U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
TUNLAW INTERNATIONAL CORPORATION
-----------------------------
(Name of Small Business Issuer)
Nevada 52-2031541
- -------------------------------- --------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1504 R Street, N.W., Washington, D.C. 20009
------------------------------------------------------------
(Address of Principal Executive Offices including Zip Code)
202/387-5400
_____________
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.0001 Par Value
(Title of Class)
<PAGE>
PART I
ITEM 1. BUSINESS.
Tunlaw International Corporation (the "Company"), was incorporated
on March 27, 1997 under the laws of the State of Nevada to engage in any
lawful corporate undertaking, including, but not limited to, selected mergers
and acquisitions. 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.
The Company has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company whose
securities are qualified for trading in the United States secondary market.
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.
There are certain perceived benefits to being a reporting company with
a class of publicly-traded securities. These are commonly thought to
include the following:
* the ability to use registered securities to make acquisition of
assets or businesses;
* increased visibility;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for whom a primary purpose of becoming public
is the use of its securities for the acquisition of assets or
businesses;
* 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;
* a company which wishes to become public with less dilution
of its common stock than would occur upon an underwriting;
* a company which believes that it will be able obtain
investment capital on more favorable terms after it has
become public;
* a foreign company which may wish an initial entry into the
United States securities market;
* a special situation company, such as a company seeking a
public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan;
* a company seeking one or more of the other perceived
benefits of becoming a public company.
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.
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.
The proposed business activities described herein classify the Company
as a "blank check" company. SEE "GLOSSARY". 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.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so
under the Securities Exchange Act of 1934.
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. See "MANAGEMENT."
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. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS
OF 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.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations regarding
such an acquisition. The Company's officer and director nor any affiliate
has engaged in any negotiations with any representative of any company
regarding the possibility of an acquisition or merger between the Company
and such other company.
Pierce Mill Associates, the principal shareholder of the Company,
anticipates seeking out a target company through solicitation. Such
solicitation may include newspaper or magazine advertisements, mailings
and other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide
Web sites and similar methods. No estimate can be made as to the number
of persons who will be contacted or solicited. Any such solicitation will be
at the expense of Pierce Mill Associates. Pierce Mill Associates pays
referral fees to consultants and others who refer target businesses for
mergers into blank check companies in which Pierce Mill Associates has an
interest. Payments are made if a merger occurs, and may consist of cash or
a portion of the stock in the Company retained by Pierce Mill, or both.
The Company has no full time employees. The Company's president
has agreed to allocate a portion of his time to the activities of the Company,
without compensation. The president anticipates that the business plan of
the Company can be implemented by his devoting approximately 10 hours
per month to the business affairs of the Company and, consequently,
conflicts of interest may arise with respect to the limited time commitment
by such officer. See "ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS."
Management is currently involved with other blank check companies,
and is involved in creating additional blank check companies similar to this
one. In addition, the Company's officer and director expects, in the future,
to become involved with other companies which have a business purpose
similar to that of the Company. 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. Management anticipates 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, other 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. See "ITEM 5, DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS -
CURRENT BLANK CHECK COMPANY ACTIVITIES".
The Articles of Incorporation of the Company provides that the
Company may indemnify officers and/or directors of the Company for
liabilities, which can include liabilities arising under the securities laws.
Therefore, assets of the Company could be used or attached to satisfy any
liabilities subject to such indemnification. See "ITEM 12,
INDEMNIFICATION OF DIRECTORS AND OFFICERS."
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity presented to it by persons
or firms who or which desire to seek the perceived advantages of a
corporation which has a class of securities registered under the Exchange
Act. The Company will not restrict its search to any specific business,
industry, or geographical location and the Company may participate in a
business venture of virtually any kind or nature. This discussion of the
proposed business is not meant to be restrictive of the Company's virtually
unlimited discretion to search for and enter into potential business
opportunities. Management anticipates that it will be able to participate in
only one potential business venture because the Company has nominal assets
and limited financial resources. See ITEM F/S, "FINANCIAL
STATEMENTS." This lack of diversification should be considered a
substantial risk to the shareholder of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
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 anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. 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.
