking a business combination, management anticipates
devoting up to ten hours per month to the business of the
Company. The Company's sole officer has not entered into a
written employment agreement with the Company and he is not
expected to do so in the foreseeable future. The Company has
not obtained key man life insurance on its officer and
director. Notwithstanding the combined limited experience and
time commitment of management, loss of the services of this
individual would adversely affect development of the Company's
business and its likelihood of continuing operations.
CONFLICTS OF INTEREST - GENERAL. The Company's officer
and director participates in other business ventures which may
compete directly with the Company. Additional conflicts of
interest and non-arms length transactions may also arise in
the future. Management has adopted a policy that the Company
will not seek a merger with, or acquisition of, any entity in
which any member of management serves as an officer, director
or partner, or in which they or their family members own or
hold any ownership interest.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Section 13 of the Securities Exchange Act of 1934 (the
"Exchange Act"), requires companies subject thereto to provide
certain information about significant acquisitions, including
certified financial statements for the company acquired,
covering one or two years, depending on the relative size of
the acquisition. The time and additional costs that may be
incurred by some target companies to prepare such financial
statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable
to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The
Company has neither conducted, nor have others made available
to it, results of market research indicating that market
demand exists for the transactions contemplated by the
Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the
event demand is identified for a merger or acquisition
contemplated by the Company, there is no assurance the Company
will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed
operations, even if successful, will in all likelihood result
in the Company engaging in a business combination with only
one business opportunity. Consequently, the Company's
activities will be limited to those engaged in by the business
opportunity which the Company merges with or acquires. The
Company's inability to diversify its activities into a number
of areas may subject the Company to economic fluctuations
within a particular business or industry and therefore
increase the risks associated with the Company's operations.
REGULATION. Although the Company will be subject to
regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment
Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities.
In the event the Company engages in business combinations
which result in the Company holding passive investment
interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to
register as an investment company and could be expected to
incur significant registration and compliance costs . The
Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject the
Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business
combination involving the issuance of the Company's common
stock will, in all likelihood, result in shareholders of a
target company obtaining a controlling interest in the
Company. Any such business combination may require management
of the Company to sell or transfer all or a portion of the
Company's common stock held by it, and to resign as a member
of the Board of Directors and an officer of the Company. The
resulting change in control of the Company will likely result
in removal of the present officer and director of the Company
and a corresponding reduction in or elimination of his
participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING
BUSINESS COMBINATION. The Company's primary plan of operation
is based upon a business combination with a business entity
which, in all likelihood, would result in the Company issuing
securities to shareholders of such business entity. The
issuance of previously authorized and unissued common stock of
the Company would result in reduction in percentage of shares
owned by the present shareholder of the Company and would most
likely result in a change in control or management of the
Company.
ASPECTS OF BLANK CHECK OFFERING. The Company may enter
into a business combination with a business entity that
desires to establish a public trading market for its shares.
A target company may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by
seeking a business combination with the Company. Such
consequences may include, but are not limited to, time delays
of the registration process, significant expenses to be
incurred in such an offering, loss of voting control to public
shareholders or the inability to obtain an underwriter or to
obtain an underwriter on terms satisfactory to the Company.
TAXATION. Federal and state tax consequences will, in
all likelihood, be major considerations in any business
combination the Company may undertake. Currently, such
transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and
state tax provisions. The Company intends to structure any
business combination so as to minimize the federal and state
tax consequences to both the Company and the target company;
however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free
reorganization or that the parties will obtain the intended
tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY
DISQUALIFY BUSINESS OPPORTUNITIES. Management of the Company
will request that any potential business opportunity provide
audited financial statements. One or more attractive business
opportunities may choose to forego the possibility of a
business combination with the Company rather than incur the
expenses associated with preparing audited financial
statements.
In such case, the Company may choose to obtain certain
assurances as to the target company's assets, liabilities,
revenues and expenses prior to consummating a business
combination, with further assurances that an audited financial
statement would be provided after closing of such a
transaction. Closing documents relative thereto may include
representations that the audited financial statements will not
materially differ from the representations included in such
closing documents.
