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, 1998
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 jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 No
Check if there is no disclosure of delinquent filers 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 proxy 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, 1998
Common Stock, par value $0.0001 5,000,000
Documents incorporated by reference: None
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 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 shareholders. 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 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. These 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 stock; (8) enhanced corporate image; and (9) 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 (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 to 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; or (7) a company seeking one or more of the
other perceived benefits of becoming a public company.
Management is actively engaged in seeking a qualified private company
as a candidate for a business combination. 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 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.
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. Outside consultants or advisors may be utilized by the Company to
assist in the search for qualified target companies. If the Company does
retain such an outside consultant or advisor, any cash fee earned by such
person will need to be assumed by the target business, as the Company has
limited cash assets with which to pay such obligation.
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 may 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 does not have the capacity to conduct as extensive an
investigation of a target business as might be undertaken by a venture
capital fund or similar institution. As a result, management may elect to
merge with a target business which has one or more undiscovered shortcomings
and may, if given the choice to select among target businesses, fail to
enter into an agreement with the most investment-worthy target business.
Following a business combination the Company may benefit from the
services of others in regard to accounting, legal services, underwritings
and corporate public relations. If requested by a target business,
management may recommend one or more underwriters, financial advisors,
accountants, public relations firms or other consultants to provide such
services.
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 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
preexisting agreements of target businesses for the continuation of the
services of attorneys, accountants, advisors or consultants could be a
factor in the selection of a target business.
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 likely that the present management and shareholders
of the Company will no longer be in control of the Company. In addition, it
is likely that the Company's officer and director will, as part of the terms
of the acquisition transaction, resign and be replaced by one or more new
officers and directors.
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.
The issuance of additional securities and their potential sale into any
trading market which may develop in the Company's securities may depress the
market value of the Company's securities in the future if such a market
develops, of which there is no assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire 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
With respect to any merger or acquisition negotiations with a target
business, management expects to focus on the percentage of the Company which
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 shareholders
will in all likelihood hold a substantially lesser percentage ownership
interest in the Company following any merger or acquisition. 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.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing computer
programs use only two digits to identify a year in such program's date
field. These programs were designed and developed without consideration of
the impact of the change in the century for which four digits will be
required to accurately report the date. If not corrected, many computer
applications could fail or create erroneous results by or following the year
2000 ("Year 2000 Problem"). Many of the computer programs containing such
date language problems have not been corrected by the companies or
governments operating such programs. It is impossible to predict what
computer programs will be effected, the impact any such computer disruption
will have on other industries or commerce or the severity or duration of a
computer disruption.
The Company does not have operations and does not maintain computer
systems. Before the Company enters into any business combination, it may
inquire as to the status of any target business's Year 2000 Problem, the
steps such target business has taken or intends to take to correct any such
problem and the probable impact on such target business of any computer
disruption. However, there can be no assurance that the Company will not
merge with a target business that has an uncorrected Year 2000 Problem or
that any planned Year 2000 Problem corrections will be sufficient. The
extent of the Year 2000 Problem of a target business may be impossible to
ascertain and any impact on the Company will likely be impossible to predict.
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.
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 shareholders of the Company have executed and delivered "lock-up" letter
agreements, 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 shareholders have 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 26, 1997 Pierce Mill 5,000,000 $500
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 is
therefore considered to be the beneficial owner of the common stock of the
Company issued to Pierce Mill Associates, Inc. With respect to the sales
made to Pierce Mill Associates, Inc., the Company relied on Section 4(2) of
the Securities Act of 1933, as amended and Rule 506 promulgated thereunder.
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 shareholders, the Company has not commenced any operational
activities.
Management is actively engaged in seeking a qualified private company
as a candidate for a business combination. 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 business, 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
businesses, but may acquire a business which is in its preliminary or
development stage, which is already in operation, or in essentially any
stage of its business 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.
