<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A2
Post Effective Amendment No. 2 to Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
FIRST DELTAVISION, INC.
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(Name of Small Business Issuer as specified in its charter)
NEVADA 0-23511 87-0412182
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(State or other jurisdiction of SEC File (I.R.S. incorporation or
organization) Number Employer I.D. No.)
9005 Cobble Canyon Lane
Sandy, Utah 84093
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 942-0555
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 par value common stock
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Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index herein.
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PART I
Item 1. Description of Business.
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Business Development.
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First Deltavision, Inc. (the "Company") was organized under the laws of
the State of Utah on July 31, 1984, under the name "Aquachlor Marketing Inc."
The Company was incorporated primarily to engage in the sale, marketing and
manufacturing of an electronic chlorinator for swimming pools and food
processing and the sale of swimming pool and food processing equipment and
supplies.
The Company was initially authorized to issue a total of 50,000
shares of common stock having no par value.
On October 21, 1988, the Company completed an Agreement and Plan of
Reorganization (the "Plan")with Deltavision, a partnership ("Deltavision").
The Company agreed to issue 1,200,000 shares of its common stock and to pay
$150,000, in the form of a five year note at ten percent annual interest, for
all of the technology of Deltavision.
An amendment to the Articles of Incorporation of the Company on December
9, 1988, increased its authorized shares to 50,000,000 and the par value to
$0.001, and provided for a five for one forward split of the outstanding
securities. Copies of the initial Articles of Incorporation and this
amendment were attached to the Company's Registration Statement on Form 10-SB,
which was filed with the Securities and Exchange Commission on December 16,
1997, and incorporated herein by reference. See the Exhibit Index, Part
III, Item 1.
On December 23, 1988, the Company merged with a Nevada corporation of the
same name which was formed by the Company for the purpose of changing its
domicile. On the same date, the Company also amended its Articles of
Incorporation to change its name to "Deltavision, Inc." Copies of the
Agreement of Merger and this amendment were attached to the Company's
Registration Statement on Form 10-SB, which was filed with the Securities and
Exchange Commission on December 16, 1997, and incorporated herein by
reference. See the Exhibit Index, Part III, Item 1.
The business operations of the Company succeeded to on the acquisition
of Deltavision proved unsuccessful, and the Company was dormant from 1989
until May of 1996.
On May 27, 1996, at a Special Meeting of the Board of Directors, the
Board authorized the issuance of a total of 38,000,000 "unregistered" and
"restricted" shares of its common stock for services rendered by David C.
Merrell, Todd D. Ross and Jerry Peterson. Mr. Merrell and Mr. Ross are
directors and executive officers of the Company. See Part I, Items 4 and 5.
The Company's charter was revived on March 25, 1997, and the name
"Deltavision, Inc." was not available at the time of the revival; the Company
applied for revival under the name "First Deltavision, Inc." in accordance
with the Nevada Revised Statutes. Copies of the Application of Revival were
attached to the Company's Registration Statement, which were filed with the
Securities and Exchange Commission on December 16, 1997, and the Certificate
of Revival is attached hereto and incorporated herein by reference. See the
Exhibit Index, Part III, Item 1.
On April 23, 1997, the Board of Directors unanimously resolved to execute
a written compensation agreement (the "Consulting Compensation Agreement")
authorizing the issuance of 30,000 post-split (see the following paragraph)
shares as follows: Leonard W. Burningham, Esq., 20,000 shares; Branden T.
Burningham, Esq., 3,500 shares; Sheryl Ross, 3,500 shares and Bradley C.
Burningham, 3,000 shares. Messrs. Leonard W. and Branden T. Burningham are
father and son, respectively, and are both practicing lawyers, who provided
legal services; Bradley C. Burningham is also the son of Leonard W.
Burningham, and is employed by his father as a "due diligence" consultant; and
Ms. Ross is Leonard W. Burningham's office manager, who provided miscellaneous
services for the benefit of the Company.
On May 6, 1997, the Company's Board of Directors unanimously approved a
248.339 for one reverse split of its outstanding common voting stock, while
retaining the authorized shares and par value at current numbers, with
appropriate adjustments in the stated capital and capital surplus accounts of
the Company. Fractional shares were rounded up to the nearest whole share,
with no stockholder's holdings to be reduced to less than 100 shares as a
result of the reverse split, and those stockholders who presently owned less
than 100 shares prior to the reverse split would not be affected thereby.
Additional shares required for rounding were deducted from the holdings of
David C. Merrell, the Company's President and one of its directors. An
amendment to the Certificate of Incorporation of the Company was filed with
the State of Nevada on May 6, 1997, respecting the reverse split, and a copy
of thereof was attached to the Company's Registration Statement on Form 10-SB,
which was filed with the Securities and Exchange Commission on December 16,
1997, and incorporated herein by reference. See the Exhibit Index, Part III,
Item 1.
All references to outstanding common stock hereafter take into account
this reverse split.
On October 15, 1997, the Board of Directors unanimously resolved to
issue 5,000 "unregistered" and "restricted" shares of its common stock to
Raymond Wilson as additional consideration for his release of any and all
liabilities owed to him by the Company; Mr. Wilson was formerly a director and
executive officer of the Company and was the party to whom the Company
executed and delivered its $150,000 promissory note on the completion of the
acquisition of Deltavision. A copy of the General Release, which provided for
Mr. Wilson to retain 7,500 post-split shares (at the time of the execution of
the General Release, Mr. Wilson and his family already owned 2,500 post-split
shares of the Company), is attached hereto and incorporated herein by
reference. It also resolved to issue 1,000 "unregistered" and "restricted"
shares of its common stock to Victor Ivachin, a non-affiliated party, for
services rendered and valued at par value.