COMPETITION. The Company will remain an insignificant
participant among the firms which engage in the acquisition of
business opportunities. There are many established venture
capital and financial concerns which have significantly
greater financial and personnel resources and technical
expertise than the Company. In view of the Company's combined
extremely limited financial resources and limited management
availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's
competitors.
ITEM 2. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no
agreements to acquire any properties. The Company currently
uses the offices of Pierce Mill Associates, Inc. at no cost to
the Company and the Company expects this arrangement to
continue until the Company completes an acquisition or merger.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or
against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fourth quarter of the fiscal year covered by this report.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is currently no public market for the securities of
the Company. The Company does not intend to trade its
securities in the secondary market until completion of a
business combination or acquisition. It is anticipated that
following such occurrence the Company will cause its common
stock to be listed or admitted to quotation on the NASD OTC
Bulletin Board or, if it then meets the financial and other
requirements thereof, on the Nasdaq SmallCap Market, National
Market System or regional or national exchange.
The proposed business activities described herein
classify the Company as a "blank check" company. The
Securities and Exchange Commission and many states have
enacted statutes, rules and regulations limiting the sale of
securities of blank check companies in their respective
jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully
implemented its business plan described herein. Accordingly,
the shareholder of the Company has executed and delivered a
"lock-up" letter agreement, affirming that such shareholder
will not sell or otherwise transfer its shares of the
Company's common stock except in connection with or following
completion of a merger or acquisition and the Company is no
longer classified as a blank check company. The shareholder
has deposited such shareholder's respective stock certificate
with the Company's management, who will not release the
respective certificates except in connection with or following
the completion of a merger or acquisition.
There is currently one shareholder of the outstanding
common stock of the Company. The Company has not designated
nor issued any preferred stock.
During the past three years, the Company has sold
securities which were not registered as follows:
NUMBER OF
DATE NAME SHARES CONSIDERATION
June 28, 1997 Pierce Mill Associates, Inc. 5,000,000 $500
________
(1) Mr. Cassidy, the president and sole director of the
Company, is the sole director and shareholder of Pierce
Mill Associates, Inc. and the beneficial owner of such
shares.
The issued and outstanding shares of the Company's Common
Stock were issued in accordance with the exemptions from
registration afforded by Sections 4(2) of the Securities Act
of 1933 and Rule 506 promulgated thereunder.
The shareholder of the Company has executed and delivered
a "lock-up" letter agreement which provides that such
shareholder shall not sell the securities except in connection
with or following the consummation of a merger or acquisition.
Further, the shareholder has placed its stock certificates
with the Company. Any liquidation by the shareholder after
the release from the "lock-up" selling limitation period may
have a depressive effect upon the trading price of the
Company's securities in any future market which may develop.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Company was formed to engage in a merger with or
acquisition of an unidentified foreign or domestic private
company which desires to become a reporting ("public") company
whose securities are qualified for trading in the United
States secondary market. The Company meets the definition of
a "blank check" company contained in Section (7)(b)(3) of the
Securities Act of 1933, as amended. The Company has been in
the developmental stage since inception and has no operations
to date. Other than issuing shares to its original
shareholder, the Company has not commenced any operational
activities. As such the Company can be defined as a "shell"
company, whose purpose is to locate and consummate a merger or
acquisition with another entity.
Management is actively engaged in seeking a qualified
private company as a candidate for a business combination.
Management is in discussion with a number of both foreign and
domestic companies, and has received information and proposals
from several of those companies. The Company is authorized to
enter into a definitive agreement with a wide variety of
private businesses without limitation as to their industry or
revenues. It is not possible at this time to predict with
which private company, if any, the Company will enter into a
definitive agreement or what will be the industry, operating
history, revenues, future prospects or other characteristics
of that company.