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 shareholders have agreed that they 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
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEET AS OF DECEMBER 31, 1998
PAGE 3 - STATEMENTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 AND FOR THE PERIOD
FROM MARCH 27, 1997 (INCEPTION) TO
DECEMBER 31, 1998
PAGE 4 - STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE PERIOD FROM MARCH 27,
1997 (INCEPTION) TO DECEMBER 31,1998
PAGE 5 - STATEMENTS OF CASH FLOW FOR THE YEAR ENDED
DECEMBER 31, 1998 AND FOR THE PERIOD FROM
MARCH 27, 1997 (INCEPTION) TO DECEMBER
31, 1998
PAGE 6 - 8 - NOTES TO FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Tunlaw International Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Tunlaw International
Corporation (a development stage company) as of December 31, 1998 and the
related statements of operations, changes in stockholders' equity and cash
flows for the year then ended and for the period from March 27, 1997
(inception) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are 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 statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of Tunlaw International
Corporation (a development stage company) as of December 31, 1998, and the
results of its operations and its cash flows for the year then ended and
from March 27, 1997 (inception) to December 31, 1998, in conformity with
generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
February 19, 1999
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1998
ASSETS
Cash $ 932
TOTAL ASSETS $ 932
LIABILITIES AND STOCKHOLDERS' EQUITY
Loan payable to Cassidy & Associates
Trust $ 50
Total Liabilities 50
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001
par value, 10 million
shares authorized, none
issued and outstanding -
Common Stock, $.0001 par
value, 50 million shares
authorized, 5,000,000 issued
and outstanding 500
Capital in excess of par 500
Accumulated deficit during
development stage (118)
Total Stockholders' Equity 882
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 932
See accompanying notes to financial statements.
2
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE PERIOD FROM MARCH 27, 1997
(INCEPTION) TO DECEMBER 31, 1998
CUMULATIVE FROM
MARCH 27, 1997
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31,1998
Income $ - $ -
Expenses
Bank charges $ 118 $ 118
NET LOSS $ (118) $ (118)
See accompanying notes to financial statements.
3
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 27, 1997
(INCEPTION) TO DECEMBER 31, 1998
Deficit
Additional Accumulated
Common Paid-In During Devel-
Stock Capital opment Stage Total
Common stock issuance $ 500 $ 500 $ - $ 1,000
Balance at December
31, 1997 500 500 - 1,000
Net loss for the year
ended December 31, 1998 - - (118) (118)
BALANCE AT DECEMBER
31, 1998 500 $ 500 $ (118) $ 882
See accompanying notes to financial statements.
4
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE PERIOD FROM MARCH 27, 1997
(INCEPTION) TO DECEMBER 31, 1998
CUMULATIVE FROM
MARCH 27, 1997
(INCEPTION) TO YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1998
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (118) $ (118)
Adjustments to
reconcile net loss
to net cash used
by operating activities: - -
Net cash used in
operating activities (118) (118)
CASH FLOWS FROM INVESTING
ACTIVITIES - -
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of common stock 1,000 -
Increase in loan payable 50 50
Net cash provided by
financing activities 1,050 50
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 932 (68)
CASH AND CASH
EQUIVALENTS - BEGINNING
OF PERIOD - 1,000
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 932 $ 932
See accompanying notes to financial statements.
5
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Tunlaw International Corporation (a development stage company)
("the Company") was incorporated in Nevada on March 27, 1997 to
serve as a vehicle to effect a merger, exchange of capital stock,
asset acquisition or other business combination with a domestic or
foreign private business. At December 31, 1998, the Company had
not yet commenced any formal business operations, and all activity
to date relates to the Company's formation and proposed fund
raising. The Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon
its ability to identify a prospective target business and raise
the capital it will require through the issuance of equity
securities, debt securities, bank borrowings or a combination
thereof.
B. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
C. Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company
considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
6
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Income Taxes
The Company accounts for income taxes under the Financial
Accounting Standards Board of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis. Deferred
tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. There were no current
or deferred income tax expense or benefits due to the Company's
limited operations for the period ended December 31, 1998.
