U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNATIONAL CAPITAL FUNDING, INC.
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(Name of small business issuer in its charter)
Colorado 84-1434313
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3140 SO. PEORIA STREET, SUITE K230
AURORA, CO 80014
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 755-9832
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Securities to be registered under Section 12(b) of the Act: NONE
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Securities registered under Section 12(g) of the Act:
COMMON STOCK, $.0001 PAR VALUE
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
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International Capital Funding, Inc. (the "Company"), was incorporated
on June 10, 1991 under the laws of the State of Colorado, to engage in any
lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. The Company has had no activity since inception
and has no operations to date. Other than issuing shares to its original
shareholders, the Company never commenced any operational activities. The
Board of Directors of the Company has elected as this time to attempt to
locate and consummate a merger or acquisition with a private entity as the
Company's principal business purpose described below.
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. As part of its business plan, this Company is filing this
registration statement on Form 10-SB on a voluntary basis in order to
become a "public" company by virtue of being subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Act"). The
Company anticipates it will voluntarily file periodic reports in the event
its obligation to file such reports is terminated under the Act. Another
aspect of its business plan which the Company intends to implement after
this registration statement becomes effective and a merger or business
combination has been consummated, is to seek to facilitate the eventual
creation of a public trading market in its then outstanding securities.
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. In order to comply with these various
limitations, management does not intend to undertake any efforts to sell
any additional securities of the Company or cause a market to develop in
the Company's securities until such time as the Company has successfully
located and consummated a merger or business combination described herein.
Accordingly, each shareholder of the Company has executed and delivered a
"no sale" letter agreement, agreeing that they shall not sell or transfer
in any way, 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
certificates in a Company escrow account. The Company will not release
these respective certificates until such time as a merger or acquisition
has been successfully consummated.
The Company's business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses, and to pursue
other related activities intended to enhance shareholder value. The
acquisition of a business opportunity may be made by purchase, merger,
exchange of stock, or otherwise, and may encompass assets or a business
entity, such as a corporation, joint venture, or partnership. The Company
has very limited capital, and it is unlikely that the Company will be able
to take advantage of more than one such business
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opportunity. The Company intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any
agreement or definitive understanding with any person concerning an
acquisition. The Company's Officers and Directors have previously been
involved in transactions involving a merger between an established company
and a shell entity, and has a number of contacts within the field of
corporate finance. As a result, they have had preliminary contacts with
representatives of numerous companies concerning the general possibility of
a merger or acquisition by a shell company. However, none of these
preliminary contacts or discussions involved the possibility of a merger or
acquisition transaction with the Company.
It is anticipated that the Company's Officers and Directors will
contact broker-dealers and other persons with whom they are acquainted who
are involved in corporate finance matters to advise them of the Company's
existence and to determine if any companies or businesses they represent
have an interest in considering a merger or acquisition with the Company.
No assurance can be given that the Company will be successful in finding or
acquiring a desirable business opportunity, given the lack of any funds
available for acquisitions, or that any acquisition that occurs will be on
terms that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are
able to satisfy, or anticipate in the reasonably near future being able to
satisfy, the minimum asset requirements in order to qualify shares for
trading on NASDAQ or on a stock exchange (See "Investigation and Selection
of Business Opportunities"). The Company believes a merger would appeal to
these types of companies because of the difficulty and expense of obtaining
public financing or lack of interest in their industry segment by the
investment community. In addition, many companies do not wish to incur the
dilution of ownership which occurs in a public offering and/or are not in
the need for cash.
The Company anticipates that the business opportunities presented to
it will (i) be recently organized with no operating history, or a history
of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds
to develop a new product or service or to expand into a new market; (iv) be
relying upon an untested product or marketing concept; or (v) have a
combination of the characteristics mentioned in (i) through (iv). The
Company intends to concentrate its acquisition efforts on properties or
businesses that it believes to be undervalued. Given the above factors,
investors should expect that any acquisition candidate may have a history
of losses or low profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural
resources, manufacturing, high technology, product development, medical,
communications and others. The Company's discretion in the selection of
business opportunities is unrestricted, subject to the availability of such
opportunities, economic conditions, and other factors.
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As a consequence of this registration of its securities, any entity
which has an interest in being acquired by, or merging into the Company, is
expected to be an entity that desires to become a public company and
eventually establish a public trading market for its securities. In
connection with such a merger or acquisition, it is highly likely that an
amount of stock constituting control of the Company would be issued by the
Company or purchased from the current principal shareholders of the Company
by the acquiring entity or its affiliates. If stock is purchased from the
current shareholders, the transaction is very likely to result in
substantial gains to them relative to their purchase price for such stock.
In the Company's judgment, none of its Officers and Directors would thereby
become an "underwriter" within the meaning of the Section 2(11) of the
Securities Act of 1933, as amended.
Depending upon the nature of the transaction, the current Officers and
Directors of the Company may resign their management positions with the
Company in connection with the Company's acquisition of a business
opportunity. See "Form of Acquisition," below, and "Risk Factors - The
Company - Lack of Continuity in Management." In the event of such
resignations, the Company's current management would not have any control
over the conduct of the Company's business following the Company's
combination with a business opportunity.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its Officers and
Directors, its other stockholders, professional advisors such as attorneys
and accountants, securities broker-dealers, venture capitalists, members of
the financial community, and others who may present unsolicited proposals.
In this regard, the Company may utilize selected mailings, "word of mouth"
referrals, advertisements and/or personal phone calls by the Company's
Officers and Directors, however, the Company is unable to predict the
number of persons or entities to be contacted. It is anticipated the
majority, if not all of the contacts made will be to persons currently
unknown to the Company's current management. The Company has no plans,
understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company will not enter into a merger or acquisition transaction
with any business with which its Officers or Directors are currently
affiliated. The Company will not pay a finders' fee to any or other
related acquisition fee to its Officers, Directors, promoters or their
affiliates or associates from revenues or other funds of an acquisition or
merger candidate or by the issuance of debt or equity of such an entity.
In addition, the Company will not obtain an independent appraisal of any
proposed business opportunity due to the cost.
INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
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To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the
other company's management and personnel, the anticipated acceptability of
new products or marketing concepts, the merit of technological changes, the
perceived benefit the company will derive from becoming a publicly held
entity, and numerous other factors which are difficult, if not impossible,
to analyze through the application of any objective criteria. In many
instances, it is anticipated that the historical operations of a specific
business opportunity may not necessarily be indicative of the potential for
the future because of the possible need to shift marketing approaches
substantially, expand significantly, change product emphasis, change or
substantially augment management, or make
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other changes. The Company will be dependent upon the owners of a business
opportunity to identify any such problems which may exist and to implement,
or be primarily responsible for the implementation of, required changes.
Because the Company may participate in a business opportunity with a newly
organized firm or with a firm which is entering a new phase of growth, it
should be emphasized that the Company will incur further risks, because
management in many instances will not have proved its abilities or
effectiveness, the eventual market for such company's products or services
will likely not be established, and such company may not be profitable when
acquired.
It is anticipated that the Company will not be able to diversify, but
will essentially be limited to one such venture because of the Company's
limited financing. This lack of diversification will not permit the
Company to offset potential losses from one business opportunity against
profits from another, and should be considered an adverse factor affecting
any decision to purchase the Company's securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the Company's
management to complete acquisitions without submitting any proposal to the
stockholders for their consideration. Holders of the Company's securities
should be aware that the Company will not furnish such holders, prior to
any merger or acquisition, with financial statements, or any other
documentation, concerning a target company or its business. The proposed
participation in a business opportunity will not be submitted to the
stockholders for their consideration.
The analysis of business opportunities will be undertaken by or under
the supervision of the Company's President, who is not a professional
business analyst. See "Management." The Company will not use outside
consultants and/or advisors to assist in the investigation or selection of
business opportunities. The Company anticipates that it will consider,
among other things, the following factors:
1. Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
2. The Company's perception of how any particular business
opportunity will be received by the investment community and by
the Company's stockholders;
3. Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a
significant prospect in the foreseeable future of becoming
sufficient to enable the securities of the Company to qualify for
listing on an exchange or on a national automated securities
quotation system, such as NASDAQ, so as to permit the trading of
such securities to be exempt from the requirements of Rule 15c2-6
recently adopted by the Securities and Exchange Commission. See
"Risk Factors - The Company - Regulation of Penny Stocks."
