U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB \A 1
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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3PM HOLDING CORP.
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(Name of Small Business Issuer in its charter)
Colorado 84-1284185
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, Colorado 80111
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (303) 741-1118
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Forty Pages
Exhibit Index is Located at Page 39 .
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TABLE OF CONTENTS
Page
Part I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . 8
Item 3. Description of Property. . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . 15
Item 6. Executive Compensation . . . . . . . . . . . 20
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . 21
Item 8. Description of Securities. . . . . . . . . . . 21
Part II
Item 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder
Matters . . . . . . . . . . . . . .. . . . . . 23
Item 2. Legal Proceedings. . . . . . . . . . . . . . . 25
Item 3. Changes in and Disagreements with Accountants. 25
Item 4. Recent Sales of Unregistered Securities. . . . 25
Item 5. Indemnification of Directors and Officers. . . 26
Part F/S
Financial Statements . . . . . . . . . . . . . 27
Part III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . 39
Item 2. Description of Exhibits. . . . . . . . . . . . 39
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PART I
Item 1. Description of Business
3PM Holding Corp. (the "Company"), was incorporated on October
19, 1994 under the laws of the State of Colorado under the name
3PM, Inc., to engage in any lawful corporate undertaking. The
Company has been in the developmental stage since inception and
initially was engaged in the business of retail service and repair
of electronic equipment under franchises. The Company acquired the
rights to purchase five franchises, two of which were acquired and
operated in the Denver Metropolitan area. In April 1996, the
Company's Board of Directors elected to terminate the initial
business plan, sold its repair franchises and rights thereto, and
adopted a plan consistent with the plan outlined hereinbelow. The
Company will seek out, investigate and possibly acquire an interest
in business opportunities. As such, the Company can be defined as
a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The
Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose,
described below under "Item 2. Plan of Operation."
The Company is filing this registration statement on a
voluntary basis because the primary attraction of the Company as a
merger partner or acquisition vehicle will be its status as a
public company. Any business combination or transaction will
likely result in a significant issuance of shares and substantial
dilution to present stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. 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 or undertake any
offering of the Company's securities, either debt or equity, until
such time as the Company has successfully implemented its business
plan described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they 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. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. However, while
management believes that the procedures established to preclude any
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sale of the Company's securities prior to closing of a merger or
acquisition will be sufficient, there can be no assurances that the
procedures established relevant herein will unequivocally limit any
shareholder's ability to sell their respective securities before
such closing.
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 a limited operating history and no significant
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 profitable business
opportunity. There is no assurance that the Company can identify
such a business opportunity 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 business opportunity. While
management intends to seek business combination(s) 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
successor firm or venture partner firm 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,
joint ventures with and acquisitions of small private and public
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 desirable 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 in
seeking merger or acquisition candidates with numerous other small
public companies.
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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, joint venture with or acquisition of, a private or public
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 and without which the Company would
not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity 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.
Management presently holds approximately 64% interest in the
Company, which will assure adoption of any matter acceptable to
management which requires majority approval by the Company's
shareholders. While seeking a business combination, management
anticipates devoting up to twenty hours per month to the business
of the Company. None of the Company's officers has entered into a
written employment agreement with the Company and none is expected
to do so in the foreseeable future. The Company has not obtained
key man life insurance on any of its officers or directors.
Notwithstanding the combined limited experience and time commitment
of management, loss of the services of any of these individuals
would adversely affect development of the Company's business and
its likelihood of continuing operations. See "Item 4. Security
Ownership of Certain Beneficial Owners and Management."
Conflicts of Interest - General. Officers and directors of
the Company may in the future participate in business ventures
which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. Management has adopted a policy that
the Company will not seek a merger with, or acquisition of, any
entity in which management serve as officers, directors or
partners, or in which they or their family members own or hold any
ownership interest.
Reporting Requirements May Delay or Preclude Acquisition.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), require companies subject thereto to provide
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certain information about significant acquisitions, including
certified financial statements for the company acquired, covering
one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by
some target entities to prepare such 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 1934 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 a business opportunity.
Consequently, the Company's activities may be limited to those
engaged in by business opportunities 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 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 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
Probable Change in Control and Management. A business
combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private
company obtaining a controlling interest in the Company. Any such
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business combination may require management of the Company to sell
or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of
the Company and a corresponding reduction in or elimination of
their 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 private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present
and prospective shareholders of the Company and may result in a
change in control or management of the Company.
Disadvantages of Blank Check Offering. The Company may enter
into a business combination with an entity that desires to
establish a public trading market for its shares. A business
opportunity 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 and the inability or
unwillingness to comply with various federal and state laws enacted
for the protection of investors.
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 entity; 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 believes that
any potential business opportunity must provide audited financial
statements for review, for the protection of all parties to the
business combination. One or more attractive business
opportunities may choose to forego the possibility of a business
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combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues, in
exchange for its securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations
regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration
statement.