E. New Accounting Pronouncements
The Financial Accounting Standards Board has recently issued
several new accounting pronouncements. Statement No. 129,
"Disclosure of Information about Capital Structure" establishes
standards for disclosing information about an entity's capital
structure, is effective for financial statements for periods
ending after December 15, 1997 and has been adopted by the Company
as of December 31, 1997. Statement No. 130, "Reporting
Comprehensive Income" establishes standards for reporting and
display of comprehensive income and its components, and is
effective for fiscal years beginning after December 15, 1997.
Statement No. 131, "Disclosures about Segments of an Enterprise
and Related Information" establishes standards for the way that
public business enterprises report information about operating
segments in annual financial statements and requires that those
enterprises report selected information about operating segments
in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and
services, geographic areas, and major customers, and is
effective for
7
TUNLAW INTERNATIONAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
financial statements for periods beginning after December 15,
1997. The Company believes that its adoption of Statements 130
and 131 will not have a material effect on the Company's financial
position or results of operations.
NOTE 2 - STOCKHOLDERS' EQUITY
A. Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred
stock at $.0001 par value, with such designations, voting and
other rights and preferences as may be determined from time to
time by the Board of Directors.
B. Common Stock
The Company is authorized to issue 50,000,000 shares of common
stock at $.0001 par value. The Company issued 5,000,000 shares to
Pierce Mill Associates, Inc.
NOTE 3 - RELATED PARTIES
Legal counsel to the Company is a firm owned by a director of the
Company who also owns 100% of the outstanding stock of Pierce
Mill Associates, Inc., the 100% shareholder. The same party is
also the controlling owner of Cassidy & Associates.
8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company filed a Form 8-K on February 18, 1999 noticing the change in
the Company's accountants. There were no disagreements with accountants on
accounting and financial disclosure for the period covered by this report.
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 63 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 nor 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., LL.B., 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. In August,
1988, First Agate Capital Corporation offered 50,000 units at $10.00 for an
aggregate of $500,000 in an underwritten offering of its common stock and
warrants. First Agate Capital is no longer a public company and has had no
activity since 1991. In November, 1988, Consolidated Financial Corporation
offered 50,000 units at $10.00 for an aggregate of $500,000 in an
underwritten offering of its common stock and warrants. In 1990, in
connection with the change in control of Consolidated Financial Corporation,
Mr. Cassidy transferred all his shares of Consolidated Financial Corporation
common stock without compensation or any financial benefit and resigned as
an officer and director of that company. Mr. Cassidy has had no further
relationship or transactions with Consolidated Financial Corporation since
1990. As described in public filings made by the company, in June, 1991,
the new management of Consolidated Financial Corporation effected its merger
with A.B.E Industrial Holdings.
CURRENT BLANK CHECK COMPANIES
Mr. Cassidy is the president, sole director and beneficial shareholder
of Tunlaw International Corporation, Aberdeen Acquisition Corporation,
Barhill Acquisition Corporation, Sunderland Acquisition Corporation and
Westford Acquisition Corporation. Until its business combination on
December 30, 1997, Mr. Cassidy was the sole director and beneficial
shareholder of Corcoran Technologies Corporation. Until its business
combination on December 4, 1998, Mr. Cassidy was the sole director and
beneficial shareholder of Chatsworth Acquisition Corporation. Each of these
companies filed registration statements on Forms 10-SB under the Exchange
Act which became effective and each files periodic reports under the
Exchange Act. Mr. Cassidy is the president, sole director and a beneficial
shareholder of Blencathia Acquisition Corporation which filed a registration
statement on Form 10-SB under the Exchange Act on February 9, 1999 and of
Warwick Acquisition Corporation and Torbay Acquisition Corporation which
filed their registration statements on Form 10-SB on February 19, 1999. The
initial business purpose of each of these companies was or is to engage in a
merger or acquisition with an unidentified company or companies and each
were or will be classified as a blank check company until completion of a
business combination.
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.