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.
Management of the Company, which in all likelihood will not be
experienced in matters relating to the business of a Target Business, will
rely upon its own efforts in accomplishing the business purposes of the
Company. It is not anticipated that any outside consultants or advisors will
be utilized by the Company to effectuate its business purposes described
herein. However, if the Company does retain such an outside consultant or
advisor, any cash fee earned by such party will need to be paid by the
prospective merger/acquisition candidate, as the Company has limited cash
assets with which to pay such obligation.
If Management did determine to utilize the services of a consultant in
the selection of a Target Business, such consultant would likely be used to
supplement the business experience of Management, such as accountants,
technical experts, appraisers, attorneys, or others. Management would
recommend the use of a consultant based on the type of Target Business
sought, the form and amount of compensation required by the consultant,
the years such consultant had been in business and rate of success in
matching Target Businesses with acquiring companies. If a consultant were
used, Management would expect that any such consultant would provide the
Company with a selection of Target Businesses, would provide due
diligence assistance for study of the Target Business, would assist in
negotiating the terms of a Business Combination, and would serve to
facilitate the negotiation process. More than one consultant could be used
in locating a Target Business.
The Company has no agreements or understandings with any consultant
to provide public relations or any other services and does not intend to have
any such relationship prior to acquisition of a Target Business. If requested
by a Target Business, Management can recommend one or more
underwriters, financial advisors, accountants, public relations firms or other
consultants.
A potential Target Business may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued
after any Business Combination. Additionally, a particular Target Business
may be presented to the Company only on the condition that the services of
a consultant or advisor be continued after a merger or acquisition. Such
pre-existing agreements of Target Businesses for the continuation of the
services of attorneys, accountants, advisors or consultants could be a factor
in the Company's selection of a Target Business.
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.
ACQUISITION OF OPPORTUNITIES
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.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of
such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth
remedies on default and will include miscellaneous other terms.
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'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.
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 3. 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 4. 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.
<TABLE>
<CAPTION>
Name and Address Amount of Beneficial Percent of
of Beneficial Owner Ownership Class
- ------------------------ ------------------ -------------------
<S> <C> <C>
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%
</TABLE>
(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.
(1) 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 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS.
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
expected 1997 revenues of approximately $16,000,000 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.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, 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. Any violation of
such Act would subject the Company to material adverse consequences.
ITEM 6. 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. See "CONFLICTS OF INTEREST".
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 7. 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 5,000,000 $500
Associates, Inc.
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. SEE "GLOSSARY". 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 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.0001 per share, and 10,000,000
shares of Preferred Stock, par value $.0001 per share. The following
statements relating to the capital stock are summaries and do not purport to
be complete. Reference is made to the more detailed provisions of, and
such statements are qualified in their entirety by reference to, the Certificate
of Incorporation and the By-laws, copies of which are filed as exhibits to
this registration statement.
COMMON STOCK
Holders of Common Stock will be entitled to one vote per share with
respect to all matters required by law to be submitted to holders of
Common Stock. The Common Stock will not have cumulative voting
rights. The Certificate provides that any action required to be taken or that
may be taken at an annual or special meeting of stockholders may be taken
by written consent in lieu of a meeting of stockholders.
Subject to the prior rights of holders of Preferred Stock, if any, holders
of the Common Stock will be entitled to receive such dividends as may be
lawfully declared by the Board of Directors. Upon any dissolution,
liquidation or winding up of the Company, whether voluntary or
involuntary, holders of the Common Stock are entitled to share ratably in
all assets remaining after the liquidation payments have been made on all
outstanding shares of Preferred Stock, if any.
The Common Stock will not have any preemptive, subscription or
conversion rights. The Board of Directors has the authority to issue
additional shares of Common Stock.