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their
time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be
implemented by their devoting approximately 20 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 officers. See "Item 5. Directors, Executive Officers,
Promoters and Control Persons - Resumes."
The Company's officers and directors may, in the future,
become involved with other companies who have a business purpose
similar to that of the Company. As a result, potential conflicts
of interest may arise in the future. If such a conflict does arise
and an officer or director of the Company is presented with
business opportunities under circumstances where there may be a
doubt as to whether the opportunity should belong to the Company or
another "blank check" company they are affiliated with, they will
disclose the opportunity to all such companies. If a situation
arises in which more than one company desires to merge with or
acquire that target company and the principals of the proposed
target company has no preference as to which company will merger or
acquire such target company, the company which first filed a
registration statement with the Securities and Exchange Commission
will be entitled to proceed with the proposed transaction.
The Articles of Incorporation of the Company provides that the
Company shall possess and 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 "PART II - Item 5.
Indemnification of Directors and Officers."
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General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. 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
purposefully general and 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 may be able to participate in only one potential business
venture because the Company has nominal assets and limited
financial resources. See "PART F/S - Financial Statements." This
lack of diversification should be considered a substantial risk to
shareholders 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. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes 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, providing liquidity (subject to restrictions of
applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur 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
significant 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 owners of the
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business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 (the "34 Act") specifically
requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings
relevant to complying with the 34 Act. Nevertheless, the officers
and directors of the Company have not conducted market research and
are not aware of statistical data which would 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 officers and directors of the
Company, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary
prospective business opportunities which may be brought to its
attention through present associations of the Company's officers
and directors, or by the Company's shareholders. 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 of acceptance of products,
services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to 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 Company
will not acquire or merge with any company for which audited
financial statements cannot be obtained within a reasonable period
of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, shall rely
upon their own efforts as well as the efforts of the Company's
legal counsel and, to a much lesser extent, the efforts of the
Company's shareholders, 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
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candidate, as the Company has minimal cash assets with which to pay
such obligation. There have been no contracts or agreements with
any outside consultants and none are anticipated in the future.
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 in one or more private
placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully
consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses
in the implementation of its business plan described herein.
Because the Company has no capital with which to pay these
anticipated expenses, present management of the Company will pay
these charges with their personal funds, as interest free loans to
the Company. However, the only opportunity which management has to
have these loans repaid will be from a prospective merger or
acquisition candidate. Management has agreed among themselves that
the repayment of any loans made on behalf of the Company will not
impede, or be made conditional in any manner, to consummation of a
proposed transaction.
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
shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any terms of sale of the shares
presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar
terms and conditions. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
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
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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 successfully consummated a
merger or acquisition and the Company is no longer considered a
"shell" 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 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 so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors
of the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information
provided, check references of management and key personnel and take
other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity and the relative negotiation strength of the Company
and such other management.
With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of
the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company'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. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company 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
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Company's then shareholders. In the event it is necessary to
obtain the approval of the shareholders of the Company to lawfully
consummate a business transaction, the effect will be to assure
such approval where management supports such a business transaction
because management presently controls sufficient shares of the
Company to effectuate a positive vote on the proposed transaction.
The Company will participate in a business opportunity only
after the negotiation and execution of appropriate written
agreements. Although the terms of such agreements cannot be
predicted, generally such agreements will require some specific
representations and warranties by all of 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.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of the Company to file
independent 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 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents may
provide that the proposed transaction will be voidable, at the
discretion of the present management of the Company. If such
transaction is voided, the agreement may also contain a provision
providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
Forward Looking Statements
This registration statement contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") concerning the Company's operations,
economic performance and financial conditions, including, in
particular, the likelihood of the Company's success in merging with
an established privately held company or acquiring assets. These
statements are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and
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contingencies, many of which are beyond the control of the Company
and reflect future business decisions which are subject to change.
Some of these assumptions inevitably will not materialize and
unanticipated events will occur which will affect the Company's
results. Consequently, actual results will vary from the
statements contained herein and such variance may be material.
Prospective investors should not place undue reliance on this
information.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a
result of this potential problem. However, it is possible that
this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management
intends to address this potential problem with any prospective
merger or acquisition candidate. There can be no assurances that
new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is so consummated.
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 intends to
attempt to acquire assets or a business in exchange for its
securities which assets or business is determined to be desirable
for its objectives.
The Company operates from its offices at 5650 Greenwood Plaza
Blvd., Suite 216, Englewood, Colorado 80111. This space is
provided to the Company on a rent free basis by the President of
the Company and it is anticipated that this arrangement will remain
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until such time as the Company successfully consummates a merger or
acquisition. Management believes that this space will meet the
Company's needs for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The table below lists the beneficial ownership of the
Company's voting securities by each person known by the Company to
be the beneficial owner of more than 5% of such securities, as well
as the securities of the Company beneficially owned by all
directors and officers of the Company. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power
with respect to the shares shown.