Taking into account the reverse split, the issuance of the 30,000 shares
to the foregoing consultants and the issuance of the 6,000 shares in the
preceding paragraph, there are 235,000 outstanding shares of the Company's
common stock.
Business.
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Other than the above-referenced matters and seeking and investigating
potential assets, property or business to acquire, the Company has had no
business operations for the past eight fiscal years. To the extent that the
Company intends to continue to seek the acquisition of assets, property or
business that may benefit the Company and its stockholders, it is essentially
a "blank check" company. Because the Company has limited assets and conducts
no material business, management anticipates that any such acquisition would
require it to issue shares of its common stock as the sole consideration for
the acquisition. This may result in substantial dilution of the shares of
current stockholders. The Company's Board of Directors shall make the final
determination whether to complete any such acquisition; the approval of
stockholders will not be sought unless required by applicable laws, rules and
regulations, its Articles of Incorporation or Bylaws, or contract nor does the
Company intend to provide any disclosure documentation to stockholders unless
similarly required. The Company makes no assurance that any future enterprise
will be profitable or successful.
The Company is not currently engaging in any substantive business
activity and has no plans to engage in any such activity in the foreseeable
future. In its present form, the Company may be deemed to be a vehicle to
acquire or merge with a business or company. The Company does not intend to
restrict its search to any particular business or industry, and the areas in
which it will seek out acquisitions, reorganizations or mergers may include,
but will not be limited to, the fields of high technology, manufacturing,
natural resources, service, research and development, communications,
transportation, insurance, brokerage, finance and all medically related
fields, among others. The Company recognizes that the number of suitable
potential business ventures that may be available to it may be extremely
limited, and may be restricted to entities who desire to avoid what may be
deemed to be the adverse factors related to an initial public
offering ("IPO"). The most prevalent of these factors include substantial time
requirements, legal and accounting costs, the inability to obtain an
underwriter who is willing to publicly offer and sell shares, the lack of or
the inability to obtain the required financial statements for such an
undertaking, limitations on the amount of dilution to public investors in
comparison to the stockholders of any such entities, along with other
conditions or requirements imposed by various federal and state securities
laws, rules and regulations. Any of these types of entities, regardless of
their prospects, would require the Company to issue a substantial number of
shares of its common stock to complete any such acquisition, reorganization or
merger, usually amounting to between 80 and 95 percent of the outstanding
shares of the Company following the completion of any such transaction;
accordingly, investments in any such private entity, if available, would be
much more favorable than any investment in the Company.
Although the Company has not communicated with any other entity with
respect to any potential merger or acquisition transaction, management has
determined to file this Registration Statement on a voluntary basis. In order
to have stock quotations for its common stock on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ"), one of the
requirements is that an issuer must have such securities registered under the
Securities and Exchange Act of 1934 (the "1934 Act." Upon the effective date
of this Registration Statement, the Company's common stock became registered
for purposes of the 1934 Act. Management believes that this will make the
Company more desirable for entities that may be interested in engaging in a
merger or acquisition transaction. To the extent that management deems it
advisable or necessary to maintain a quotation of its common stock on any
securities market, the Company will voluntarily file periodic reports in the
event its obligation to file such reports is terminated under the 1934 Act.
In the event that the Company engages in any transaction resulting in a
change of control of the Company and/or the acquisition of a business by
purchase, reorganization or merger, the Company will be required to file with
the Securities and Exchange Commission a Current Report on
Form 8-K within 15 days of such transaction. A filing on Form 8-K also
requires the filing of audited financial statements of the acquired venture,
as well as pro forma financial information consisting of a pro forma condensed
balance sheet, pro forma statements of income and accompanying explanatory
notes, within 75 days of the date of any such report.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none
of which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly or accurately
analyze, let alone describe or identify, without referring to specific
objective criteria.
Mr. Merrell has substantial experience and expertise with analyzing
prospective business endeavors and will be the one to determine the viability
of a prospective business endeavor. Mr. Merrell has for the last eight years,
through his business DCM Finance, found several profitable businesses that he
has merged into "blank check" companies in which he was involved. Mr. Ross
has limited experience with analyzing the quality of a prospective business
endeavor. See the heading "Other Public Shell Activities," of Part I, Item 5,
of this Registration Statement.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of
changing market strategies, plant or product expansion, changes in product
emphasis, future management personnel and changes in innumerable other
factors. Further, in the case of a new business venture or one that is in a
research and development mode, the risks will be substantial, and there will
be no objective criteria to examine the effectiveness or the abilities of its
management or its business objectives. Also, a firm market for its products or
services may yet need to be established, and with no past track record, the
profitability of any such entity will be unproven and cannot be predicted with
any certainty.
Management or its legal counsel and authorized representatives will
attempt to meet personally with management and key personnel of the entity
sponsoring any business opportunity afforded to the Company, visit and inspect
material facilities, obtain independent analysis or verification of
information provided and gathered, check references of management and key
personnel and conduct other reasonably prudent measures calculated to ensure a
reasonably thorough review of any particular business opportunity; however,
due to time constraints of management and minimal resources to engage others,
these activities may be limited.
The Company is unable to predict the time as to when and if it may
actually participate in any specific business endeavor. The Company
anticipates that proposed business ventures will be made available to it
through personal contacts of directors, executive officers and principal
stockholders, professional advisors, broker-dealers in securities, venture
capital personnel, members of the financial community and others who may
present unsolicited proposals. In certain cases, the Company may agree to pay
a finder's fee or to otherwise compensate the persons who submit a potential
business endeavor in which the Company eventually participates. Such persons
may include the Company's directors, executive officers, beneficial owners or
their affiliates. In this event, such fees may become a factor in negotiations
regarding a potential acquisition and, accordingly, may present a conflict of
interest for such individuals.