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.
The Company believes that the Board of Directors' ability to issue
additional shares of Common Stock could facilitate certain financings and
acquisitions and provide a means for meeting other corporate needs that
might arise. The authorized but unissued shares of Common Stock will be
available for issuance without further action by the Company's stockholders,
unless stockholder action is required by applicable law or the rules of any
stock exchange or market on which the Common Stock may then be listed
or traded.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of
Preferred Stock without further stockholder approval. The shares of
Preferred Stock may be issued in one or more series, with the number of
shares of each series and the rights, preferences and limitations of each
series to be determined by the Board of Directors.
Among the specific matters that may be determined by the Board of
Directors are dividend rights, if any, redemption rights, if any, the terms of
a sinking or purchase fund, if any, the amount payable in the event of any
voluntary liquidation, dissolution or winding up of the affairs of the
Company, conversion rights, if any, and voting powers, if any.
The issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might
impede a business combination by including class voting rights that would
enable the holder to block such a transaction, or facilitate a business
combination by including voting rights that would provide a required
percentage vote of the stockholders. In addition, under certain
circumstances, the issuance of Preferred Stock could adversely affect the
voting power of the holders of the Common Stock. Although the Board of
Directors is required to make any determination to issue such stock based
on its judgment as to the best interests of the stockholders of the Company,
the Board of Directors could act in a manner that would discourage an
acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market
price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized
stock, unless otherwise required by law or stock exchange rules. The
Company has no present plans to issue any Preferred Stock.
DIVIDENDS
The Company does not expect to pay dividends. Dividends, if any, will
be contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any,
will be within the discretion of the Company's Board of Directors. The
Company presently intends to retain all earnings, if any, for use in its
business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends in the foreseeable future.
GLOSSARY
"Blank Check" Company As defined in Section 7(b)(3) of the
Securities Act, a "blank check" company
is a development stage company that has
no specific business plan or purpose or
has indicated that its business plan is
to engage in a merger or acquisition with
an unidentified company or companies
and is issuing "penny stock" securities
as defined in Rule 3a51-1 of the
Exchange Act.
The Company Tunlaw International Corporation, the
company whose common stock is the
subject of this registration statement.
Exchange Act The Securities Exchange Act of 1934,
as amended.
"Penny Stock" Security As defined in Rule 3a51-1 of the
Exchange Act, a "penny stock" security
is any equity security other than a
security (i) that is a reported security
(ii) that is issued by an investment
company (iii) that is a put or call issued
by the Option Clearing Corporation;
(iv) that has a price of $5.00 or more
(except for purposes of Rule 419 of the
Securities Act); (v) that is registered on
a national securities exchange; (vi) that
is authorized for quotation on the
Nasdaq Stock Market, unless other
provisions of Rule 3a51-1 are not
satisfied; or (vii) that is issued by an
issuer with (a) net tangible assets in
excess of $2,000,000, if in continuous
operation for more than three years or
$5,000,000 if in operation for less than
three years or (b) average revenue of at
least $6,000,000 for the last three
years.
Pierce Mill Associates Pierce Mill Associates, Inc., a private
company owned by management of the
Company. Pierce Mill has purchased
5,000,000 shares of
the Company's common stock.
Securities Act The Securities Act of 1933, as amended.
Small Business Issuer As defined in Rule 12b-2 of the
Exchange Act, a "Small Business
Issuer" is an entity (i) which has
revenues of less than $25,000,000 (ii)
whose public float (the outstanding
securities not held by affiliates) has a
value of less than $25,000,000 (iii)
which is a United States or Canadian
issuer (iv) which is not an Investment
Company and (v) if a majority-owned
subsidiary, whose parent corporation is
also a small business issuer.
<PAGE>
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present
and there has been no trading market to date. There is no assurance that a
trading market will ever develop or, if such a market does develop, that it
will continue.
(a) MARKET PRICE. The Company's Common Stock is not quoted
at the present time.