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4. Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations, through
the sale of additional securities, through joint ventures or
similar arrangements, or from other sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar
size and experience within the industry segment as well as within
the industry as a whole;
7. Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
8. The cost of participation by the Company as compared to the
perceived tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other
required items.
In regard to the possibility that the shares of the Company would
qualify for listing on the NASDAQ SmallCap Market, the current standards
include the requirements that the issuer of the securities that are sought
to be listed have net tangible assets of at least $4,000,000 or a market
capitalization of $50 million or $950,000 in net income in the latest
fiscal year. Many, and perhaps most, of the business opportunities that
might be potential candidates for a combination with the Company would not
satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to analyze
all factors appropriate to each opportunity and make a determination based
upon reasonable investigative measures and available data. 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. Potential investors must recognize that,
because of the Company's limited capital available for investigation and
management's limited experience in business analysis, the Company may not
discover or adequately evaluate adverse facts about the opportunity to be
acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals
and the selection of a business opportunity may take several months or
more.
Prior to making a decision to participate in a business opportunity,
the Company will generally request that it be provided with written
materials regarding the business opportunity containing such items as a
description of products, services and company history; management resumes;
financial information; available projections, with related assumptions upon
which they are based; an explanation of proprietary products and services;
evidence of existing patents, trademarks, or services marks, or rights
thereto; present and proposed forms of compensation to management; a
description of transactions between such company and its affiliates during
relevant periods; a description of present and required facilities; an
analysis of risks and
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competitive conditions; a financial plan of operation and estimated capital
requirements; audited financial statements, or if they are not available,
unaudited financial statements, together with reasonable assurances that
audited financial statements would be able to be produced within a
reasonable period of time not to exceed 60 days following completion of a
merger transaction; and other information deemed relevant.
As part of the Company's investigation, the Company's executive
Officers and Directors may meet personally with management and key
personnel, may visit and inspect material facilities, obtain independent
analysis or 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.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact
of Securities and Exchange Commission regulations regarding purchase and
sale of "penny stocks." The regulations would affect, and possibly impair,
any market that might develop in the Company's securities until such time
as they qualify for listing on the NASDAQ SmallCap Market or on another
exchange which would make them exempt from applicability of the "penny
stock" regulations. See "Risk Factors - Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company
to be attractive. These include acquisition candidates desiring to create
a public market for their shares in order to enhance liquidity for current
shareholders, acquisition candidates which have long-term plans for raising
capital through the public sale of securities and believe that the possible
prior existence of a public market for their securities would be
beneficial, and acquisition candidates which plan to acquire additional
assets through issuance of securities rather than for cash, and believe
that the possibility of development of a public market for their securities
will be of assistance in that process. Acquisition candidates which have
a need for an immediate cash infusion are not likely to find a potential
business combination with the Company to be an attractive alternative.
FORM OF ACQUISITION
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It is impossible to predict the manner in which the Company may
participate in a business opportunity. Specific business opportunities
will be reviewed as well as the respective needs and desires of the Company
and the promoters of the opportunity and, upon the basis of that review and
the relative negotiating strength of the Company and such promoters, the
legal structure or method deemed by management to be suitable will be
selected. Such structure may include, but is not limited to leases,
purchase and sale agreements, licenses, joint ventures and other
contractual arrangements. The Company may act directly or indirectly
through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger,
consolidation or reorganization of the Company with other corporations or
forms of business organization, and although it is likely, there is no
assurance that the Company would be the surviving entity. In addition, the
present management and stockholders of the Company most likely will not
have control of a majority of the voting shares of the Company following a
reorganization transaction. As part of such a transaction, the Company's
existing directors may resign and new directors may be appointed without
any vote by stockholders.
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It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such transaction
cannot be predicted, it should be noted that in certain circumstances the
criteria for determining whether or not an acquisition is a so-called "tax
free" reorganization under the Internal Revenue Code of 1986, depends upon
the issuance to the stockholders of the acquired company of a controlling
interest (i.e. 80% or more) of the common stock of the combined entities
immediately following the reorganization. If a transaction were structured
to take advantage of these provisions rather than other "tax free"
provisions provided under the Internal Revenue Code, the Company's current
stockholders would retain in the aggregate 20% or less of the total issued
and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior
to such reorganization. Any such issuance of additional shares might also
be done simultaneously with a sale or transfer of shares representing a
controlling interest in the Company by the current Officers, Directors and
principal shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the
Company may agree to register such securities either at the time the
transaction is consummated, or under certain conditions or at specified
times thereafter. The issuance of substantial additional securities and
their potential sale into any trading market that might develop in the
Company's securities may have a depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of
such agreement cannot be predicted, generally such an agreement would
require specific representations and warranties by all of the parties
thereto, specify certain events of default, detail the terms of closing and
the conditions which must be satisfied by each of the parties thereto prior
to such closing, outline the manner of bearing costs if the transaction is
not closed, set forth remedies upon default, and include miscellaneous
other terms.
As a general matter, the Company anticipates that it, and/or its
Officers and principal shareholders will enter into a letter of intent with
the management, principals or owners of a prospective business opportunity
prior to signing a binding agreement. Such a letter of intent will set
forth the terms of the proposed acquisition but will not bind any of the
parties to consummate the transaction. Execution of a letter of intent
will by no means indicate that consummation of an acquisition is probable.
Neither the Company nor any of the other parties to the letter of intent
will be bound to consummate the acquisition unless and until a definitive
agreement concerning the acquisition as described in the preceding
paragraph is executed. Even after a definitive agreement is executed, it
is possible that the acquisition would not be consummated should any party
elect to exercise any right provided in the agreement to terminate it on
specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for
accountants, attorneys and others. If a decision is made not to
participate in a specific business
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opportunity, the costs theretofore incurred in the related investigation
would not be recoverable. Moreover, because many providers of goods and
services require compensation at the time or soon after the goods and
services are provided, the inability of the Company to pay until an
indeterminate future time may make it impossible to procure goods and
services.
The Company may borrow funds from its Officers, Directors and/or
outside sources, however, these funds will not be used to make payments to
the Company's management, promoters or their affiliates or associates.
Neither the Company, nor anyone acting on its behalf, has taken any
affirmative steps to request or encourage any broker-dealer to act as a
market maker for the Company's securities.
INVESTMENT COMPANY ACT AND OTHER REGULATION
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The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified
as an "investment company" under the Investment Company Act of 1940 (the
"Investment Act"), and therefore to avoid application of the costly and
restrictive registration and other provisions of the Investment Act, and
the regulations promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage
primarily in the business of investing, reinvesting or trading in
securities, or that does not engage in the business of investing, owning,
holding or trading "investment securities" (defined as "all securities
other than government securities or securities of majority-owned
subsidiaries") the value of which exceeds 40% of the value of its total
assets (excluding government securities, cash or cash items). The Company
intends to implement its business plan in a manner which will result in the
availability of this exception from the definition of "investment company."
Consequently, the Company's participation in a business or opportunity
through the purchase and sale of investment securities will be limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates
a reorganization as discussed above. Each of these areas is regulated by
the Investment Act, in order to protect purchasers of investment company
securities. Since the Company will not register as an investment company,
stockholders will not be afforded these protections.
Any securities which the Company might acquire in exchange for its
Common Stock will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to
resell such securities, such sale cannot proceed unless a registration
statement has been declared effective by the Securities and Exchange
Commission or an exemption from registration is available. Section 4(1) of
the Act, which exempts sales of securities not involving a distribution,
would in all likelihood be available to permit a private sale. Although
the plan of operation does not contemplate resale of securities acquired,
if such a sale were to be necessary, the Company would be required to
comply with the provisions of the Act to effect such resale.
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An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance
with such regulations can be expected to be a time-consuming and expensive
process.
COMPETITION
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The Company expects to encounter substantial competition in its
efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than the Company and will therefore be in a better
position than the Company to obtain access to attractive business
opportunities. The Company also will experience competition from other
public "blind pool" companies, many of which may have more funds available
than does the Company, or from those formed in the future by the Company's
management, promoters or their affiliates or associates.