The Company will not seek out a target company, but will use referrals
from previous business contacts for potential acquisition targets.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business
or company in which the Company's executive officers, directors, beneficial
owners or their affiliates may have an ownership interest. Current Company
policy does not prohibit such transactions. Because no such transaction is
currently contemplated, it is impossible to estimate the potential pecuniary
benefits to these persons.
Further, substantial fees are often paid in connection with the
completion of these types of acquisitions, reorganizations or mergers, ranging
from a small amount to as much as $250,000. These fees are usually divided
among promoters or founders, after deduction of legal, accounting and other
related expenses, and it is not unusual for a portion of these fees to be paid
to members of management or to principal stockholders as consideration for
their agreement to retire a portion of the shares of common stock owned by
them. It is not anticipated that any such opportunity will be afforded to
other stockholders. In the event that such fees are paid, they may become a
factor in negotiations regarding any potential acquisition by the Company and,
accordingly, may present a conflict of interest for such individuals.
Management may actively negotiate or otherwise consent to the purchase of any
portion of its common stock as a condition to, or in connection with, a
proposed merger or acquisition. In such an event, the Company's remaining
stockholders may not be afforded an opportunity to approve or consent to any
particular stock buy out transaction.
The Company's officers and directors in the past have not used any
particular consultants and do not intend to use any consultants in regard to
this Company.
Although it is not formally prohibited by Company policy, it is not
expected that the Company will borrow funds in order to make payment to its
management, promoters or their affiliates or associates in connection with any
buy out transaction.
Management intends to submit for quotations of its common stock on the
OTC Bulletin Board of the National Associates of Securities Dealers, Inc.
("NASD"); however, management has had no discussions with any broker-dealer in
this respect.
Risk Factors.
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In any business venture, there are substantial risks specific to the
particular enterprise and which cannot be ascertained until a potential
acquisition, reorganization or merger candidate has been identified; however,
at a minimum, the Company's present and proposed business operations will be
highly speculative and subject to the same types of risks inherent in any new
or unproven venture, and will include those types of risk factors outlined
below.
Extremely Limited Assets; No Source of Revenue. The Company has
virtually no assets and has had no revenue for the past eight fiscal years or
to the date hereof. Nor will the Company receive any revenues until it
completes an acquisition, reorganization or merger, at the earliest. During
the fiscal year ended June 30, 1997 and the six month period ended December
31, 1997, the Company realized net losses of $7,940 and $5,986, respectively.
In addition, the Independent Auditors Report, dated February 19, 1998, for the
Company's most recent audited financial statements, expressed "substantial
doubt about the Company's ability to continue as a going concern." The
Company can provide no assurance that any acquired venture will produce any
material revenues for the Company or its stockholders or that any such venture
will operate on a profitable basis. Except as indicated under the heading
"Plan of Operation" of the caption "Management's Discussion and Analysis or
Plan of Operation," Part I, Item 2, herein, there are no plans, proposals,
agreements or understandings with respect to the sale or issuance of
additional securities by the Company prior to the location of an acquisition
or merger candidate or over the next twelve month period.
Discretionary Use of Proceeds; "Blank Check" Company. Because the
Company is not currently engaged in any substantive business activities, as
well as management's broad discretion with respect to the acquisition of
assets, property or business, the Company may be deemed to be a "blank check"
company. Although management intends to apply substantially all of the
proceeds that it may receive through the issuance of stock or debt to a
suitable acquisition, subject to the criteria identified above, such proceeds
will not otherwise be designated for any more specific purpose. The Company
can provide no assurance that any allocation of such proceeds will allow it to
achieve its business objectives.
Management believes that there are literally thousands of "blank check"
companies, many of which may have substantially greater financial and
management resources and capabilities, which are searching for similar
business opportunities. This highly competitive environment may make it more
difficult for the Company to locate and enter into a reorganization
transaction with a suitable company. See the heading "Other Public Shell
Activities," of Part I, Item 5.
Absence of Substantive Disclosure Relating to Prospective
Acquisitions. Because the Company has not yet identified any assets, property
or business that it may acquire, potential investors in the Company will have
virtually no substantive information upon which to base a decision of whether
to invest in the Company. Potential investors would have access to
significantly more information if the Company had already identified a
potential acquisition or if the acquisition target had made an offering of its
securities directly to the public. The Company can provide no assurance that
any investment in the Company will not ultimately prove to be less favorable
than such a direct investment.
Unspecified Industry and Acquired Business; Unascertainable Risks.
To date, the Company has not identified any particular industry or business in
which to concentrate its acquisition efforts. Accordingly, prospective
investors currently have no basis to evaluate the comparative risks and
merits of investing in the industry or business in which the Company may
invest. To the extent that the Company may acquire a business in a high
risk industry, the Company will become subject to those risks. Similarly, if
the Company acquires a financially unstable business or a business that is in
the early stages of development, the Company will become subject to
the numerous risks to which such businesses are subject. Although management
intends to consider the risks inherent in any industry and business in which
it may become involved, there can be no assurance that it will correctly
assess such risks.
Uncertain Structure of Acquisition. Management has had no
preliminary contact or discussions regarding, and there are no present plans,
proposals or arrangements to acquire any specific assets, property or
business. Accordingly, it is unclear whether such an acquisition would take
the form of an exchange of capital stock, a merger or an asset acquisition.