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent of
of Class Owner Owner Class
________ _________________________ __________ __________
Common Greg Simonds 160,000 32%
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Common Greg Skufca 160,000 32%
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Common All Officers and 320,000 64%
Directors as a
Group (2 persons)
- ------------------
The balance of the Company's outstanding Common Shares are
held by 8 persons.
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The directors and officers of the Company are as follows:
Name Age Position
________________ ___ _________________________
Gregory J. Simonds 45 President, Director
Gregory W. Skufca 38 Secretary/Treasurer &
Director
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The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the will
of the Board of Directors. There is no family relationship between
any executive officer and director of the Company.
Resumes
Gregory J. Simonds, is President and a director of the
Company, positions he has held since the Company's inception. In
addition to his positions with the Company, since June 1991, Mr.
Simonds has been self-employed, acting as a consultant to various
different companies, both public and private, as well as managing
his own investment portfolio. Mr. Simonds is also President,
Treasurer and a Director of Golden Chain Marketing, Inc., a
privately held Colorado corporation in the development stage which
intends to engage in the business of designing,
manufacturing, merchandising and wholesale distribution of
a full line of gold and silver products. Further, Mr. Simonds is
also President and a director of Princeton Management Corporation,
a Colorado corporation whose principal business is the same as that
of the Company. In March 1990, Mr. Simonds, together with Mr.
Skufca, formed GS2 Partnership, a Colorado general partnership, for
the purposes of providing funding to start-up and development stage
companies. Mr. Simonds received a Bachelor of Science degree
from New England College, Henniker, New Hampshire in 1973. Mr.
Simonds devotes only such time as necessary to the business of the
Company, which time is not expected to exceed 20 hours per month.
Gregory W. Skufca, is Secretary/Treasurer and a director of
the Company, positions he has held since the Company's inception.
In addition to his positions with the Company, since January 1989,
Mr. Skufca is also the President of Financial Communications,
Englewood, Colorado, a sole proprietorship engaged in assisting
public and private investors, assisting in the obtaining and
structuring of venture capital financing and public relations.
In addition, Mr. Skufca is also Vice President, Secretary
and a director of Golden Chain Marketing, Inc. Prior, from May
1987 through January 1989, Mr. Skufca served as a loan officer and
consultant with Skufca-Meyer Financial Corp., Lakewood, Colorado,
a small privately held lender specializing in residential mortgages
and corporate financing. In March 1990, Mr. Skufca, together
with Mr. Simonds, formed GS2 Partnership, a Colorado general
partnership, for the purposes of providing funding to start-up and
development stage companies. Mr. Skufca obtained a Bachelor's
degree from the University of Colorado at Boulder in 1980. He
devotes only such time as necessary to the business of the Company,
which is not expected to exceed 20 hours per month.
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<PAGE>
Prior "Blank Check" Experience
Mr. Skufca has formerly participated in the following "Blank
Check" offerings:
From September 1987 through July 1988, Mr. Skufca served as
President and director of Marantha II, Inc. ("Marantha"). In
March 1988, Marantha closed its initial public offering of
securities, wherein it raised the gross amount of $163,000 by
selling Units a an offering price of $.01 per Unit, each Unit
consisting of 1 share of common stock and 2 warrants. In July
1988, Marantha consummated a reverse merger with Equity Investors,
Inc. ("Equity") wherein Marantha issued 90% of its common stock to
the shareholders of Equity. Equity was engaged in the business of
real estate investment, management and related services. After
this acquisition, Mr. Skufca resigned his positions with Marantha,
which also changed its name to Equity Financial Group, Inc. Equity
Financial Group, Inc. ceased operations in 1990.
In April 1988, Mr. Skufca accepted the appointment to the
positions of President and a director of Parle International, Inc.
("Parle"). In October 1988, Parle successfully completed an
initial public offering of its securities on a "blank check"
basis , wherein the company raised an aggregate of $225,000 by
selling Units at an offering price of $10 per Unit, each Unit
consisting of 1,000 shares of common stock and 10 warrants. In
December 1988, Parle acquired Vision Pictures, Inc., a Los Angeles,
California based motion picture company. Mr. Skufca resigned as
President of Parle simultaneous with the closing of this
transaction and thereafter resigned as a director in 1989. Vision
Pictures, Inc. changed its name to Independent Telemedia in 1990.
Independent Telemedia trades on the NASDAQ under the symbol "INDE."
Also in 1988, Mr. Skufca became the President and a director
of Kiwi III, Ltd. ("Kiwi"), a "blank check" company. Kiwi
conducted an initial public offering of its securities which
closed in December 1988. In this offering, the company raised an
aggregate of $150,000 by selling Units at an offering price of $10
per Unit, each Unit consisting of 1,000 common shares and 10
warrants. In October 1989, acquired Beat the House
Enterprises, Inc., Las Vegas, Nevada, a manufacturer of gaming
devices. Simultaneous with the closing of this transaction, Mr.