CORPORATE OFFICES
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The Company currently maintains a mailing address at 3140 So. Peoria
Street, Suite K230, Aurora, Colorado 80014, which is the office address of
its President. The Company's telephone number is (303) 755-9832. Other
than this mailing address, the Company does not currently maintain any
other office facilities, and does not anticipate the need for maintaining
office facilities at any time in the foreseeable future. The Company pays
no rent or other fees for the use of this mailing address.
EMPLOYEES
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The Company is a development stage company and currently has no
employees. Management of the Company expects to use consultants, attorneys
and accountants as necessary, and does not anticipate a need to engage any
full-time employees so long as it is seeking and evaluating business
opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
RISK FACTORS
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Current and prospective shareholders should carefully consider the
following risk factors, together with the other information contained in
this Form 10, in evaluating the Company and its business. In particular,
readers should note the this Form 10 contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1996
and that actual results could differ materially from those contemplated by
such statements. The factors listed below represent certain important
factors the Company believes could cause such results to differ. These
factors are not intended to represent a complete list of the general or
specific risks that may affect the Company. It should be recognized that
other risks may be significant, presently or in the future, and the risks
set forth below may affect the Company to a greater extent than indicated.
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CONFLICTS OF INTEREST. Certain conflicts of interest exist between
the Company and all of its Officers and Directors. They have other
business interests to which they devote their attention, and they may be
expected to continue to do so in the future. As a result, conflicts of
interest may arise that can be resolved only through their exercise of
such judgment as is consistent with their fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
It is anticipated that Company's Officers and Directors may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's Officers and
Directors may receive a "substantial premium" to acquire their shares in a
merger or acquisition transaction and could consider their own personal
pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders will not be afforded the
opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
POSSIBLE NEED FOR ADDITIONAL FINANCING. The Company has virtually no
cash funds and has received a "going concern" qualification by its auditors
for the fiscal year ended November 20, 1997, and it may be impossible to
take advantage of any available business opportunities. Even if the lack
of funds does not hinder the acquisition or an interest in, or complete a
transaction with, a business opportunity, the Company will not, in all
likelihood, have enough capital to exploit the opportunity. Accordingly,
the ultimate success of the Company may depend upon its ability to raise
additional capital. The Company has not investigated the availability,
source, or terms that might govern the acquisition of additional capital
and will not do so until it determines a need for additional financing. If
additional capital is needed, there is no assurance that funds will be
available from any source or, if available, that they can be obtained on
terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its
debt/equity securities.
REGULATION OF PENNY STOCKS. The Company's securities, when and if
available for trading, will be subject to a Securities and Exchange
Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions
covered by the rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and
also may affect the ability of purchasers in this offering to sell their
securities in any market that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include Rules
3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the
Securities Exchange Act of 1934, as amended. Because the securities of
the Company may constitute "penny stocks" within the meaning of the rules,
the rules would apply to the Company and to its securities. The rules may
further affect the ability
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of owners of Shares to sell the securities of the Company in any market
that might develop for them.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few broker-
dealers that are often related to the promoter or issuer; (ii) manipulation
of prices through prearranged matching of purchases and sales and false and
misleading press releases; (iii) "boiler room" practices involving high-
pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and
markups by selling broker-dealers; and (v) the wholesale dumping of the
same securities by promoters and broker-dealers after prices have been
manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically
in the penny stock market. Although the Company does not expect to be in
a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being
established with respect to the Company's securities.
NO OPERATING HISTORY. The Company was formed in June 1991 for the
purpose of to engage in any lawful activity, however, the Company has no
operating history, revenues from operations, or assets other than services
from private sales of stock. The Company faces all of the risks of a new
business and the special risks inherent in the investigation, acquisition,
or involvement in a new business opportunity. The Company must be regarded
as a new or "start-up" venture with all of the unforeseen costs, expenses,
problems, and difficulties to which such ventures are subject.
NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that
the Company will acquire a favorable business opportunity. Even if the
Company should become involved in a business opportunity, there is no
assurance that it will generate revenues or profits, or that the market
price of the Company's Common Stock will be increased thereby.
POSSIBLE BUSINESS - NOT IDENTIFIED AND HIGHLY RISKY. The Company has
not identified and has no commitments to enter into or acquire a specific
business opportunity and therefore can disclose the risks and hazards of a
business or opportunity that it may enter into in only a general manner,
and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. A shareholder can expect a potential
business opportunity to be quite risky. The Company's acquisition of or
participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the
business or opportunity proves to be unsuccessful. See Item 1
"Description of Business."
TYPE OF BUSINESS ACQUIRED. The type of business to be acquired may be
one that desires to avoid effecting its own public offering and the
accompanying expense, delays, uncertainties, and federal and state
requirements which purport to protect investors. Because of the Company's
lack of capital, it is more likely than not that any acquisition by the
Company will involve other parties whose primary interest is the
acquisition of control of a publicly traded
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company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
IMPRACTICABILITY OF EXHAUSTIVE INVESTIGATION. The Company's lack of
funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and
analysis of a business opportunity before the Company commits its capital
or other resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent analysis, market
surveys and the like which, if the Company had more funds available to it,
would be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner, sponsor, or
others associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds may
be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or
not any business opportunity investigated is eventually acquired.
LACK OF DIVERSIFICATION. Because of the lack of financial resources
that the Company has, it is unlikely that the Company will be able to
diversify its acquisitions or operations. The Company's probable inability
to diversify its activities into more than one area will subject the
Company to economic fluctuations within a particular business or industry
and therefore increase the risks associated with the Company's operations.
POSSIBLE RELIANCE UPON UNAUDITED FINANCIAL STATEMENTS. The Company
generally will require audited financial statements from companies that it
proposes to acquire. No assurance can be given, however, that audited
financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been
verified by outside auditors. The lack of the type of independent
verification which audited financial statements would provide, increases
the risk that the Company, in evaluating an acquisition with such a target
company, will not have the benefit of full and accurate information about
the financial condition and operating history of the target company. This
risk increases the prospect that the acquisition of such a company might
prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
thus will be required to furnish certain information about significant
acquisitions, including audited financial statements for any business that
it acquires. Consequently, acquisition prospects that do not have, or are
unable to provide reasonable assurances that they will be able to obtain,
the required audited statements would not be considered by the Company to
be appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Should the Company, during the time it
remains subject to the reporting provisions of the Exchange Act, complete
an acquisition of an entity for which audited financial statements prove to
be unobtainable, the Company would be exposed to enforcement actions by the
Securities and Exchange Commission (the "Commission") and to corresponding
administrative sanctions, including permanent injunctions against the
Company and its management. The legal and other costs of defending a
Commission enforcement action are likely to have material, adverse
consequences for the Company and its
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business. The imposition of administrative sanctions would subject the
Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent
the securities of the Company from becoming eligible for listing on NASDAQ,
the automated quotation system sponsored by the National Association of
Securities Dealers, Inc., or on any existing stock exchange. Moreover, the
lack of such financial statements is likely to discourage broker-dealers
from becoming or continuing to serve as market makers in the securities of
the Company. Without audited financial statements, the Company would
almost certainly be unable to offer securities under a registration
statement pursuant to the Securities Act of 1933, and the ability of the
Company to raise capital would be significantly limited until such
financial statements were to become available.
OTHER REGULATION. An acquisition made by the Company may be of a
business that is subject to regulation or licensing by federal, state, or
local authorities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit other
investment opportunities of the Company.
DEPENDENCE UPON MANAGEMENT; LIMITED PARTICIPATION OF MANAGEMENT. The
Company currently has three individuals who serve as its Officers and
directors. The Company will be heavily dependent upon their skills,
talents, and abilities to implement its business plan, and may, from time
to time, find that the inability of the Officers and Directors to devote
their full time attention to the business of the Company results in a delay
in progress toward implementing its business plan. The Company does not
and will not obtain "key man" life insurance on either of these
individuals. Furthermore, since only three individuals are serving as the
Officers and Directors of the Company, it will be entirely dependent upon
their experience in seeking, investigating, and acquiring a business and in
making decisions regarding the Company's operations. The analysis of
business opportunities will be primarily handled by the Company's President
who is not a professional business analyst. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the information
concerning the Company's Officers and Directors.