The Securities and Exchange Commission has adopted Rule 15g-9
which established the definition of a "penny stock," for purposes relevant to
the Company, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks; and (ii) the broker or
dealer receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that
person and that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that
the broker or dealer received a signed, written agreement from the investor
prior to the transaction. Disclosure also has to be made about the risks of
investing in penny stocks in both public offerings and in secondary trading,
and about commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information
on the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"),
which administers the Nasdaq Stock Market, has recently announced
changes in the criteria for initial and continued eligibility for listing on the
Nasdaq Stock Market. In order to qualify for listing on the Nasdaq
SmallCap Market, a company must have at least (i) net tangible assets of
$4,000,000 or market capitalization of $50,000,000 or net income for two
of the last three years of $750,000; (ii) public float of 1,000,000 shares
with a market value of $5,000,000; (iii) a bid price of $4.00; (iv) three
market makers; (v) 300 shareholders and (vi) an operating history of one
year or, if less than one year, $50,000,000 in market capitalization. For
continued listing on the Nasdaq SmallCap Market, a company must have at
least (i) net tangible assets of $2,000,000 or market capitalization of
$35,000,000 or net income for two of the last three years of $500,000; (ii)
public float of 500,000 shares with a market value of $1,000,000; (iii) a bid
price of $1.00; (iv) two market makers; and (v) 300 shareholders.
There can be no assurances that, upon a successful merger or
acquisition, the Company will qualify its securities for listing on the Nasdaq
SmallCap Market or a national or regional exchange, or be able to maintain
the maintenance criteria necessary to insure continued listing. The failure
of the Company to qualify its securities or to meet the relevant maintenance
criteria after such qualification may result in the discontinuance of the
inclusion of the Company's securities. In such events, trading, if any, in
the Company's securities may then continue in the over-the-counter market.
As a result, a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
(b) HOLDERS. There is one (1) holder of the Company's Common
Stock. On June 28, 1997, the Company issued 5,000,000 of its Common
Shares to this person for cash at $.0001 per share for a total price of $500.
All of the issued and outstanding shares of the Company's Common Stock
were issued in accordance with the exemption from registration afforded by
Section 3(b) of the Securities Act of 1933 and Rule 504 promulgated
thereunder.
(c) DIVIDENDS. The Company has not paid any dividends to date,
and has no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. 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 said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which
were not registered as follows:
NUMBER OF
DATE NAME SHARES CONSIDERATION
June 28, Pierce Mill 5,000,000 $500
1997 Associates, Inc.(1)
_______
(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.
With respect to the sales made, the Company relied on Section 3(b) of
the Securities Act of 1933, as amended and Rule 504 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 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Business Corporation Act provides
that each corporation shall have the following powers:
"1. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or
matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered
by a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent
legal counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of
officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation. The
provisions of this subsection do not affect any rights to advancement of
expenses to which corporate personnel other than director or officers may
be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to
subsection 5, may not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
(c) The Company's Articles of Incorporation provides that "the
Corporation shall indemnify its officers, directors, employees and agents to
the fullest extent permitted by the General Corporation Law of Nevada, as
amended from time to time."
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION LOCATION
- -------- ------------ -------------
(2) Articles of Incorporation and By-laws:
2.1** Articles of Incorporation
2.2** By-laws
(3) Instruments Defining the Rights of Holders:
3.1 * Lock-up Agreements
(10)(a) Consents - Experts:
10.1 * Consent of Accountants
____
* filed herewith.
** Previously filed.
<PAGE>
PART F/S
FINANCIAL STATEMENTS.