Skufca resigned his positions with Kiwi. In 1994, Kiwi changed its
business operations to the oil and gas industry and also changed
its name to Petro Union. Petro Union trades on the NASDAQ under
the symbol "PTRUQ."
Mr. Skufca also served as President and a director of Focus V,
Inc. ("Focus"). Focus undertook an initial public offering of its
securities in February 1989, raising an aggregate of $175,000 by
selling Units at an offering price of $10 per Unit, each Unit
consisting of 1,000 common shares and 10 warrants. Thereafter ,
in
17
<PAGE>
December 1989, Focus acquired Work Recovery Centers, Inc.
("WRCI"), a Tucson, Arizona based manufacturer and distributor of
computerized work stations and assessment centers for the workman
rehabilitation industry. Mr. Skufca resigned his positions with
Focus upon the closing of the transaction with WRCI. WRCI trades
on the OTC Bulletin Board.
In October 1989, Mr. Skufca became President of Plantation
Capital Corp. ("PCC") which closed an initial public
offering of its securities in November 1989, raising $150,000 by
selling Units at an offering price of $10 per Unit, each Unit
consisting of 1,000 common shares and 10 warrants. Thereafter,
in December 1990, PCC acquired Rehabnet, Inc. Mr. Skufca
resigned his positions with Plantation upon the closing of the
transaction with Rehabnet. In May 1994, Rehabnet was acquired by
Work Recovery Centers, Inc. in a share-for-share exchange. In July
1994, Rehabnet acquired Forestry International. Forestry
International trades on the Bulletin Board under the symbol "FYNI."
In July 1994, Mr. Skufca became President of Knight Natural
Gas, Inc. ("Knight") Knight filed a registration statement with
the SEC on Form 10-SB, which became effective in July 1996. In
August 1996, Knight acquired Kalan Gold Corp., a gold exploration
company which trades on the OTC Bulletin Board under the symbol
"KNGC." Upon consummation of the transaction with Kalan
Gold Corp., Mr. Skufca resigned his position with Knight.
Mr. Skufca was also President and a director of HA Spinnaker,
Inc., a Colorado corporation ("Spinnaker"), whose principal
business was consistent with the business of the Company described
herein. Effective October 29, 1997, Spinnaker
executed a Plan of Reorganization with Zaba International, Inc., a
Nevada corporation proposed to engage in the business of
manufacturing tillage and seeding agricultural equipment, street
sweepers and what current management views as a new asphalt surface
pothole patcher. As a material term of this
transaction, Spinnaker amended its Articles of Incorporation,
changing its name to Zaba International, Inc. As of the date of
this registration statement, this company is in the process of
filing an application to trade its common stock on the OTC Bulletin
Board. There are no assurances that this company's
application to trade its securities will be approved.
In addition, Mr. Simonds is also President and a director of
Princeton Management Corporation, a Colorado corporation
("Princeton") whose principal business is consistent with the
business of the Company as outlined hereinabove. Princeton
filed a registration statement with the SEC on Form 10-SB, which
became effective in March 1997. As of the date of this
registration statement, Princeton is in the process of reviewing
potential merger or acquisition candidates, but no definitive
agreement has been reached with any third party relevant thereto.
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Conflicts of Interest
Members of the Company's management are associated with other
firms involved in a range of business activities. Consequently,
there are potential inherent conflicts of interest in their acting
as officers and directors of the Company. Insofar as the officers
and directors are engaged in other business activities, management
anticipates it will devote only a minor amount of time to the
Company's affairs.
The officers and directors of the Company are now and may in
the future become shareholders, officers or directors of other
companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in
the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to the
attention of such individuals in the performance of their duties or
otherwise. The Company does not currently 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.
The officers and directors are, so long as they are officers
or directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties
or in any other manner, will be considered opportunities of, and be
made available to the Company and the companies that they are
affiliated with on an equal basis. A breach of this requirement
will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers
and directors are affiliated with both desire to take advantage of
an opportunity, then said officers and directors would abstain from
negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if
the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy
with respect to such transactions.
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
19
<PAGE>
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 would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously
approved a resolution stating that it is the Company's desire to be
exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
They all have agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation
of a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay directors.
Further, none of the directors are accruing any compensation
pursuant to any agreement with the Company.
It is possible that, after the Company successfully
consummates a merger or acquisition with an unaffiliated entity,
that entity may desire to employ or retain one or a number of
members of the Company's management for the purposes of providing
services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to
members of management will not be a consideration in the Company's
decision to undertake any proposed transaction. Each member of
management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation to be
paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member
of the Company's Board of Directors is offered compensation in any
form from any prospective merger or acquisition candidate, the
proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may
refer a prospective merger or acquisition candidate to the Company.