LACK OF CONTINUITY IN MANAGEMENT. The Company does not have an
employment agreement with its Officers and Directors, and as a result,
there is no assurance that they will continue to manage the Company in the
future. In connection with acquisition of a business opportunity, it is
likely the current Officers and Directors of the Company may resign. A
decision to resign will be based upon the identity of the business
opportunity and the nature of the transaction, and is likely to occur
without the vote or consent of the stockholders of the Company.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Company's Articles of
Incorporation provide for the indemnification of its Directors, Officers,
employees, and agents, under certain circumstances, against attorney's fees
and other expenses incurred by them in any litigation to which they become
a party arising from their association with or activities on behalf of the
Company. The Company will also bear the expenses of such litigation for
any of its Directors, Officers, employees, or agents, upon such person's
promise to repay the Company therefor if it is ultimately determined that
any such person shall not have been entitled to indemnification.
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This indemnification policy could result in substantial expenditures by the
Company which it will be unable to recoup.
DIRECTOR'S LIABILITY LIMITED. The Company's Articles of Incorporation
exclude personal liability of its Directors to the Company and its
stockholders for monetary damages for breach of fiduciary duty except in
certain specified circumstances. Accordingly, the Company will have a much
more limited right of action against its directors than otherwise would be
the case. This provision does not affect the liability of any director
under federal or applicable state securities laws.
DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the business
experience of its Officers and Directors, the Company may be required to
employ accountants, technical experts, appraisers, attorneys, or other
consultants or advisors. Due to the Company's limited financial resources,
it may not be in a position to retain outside advisors. The selection of
any such advisors will be made by the Company's President without any input
from stockholders. Furthermore, it is anticipated that such persons may be
engaged on an "as needed" basis without a continuing fiduciary or other
obligation to the Company. In the event the President of the Company
considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if they are able to provide the required
services.
LEVERAGED TRANSACTIONS. There is a possibility that any acquisition
of a business opportunity by the Company may be leveraged, i.e., the
Company may finance the acquisition of the business opportunity by
borrowing against the assets of the business opportunity to be acquired, or
against the projected future revenues or profits of the business
opportunity. This could increase the Company's exposure to larger losses.
A business opportunity acquired through a leveraged transaction is
profitable only if it generates enough revenues to cover the related debt
and expenses. Failure to make payments on the debt incurred to purchase
the business opportunity could result in the loss of a portion or all of
the assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient revenues
to cover the related debt and expenses.
COMPETITION. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company.
These competitive conditions will exist in any industry in which the
Company may become interested.
NO FORESEEABLE DIVIDENDS. The Company has not paid dividends on its
Common Stock and does not anticipate paying such dividends in the
foreseeable future.
LOSS OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. The Company
may consider an acquisition in which the Company would issue as
consideration for the business opportunity to be acquired an amount of the
Company's authorized but unissued Common Stock that would, upon issuance,
represent the great majority of the voting power and equity of the Company.
The result of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the Company's
management could be replaced by persons unknown at this time. Such a
merger would result in a greatly reduced percentage of ownership
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of the Company by its current shareholders. In addition, the Company's
President could sell his control block of stock at a premium price to the
acquired company's stockholders.
The acquisition will, in all probability, be structured as a tax-free
exchange under the Internal Revenue Code of 1986 to facilitate the
shareholders of the business entity to be acquired. If so structured, the
Company's shareholders will not be impacted either positively or
negatively.
NO PUBLIC MARKET EXISTS. There is no public market for the Company's
Common Stock, and no assurance can be given that a market will develop or
that a shareholder ever will be able to liquidate his investment without
considerable delay, if at all. If a market should develop, the price may
be highly volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the
securities offered hereby. Owing to the low price of the securities, many
brokerage firms may not be willing to effect transactions in the
securities. Even if a shareholder finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use
of such securities as collateral for any loans.
BLUE SKY CONSIDERATIONS. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any state,
the holders of such shares and persons who desire to purchase them in any
trading market that might develop in the future, should be aware that there
may be significant state blue-sky law restrictions upon the ability of
investors to sell the securities and of purchasers to purchase the
securities. Some jurisdictions may not under any circumstances allow the
trading or resale of blind-pool or "blank-check" securities. Accordingly,
shareholders of the Company should consider the secondary market for the
Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
- -------------------------------------------------
When used in this Form 10, the words "anticipate," "estimate,"
"expect," "project," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions including the possibility that the Company's
Internet backbone will fail to generate projected revenues or the Company
will be unable to satisfy certain settlement agreements. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company is in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity other than the receipt of services valued in the
amount of $1,500. The Company's balance sheet as of September 30,
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1997, reflects no assets and no liabilities. Further, there exists no
agreements or understandings with regard to loan agreements by or with the
Officers, Directors, principals or affiliates of the Company.
The Company will attempt to carry out its plan of business as
discussed above. The Company cannot predict to what extent its lack of
liquidity and capital resources will hinder its business plan prior to the
consummation of a business combination.
RESULTS OF OPERATIONS
- ---------------------
During the period from September 30, 1996 through September 30, 1997
and from June 1991 (inception) through September 30, 1997, the Company has
engaged in no significant operations other than organizational activities
and the preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. No revenues have been received by the
Company during this period.
The Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues and may
operate at a loss after completing a business combination, depending upon
the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
- -----------------------------
The Company believes that its existing capital will not be sufficient
to meet the Company's cash needs, including the costs of compliance with
the continuing reporting requirements of the Securities Exchange Act of
1934, as amended. Once a business combination is completed, the Company's
needs for additional financing are likely to increase substantially,
however, there currently exists no plan or understanding by which the
Company will raise capital, either debt or equity, over the next twelve
(12) months.
No commitments to provide additional funds have been made by
management or other stockholders. Accordingly, there can be no assurance
that any funds will be available to the Company to allow it to cover its
expenses.
The Company might seek to compensate providers of services by
issuances of stock in lieu of cash.
IMPACT OF THE YEAR 2000 ISSUE
- -----------------------------
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of
the Company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar
normal business activities.
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Based on a recent assessment, the Company, in its present status,
determined that it will not be required to modify or replace significant
portions of its software so that its computer systems will properly utilize
dates beyond December 31, 1999.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company does not currently maintain an office or any other
facilities. It does currently maintain a mailing address at 3140 So.
Peoria Street, Suite K230, Aurora, Colorado 80014, which is the office
address of its President. The Company pays no rent for the use of this
mailing address. The Company does not believe that it will need to
maintain an office at any time in the foreseeable future in order to carry
out its plan of operations described herein. The Company's telephone
number is (303) 755-9832.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and
beneficially by executive Officers, Directors and persons who hold 5.0% or
more of the outstanding Common Stock of the Company. Also included are the
shares held by all executive Officers and Directors as a group.
Number of
Shares Owned Percent of
Name and Address Beneficially Class Owned
- ---------------- ------------ -----------
Mathew J. Kavanagh III 255,000 51%
3140 South Peoria
Suite K230
Aurora, CO 80014
Anthony M. Griffin 1,000 *
7345 E. Peakview Avenue
Englewood, CO 80111
Gary M. Griffin 50,000 (1) *
7345 E. Peakview Avenue
Englewood, CO 80111
Terry Whiteside 50,000 10%
7345 E. Peakview Avenue
Englewood, CO 80111
Marshal Griffin 50,000 10%
Muntaner 72
Barcelona, Spain
Duane Peterson 25,000 5%
44-100 Monterey, #206
Palm Desert, CA 92260
Alex Herman 25,000 5%
Hong Kong
Equitus Corp. 90,000 (2) 18%
0832-1020 World Trade Center
Panama, Republic de Panama
All Directors and Executive 306,000 61%
Officers as a group (3 persons)
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___________________
* Less than 1%
(1) Mr. Griffin may be deemed to be the beneficial owner of 50,000 shares
of the Company's Common Stock by virtue of his wife's ownership of
said shares, however, Mr. Griffin disclaims any beneficial ownership
with respect to these shares.
(2) Mr. Jose Severino is the sole equity owner of Equitus Corp.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Directors and executive Officers currently serving the Company are
as follows:
Name Age Positions Held and Tenure
- ---- --- -------------------------
Matthew J. Kavanagh III 62 President, Treasurer and Director since
January 13, 1995
Anthony M. Griffin 29 Secretary and Director since January 13,
1995
Gary M. Griffin 56 Director since January 13, 1995
The Directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, Directors will be elected for
one-year terms at the annual stockholders' meeting. Officers will hold their
positions at the pleasure of the Board of Directors, absent any employment
agreement, of which none currently exists or is contemplated. There is no
arrangement or understanding between the Directors and Officers of the
Company and any other person pursuant to which any Director or Officer was
or is to be selected as a Director or Officer of the Company.