However, because the Company has virtually no resources as of the date of this
Registration Statement, management expects that any such acquisition would
take the form of an exchange of capital stock. See Part I, Item 2 of this
Registration Statement.
State Restrictions on "Blank Check" Companies. A majority of states
prohibit or substantially restrict the registration and sale of "blank check"
companies within their borders or use "merit review powers" to exclude
securities offerings from their borders in an effort to screen out offerings
of highly dubious quality. The Company intends to comply fully with all state
securities laws, and plans to take the steps necessary to ensure that any
future offering of its securities is limited to those states in which such
offerings are allowed. However, these legal restrictions may have a material
adverse impact on the Company's ability to raise capital because potential
purchasers of the Company's securities must be residents of states that permit
the purchase of such securities. These restrictions may also limit or
prohibit stockholders from reselling shares of the Company's common stock
within the borders of regulating states.
By regulation or policy statement, several states place various
restrictions on the sale or resale of equity securities of "blank check" or
"blind pool" companies. These restrictions include, but are not limited to,
heightened disclosure requirements, exclusion from "manual listing"
registration exemptions for secondary trading privileges and outright
prohibition of public offerings of such companies.
In most jurisdictions, "blank check" and "blind pool" companies are
not eligible for participation in the Small Corporate Offering Registration
("SCOR") program, which permits an issuer to notify the Securities and
Exchange Commission of certain offerings registered in such states by filing a
Form D under Regulation D of the Securities and Exchange Commission. The
majority of states have adopted some form of SCOR. States participating in
the SCOR program also allow applications for registration of securities by
qualification by filing a Form U-7 with the states' securities commissions.
Nevertheless, the Company does not anticipate making any SCOR offering or
other public offering in the foreseeable future, even in any jurisdiction
where it may be eligible for participation in SCOR despite its status as a
"blank check" or "blind pool" company.
The National Securities Markets Improvement Act of 1996 provides an
exemption from state regulation of offerings of "covered securities."
"Covered securities" include, among other things, transactions by persons
other than issuers, underwriters or dealers, and certain transactions by
dealers, in securities of issuers that file reports with the Securities and
Exchange Act. Upon the effectiveness of this Registration Statement, the
Company became subject to the reporting requirements of Section 13 of the
Exchange Act, and management believes that such transactions will be exempt
from state regulation, with the possible exception of certain notice filings
and payment of fees.
The net effect of the above-referenced laws, rules and regulations
will be to place significant restrictions on the Company's ability to
register, offer and sell and/or to develop a secondary market for shares of
the Company's common stock in virtually every jurisdiction in the United
States. These restrictions should cease once and if the Company acquires a
venture by purchase, reorganization or merger, so long as the business
operations succeeded to involve sufficient activities of a specific nature.
Dependence on Management. The Company will be entirely dependent upon
its management in locating any suitable acquisition or merger candidate. The
Company has no employment agreements with management and does not maintain
"key man" life insurance for such individuals.
Management to Devote Insignificant Time to Activities of the
Company. Members of the Company's management are not required to devote
their full time to the affairs of the Company. Because of their time
commitments, as well as the fact that the Company has no business operations,
the members of management anticipate that they will devote less than 10% of
their working hours to the activities of the Company, at least until such time
as the Company has identified a suitable acquisition target.
Loss of Corporate Control. Due to the fact that the Company has no
assets, management anticipates that any merger or acquisition transaction will
require the Company to issue shares of its common stock as the sole
consideration for such transaction. Such an issuance would almost certainly
result in a change in control of the Company and may also result in
substantial dilution of the shares of current stockholders.
Conflicts of Interest; Related Party Transactions. Although the
Company has not identified any potential acquisition target, the possibility
exists that the Company may acquire or merge with a business or company in
which the Company's executive officers, directors, beneficial owners or their
affiliates may have an ownership interest. Such a transaction may occur if
management deems it to be in the best interests of the Company and its
stockholders, after consideration of the above referenced factors. A
transaction of this nature would present a conflict of interest to those
parties with a managerial position and/or an ownership interest in both the
Company and the acquired entity, and may compromise management's fiduciary
duties to the Company's stockholders. In addition, any remedy available under
state corporate law in the event that management's fiduciary duties are
compromised will most likely be prohibitively expensive and time consuming.
An independent appraisal of the acquired company may or may not be obtained in
the event a related party transaction is contemplated. Furthermore, because
management and/or beneficial owners of the Company's common stock may be
eligible for finder's fees or other compensation related to potential
acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. Members of management
also serve in a similar capacities for several other companies that may be
deemed to be "blank check" companies. In the event that a potential merger or
acquisition candidate is brought to management's attention, these other
relationships may present a conflict of interest. Management will attempt to
minimize such conflict by presenting a list of the various "blank check"
companies that are available for such a transaction and allowing management of
the candidate entity to select the company that best meets its needs. Factors
that differentiate such "blank check" companies from one another include, for
example, the state of incorporation (and, accordingly, the corporation laws to
which such company is subject); whether or not the company has filed a
Registration Statement on Form 10-SB and is subject to the periodic reporting,
proxy and other requirements of the 1934 Act; the authorized classes of stock
and number of shares; the number of shares issued and outstanding; the number
of stockholders; the amount and nature of any assets and liabilities; and
whether or not the company's securities are quoted on the OTC Bulletin Board
of the NASD.
Competition. Management believes that there are thousands of "blank
check" companies that are also seeking merger or acquisition transactions.