In the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form of
20
<PAGE>
cash consideration. However, if such compensation is in the form
of cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has insufficient cash available.
The amount of such finder's fee cannot be determined as of the date
of this registration statement, but such compensation will be
negotiated on an "arm's length" basis between the respective
parties. Any such arrangement is expected to be comparable to
consideration normally paid in like transactions, in that the total
compensation is not expected to exceed 10% of the value of such
transaction. No member of management of the Company will receive
any finder's fee, either directly or indirectly, as a result of
their respective efforts to implement the Company's business plan
outlined herein.
In August 1996, the shareholders approved the adoption of a
Stock Plan pursuant to Rule 701 promulgated under the Securities
Act of 1933 for the benefit of its officers, directors and
employees. As of the date of this registration statement, no
shares have been issued under the plan.
Item 7. Certain Relationships and Related Transactions.
In December 1995, GS2 Partnership, a Colorado general
partnership in which Messrs. Simonds and Skufca are the general
partners, loaned the Company the principal amounts of $69,510. GS2
Partnership was formed in 1990 to provide both start-up and
development stage companies with capital to implement their
business plans. The loan is unsecured, accrues interest at the
rate of 6% per annum and is due upon demand. This loan related to
the business activities of the Company described in Part I, Item 1,
prior to the adoption of the Company's present business plan
described herein above.
However, it is the intention of Messrs. Simonds and Skufca to
forgive this indebtedness if necessary in order to effectuate a
merger or acquisition which the Company's Board of Directors
believes to be in the best interests of the Company and its
shareholders. See "Item 2, General Business Plan."
There have been no other related party transactions, or any
other transactions or relationships required to be disclosed
pursuant to Item 404 of Regulation S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 120,000,000
shares, of which 20,000,000 shares are Preferred Shares, par value
$0.01 per share, and 100,000,000 are Common Shares, par value
$0.0001 per share. There are 500,000 Common Shares issued and
outstanding as of the date of this filing. There are no preferred
shares issued or outstanding.
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<PAGE>
Common Stock. All shares of Common Stock have equal voting
rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by shareholders.
The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully-
paid and nonassessable shares. Cumulative voting in the election
of directors is not permitted, which means that the holders of a
majority of the issued and outstanding shares of Common Stock
represented at any meeting at which a quorum is present will be
able to elect the entire Board of Directors if they so choose and,
in such event, the holders of the remaining shares of Common Stock
will not be able to elect any directors. In the event of
liquidation of the Company, each shareholder is entitled to receive
a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All
shares of the Company's Common Stock issued and outstanding are
fully paid and nonassessable. Holders of the Common Stock are
entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of
Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued
from time to time in one or more series as may be determined by the
Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall
have preemptive rights. The Company has no shares of Preferred
Stock outstanding, and the Board of Directors does not plan to
issue any shares of Preferred Stock for the foreseeable future,
unless the issuance thereof shall be in the best interests of the
Company. This may include issuance of Preferred Stock to deter or
delay a takeover that the Company's management opposes, or as part
of the structure of a proposed merger or acquisition as a mechanism
to means of providing control over the Company to the parties to
whom such shares were issued.
The proposed business activities described herein classify the
Company as a "blank check" company. 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. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they 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. In order to
provide further assurances that no trading will occur in the
22
<PAGE>
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. However, while
management believes that the procedures established to preclude any
sale of the Company's securities prior to closing of a merger or
acquisition will be sufficient, there can be no assurances that the
procedures established relevant herein will unequivocally limit any
shareholder's ability to sell their respective securities before
such closing.
PART II
Item 1. Market Price of and Dividends on Registrant's Common
Equity and Other Shareholder Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. Management
has not undertaken any discussions, preliminary or otherwise, with
any prospective market maker concerning the participation of such
market maker in the aftermarket for the Company's securities and
management does not intend to initiate any such discussions until
such time as the Company has consummated a merger or acquisition.
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 a Rule
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
23
<PAGE>
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 stock in both public offering 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 NASDAQ, has recently made changes in the
criteria for continued NASDAQ eligibility. In order to continue to
be included on NASDAQ, a company must maintain $2,000,000 in total
assets, a $200,000 market value of its publicly traded securities
and $1,000,000 in total capital and surplus. In addition,
continued inclusion requires two market makers and a minimum bid
price of $1.00 per share; provided, however, that if a company
falls below such minimum bid price it will remain eligible for
continued inclusion on NASDAQ if the market value of its publicly
traded securities is at least $1,000,000 and the Company has
$2,000,000 in capital and surplus.
Management intends to strongly consider undertaking a
transaction with any merger or acquisition candidate which will
allow the Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national 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 in the future may result in the discontinuance of the
inclusion of the Company's securities on a national exchange. In
such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ 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 are twelve (10) holders of the Company's
Common Stock. In October 1994, the Company issued 50,000 shares of
its Common Shares to its initial shareholders for cash
consideration of $500.00 ($.01 per share) and, subsequently, in
September 1997, the Company undertook a forward split of its issued
and outstanding common stock, whereby ten (10) shares were issued
in exchange for each share then issued and outstanding. 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 4(2) of the Securities Act of 1933.