There is no family relationship between or among any Officer and
Director except that Gary M. Griffin and Anthony M. Griffin are father and
son.
The Directors and Officers of the Company will devote their time to
the Company's affairs on an "as needed" basis. As a result, the actual
amount of time which he will devote to the Company's affairs is unknown and
is likely to vary substantially from month to month.
The Company has no audit or compensation committee.
BIOGRAPHICAL INFORMATION
- ------------------------
MATTHEW J. KAVANAGH III. Mr. Kavanagh, who is the Company's President
and Treasurer, has served as an Officer and Director of the Company since
January 13, 1995. Since September 1982, to the present, Mr. Kavanagh has
been the President of The Amherst Group, Ltd, a private business consulting
firm located in Aurora, Colorado. From July 1983 to
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February 1986, Mr. Kavanagh served as Vice President of Operations for The
Charles Golding Company, a private commercial real estate development
company located in Englewood, Colorado. From October 1986 to January 1988,
Mr. Kavanagh was a business consultant with the Laurance Group, a private
business consulting firm located in Englewood, Colorado. From October 1986
to December 1987, Mr. Kavanagh was an Officer and Director of Clearview
Capital Corporation, a public "blank check" company located in Englewood,
Colorado. In December 1987, Clearview Capital Corporation merged with a
Houston, Texas based, Mexican Restaurant operation and changed its name to
Arriba Fajita Holdings Inc. From February 1987 to February 1988, Mr.
Kavanagh served as an Officer of Medical Ancillary Services, Inc. a
publicly-owned company located in Los Angeles, California. This company
provided "one call" medical services to convalescent and nursing homes.
From May 1987, to January 1988, Mr. Kavanagh served as an Officer and
Director of Tonga Capital Corporation, a public "blank check" company
located in Englewood, Colorado. In October 1987, Tonga commenced an
initial public offering of its securities, raising net proceeds of
$146,250, through the offer and sale of units comprised of one share of
common stock and one common stock purchase warrant at the price of $.01 per
unit. Mr. Kavanagh resigned as an Officer and Director of Tonga in January
1988, prior to Tonga having entered into a merger or acquisition agreement
with any business. During the course of Mr. Kavanagh's tenure with the
company, Tonga completed its initial public offering of securities and had
begun the search for a merger or acquisition candidate. As an Officer and
Director of the Company. Mr. Kavanagh had the opportunity to purchase
1,000,000 shares of Tonga's common stock for $100.00. Upon his resignation
from Tonga, Mr. Kavanagh re-contributed the 1,000,000 shares to the
Company's treasury. From September 1987 to January 1988, Mr. Kavanagh
served as an Officer and Director of Hydropower Development Systems, Inc.,
a publicly-owned company located in Englewood, Colorado. During Mr.
Kavanagh's tenure, Hydropower had no material assets or operations. From
September 1987 to January 1988, Mr. Kavanagh served as an Officer and
Director of Continental Power Systems, Inc. of Englewood, Colorado. This
publicly-traded company planned to design, construct and operate plants
which would convert waste tires to energy. From September 1987 to January
1988, Mr. Kavanagh served as an Officer and Director of publicly-traded,
McGregor Capital Corporation McGregor Capital had previously completed its
initial public offering, having raised a net proceeds of approximately
$135,000 at a price of $.01 per unit. During the course of Mr. Kavanagh's
four month tenure, McGregor was actively seeing a merger or acquisition
candidate. However, Mr. Kavanagh resigned as an Officer and Director of
the Corporation prior to McGregor having entered into any merger or
acquisition agreement with any candidate. Mr. Kavanagh received 1,250,000
shares of McGregor's common stock for services he rendered to McGregor
during this time as an Officer and Director. In January 1988, Mr. Kavanagh
became an Officer and Director of Huntington Capital Corporation of
Englewood, Colorado. The corporation was originally formed as Lakeshore
Capital on July 6, 1988, but changed its name to Huntington Capital
Corporation, November 1, 1988. Its purpose was to create a vehicle to
obtain capital to take advantage of business opportunities which may have
potential profit. Mr. Kavanagh purchased 5,500,000 founding shares for
$1,100 which he still owns. There were no public funds raised and the
corporation remained inactive until recently. Mr. Kavanagh submitted his
resignation as an Officer and Director on April 26, 1996, and has no
current management involvement. The corporation is now being reactivated
and re-registered by another group of participants. From August 1994 to
September 1996, Mr. Kavanagh was an Officer and Director of Ogden, McDonald
and Company. The company was sold in September 1996 to American Petromoly,
Inc. This
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Houston company is a manufacturer of oil derivative products. Mr. Kavanagh
resigned as an Officer and Director upon the sale of the corporation. In
August 1996, Mr. Kavanagh was elected and currently serves as an Officer
and Director of publicly-traded USAsurance, Group, Inc. - a speciality
finance company located in Englewood, Colorado.
ANTHONY GRIFFIN. Mr. Griffin has been the Company's Secretary and a
Director since January 13, 1995. Mr. Griffin has been the Company's
Secretary and a Director since January 13, 1995. Mr. Griffin attended the
University of Colorado, Boulder full time through the Spring of 1992. He
now holds a Bachelor of Arts degree from that institution. From 1992 Mr.
Griffin served as a manager and employee benefits consultant with Scoure
Financial Services, Inc. From 1994 through 1996, Mr. Griffin served in the
same capacity with Benefits Inc. in Denver, Colorado. Since that time, Mr.
Griffin has served as the Managing partner with Asset Partners, LLC, an
employee benefit consulting firm.
GARY M. GRIFFIN. Mr. Griffin has been a Director of the Company since
January 13, 1995. Since April 1988, Mr. Griffin has served as the
President of Consultant Group, Inc., Englewood, Colorado, a corporation
solely-owned by him, which provides financial public relations services and
advice on corporate restructuring to private and public corporations
operating in the United States, the United Kingdom and France. From
January 1992 to November 1994, Mr. Griffin was the President of Beneficial
Capital Financial Services, Inc., a financial consulting firm. He served
as the Treasurer and Chairman of the Board of Directors of Resource Finance
Group, Ltd. ("RFG"), a public Colorado corporation engaged in the business
of providing operators of metal mines in selected developing countries with
mining and processing equipment and training in exchange for a revenue
interest in the mines, from August 1991 until RFG merged, in April 1993,
with Onyx Systems, Ltd. He received a Bachelor of Business Administration
from the University of Texas in 1964 and a Master's degree in business
administration from North Texas State University in 1965.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
- -----------------------------------------
As permitted by Colorado law, the Company's Articles of Incorporation
provide that the Company will indemnify its Directors and Officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil
or criminal action brought against them on account of their being or having
been Company Directors or Officers unless, in any such action, they are
adjudged to have acted with gross negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Directors, Officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
EXCLUSION OF LIABILITY
- ----------------------
Pursuant to the Colorado Business Corporation Act, the Company's
Articles of Incorporation exclude personal liability for its directors for
monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any breach of the duty of loyalty,
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, acts in violation of Section 7-106-401 of
the Colorado Business
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Corporation Act, or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit any
right which a director may have to be indemnified and does not affect any
director's liability under federal or applicable state securities laws.
OTHER PUBLIC SHELL ACTIVITIES
- -----------------------------
From October 1986 to December 1987, Mr. Kavanagh was an Officer and
Director of Clearview Capital Corporation (SEC File #33-12288), a public
"blank check" company located in Englewood, Colorado. In December 1987,
Clearview Capital Corporation merged with a Houston, Texas based, Mexican
Restaurant operation and changed its name to Arriba Fajita Holdings Inc.