Corcoran Technologies Corporation was formed on March 27, 1997 to engage in
a merger or acquisition with an unidentified company or companies and was
structured substantially identically to the Company, including identical
management and beneficial shareholders. At the time of the merger, Prime
Management, Inc. was an operating transportation company with 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. and Corcoran
Technologies Corporation filed a Form 8-K with the Securities and Exchange
Commission describing the merger. The common stock of Prime Companies, Inc.
trades on the NASD OTC Bulletin Board under the symbol PRMC. Detailed
information concerning Prime Companies, Inc. may be obtained from its
filings under the Exchange Act which are found on the EDGAR archives page of
the Securities and Exchange Commission's Web site at www.sec.gov.
On December 4, 1998, AmeriCom USA, Inc., a Delaware corporation,
merged with and into Chatsworth Acquisition Corporation. Chatsworth
Acquisition Corporation was formed on December 3, 1997 to engage in a merger
or acquisition with an unidentified company or companies and was structured
substantially identically to the Company, including identical management and
beneficial shareholders. AmeriCom USA, Inc. is an operating Internet
advertising company with one wholly-owned subsidiary, Diversified Associates
International, a California company. Pursuant to the merger, Chatsworth
Acquisition Corporation changed its name to AmeriCom USA, Inc. and
Chatsworth Acquisition Corporation filed a Form 8-K with the Securities and
Exchange Commission describing the merger. AmeriCom USA, Inc. is seeking
the admission of its common stock to quotation on the NASD OTC Bulletin
Board. Detailed information concerning AmeriCom USA, Inc. may be obtained
from its filings under the Exchange Act which are found on the EDGAR archives
page of the Securities and Exchange Commission's Web site at www.sec.gov.
On February 22, 1999, AmeriCom USA, Inc. filed a Form 8-K describing its
acquisition of Kiosk Software, Inc., which has developed a proprietary kiosk
operating system and specializes in complete kiosk development services
including custom cabinet design and multimedia software development.
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 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 common stock of the Company. Mr. Cassidy is 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 fee 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 are regularly in discussion with potential target businesses
which may wish to combine with the Company or similar companies with which
management is associated. There are no binding arrangements or
understandings with any representatives of the owners of any business or
company regarding the possibility of a business combination with the Company.
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.
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, 1998, 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 Outstanding Stock
------------------------ ------------------ ----------------
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 8, 1998, the Company issued a total of 5,000,000 shares of
Common Stock to the following person 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. 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 shareholders of the Company have executed and delivered a "lock-up"
letter agreements, affirming that such shareholders shall not sell their
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 shareholders have
placed the respective stock certificates 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
3.1* Certificate of Incorporation filed as an exhibit to the
Company's registration statement on Form 10-SB filed on July 2,
1997 and incorporated herein by reference.
3.2* By-Laws filed as an exhibit to the Company's registration
statement on Form 10-SB filed on July 2, 1997 and incorporated
herein by reference.
9.1* Lock-Up Agreement with Pierce Mill Associates filed as an
exhibit to the Company's registration statement on Form 10-SB
filed on August 13, 1998, and incorporated herein by reference.
23.1 Consent of Accountants
27.1 Financial Data Schedule
_____
* Previously filed
(b) There were no reports on Form 8-K filed by the Company during
the quarter ended December 31, 1998. The Company filed a Form 8-K on
February 18, 1999 noticing a change in accountants.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly 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
March 31, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME OFFICE DATE
/s/ James M. Cassidy Director March 31, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001041580
<NAME> TUNLAW INTERNATIONAL CORPORATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 932
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 932
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 932
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 5000000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 932
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.0
<EPS-DILUTED> 0.0
</TABLE>
WEINBERG & COMPANY, PA
Town Executive Center
6100 Glades Road, Suite 314
Boca Raton, Florida 33434
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form 10-KSB of Tunlaw International
Corporation of our report for the period from March 27, 1997 (inception)
to December 31, 1998 dated February 19, 1999 relating to teh financial
statements of Tunlaw International Corporation which appear in
such Form 10-KSB.
WEINBERG & COMPANY PA
Certified Public Accountants
Boca Raton, Florida
March 8, 1999