The Company will not acquire or merge with any entity
which cannot provide audited financial statements at or within
a reasonable period of time after closing of the proposed
transaction. The Company is subject to all the reporting
requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited
financial statements as part of its Form 8-K to be filed with
the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited
financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with
the requirements of the Exchange Act, or if the audited
financial statements provided do not conform to the
representations made by the target company, the closing
documents may provide that the proposed transaction will be
voidable at the discretion of the present management of the
Company.
The Company will not restrict its search for any specific
kind of firms, but may acquire a venture which is in its
preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate life.
It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such
business may need to seek additional capital, may desire to
have its shares publicly traded, or may seek other perceived
advantages which the Company may offer. However, the Company
does not intend to obtain funds to finance the operation of
any acquired business opportunity until such time as the
Company has successfully consummated such a merger or
acquisition.
A business combination with a target business will
normally involve the transfer to the target business of the
majority of common stock of the Company, and the substitution
by the target business of its own management and board of
directors.
The Company has, and will continue to have, no capital
with which to provide the owners of business opportunities
with any cash or other assets. However, management believes
the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring
the cost and time required to conduct an initial public
offering. The officer and director of the Company has not
conducted market research and is not aware of statistical data
to support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The Company's sole shareholder has agreed that it will
advance to the Company any additional funds which the Company
needs for operating capital and for costs in connection with
searching for or completing an acquisition or merger. Such
advances will be made without expectation of repayment unless
the owners of the business which the Company acquires or
merges with agree to repay all or a portion of such advances.
There is no minimum or maximum amount such shareholder will
advance to the Company. The Company will not borrow any funds
for the purpose of repaying advances made by such shareholder,
and the Company will not borrow any funds to make any payments
to the Company's promoters, management or their affiliates or
associates.
The Board of Directors has passed a resolution which
contains a policy that the Company will not seek an
acquisition or merger with any entity in which the Company's
officer, director, shareholder or his affiliates or associates
serve as officer or director or hold any ownership interest.
ITEM 7. FINANCIAL STATEMENTS
John P. MacLean
Certified Public Accountant
15701 Alameda Drive
Bowie, Maryland 20716
301/249-4900
Tunlaw International Corporation
I have audited the accompanying Balance Sheet of Tunlaw
International Corporation as of December 31, 1997. This
financial statement is the responsibility of Tunlaw
International Corporation's management. My responsibility is
to express an opinion on this financial statement based on my
audit.
I conducted my audit in accordance with generally
accepted auditing standards. Those standards require that I
plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statement referred to above
presents fairly, in all materials respects, the financial
position of Tunlaw International Corporation as of December
31, 1997, in conformity with generally accepted accounting
principles.
/s/ John P. MacLean, CPA, CFP
March 23, 1998
<PAGE>
TUNLAW INTERNATIONAL CORPORATION
Balance Sheet
December 31, 1997
ASSETS
Cash $1,000
Total assets $1,000
LIABILITIES
Current -0-
Long-term -0-
Total Liabilities -0-
Shareholder Equity
Common Stock (5,000,000 shares
$.0001 par value) $500
Additional paid in capital $500
Total Equity $1,000
See Auditor's Report
<PAGE>
Tunlaw International Corporation
Notes to Financial Statements
December 31, 1997
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying financial
statement follows.
(A) DESCRIPTION OF BUSINESS. The company was organized April
24, 1997 for the purpose of engaging in any lawful business.
The company is in the development stage and operations have
not commenced. The Company has selected the calendar year as
its fiscal year.
(B) COMMON STOCK ISSUED. The Company has authorized
50,000,000 shares of Common Stock having a par value of $.0001
per share and 10,000,000 shares of preferred stock having a
par value $.0001 per share. As of December 31, 1997,
5,000,000 shares of Common Stock had been issued and are
outstanding.
(C) NO COSTS INCURRED. As of December 31, 1997, no
shareholders, officers, directors or other related parties had
incurred costs on behalf of the Company.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has not changed accountants since its
formation and there are no disagreements with the findings of
its accountants.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
Control Persons; Compliance with Section 16(a) of
the Exchange Act
The Directors and Officers of the Company are as follows:
Name Age Positions and Offices Held
James M. Cassidy 62 President,
Secretary, Director
There are no agreements or understandings for the officer
or director to resign at the request of another person and the
above-named officer and director is not acting on behalf of or
will act at the direction of any other person.