From May 1987 to January 1988, Mr. Kavanagh served as an Officer and
Director of Tonga Capital Corporation, a public "blank check" company
located in Englewood, Colorado. In October 1987, Tonga commenced an
initial public offering of its securities, raising net proceeds of
$146,250, through the offer and sale of units comprised of one share of
common stock and one common stock purchase warrant at the price of $.01 per
unit. Mr, Kavanagh resigned as an Officer and Director of Tonga in January
1988, prior to Tonga having entered into a merger or acquisition agreement
with any business. During the course of Mr. Kavanagh's tenure with the
company, Tonga completed its initial public offering of securities and had
begun the search for a merger or acquisition candidate. As an Officer and
Director of the Company, Mr. Kavanagh had the opportunity to purchase
1,000,000 shares of Tonga's common stock for $100.00. Upon his resignation
from Tonga, Mr. Kavanagh re-contributed the 1,000,000 shares to the
Company's treasury. In January 1989, Mr. Kavanagh became an Officer and
Director of Huntington Capital Corporation of Englewood, Colorado (SEC File
#33-26307). The corporation was originally formed as Lakeshore Capital in
July 6, 1988, but changed its name to Huntington Capital Corporation,
November 1, 1988. Its purpose was to create a vehicle to obtain capital to
take advantage of business opportunities which may have potential profit.
Mr. Kavanagh purchased 5,500,000 founding shares for $1,100, which he still
owns. There were no public funds raised and the Corporation remained
inactive until recently. Mr. Kavanagh submitted his resignation as an
Officer and Director April 26, 1996, and has no current management
involvement. The corporation is now being reactivated and re-registered by
another group of participants. From August 1994 to September 1996, Mr.
Kavanagh was an Officer and Director of Ogden, McDonald and Company (SEC
File #0-24682). The company was sold in September 1996 to American
Petromoly, Inc. This Houston located company is a manufacturer of oil
derivative products. Mr. Kavanagh resigned as an Officer and Director upon
the sale of the Corporation. For his services in connection with the
merger, he received 25,000 shares, which he sold for $6,000.
Mr. Gary Griffin was President of Beneficial Capital Financial
Services, Inc. from January 1992 to November 1994 when it merged with
Golden Eagle International Corp. Mr. Griffin resigned as an Officer and
Director of that corporation upon the close of the merger.
No other Officer and/or Director of the Company has any prior
involvement with public shell companies or experience in identifying
emerging companies for investment and/or business combinations.
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CONFLICTS OF INTEREST
- ---------------------
The Officers and Directors of the Company will devote only a small
portion of their time to the affairs of the Company, estimated to be no
more than approximately 10 hours per month. There will be occasions when
the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may
require that the Company attempt to employ additional personnel. There is
no assurance that the services of such persons will be available or that
they can be obtained upon terms favorable to the Company.
The Company's Officers and Directors may elect, in the future, to form
one or more additional shell companies with a business plan similar or
identical to that of the Company. Any such additional shell companies
would also be in direct competition with the Company for available business
opportunities. To avoid a conflict in this regard, the Company's Officers
and Directors will not submit a business opportunity to any other shell
company of which they are associated until it has first been reviewed by
the Company's Board of Directors and accepted or rejected.
The Company's Officers and Directors may actively negotiate or
otherwise consent to the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium over the initial
cost of such shares may be paid by the purchaser in conjunction with any
sale of shares by the Company's Officers and Directors which is made as a
condition to, or in connection with, a proposed merger or acquisition
transaction. The fact that a substantial premium may be paid to the
Company's Officers and Directors to acquire their shares creates a
potential conflict of interest for them in satisfying their fiduciary
duties to the Company and its other shareholders. Even though such a sale
could result in a substantial profit to them, they would be legally
required to make the decision based upon the best interests of the Company
and the Company's other shareholders, rather than their own personal
pecuniary benefit.
ITEM 6. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------------------------------------------------------
Name Other
and Annual Restricted All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonuses($) sation Awards SARs Payouts sation
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Matthew J. Kavanagh 1997 $ 0 -0- $ 0 -0- -0- -0- $675(1)
President 1996 N/A -0- $ 0 -0- -0- -0- -0-
Treasurer & Director 1995 N/A -0- $ 0 -0- -0- -0- -0-
</TABLE>
(1) Mr. Kavanagh received 225,000 shares of the Company's Common Stock
valued at $675 for services rendered the Company in 1995.
-24-
<PAGE>
The Company has no stock option, retirement, pension, or profit-sharing
programs for the benefit of Directors, Officers or other employees,
but the Board of Directors may recommend adoption of one or more such
programs in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Prior to the date of this Registration Statement, the Company issued
to Matthew J. Kavanagh, Anthony Griffin and Gary Griffin, Officers and
Directors of the Company, and to Terry Whiteside, Marshal Griffin, Duane
Peterson, Alex Herman, Equitus Corp., Rachel Ellis, Mark Hogan, Michael
Ferm and Keith Johnson, the founding shareholders, a total of 500,000
shares of Common Stock for a total of $1,500 in services valued at $1,500.
Services included advise as to corporate structure. Certificates
evidencing the Common Stock issued by the Company to these persons have all
been stamped with a restrictive legend, and are subject to stop transfer
orders by the Company. In addition, these shares have been placed in
escrow with the Company only to be released upon the successful completion
of a merger or business combination as described herein.
No Officer, Director, promoter, or affiliate of the Company has or
proposes to have any direct or indirect material interest in any asset
proposed to be acquired by the Company through security holdings,
contracts, options, or otherwise.
The Company will adopt a policy under which any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a prospective business opportunity would be paid
in stock or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in what
amount such a stock issuance might be made.
Although there is no current plan in existence, it is possible that
the Company will adopt a plan to pay or accrue compensation to its Officers
and Directors for services related to seeking business opportunities and
completing a merger or acquisition transaction.
The Company maintains a mailing address at the office of its
President, but otherwise does not maintain an office. As a result, it pays
no rent and incurs no expenses for maintenance of an office and does not
anticipate paying rent or incurring office expenses in the future. It is
likely that the Company will establish and maintain an office after
completion of a business combination.
Although management has no current plans to cause the Company to do
so, it is possible that the Company may enter into an agreement with an
acquisition candidate requiring the sale of all or a portion of the Common
Stock held by the Company's current stockholders to the acquisition
candidate or principals thereof, or to other individuals or business
entities, or requiring some other form of payment to the Company's current
stockholders, or requiring the future employment of specified Officers and
payment of salaries to them. It is more likely than not that any sale of
securities by the Company's current stockholders to an acquisition
candidate would be at a price substantially higher than that originally
paid by such stockholders. Any payment to current stockholders in the
context of an acquisition involving the Company would
-25-
<PAGE>
be determined entirely by the largely unforeseeable terms of a future
agreement with an unidentified business entity.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
- ------------
The Company's Articles of Incorporation authorize the issuance of
500,000,000 shares of Common Stock. Each record holder of Common Stock is
entitled to one vote for each share held on all matters properly submitted
to the stockholders for their vote. Cumulative voting for the election of
directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors
out of legally available funds; and, in the event of liquidation,
dissolution or winding up of the affairs of the Company, holders are
entitled to receive, ratably, the net assets of the Company available to
stockholders after distribution is made to the preferred stockholders, if
any, who are given preferred rights upon liquidation. Holders of
outstanding shares of Common Stock have no preemptive, conversion or
redemptive rights. All of the issued and outstanding shares of Common
Stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent
that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
PREFERRED STOCK
- ---------------
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of preferred stock. The Board of Directors of the
Company is authorized to issue the preferred stock from time to time in
series and is further authorized to establish such series, to fix and
determine the variations in the relative rights and preferences as between
series, to fix voting rights, if any, for each series, and to allow for the
conversion of preferred stock into Common Stock. No preferred stock has
been issued by the Company. The Company anticipates that preferred stock
may be utilized in making acquisitions.
TRANSFER AGENT
- --------------
The Company is currently serving as its own transfer agent, and plans
to continue to serve in that capacity until such time as management
believes it is necessary or appropriate to employ an independent transfer
agent in order to facilitate the creation of a public trading market for
the Company's securities. Since the Company does not currently expect any
public market to develop for its securities until after it has completed a
business combination, it does not currently anticipate that it will seek to
employ an independent transfer agent until it has completed such a
transaction.
-26-
<PAGE>
REPORTS TO STOCKHOLDERS
- -----------------------
The Company plans to furnish its stockholders with an annual report
for each fiscal year containing financial statements audited by its
independent certified public accountants. In the event the Company enters
into a business combination with another company, it is the present
intention of management to continue furnishing annual reports to
stockholders. Additionally, the Company may, in its sole discretion, issue
unaudited quarterly or other interim reports to its stockholders when it
deems appropriate. The Company intends to comply with the periodic
reporting requirements of the Securities Exchange Act of 1934 for so long
as it is subject to those requirements.