Each of these entities will present competition to the Company in its search
for a suitable transaction candidate. In addition, David C. Merrell, the
Company's President and director, also serves as President and director of 15
companies that may be deemed to be "blank check" companies, and each of these
entities may be regarded as a direct competitor of the Company in the search
for suitable business opportunities. See the heading "Other 'Public Shell'
Activities" of the caption "Directors, Executive Officers, Promoters and
Control Persons," Part I, Item 5 of this Registration Statement.
Voting Control. Due to his ownership of a majority of the Company's
outstanding voting securities, David C. Merrell, the President and a director
of the Company, has the ability to elect all of the Company's directors, who
in turn elect all executive officers, without regard to the votes of other
stockholders. Mr. Merrell's present beneficial ownership amounts to
approximately 58% of the outstanding voting securities of the Company. See
Part I, Item 4.
No Market for Common Stock; No Market for Shares. Although the
Company intends to submit for listing of its common stock on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the "NASD"),
there is currently no market for such shares; and there can be no assurance
that such a market will ever develop or be maintained. Any market price for
shares of common stock of the Company is likely to be very volatile, and
numerous factors beyond the control of the Company may have a significant
effect. In addition, the stock markets generally have experienced, and
continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Company's common stock in any market
that may develop.
There has been no "established public market" for the Company's
common stock during the past seven years; the last quotations for securities
of the Company appeared in the "Pink Sheets" of the National Quotations
Bureau, Inc. during the last quarter of 1989 and the first quarter of 1990.
At such time as the Company completes an acquisition, reorganization or merger
transaction, if at all, it may attempt to qualify for listing on either NASDAQ
or a national securities exchange. However, at least initially, any trading
in its common stock will most likely be conducted in the over-the-counter
market in the "Pink Sheets" or the OTC Bulletin Board of the NASD.
Risks of "Penny Stock." The Company's common stock may be deemed to
be "penny stock" as that term is defined in Reg. Section 240.3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks (i) with a price
of less than five dollars per share; (ii) that are not traded on a
"recognized" national exchange; (iii) whose prices are not quoted on the
NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (i) above); or (iv) in issuers with net tangible assets less than
$2,000,000 (if the issuer has been in continuous operation for at least three
years) or $5,000,000 (if in continuous operation for less than three years),
or with average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended,
and Reg. Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the
Company's common stock are urged to obtain and read such disclosure carefully
before purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange
Commission requires broker-dealers in penny stocks to approve the account of
any investor for transactions in such stocks before selling any penny stock to
that investor. This procedure requires the broker-dealer to (i) obtain from
the investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for investors in the Company's common stock to resell their
shares to third parties or to otherwise dispose of them.
Year 2000.
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Because the Company is not presently engaged in any substantial business
operations, management does not believe that computer problems associated with
the change of year to the year 2000 will have any material effect on its
operations. However, the possibility exists that the Company may merge with
or acquire a business that will be negatively affected by the "year 2000"
problem. The effect of such problem or the Company in the future can not be
predicted with any accuracy until such time as the Company identifies a merger
or acquisition target.
Principal Products and Services.
- --------------------------------
The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activities to be conducted
by the Company are to manage its current limited assets and to seek out and
investigate the acquisition of any viable business opportunity by purchase and
exchange for securities of the Company or pursuant to a reorganization or
merger through which securities of the Company will be issued or exchanged.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts,
professionals, securities broker-dealers, venture capital personnel, members
of the financial community and others who may present unsolicited proposals;
the Company may also advertise its availability as a vehicle to bring a
company to the public market through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- --------------------------------
Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the Company;
many of these companies have substantial current assets and cash reserves.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly-held vehicle through which a
private entity may have access to the public capital markets, as well as the
other "blank check" companies for which David C. Merrell serves as a director
and executive officer. There is no reasonable way to predict the competitive
position of the Company or any other entity in the strata of these endeavors;
however, the Company, having limited assets and cash reserves, will no doubt
be at a competitive disadvantage in competing with entities which have
recently completed IPO's, have significant cash resources and have recent
operating histories when compared with the complete lack of any substantive
operations by the Company for the past several years. For a discussion of the
other "blank check" companies for which Mr. Merrell serves as a director and
executive officer, see the heading "Other 'Public Shell' Activities" of the
caption "Directors, Executive Officers, Promoters and Control Persons," Part
I, Item 5 of this Registration Statement.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- ----------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
None; not applicable.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
Because the Company currently produces no products or services, it is not
presently subject to any governmental regulation in this regard. However, in
the event that the Company engages in a merger or acquisition transaction with
an entity that engages in such activities, it will become subject to all
governmental approval requirements to which the merged or acquired entity is
subject.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective
as of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc. ("NASAA") have
expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets. The present laws, rules and regulations
designed to promote availability to the small business issuer of these capital
markets and similar laws, rules and regulations that may be adopted in the
future will substantially limit the demand for "blank check" companies like
the Company, and may make the use of these companies obsolete.
Research and Development.
- -------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------
None.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- -------------------------------------------------------------------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations or had any
revenues from operations during the past eight fiscal years. The Company's
plan of operation for the next 12 months is to continue to seek the
acquisition of assets, property or business that may benefit the Company and
its stockholders. Because the Company has virtually no resources, management
anticipates that to achieve any such acquisition, the Company will be required
to issue shares of its common stock as the sole consideration for any such
venture.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing or the
payment of expenses associated with reviewing or investigating any potential
business venture, which may be advanced by management or principal
stockholders as loans to the Company. Because the Company has not identified
any such venture as of the date of this Registration Statement, it is
impossible to predict the amount of any such loan. However, there are no
preliminary agreements or understandings with respect to loan agreements by
officers, directors, principals or affiliates of the Company and any such loan
will not exceed $25,000 and will be on terms no less favorable to the Company
than would be available from a commercial lender in an arm's length
transaction. As of the date of this Registration Statement, the Company has
not actively begun to seek any such venture.