Set forth below is the name of the director and officer
of the Company, all positions and offices with the Company
held, the period during which he has served as such, and the
business experience during at least the last five years:
JAMES MICHAEL CASSIDY, ESQ., J.D., LL.M., received a
Bachelor of Science in Languages and Linguistics from
Georgetown University in 1960, a Bachelor of Laws from The
Catholic University School of Law in 1963, and a Master of
Laws in Taxation from The Georgetown University School of Law
in 1968. From 1963-1964, Mr. Cassidy was law clerk to the
Honorable Inzer B. Wyatt of the United States District Court
for the Southern District of New York. From 1964-1965, Mr.
Cassidy was law clerk to the Honorable Wilbur K. Miller of the
United States Court of Appeals for the District of Columbia.
From 1969-1975, Mr. Cassidy was an associate of the law firm
of Kieffer & Moroney and a principal in the law firm of
Kieffer & Cassidy, Washington, D.C. From 1975 to date, Mr.
Cassidy has been a principal in the law firm of Cassidy &
Associates, Washington, D.C. and its predecessors,
specializing in securities law and related corporate and
federal taxation matters. Mr. Cassidy is a member of the bar
of the District of Columbia and is admitted to practice before
the United States Tax Court and the United States Supreme
Court.
PREVIOUS BLANK-CHECK COMPANIES
In 1988, management was involved in two blank check
offerings. Mr. Cassidy was vice president, a director and a
shareholder of First Agate Capital Corporation and
Consolidated Financial Corporation. First Agate Capital
Corporation is no longer a public company and has had no
activity since 1991. Consolidated Financial Corporation was
transferred to new management in 1990. As part of such
transaction, Mr. Cassidy transferred his shares and did not
continue as an officer or director. New management effected
the merger of Consolidated Financial Corporation with A.B.E
Industrial Holdings in June, 1991.
CURRENT BLANK CHECK COMPANIES
Mr. Cassidy is the president, sole director and a
beneficial shareholder of Sheffield Acquisitions, Inc.,
Aberdeen Acquisitions Corporation and Chatsworth Acquisitions
Corporation. Until December 30, 1997, Mr. Cassidy was the
sole director and beneficial shareholder of Corcoran
Technologies Corporation. Sheffield Acquisitions, Inc. has
filed a registration statement on Form S-1 under the
Securities Act and Corcoran Technologies Corporation, Aberdeen
Acquisitions Corporation and Chatsworth Acquisitions
Corporation filed registration statements on Forms 10-SB under
the Exchange Act. The initial business purpose of each of
these companies was to engage in a merger or acquisition with
an unidentified company or companies and each will be
classified as a blank check company until completion of a
business acquisition.
Mr. Cassidy anticipates being involved with additional
blank check companies filed under the Securities Act or under
the Exchange Act.
RECENT TRANSACTIONS BY BLANK CHECK COMPANIES
On December 30, 1997, Prime Management, Inc., a
California corporation, merged with and into Corcoran
Technologies Corporation. Prime Management, Inc. is an
operating transportation company with 1997 revenues of
$15,958,229 which has two wholly-owned subsidiaries, Mid-Cal
Express, a long-haul trucking company hauling shipments of
general commodities, including temperature-sensitive goods, in
both intrastate and interstate commerce and Mid-Cal Logistics,
a freight brokerage company. Pursuant to the merger, Corcoran
Technologies Corporation changed its name to Prime Companies,
Inc. Corcoran Technologies Corporation has filed a Form 8-K
with the Securities and Exchange Commission describing the
merger in greater detail.
CONFLICTS OF INTEREST
The Company's officer and director has organized and
expects to organize other companies of a similar nature and
with a similar purpose as the Company. Consequently, there
are potential inherent conflicts of interest in acting as an
officer and director of the Company. Insofar as the officer
and director is engaged in other business activities,
management anticipates that it will devote only a minor amount
of time to the Company's affairs. The Company does not have a
right of first refusal pertaining to opportunities that come
to management's attention insofar as such opportunities may
relate to the Company's proposed business operations.