24
<PAGE>
As of the date of this registration statement, all of the
shares of the Company's Common Stock are eligible for sale under
Rule 144 promulgated under the Securities Act of 1933, as amended,
subject to certain limitations included in said Rule. In general,
under Rule 144, a person (or persons whose shares are aggregated),
who has satisfied a one year holding period, under certain
circumstances, may sell within any three month period a number of
shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who has satisfied a two year
holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
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.
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.
The Company has not issued any of its securities since October
1994. All of the shares of Common Stock of the Company previously
issued have been issued for investment purposes in a "private
transaction" and are "restricted" shares as defined in Rule 144
under the Securities Act of 1933, as amended (the "Act"). These
shares may not be offered for public sale except under Rule 144, or
otherwise, pursuant to the Act. See "PART II, Item 1(b)."
As of the date of this report, all of the issued and
outstanding shares of the Company's Common Stock are eligible for
sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule.
However, all of the shareholders of the Company have executed and
delivered a "lock-up" letter agreement which provides that each
such shareholder shall not sell their respective securities until
such time as the Company has successfully consummated a merger or
acquisition. Further, each shareholder has placed their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who has agreed not to release any of the certificates
until the Company has closed a merger or acquisition. Any
liquidation by the current shareholders after the release from the
25
<PAGE>
"lock-up" selling limitation period may have a depressive effect
upon the trading prices of the Company's securities in any future
market which may develop.
In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a one year holding period, under
certain circumstances, may sell within any three month period a
number of shares which does not exceed the greater of one percent
of the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two
year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation, as amended,
incorporate the provisions of the Colorado Business Corporation Act
providing for the indemnification of officers and directors and
other persons against expenses, judgments, fines and amounts paid
in settlement in connection with threatened, pending or
contemplated suits or proceedings against such persons by reason of
serving or having served as officers, directors or in other
capacities, except in relation to matters with respect to which
such persons shall be determined not to have acted in good faith
and in the best interests of the Company. With respect to matters
as to which the Company's officers and directors and others are
determined to be liable for misconduct or negligence, including
gross negligence in the performance of their duties to the Company,
Colorado law provides for indemnification only to the extent that
the court in which the action or suit is brought determines that
such person is fairly and reasonably entitled to indemnification
for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company has
been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
26
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PART F/S
Financial Statements.
The following financial statements are attached to this report
and filed as a part thereof. See page 28 .
1) Table of Contents - Financial Statements
2) Independent Auditor's Report
3) Balance Sheet
4) Statement of Operations
5) Statement of Changes in Shareholders' Equity
6) Statement of Cash Flows
7) Notes to Financial Statements
27
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3PM HOLDING CORP.
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
28
<PAGE>
3PM, INC.
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-9
29
<PAGE>
Kish, Leake & Associates P.C.
Certified Public Accountants
J.D.Kish, C.P.A., M.B.A. 7901 E Belleview Ave - Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
--------------------- Telephone (303) 779-5006
Arleen R. Brogan, C.P.A. Facsimile (303) 779-5724
Independent Auditors' Report
Board of Directors
3PM Holding Corp.
We have audited the accompanying balance sheet of 3PM Holding Corp., as of
December 31, 1996, and the related statements of operations, changes in
stockholders' equity, and cash flows for the fiscal years ended December
31, 1996 and 1995. 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 statement 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 3PM Holding Corp., as
of December 31, 1996, and the results of its operations and its cash flows
for the fiscal years ended December 31, 1996 and 1995, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The deficiency in working
capital as of December 31, 1996 and the Company's operating loss since
inception raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are described in
Note 6. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
October 10, 1997
-1-
30
<PAGE>
<TABLE>
3PM Holding Corp.
Balance Sheet
- ------------------------------------------------------------------------------
<CAPTION>
Audited Unaudited
December September
31, 1996 30, 1997
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 4,787 $ 2,100
-------- --------
TOTAL ASSETS 4,787 2,100
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable Trade 4,391 0
Notes Payable Related Party 67,510 69,510
Accrued Interest Payable 6,661 6,661
-------- --------
Total Current Liabilities 78,562 76,171
-------- --------
TOTAL LIABILITIES 78,562 76,171
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, Par Value $.01;
Authorized 20,000,000 Shares 12/31/96 and 9/30/97;
Issued and Outstanding 0 Shares 12/31/96 and 9/30/97. 0 0
Common Stock
Authorized: 100,000 Shares 12/31/96 $.001 Par Value,
100,000,000 Shares 9/30/97 $.0001 Par Value.