Results of Operations.
- ---------------------
The Company has had no material operations since 1989. Losses of ($118),
($38,118) and ($7,940), respectively, for the fiscal years ended June 30,
1995, 1996 and 1997, resulted from the issuance of shares of common stock of
the Company for services rendered. These services primarily related to
maintaining the Company in good standing and "due diligence" activities
with respect to its history and past operations. These activities have
included, for example, confirming good standing, reviewing stock transfer
records and Articles of Incorporation, as amended, and arranging for the
preparation and auditing of financial statements. These activities were
undertaken in contemplation of the preparation of this Registration Statement.
Liquidity.
- ---------
The Company had no liquidity during the fiscal years ended June 30, 1996
and 1995. Advances by a director and executive officer during the fiscal year
ended June 30, 1997, amounted to $4,151, and were utilized for miscellaneous
expenses, filing fees and franchise taxes. Except as stated under the heading
"Plan of Operation," above, the Company does not contemplate raising capital
over the next twelve months by issuance of debt or equity securities. The
Company has no loan agreements with any officer or director.
Ordinarily any fees paid to management in connection with the
reorganization are first used to pay liabilities. If there are no funds
available, it is expected that management would contribute these amounts to
capital to pay these liabilities in hopes of enhancing the value of their
stock ownership.
Item 3. Description of Property.
- ---------------------------------
The Company has no assets, property or business; its principal
executive office address and telephone number are the home address and
telephone number of its President, David C. Merrell, and are provided at no
cost. Because the Company has no current business operations, its activities
have been limited to keeping itself in good standing in the State of Nevada,
and with preparing this Registration Statement and the accompanying financial
statements. These activities have consumed an insignificant amount of
management's time; accordingly, the costs to Mr. Merrell of providing the use
of his home and telephone have been minimal.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of those persons
who own more than five percent of the Company's common stock as of the date
hereof, to wit:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
David C. Merrell 136,648 58.148%
9005 Cobble Canyon Ln.
Sandy, Utah 84093
Leonard W. Burningham, Esq. 20,000 8.500%
455 East 500 South
Suite #205
Salt Lake City, Utah 84111
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of the date hereof, to wit:
Number of Shares
Beneficially Owned Percentage of
Name and Address as of 12/31/96 of Class
- ---------------- ------------------ -------------
[S] [C] [C]
David C. Merrell 136,648 58.148%
9005 Cobble Canyon Ln.
Sandy, Utah 84093
Todd D. Ross 4,027 1.713%
38 South 1650 West
Cedar City, Utah 84720
Totals: 140,675 59.86%
See the caption "Directors, Executive Officers, Promoters and Control
Persons," below, Part I, Item 5, for information concerning the offices or
other capacities in which the foregoing persons serve with the Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- -------- -------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These are the only persons whose
activities are expected to be material to the Company prior to the completion
of any merger or acquisition transaction. They will serve until the
next annual meeting of the stockholders (held in May of each year) or until
their successors are elected or appointed and qualified, or their prior
resignation or termination.
<TABLE>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
David C. Merrell Director and 5/21/96 *
President
Todd D. Ross Director and 5/21/96 *
Secy./Treasurer
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
David C. Merrell. Mr. Merrell is 39 years of age, and since 1989, he has
been the owner of DCM Finance, a Salt Lake City based finance company that
makes and brokers real estate loans. Mr. Merrell received his Bachelor of
Science degree in Economics from the University of Utah in 1981.
Todd D. Ross. Mr. Ross is 37 years of age, and since 1995, he has been a
partner in DCM Finance, a Salt Lake City Based finance company. Mr. Ross
developed and manages DCM's Internet site. He also reviews and submits
venture capital proposals for funding. Since 1991, Mr. Ross has also been the
Lighting Director for the Utah Shakespearean Festival.
Other "Public Shell" Activities.
- -------------------------------
None of the directors and executive officers are or have ever been
involved in any blank check public offerings and have no plans to do such an
offering. Furthermore, none of the current directors or executive officers
were involved when the Company had operations. However, as indicated below,
David C. Merrell has been and is currently involved as a director and
executive officer of other companies that may be deemed to be "blank check"
companies and future involvement in other "blank check" companies is very
likely, but presently unplanned.
David C. Merrell, President and Director. Mr. Merrell also serves as a
director and executive officer of the following public companies, (see the
heading "Business," of Part I, Item 1, and the risk factor "Conflicts of
Interest; Related Party Transactions," of the heading "Risk Factors," of Part
I, Item 1) which may give rise to a conflict of interest in seeking
acquisition of any property, assets and business, by reorganization, merger or
otherwise. Mr. Merrell does not believe that there will be any material
conflict of interest in serving as a director or executive officer in any of
these companies because information regarding these companies is usually
provided to persons who are interested in seeking to "go public" pursuant to a
"reverse" reorganization, merger or acquisition, and these persons generally
make the determination as to which company would better fit their
requirements.