A conflict may arise in the event that another blank
check company with which management is affiliated is formed
and actively seeks a target business. It is anticipated that
target businesses will be located for the Company and other
blank check companies in chronological order of the date of
formation of such blank check companies. However, any blank
check companies that may be formed may differ from the Company
in certain items such as place of incorporation, number of
shares and shareholders, working capital, types of authorized
securities, or other items. It may be that a target business
may be more suitable for or may prefer a certain blank check
company formed after the Company. In such case, a business
combination might be negotiated on behalf of the more suitable
or preferred blank check company regardless of date of
formation.
Mr. Cassidy, the president and director of the Company,
is the sole shareholder of Pierce Mill which is, in turn, the
sole shareholder of the Company. Mr. Cassidy will be
responsible for seeking, evaluating, negotiating and
consummating a business combination with a target business
which may result in terms providing benefits to Mr. Cassidy.
Mr. Cassidy is the principal of Cassidy & Associates, a
law firm located in Washington, D.C. As such, demands may be
placed on the time of Mr. Cassidy which would detract from the
amount of time he is able to devote to the Company. Mr.
Cassidy intends to devote as much time to the activities of
the Company as required. However, should such a conflict
arise, there is no assurance that Mr. Cassidy would not attend
to other matters prior to those of the Company. Mr. Cassidy
projects that initially approximately ten hours per month of
his time may be spent locating a target business which amount
of time would increase when the analysis of, and negotiations
and consummation with, a target business are conducted.
The terms of business combination may include such terms
as Mr. Cassidy remaining a director or officer of the Company
and/or the continuing securities or other legal work of the
Company being handled by the law firm of which Mr. Cassidy is
the principal. The terms of a business combination may
provide for a payment by cash or otherwise to Pierce Mill for
the purchase of its Common Stock by a target business. Mr.
Cassidy would directly benefit from such employment or
payment. Such benefits may influence Mr. Cassidy's choice of a
target business.
Management owns 100% of Pierce Mill which, in turn, owns
5,000,000 shares of the shares of common stock of the Company.
Mr. Cassidy is the sole shareholder of Pierce Mill and is
therefore considered the beneficial owner of the 5,000,000
shares of the Common Stock owned by Pierce Mill. Pierce Mill
Associates is a private company whose function is to form and
market blank check companies.
No other securities, or rights to securities, of the
Company will be issued to management or promoters, or their
affiliates or associates, prior to the completion of a
business combination. At the time of a business combination,
management expects that some of the 5,000,000 shares of Common
Stock owned by Pierce Mill will be purchased by the target
business. The amount of Common Stock sold or continued to be
owned by Pierce Mill cannot be determined at this time.
Management may agree to pay finder's fees, as appropriate
and allowed, to unaffiliated persons who may bring a target
business to the Company where that reference results in a
business combination. The amount of any finder's will be
subject to negotiation, and cannot be estimated at this time.
No finder's fee of any kind will be paid to the management or
promoters of the Company, or to their associates or
affiliates. No loans of any type have, or will be, made to
management or promoters of the Company or to any of their
associates or affiliates.
The Company's officer and director, or promoters, or
their affiliates or associates have not had any negotiations
with and there are no present arrangements or understandings
with any representatives of the owners of any business or
company regarding the possibility of a business combination.
The Company will not enter into a business combination,
or acquire any assets of any kind for its securities, in which
management or promoters of the Company, or any affiliates or
associates have any interest, direct or indirect.
Pierce Mill anticipates that it will actively negotiate
the purchase of a portion of its 5,000,000 shares of Common
Stock by a target business, and anticipates that a target
business will purchase a part of its Common Stock.