Issued and Outstanding 50,000 Shares 12/31/96,
500,000 Shares 9/30/97. 50 50
Additional Paid In Capital 59,950 59,950
Retained Deficit (133,775) (134,071)
-------- --------
TOTAL SHAREHOLDERS' EQUITY (73,775) (74,071)
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 4,787 $ 2,100
======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-2-
31
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Operations
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Nine Month
Audited Audited Interim
Year Ended Year Ended Period Ended
December December September
31, 1995 31, 1996 30, 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE: $ 0 $ 0 $ 0
EXPENSES:
Bank Charges 0 434 8
Professional Fees 0 6,085 288
Total 0 6,519 296
-------- -------- --------
Net Income From Operations 0 (6,519) (296)
-------- -------- --------
Other Income ( Expense):
Interest Income 0 527 0
Interest Expense (2,611) (4,232) 0
-------- -------- --------
Total Other Income (Expense) (2,611) (3,705) 0
-------- -------- --------
Net Income (Loss) Before Taxes ($2,611) ($10,224) ($296)
======== ======== ========
Income Tax 0 0 0
-------- -------- --------
Net Income (Loss) Before
Discontinued Operations ($2,611) ($10,224) ($296)
======== ======== ========
Discontinued operations:
Loss from operations of VCR
Doctor Franchises (64,115) (7,117) 0
Loss on disposal of VCR Doctor,
including operating loss of $5,633
and loss on disposal of $29,863 0 (35,496) 0
-------- -------- --------
Net Income (Loss) ($66,726) ($52,837) ($296)
======== ======== ========
Net Income Per Common Share ($0.13) ($0.11) ($0.00)
======== ======== ========
Common Shares Outstanding 500,000 500,000 500,000
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-3-
32
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Shareholders' Equity
- ------------------------------------------------------------------------------
<CAPTION>
Number Of Additional
Common Common Paid-In Retained
Shares ** Stock Capital Earnings Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance At December 31, 1994 500,000 $ 50 $ 59,950 ($ 14,212) $ 45,788
Net Loss December 31, 1995 (66,726) (66,726)
-------- -------- -------- -------- --------
Balance At December 31, 1995 500,000 50 59,950 (80,938) (20,938)
Net Loss December 31, 1996 (52,837) (52,837)
-------- -------- -------- -------- --------
Balance At December 31, 1996 500,000 50 59,950 (133,775) (73,775)
Unaudited Net Loss September 30, 1997 (296) (296)
-------- -------- -------- -------- --------
Unaudited Balance At
September 30, 1997 500,000 $ 50 $ 59,950 ($134,071) ($74,071)
======== ======== ======== ======== ========
** Reflects 10 for 1 Stock Split.
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-4-
33
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Cash Flows
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Nine Month
Audited Audited Interim
Year Ended Year Ended Period Ended
December December September
31, 1995 31, 1996 30, 1997
-------- -------- --------
<S> <C> <C> <C>
Net Income (Loss) ($66,726) ($52,837) ($ 296)
-------- -------- --------
Items Not Affecting Cash Flow:
Depreciation & Amortization 4,170 1,217 0
Impaired Asset 14,625 0 0
-------- -------- --------
Total (47,931) (51,620) (296)
(Increase) Decrease In Prepaid Expenses 0 450 0
(Increase) Decrease In Deposits 0 1,450 0
Increase (Decrease) In Accounts
Payable Trade (2,447) 604 (4,391)
Increase (Decrease) In Other
Accrued Expenses 2,611 4,051 0
Increase (Decrease) In Payable to Bank 3,646 (3,646) 0
Loss on sale of Franchise 0 375 0
-------- -------- --------
Net Cash Flows Provided From Operations (44,121) (48,336) (4,687)
-------- -------- --------
Cash Flows From Investing Activities:
(Purchase) Sale of Signs (2,595) 1,980 0
(Purchase) Sale of Equipment 0 2,576 0
Sale of Franchise 0 25,000 0
-------- -------- --------
Net Cash Flows Provided From
Investing Activities (2,595) 29,556 0
-------- -------- --------
Cash Flows From Financing Activities:
Advances Received From Shareholder 43,510 24,000 2,000
Issuance of Stock 0 0 0
-------- -------- --------
Net Cash Flows Provided From
Financing Activities 43,510 24,000 2,000
-------- -------- --------
Net Increase In Cash (3,206) 5,220 (2,687)
Cash At Beginning Of Period 2,773 (433) 4,787
-------- -------- --------
Cash At End Of Period (433) 4,787 2,100
======== ======== ========
Summary Of Non-Cash Investing And Financing Activities: $0
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-5-
34
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
On October 19, 1994, 3PM Holding Corp. (The Company), was incorporated under the
laws of Colorado. The Company's primary purpose is any lawful business or
activity.
The Company purchased three VCR Doctor franchises whose primary purpose is the
operation of retail VCR repair stores. In April 1996, company management sold
the VCR Doctor franchise and the related assets. The sale agreement was
completed in May 1996 with a down payment and 48 monthly payments, however, the
note was defaulted on and written off.