SEC
Name of Company File No. Positions held Appointed Resigned
- --------------- ------- -------------- --------- --------
New Environmental 002 76219-NY President and 7/20/90 *
Technologies, Inc. Director
Digital Power Holding 2 93477-D President and 1/16/96 *
Company Director
Composite Design, Inc. 33 3358-NY President and 2/27/96 *
Director
A.X.R. Development, Inc. 2 99110-NY President and 9/23/96 *
Director
First Republic Capital, BD 8 28541 President and 7/31/96 *
Corporation Director
Saratoga Mint, Inc. 33 16271 President and 10/11/96 *
Director
The Theme Factory, Inc. 33 30158 President and 4/30/97 *
Director
Vibrosaun International, N/A President and 3/7/97 *
Inc. Director
E.R.C. Energy Recovery N/A President and 6/7/96 *
Corporation Director
AMCI International, Inc. N/A President and 5/18/96 *
Director
Souvall-Page & Company, N/A President and 6/23/97 *
Inc. Director
Alto Casino Corporation 33 1144-D President and 5/12/97 *
Director
Commercial Property, Inc. N/A President and 11/19/97 *
Director
Northwest Silver N/A President and 3/5/98 *
Corporation Director
Video Shopping Mall, Inc. N/A President and 3/1/98 *
Director
Cherokee Minerals and Oil, 0 23729 President and 2/1/96 1/5/98
Inc. Director
*presently serving in these capacities.
The following table summarizes the companies for which Mr. Merrell has
served as a director, executive officer or consultant and which have completed
a reorganization or merger, and the consideration received by Mr. Merrell in
connection with each reorganization:
<TABLE>
<CAPTION>
Reorg.
Original Company Name New Company Name Symbol Date Consideration(1)
- --------------------- ---------------- ------ -------- -------------
<S> <C> <C> <C> <C>
Kara International, Inc. International IHIN 2/23/98 16,000 shares
(SEC File No. 002 97690-D) Heritage $138,750
Incorporated
International Fire Trident Media TDNT 12/30/97 65,404 shares
Prevention, Inc. Group, Inc. $31,209.06
(SEC File No. 2 98074-NY)
(1) Mr. Merrell received this consideration in exchange for his
relinquishment of a controlling interest (by stock holdings) in each of these
entities.
Mr. Merrell served as the President and as a director of Kara
International, Inc., now known as International Heritage Incorporated, from
May 9, 1994, to April 11, 1997. He also served as the President and as a
director of International Fire Prevention, Inc., now known as Trident Media
Group, Inc., from September, 1996, to January 1998. Mr. Merrell presently has
no involvement with either entity other than his status as a minority
stockholder.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers.
Family Relationships.
- ---------------------
There are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid
by the Company for services rendered during the periods indicated:
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------
- -------------------
(a) (b) (d) (e) (f) (g)
(h) (I)
Securities
All
Other Underlying
Other
Name and Year or Annual Restricted
Options/LTIP Compen-
Principal Period Salary Bonus Compen- Stock SAR's (#)
Payouts sation
Position Ended ($) ($) sation($) Awards($) (1)
($)
- ------------------------------------------------------------------------------
- -------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
David C. Merrell 6/30/96 0 0 0 (1) 0
0 0
President 6/30/97 0 0 0 0 0
0 0
Director 9/30/97 0 0 0 0 0
0 0
Todd D. Ross 6/30/96 0 0 0 (1) 0
0 0
Sec./Treasurer, 6/30/97 0 0 0 0 0
0 0
Director 9/30/97 0 0 0 0 0
0 0
Raymond Wilson 6/30/96 0 0 0 0 0
0 0
Former Sec/Tres 6/30/97 0 0 0 0 0
0 0
Former Director 9/30/97 0 0 0 (2) 0
0 0
</TABLE>
(1) In May, 1996, 136,648 and 4,027 "unregistered" and
"restricted" shares of the Company's common stock, were
respectively issued to David C. Merrell and Todd R. Ross in
consideration of services rendered. See the caption "Business
Development" of this Registration Statement, Part I, Item 1.
(2) In October, 1997, the Company issued 5,000
"unregistered" and "restricted" shares of its common stock to
Raymond Wilson as additional consideration for his release of any
and all liabilities owed to him by the Company. See the caption
"Business Development" of this Registration Statement, Part I,
Item 1.
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the fiscal
years ended June 30, 1997 or 1996, or the period ending on the date of this
Registration Statement. Further, no member of the Company's management has
been granted any option or stock appreciation rights; accordingly, no tables
relating to such items have been included within this Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------------------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the captions
"Business Development" and "Executive Compensation" of this Registration
Statement, Part I, Items 1 and 6, respectively. The Company has no plans or
future policies under which it will pay or accrue compensation to its
directors, executive officers or any other persons for services related to
seeking business opportunities or completing a merger or acquisition
transaction.
On April 23, 1997, the Company executed a "Consultant Compensation
Agreement No. 1" with Leonard W. Burningham, Esq.; Branden T. Burningham, Esq;
Sheryl Ross; and Bradley C. Burningham ("the Compensation Agreement"). The
Compensation Agreement provides for these consultants to be compensated in the
aggregate amount of 30,000 shares of common stock pursuant to Rule 701 under
the Securities Act of 1933, in consideration of non-capital raising legal and
administrative services. For purposes of the Compensation Agreement, these
shares were valued at $0.04 per share. See the Exhibit Index, Part III, Item
1, of this Registration Statement.
Certain Business Relationships.
- -------------------------------
Except as indicated under the heading "Transactions With Management and
Others" of this caption, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the captions
"Business Development" and "Executive Compensation" of this Registration
Statement, Part I, Items 1 and 6, respectively.
Indebtedness of Management.
- ---------------------------
Except as indicated under the heading "Transactions With Management and
Others" of this caption, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the captions
"Business Development" and "Executive Compensation" of this Registration
Statement, Part I, Items 1 and 6, respectively.
Parents of the Issuer.