Management has adopted certain policies involving
possible conflicts of interest, including prohibiting any of
the following transactions involving management or promoters
or their affiliates or associates: (i) any lending by the
Company to such persons; (ii) the issuance of any additional
securities to such persons prior to a business combination;
(iii) the entering into any business combination or
acquisition of assets in which such persons have any interest,
direct or indirect; or (iv) the payment of any finder's fees
to such persons.
These policies have been adopted by the Board of
Directors of the Company, and any changes in these provisions
would require the approval of the Board of Directors.
Management does not intend to propose any such action and does
not anticipate that any such action will occur.
There are no binding guidelines or procedures for
resolving potential conflicts of interest. Failure by
management to resolve conflicts of interest in favor of the
Company could result in liability of management to the
Company. However, any attempt by shareholders to enforce a
liability of management to the Company would most likely be
prohibitively expensive and time consuming.
ITEM 10. EXECUTIVE COMPENSATION
The Company's officer and director does not receive any
compensation for his services rendered to the Company, nor has
he received such compensation in the past. As of the date of
this registration statement, the Company has no funds
available to pay the officer and director. Further, the
officer and director is not accruing any compensation pursuant
to any agreement with the Company.
The officer and director of the Company will not receive
any finder's fee, either directly or indirectly, as a result
of his efforts to implement the Company's business plan
outlined herein. However, the officer and director of the
Company anticipates receiving benefits as a beneficial
shareholder of the Company.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted
by the Company for the benefit of its employees.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of December 31, 1997,
each person known by the Company to be the beneficial owner of
five percent or more of the Company's Common Stock and the
director and officer of the Company. Except as noted, the
holder thereof has sole voting and investment power with
respect to the shares shown.
Name and Address Amount of Beneficial Percent of
of Beneficial Owner Ownership Class
Pierce Mill
Associates, Inc.(1) 5,000,000 100%
1504 R Street, N.W.
Washington, D.C. 20009
James M. Cassidy(2) 5,000,000 100%
1504 R Street, N.W.
Washington, D.C. 20009
All Executive Officers and
Directors as a Group
(1 Person) 5,000,000 100%
(1) Since Pierce Mill Associates has fewer than 100
shareholders and is not making and does not intend to
make a public offering of its securities, Management
believes that it is not deemed to be an investment
company by virtue of an exemption provided under the
Investment Company Act of 1940, as amended.
(2) Mr. Cassidy owns 100% of Pierce Mill Associates and is
therefore considered the beneficial owner of the
5,000,000 shares of common stock owned by it.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 26, 1997, the Company issued a total of 5,000,000
shares of Common Stock to the following persons for a total of
$500 in cash:
NUMBER OF TOTAL
NAME SHARES CONSIDERATION
Pierce Mill
Associates, Inc. 5,000,000 $500
The Board of Directors has passed a resolution which
contains a policy that the Company will not seek an
acquisition or merger with any entity in which the Company's
officer, director or shareholder or their affiliates or
associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under
which this policy may be changed.
The proposed business activities described herein
classify the Company as a "blank check" company. The
Securities and Exchange Commission and many states have
enacted statutes, rules and regulations limiting the sale of
securities of blank check companies in their respective
jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully
implemented its business plan described herein. Accordingly,
the shareholder of the Company has executed and delivered a
"lock-up" letter agreement, affirming that such shareholder
shall not sell such shareholder's respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the
Company is no longer classified as a blank check company. The
shareholder has placed the respective stock certificate with
the Company which will not release the certificates until such
time as a merger or acquisition has been successfully
consummated.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4
-- Certificate of Incorporation filed as an exhibit to
the Company's registration statement on Form 10-SB (File
No. 0-22919) filed on August 1, 1997 and is incorporated
herein by reference.
-- By-Laws filed as an exhibit to the Company's
registration statement on Form 10-SB (File No. 9-22919)
filed on August 1, 1997 which is incorporated herein by
reference.
(b) There were no reports on Form 8-K filed by the
Company during the quarter ended December 31, 1997.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange
Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TUNLAW INTERNATIONAL CORPORATION
By: /s/ James M. Cassidy
James M. Cassidy, President
Dated: March 30, 1998