Losses applicable to the discontinued franchise operations segment were $7,117
and $64,115 for the years ended December 31, 1996 and 1995 respectively. The
Company sold all of the assets of the franchise operations segment for $25,000
in the form of a note. There were no assets or liabilities from the franchise
operations remaining after the sale.
Property and Equipment
Furniture and equipment are stated at cost and are depreciated over their
estimated economic lives. Depreciation is computed using the straight-line
method.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in 1996 and 1995 was -0-.
Cash paid for income taxes in 1996 and 1995 was -0-.
There were no non-cash transactions.
Net Income (Loss) Per Common Stock
The net income (loss) per common share is computed by dividing the net income
(loss) for the period by the weighted average number of shares outstanding at
December 31, 1996 and 1995.
-6-
35
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Revenue Recognition
Revenue is recognized when repairs on the VCRs are complete.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts. Actual results could differ from those estimates.
Note 2 - Notes Payable
The Company maintains a $5,000 line of credit. The amount outstanding under
this line at December 31, 1996 was $-0- bearing a 10.75% annual interest rate.
Shareholders of the Company made unsecured demand loans to the Company bearing
simple interest at 6% annually. The notes, principle and interest, are due
December 31, 1997.
Note 3 - Rent Leases
The Company leased two retail spaces for repairs of VCRs. Both operating leases
expire December 31, 1997, however the franchises were sold in April 1996 and the
lease agreements were settled.
Note 4 - Related Party Events
Shareholders in the Company loaned money to the Company at various times during
the year.
Note 5 - Income Taxes
At December 31, 1996, the Company had a net operating loss carryforward
available for financial statement and Federal income tax purposes of
approximately $56,683 which, if not used, will expire in varying amounts during
the years 2010 to 2011.
-7-
36
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 5 - Income Taxes (cont.)
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
December 31, 1996, the Company has a deferred tax asset of $11,337 primarily for
its net operating loss carryforward which has been fully reserved through a
valuation allowance. The change in the valuation allowance for 1996 is $2,920.
Note 6 - Subsequent Events
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred losses from its inception through December
31, 1996. It has not established revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. The Company is seeking a
merger/acquisition candidate.
The Company intends to file a Form 10SB with the SEC in 1997.
On September 15, 1997 the shareholders of the Company adopted a 1 for 10 stock
split.
Note 7 - Impaired Asset
As of December 31, 1996 the Company had an impaired asset of $14,625 (net of
$375 amortization). This was an initial franchise fee for a VCR Doctor retail
store which never commenced operations.
-8-
37
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 8 - Capital Stock
The Company initially authorized 100,000 shares of $.001 par value common stock.
In September 1996 the Company amended and restates its Articles of
Incorporation. The aggregate number of shares which the corporation shall have
authority to issue is 120,000,000 of which 20,000,000 shall be Preferred Shares,
$.01 par value per share and 100,000,000 shall be Common Shares, $.0001 par
value per share. There have been no dividends paid.
Note 9 - New Accounting Pronouncements
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of"
(SFAS No. 121) issued by the Financial Accounting Standards Board (FASB) is
effective for financial statements for fiscal years beginning after December 15,
1995. The new standard establishes new guidelines regarding when impairment
losses on long-lived assets, which include plant and equipment, certain
identifiable
intangible assets and goodwill, should be recognized and how impairment losses
should be measured. See note 7. SFAS No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) issued by the FASB is effective for specific
transactions entered into after December 15, 1995, while the disclosure
requirements of SFAS No. 123 are effective for financial statements for fiscal
years beginning no later than December 15, 1995. The new standard established
a fair value method of accounting for stock-based compensation plans and for
transactions in which an entity acquires goods and services from nonemployees in
exchange for equity instruments. The Company will not adopt this accounting
policy for stock based compensation but will provide the required financial
statement disclosures. At this time there are no options outstanding that would
cause an impact on the Company's financial position and results of operations.
Note 10 - Unaudited Information
The information furnished herein was taken from the books and records of the
Company without audit. The Company believes, however, that it has made all
adjustments necessary to reflect properly the results of operations for the
interim periods presented. The adjustments consist only of normal reoccurring
accruals. The results of operations for the nine months ended September 30,
1997 are not necessarily indicative of the results to be expected for the year
ended December 31, 1997.
-9-
38
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
Page No.
- --- --------
(3) Articles of Incorporation and Bylaws.
3.1 Articles of Incorporation and Amendment
to Articles of Incorporation *
3.2 Bylaws *
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreement by the
Company's Shareholders *
(27) Financial Data Schedule
27.1 Financial Data Schedule *
- ---------------------
* Previously Filed
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
amendment to its registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
3PM HOLDING CORP.
(Registrant)
Date: January 12, 1998
By:/s/ Greg Simonds
--------------------------------
Greg Simonds,
President
40