- ----------------------
The Company has no parents. See the caption "Business Development," Part
I, Item 1, of this Registration Statement.
Transactions with Promoters.
- ----------------------------
Except as indicated under the heading "Transactions With Management and
Others" of this caption, there have been no material transactions, series of
similar transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
promoter or founder, or any member of the immediate family of any of the
foregoing persons, had a material interest. However, see the captions
"Business Development" and "Executive Compensation" of this Registration
Statement, Part I, Items 1 and 6, respectively.
Item 8. Description of Securities.
- -----------------------------------
The Company's Articles of Incorporation, as amended, authorize the
Company to issue 50,000,000 shares of common voting stock; each share has a
par value of one mill ($0.001). The holders of the Company's common stock are
entitled to one vote per share on each matter submitted to a vote at a meeting
of stockholders. The shares of common stock do not carry cumulative voting
rights in the election of directors. The Company currently has 235,000 shares
issued and outstanding.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption rights and carries no subscription or conversion
rights. In the event of liquidation of the Company, the shares of common
stock are entitled to share equally in corporate assets after satisfaction of
all liabilities. All shares of the common stock now outstanding are fully
paid and non-assessable.
There are no outstanding options, warrants or calls to purchase any
of the authorized securities of the Company.
There is no provision in the Company's Articles of Incorporation, as
amended, or Bylaws, as amended, that would delay, defer, or prevent a change
in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- --------------------------------------
Market Information.
- -------------------
There has never been any established "public market" for shares of
common stock of the Company. The Company intends to submit for listing on the
OTC Bulletin Board of the National Association of Securities Dealers ("NASD");
however, management does not expect any public market to develop unless and
until the Company completes an acquisition, reorganization or merger. In any
event, no assurance can be given that any market for the Company's common
stock will develop or be maintained. If a public market ever develops in the
future, the sale of "unregistered" and "restricted" shares of common stock
pursuant to Rule 144 under the Securities Act of 1933 by members of
management may have a substantial adverse impact on any such public market,
and current members of management have already satisfied the one year "holding
period" requirement of Rule 144. For non-affiliates who have held their
securities for at least two years, certain limitations of Rule 144, for
example, the limitation on the amount of securities sold in any three month
period, are lifted. See the caption "Security Ownership of Certain Beneficial
Owners," Part I, Item 4, of this Registration Statement.
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 166.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock or its preferred stock, and does not intend to declare dividends
in the foreseeable future. The future dividend policy of the Company cannot
be ascertained with any certainty, and if and until the Company completes any
acquisition, reorganization or merger, no such policy will be formulated.
There are no material restrictions limiting, or that are likely to limit, the
Company's ability to pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. No
federal, state or local governmental agency is presently contemplating any
proceeding against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ------------------------------------
There have been no changes in the Company's principal independent
accountant in the past two fiscal years or as of the date of this Registration
Statement. The current accounting firm for the Company audited its last
financial statements for the years ended June 30, 1988 and 1987, and the
period ended May 8, 1989.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
David C. Merrell 5/27/96 136,648 Services
Todd D. Ross 5/27/96 4,027 Services
Jerry Peterson 5/27/96 4,027 Services
Raymond Wilson 10/15/97 5,000 Release of any
and all
liabilities
Victor Ivashin 10/15/97 1,000 Services
Jerry Peterson and Victor Ivashin are persons believed to be either
"accredited investors" or "sophisticated investors," who by reason of business
acumen, experience, employment, education or other factors, were fully capable
of evaluating the risks and merits of an investment in the Company's
securities. Both Mr. Ivashin and Mr. Peterson were former directors and
executive officers of the Company and had all information regarding the
Company available to them. The offers and sales of these securities are
believed to have been exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof,
and from similar states' securities laws, rules and regulations requiring the
offer and sale of securities by available state exemptions from such
registration.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes
a Nevada corporation to indemnify any director, officer, employee, or
corporate agent "who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.751(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith and
with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or agent
is successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with the
defense."
Section 78.751 (4) of the NRS limits indemnification under Sections
78.751 (1) and 78.751(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any action
or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(I) Audited Financial Statements
December 31, 1997, June 30, 1997, 1996
and 1995**
--------
Independent Auditors' Report
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
** These financial statements have been previously filed
with the Securities and Exchange Commission as exhibits
to the initial 10-SB Registration Statement of the
Company and are incorporated herein by reference.
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
2 Agreement of Merger, dated December 23, 1988**
3.1 Articles of Incorporation of Aquachlor
Marketing, Inc.(Utah), filed on July 31, 1984**
3.2 Articles of Amendment to Articles of
Incorporation (Utah), filed on December 9, 1988**
3.3 Articles of Incorporation of Aquachlor Marketing, Inc.(Nevada),
filed on December 20, 1988**
3.4 Articles of Amendment to Articles of
Incorporation (Nevada), filed on December 23, 1988**
3.5 Application for Revival in the State of Nevada
dated March 25, 1997**
3.6 Certificate of Revival in the State of Nevada
dated March 25, 1997
3.7 Articles of Amendment to Articles of
Incorporation (Nevada), filed on May 6, 1997**
10.1 Consultant Compensation Agreement, dated April 23, 1997**
10.2 General Release signed by Raymond F. Wilson
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission as exhibits to the initial 10-SB Registration
Statement of the Company and are incorporated herein by
reference.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
FIRST DELTAVISION, INC.
Date: 5/11/98 By:/s/ David C. Merrell
------------------------
David C. Merrell, Director
and President
Date: 5/11/98 By:/s/ Todd D. Ross
------------------------
Todd D. Ross, Director
Secretary/Treasurer