-27-
<PAGE>
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
No public trading market exists for the Company's securities and all
of its outstanding securities are restricted securities as defined in Rule
144 of the Securities Act of 1933, as amended. There were eleven (11)
holders of record of the Company's common stock on September 30, 1997 and
with the exception of the shares held by the Company's Officers, Directors
and 10% shareholders, all shares have been held in excess of two years as
of June 16, 1997 and pursuant to Rule 144k, are free of restriction on
transfer. Shares held by the Officers, Directors and other affiliates (ie
10% shareholders) continue to be subject to the provisions of Rule 144 and
are not free of restriction. Accordingly, these individuals must comply
with the provisions of Rule 144, including the volume limitations and may
not sell their shares in excess of 1% of the Company's issued and
outstanding shares every ninety (90) days. No dividends have been paid to
date and the Company's Board of Directors does not anticipate paying
dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No Director, Officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the
Company, or any associate of any such Director, Officer or security holder
is a party adverse to the Company or has a material interest adverse to the
Company in reference to pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception, the Company has sold its Common Stock
to the persons listed in the table below in transactions summarized as
follows:
Aggregate Purchase
Date of Purchase Price
Name Sale Shares Price(1)(2) per Share
- ---- ---- ------ ----------- ---------
Matthew J. Kavanagh 06/13/95 255,000 $675 $.0003
Anthony Griffin 06/13/95 1,000 $ 3 $.0003
Terry Whiteside 06/13/95 50,000 $150 $.0003
Marshal Griffin 06/13/95 50,000 $150 $.0003
Duane Peterson 06/13/95 25,000 $ 75 $.0003
Alex Herman 06/13/95 25,000 $ 75 $.0003
-28-
<PAGE>
Equitas, Corp. 06/13/95 90,000 $270 $.0003
Richard Ellis 06/13/95 1,000 $ 3 $.0003
Mark Hogan 06/13/95 1,000 $ 3 $.0003
Michael Ferm 06/13/95 1,000 $ 3 $.0003
Keith Johnson 06/13/95 1,000 $ 3 $.0003
___________________
(1) Consideration consisted of services rendered to the Company related to
investigating and developing the Company's proposed business plan and
capital structure and completing the organization of the Company.
Officers and Directors met on several occasions to discuss and formate
the corporate structure and plan.
(2) Total aggregate consideration consisted of services valued by the
Company's Board of Directors at $1,500.00.
Each of the sales listed above was made for services. All of the
listed sales were made in reliance upon the exemption from registration
offered by Section 4(2) of the Securities Act of 1933, as amended and
applicable state private offering exemptions. Based upon Subscription
Agreements completed by each of the shareholders and the pre-existing
relationship between the shareholders and the Company, the Company believes
it had reasonable grounds to believe immediately prior to making an offer
to the private investors, and did in fact believe, when such subscriptions
were accepted, that such purchasers (1) were purchasing for investment and
not with a view to distribution, and (2) had such knowledge and experience
in financial and business matters that they were capable of evaluating the
merits and risks of their investment and were able to bear those risks.
The purchasers had access to pertinent information enabling them to ask
informed questions. The shares were issued without the benefit of
registration. An appropriate restrictive legend is imprinted upon each of
the certificates representing such shares, and stop-transfer instructions
have been entered in the Company's transfer records. All such sales were
effected without the aid of underwriters, and no sales commissions were
paid.
Until such time as a business combination has been consummated and a
trading market exists, if ever, the Company's shares will not be qualified
or registered for sale by the existing shareholders in any state unless or
until an exemption from registration exists under federal and state
securities laws and/or a registration statement is filed and declared
effective by the Securities and Exchange Commission. At such time as a
trading market exists, the Company's shares may be sold in the secondary
trading market if in compliance with state regulations.
The Company will not issue any additional securities unless or until
it has received legal advise as to full compliance with federal and state
securities laws.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation and the Bylaws of the Company, filed as
Exhibits 3.1 and 3.2, respectively, provide that the Company will indemnify
its Officers and Directors for costs and expenses incurred in connection
with the defense of actions, suits, or proceedings where the Officer or
Director acted in good faith and in a manner he reasonably believed to be
in the Company's best interest and is a party by reason of his status as an
Officer or Director, absent a finding of negligence or misconduct in the
performance of duty.
-29-
<PAGE>
INTERNATIONAL CAPITAL FUNDING, INC.
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flow F-4
Statement of Shareholders' Equity F-5
Notes to the Financial Statements F-6 to F-8
-30-
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Balance Sheet
- -------------------------------------------------------------------------
Unaudited Audited
December September
31, 1997 30, 1997
-------- --------
ASSETS
- ------
Current Assets:
Total Current Assets $0 $0
-- --
TOTAL ASSETS $0 $0
== ==
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES - Accounts Payable 2,868 0
----- -
SHAREHOLDERS' EQUITY:
Preferred Stock, Par Value $.01 Per
Share; Authorized 100,000,000 Shares;
Issued and outstanding -0-
Common Stock, $.0001 Par Value;
Authorized 500,000,000 Shares;
Issued and outstanding
500,000 shares. 50 50
Additional Paid-In Capital 2,950 1,450
Deficit Accumulated During
The Development Stage (5,868) (1,500)
TOTAL SHAREHOLDERS' EQUITY (2,868) 0
------ -
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $0 $0
== ==
See Accompanying Notes To These Unaudited Financial Statements.
-31-
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Unaudited Statement Of Operations
- ----------------------------------------------------------------------------
June 10,
1991
3 Months 3 Months (Inception)
Ended Ended Through
December December December
31, 1997 31, 1996 31, 1997
-------- -------- --------
Revenue: $0 $0 $0
Consulting 0 0 1,500
Office 525 0 0
Legal & Accounting 3,843 0 0
----- - -
Total Expenses 4,368 0 1,500
----- - -----
Net (Loss) (4,368) 0 (1,500)
====== = ======
Basic (Loss) Per Common Share ($0.01) $0.00 ($0.00)
====== ===== ======
Weighted Average Common
Shares Outstanding 500,000 500,000 500,000
======= ======= =======
See Accompanying Notes To These Unaudited Financial Statements.
-32-
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Unaudited Statement Of Cash Flow
- -----------------------------------------------------------------------------
June 10,
1991
3 Months 3 Months (Inception)
Ended Ended Through
December December December
31, 1997 31, 1996 31, 1997
-------- -------- --------
Cash Flows From Operating Activities:
Net (Loss) ($4,368) $0 ($1,500)
Stock Issued For Services 0 0 1,500
Expenses Paid By Shareholder
On Behalf Of Company 1,500 0 0
Increase in Accounts Payable 2,868 0 0
----- - -
Net Cash Flows From Operations 0 0 0
- - -
Cash Flows From Investing
Activities:
Net Cash Flows Provided By Investing: 0 0 0
- - -
Cash Flows From Financing
Activities:
Net Cash Flows Provided By Financing: 0 0 0
- - -
Net Increase (Decrease) In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
- - -
Cash At End Of Period $0 $0 $0
== == ==
Supplementary Disclosure Of Cash
Flow Information:
Noncash Financing Activities: -
Stock Issued For Services $0 $0 $1,500
See Accompanying Notes To These Unaudited Financial Statements
-33-
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Unaudited Statement Of Shareholders' Equity
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net (Loss)
Number Number Capital Accumulated
Of Of Paid In During The
Shares Shares Common Excess Of Preferred Development
Common Preferred Stock Par Value Stock Stage Total
------ --------- ----- --------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance At June 10, 1991 0 0 $0 $0 $0 $0 $0
January 13, 1995 Issued
500,000 Shares Of $.0001
Par Value Common Stock
for services valued at
$1,500 or $.003 per share 500,000 0 50 1,450 0 1,500
Net (Loss) (1,500) (1,500)
------- ------- ------- ------- ------- ------- -------
Balance At September 30,
1995, 1996 And 1997 500,000 0 50 1,450 0 (1,500) 0
Expenses Paid By Shareholder 1,500 1,500
Net (Loss) (4,368) (4,368)
------- ------- ------- ------- ------- ------- -------
Balance At September 30,
1995, 1996 And 1997 500,000 0 $50 $2,950 $0 ($5,868) ($2,868)
======= = === ====== == ======== =======
</TABLE>
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements
-34-
<PAGE>
International Capital Funding, Inc.