Attached are audited financial statements for the Company for the
period ended September 30, 1997. The following financial statements are
attached to this report and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Report of Independent Certified Public Accountants
3) Balance Sheet
4) Stockholders' Equity
<PAGE>
INDEX TO FINANCIAL STATEMENTS
TUNLAW INTERNATIONAL CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Certified Public Accountants F-2
Financial Statements:
Assets F-3
Stockholders' Equity F-3
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JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 Alameda Drive
Bowie, Maryland 20716
301/249-4900
FAX 301/249-9296
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Tunlaw International Corporation
I have audited the accompanying Balance Sheet of Tunlaw International
Corporation as of September 30, 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 September 30, 1997, in conformity with generally
accepted accounting principles.
/s/ John P. MacLean, CPA, CFP
September 30, 1997
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TUNLAW INTERNATIONAL CORPORATION
Balance Sheet
September 30, 1997
ASSETS
Cash $1,000
Total assets $1,000
Shareholder Equity
Common Stock (5,000,000 shares
$.0001 par value 500
Additional paid in capital 500
Total Equity 1,000
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NOTES TO FINANCIAL STATEMENT
A summary of the significant accounting policies consistently applied in
the preparation of the financial statement follows:
(A) DESCRIPTION OF BUSINESS. The Company was organized on
March 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 September 30, 1997, 5,000,000 shares of Common Stock had
been issued and were outstanding.
(C) As of September 30, 1997, no shareholders, officers, directors or
other related parties had incurred costs on behalf of the Company to be
repaid or refunded by the Company.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Amendment #1 to its registration statement to be
signed on its behalf by the undersigned thereunto duly authorized.
TUNLAW INTERNATIONAL CORPORATION
By: /s/ James M. Cassidy
James M. Cassidy
February 11, 1998
Tunlaw International Corporation
1504 R Street, NW
Washington, D.C.
June 26, 1997
Pierce Mill Associates, Inc.
1504 R Street, N.W.
Washington, D.C. 20009
Re: Lock Up Agreement with Tunlaw International Corporation
Gentlemen:
As part of the sale of the shares of Common Stock of Tunlaw
International Corporation (the "Company") to the undersigned (the
"Holder"), the Holder hereby represents, warrants, covenants and agrees,
for the benefit of the Company and the holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the
Company's Common Stock, $.0001 par value (the "Stock") at the date
hereof and during the pendency of this letter agreement that the Holder will
not transfer, sell, contract to sell, devise, gift, assign, pledge, hypothecate,
distribute or grant any option to purchase or otherwise dispose of, directly
or indirectly, its shares of Stock of the Company owned beneficially or
otherwise by the Holder except in connection with or following completion
of a merger or acquisition by the Company and the Company is no longer
classified as a blank check company as defined in Section 7(b)(3) of the
Securities Act of 1933, as amended.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) will instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of
instructing the Company's transfer agent to place a legend on the
certificate(s) evidencing the securities subject hereto and disclosing that any
transfer, sale, contract for sale, devise, gift, assignment, pledge or
hypothecation of such securities is subject to the terms of this letter
agreement and (iii) will issue stop-transfer instructions to its transfer agent
for the period contemplated by this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of
this letter agreement in any instance must be in writing and must be duly
executed by the Company and the Holder and shall not be deemed or
construed to be a waiver of such term or condition for the future, or of any
subsequent breach thereof.
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which
there is no adequate remedy at law. If there is a breach or threatened
breach of this letter agreement by the Holder, the Holder hereby agrees that
the Company and the third party beneficiaries shall be entitled to the
issuance of an immediate injunction without notice to restrain the breach or
threatened breach. The Holder also agrees that the Company and all third
party beneficiaries shall be entitled to pursue any other remedies for such a
breach or threatened breach, including a claim for money damages.
THE HOLDER
By: /s/ James M. Cassidy
President, Pierce Mill Associates, Inc.
Agreed and accepted this 26th day of June, 1997.
JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 ALAMEDA DRIVE
BOWIE, MARYLAND 20716-1312
301/249-4900
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in the Amendment #1 to the
Registration Statement on Form 10-SB of my report dated September 30,
1997, relating to the audited financial statements of Tunlaw International
Corporation.
/s/ John P. MacLean
September 30, 1997