Notes to Financial Statements
For The Three Month Period Ended December 31, 1997
- --------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month periods
ended December 31, 1997 and 1996 were taken from the books and records
without audit. However, such information reflects all adjustments
(consisting only of normal recurring adjustments, which are of the opinion
of management, necessary to reflect properly the results of interim periods
presented). The results of operations for the three month periods ended
December 31, 1997 are not necessarily indicative of the results expected
for the year ended September 30, 1998.
-35-
<PAGE>
INTERNATIONAL CAPITAL FUNDING, INC.
Audited Financial Statements
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1997 AND 1996
AND THE PERIOD JUNE 10, 1991 (INCEPTION)
THROUGH SEPTEMBER 30, 1997
-36-
<PAGE>
International Capital Funding, Inc.
TABLE OF CONTENTS
PAGE
----
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flow 4
Statement of Shareholders' Equity 5
Notes to the Financial Statements 6 to 8
-37-
<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
----------------------------
We have audited the accompanying balance sheet of International Capital
Funding, Inc. (a Developmental Stage Company), as of September 30, 1997 and
the related statements of income, shareholders' equity, and cash flows for
the fiscal years ended September 30, 1997 and 1996 and period June 10, 1991
(Inception) through September 30, 1997. 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 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 International Capital
Funding, Inc. at September 30, 1997 and the results of its operations and
its cash flows for the fiscal years ended September 30, 1997 and 1996 and
the period June 10, 1991 (Inception) through September 30, 1997 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the
Company is in the development stage and has no operations as of September
30, 1997. The deficiency in working capital as of September 30, 1997
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are described in Note 5. 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 2, 1997
-1-
38
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Balance Sheet
- -------------------------------------------------------------------------
NOTES September
----- 30, 1997
--------
ASSETS
Current Assets $0
--
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES $0
--
SHAREHOLDERS' EQUITY 1,2
Preferred Stock, $.01Par Value
Authorized 100,000,000 shares;
Issued And Outstanding At
September 30, 1997 -0- Shares
Common Stock, $.0001Par Value
Authorized 500,000,000 shares;
Issued And Outstanding At
September 30, 1997 500,000 Shares 50
Capital Paid In Excess Of Par Value 1,450
Deficit Accumulated During
The Development Stage (1,500)
------
TOTAL SHAREHOLDERS' EQUITY 0
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $0
--
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-2-
39
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Operations
- -------------------------------------------------------------------------
June 10,
1991
(Inception)
Year Ended Year Ended Through
September September September
Notes 30, 1997 30, 1996 30, 1997
----- -------- -------- --------
Revenue $0 $0 $0
-- -- --
Expenses:
Administrative 0 0 1,500
- - -----
Total Expenses 0 0 1,500
- - -----
Net (Loss) $0 0 (1,500)
-- - ------
Net (Loss) Per Common Share 1 $0.00 $0.00 ($0.00)
----- ----- ------
Common Shares Outstanding 2 500,000 500,000 500,000
------- ------- -------
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-3-
40
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Cash Flow
- --------------------------------------------------------------------------
June 10,
1991
(Inception)
Year Ended Year Ended Through
September September September
Notes 30, 1997 30, 1996 30, 1997
----- -------- -------- --------
Net (Loss) $0 $0 ($1,500)
-- -- ------
Plus Items Not Affecting
Cash Flow: 0 0 0
Services Rendered For Stock 0 0 1,500
- - -----
Net Cash Flows From Operations 0 0 0
- - -
Cash Flows From Investing
Activities:
Net Cash Flows From Investing: 0 0 0
- - -
Cash Flows From Financing
Activities:
0 0 0
- - -
Net Cash Flows From Financing: 0 0 0
- - -
Net Increase (Decrease) In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
- - -
Cash At End Of Period $0 $0 $0
-- -- --
Summary Of Non-Cash Investing
And Financing Activities:
Common Stock Issued For services $0 $0 $1,500
-- -- ------
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-4-
41
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net (Loss)
Number Number Capital Accumulated
Of Of Paid In During
Shares Shares Common Excess Of Preferred Development
NOTES Common Preferred Stock Par Value Stock Stage Total
----- ------ --------- ----- --------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance At June 10, 1991 2 0 0 $0 $0 $0 $0 $0
January 13, 1995 issued
500,000 Shares Of $.0001
Par Value Common Stock
for services valued at
$1,500 or $.003 per share 500,000 0 50 1,450 0 1,500
Net (Loss) (1,500) (1,500)
------- ------- ------- ------- ------- ------- -------
Balance At September 30,
1995, 1996 And 1997 500,000 0 $50 $1,450 $0 ($1,500) $0
------- - --- ------ -- ------- --
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-5-
42
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On May 10, 1993, International Capital Funding, Inc. (the Company) was
incorporated under the laws of Colorado to engage in any lawful business
allowed by the state of Colorado.
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on
January 13, 1995. Its purpose is to evaluate, structure and complete a
merger with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose 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 fiscal year ended September 30, 1997 and 1996 was
$-0-. Cash paid for income taxes in fiscal year ended September 30, 1997
and 1996 was $-0-.
Net (Loss) per Common Share:
Net (Loss) per common share is computed by dividing the net loss for the
period by the number of shares outstanding at September 30, 1997 and 1996.
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.
6
43
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 2 - Capital Stock and Capital in Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 500,000,000 shares of $.0001 par value
common stock and 100,000,000 shares of $.01 par value preferred stock. On
January 13, 1995, the company issued 500,000 shares of common stock valued
at $1,500 for services and cash advances paid on behalf of the Company.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at a shareholders place of
business. This address is located at 3140 S Peoria Street - K230, Aurora,
Colorado 80014. At this time the Company has no need for an office other
than to maintain a mailing address. Management has incurred a minimal
amount of time and expense on behalf of the Company.
Note 4 - Income Taxes
- ---------------------
At September 30, 1997, the company had net operating loss carryforwards
available for financial statement and Federal income tax purposes of
approximately $1,500 which, if not used, will expire in the year 2008.
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 September 30, 1997, the Company has a deferred tax asset of
$300 primarily for its net operating loss carryforward which has been fully
reserved through a valuation allowance. The change in the valuation
allowance for September 30, 1997 is $-0-.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term, revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern
is dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
7
44
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 6 - Subsequent Events
- --------------------------
The Company will be filing a Form 10 with the Securities and Exchange
Commission to become a 34 Act reporting company.
8
45
<PAGE>
PART III
ITEMS 1 AND 2. INDEX AND DESCRIPTION TO EXHIBITS
The Exhibits listed below are filed as part of this Registration
Statement.
Exhibit
No. Document
- --------- --------
EX-3.(i) Articles of Incorporation dated June 11, 1991*
EX-3.(ii) Bylaws of the Company*
EX-27.1 Financial Data Schedule*
EX-27.2 Financial Data Schedule
___________________
* previously submitted
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
INTERNATIONAL CAPITAL FUNDING, INC.
By: /s/ MATTHEW J. KAVANAGH
------------------------------------
Matthew J. Kavanagh III, President,
Treasurer and Director (Principal
Executive Officer and
Principal Financial Officer)
Date: March 2, 1998
By: /s/ ANTHONY GRIFFIN
-----------------------------------
Anthony Griffin, Secretary
Date: March 2, 1998
-46-
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNATIONAL CAPITAL FUNDING, INC.
--------------------------------------------------
(Name of small business issuer in its charter)
Colorado 84-1434313
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3140 SO. PEORIA STREET, SUITE K230
AURORA, CO 80114
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 755-9832
----------------
EXHIBIT INDEX
-------------
Exhibit Page Number in
No. Document Sequentially Numbered System
- ------- -------- ----------------------------
EX-3.(i) Articles of Incorporation* 39
EX-3.(ii) Bylaws* 47
EX-27 Financial Data Schedule* 67
EX-27.2 Financial Data Schedule
* previously submitted
-47-
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 3
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (3)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 4
<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> (4)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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