<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A1
Post-Effective Registration Statement No. 1 on Form 10-SB-A1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
SIERRA HOLDINGS GROUP, INC.
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(Name of Small Business Issuer as specified in its charter)
NEVADA 87-0576421
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(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
5445 South Highland Drive
Salt Lake City, Utah 84117
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 278-2805
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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Sierra Holdings Group, Inc. (the "Company") was organized under the
laws of the State of Utah on December 26, 1986, under the name "Celebrity
Videos Incorporated." The Company was incorporated for the primary purposes of
purchasing, selling, leasing and otherwise distributing video tapes and other
video equipment and merchandise and engaging in any and all other lawful
business.
The Company was initially authorized to issue a total of 100,000,000
shares of common stock having a par value of one mill ($0.001) per share, with
fully-paid stock not to be liable for further call or assessment. Copies of
the Company's initial Articles of Incorporation, as revised on December 31,
1986, to exempt the Company from the Utah Control Shares Acquisition Act, and
its current Bylaws are attached hereto and are incorporated herein by this
reference. See the Exhibit Index, Part III of this Registration Statement.
On December 30, 1986, the Company's Board of Directors authorized
the issuance of 980,000 "unregistered" and "restricted" shares of its common
stock to Dynamic Video Incorporated, a Utah corporation ("Dynamic Video"), in
exchange for the sum of $2,450. In addition, the Company issued 643,000
"unregistered" and "restricted" shares to Steven D. Moulton, and 377,000 such
shares to Chris C. Omer in exchange for $1,607.50 and $942.50, respectively.
Mr. Omer is a former director and executive officer of the Company, who has
had no involvement in the day to day activities of the Company for
approximately eight years.
The shareholders of Dynamic Video approved a distribution of the
Company's shares to Dynamic Video shareholders on February 6, 1987. These
shares were distributed in order to provide a partial liquidating dividend to
Dynamic Video's shareholders. In a letter dated January 12, 1987, the State
of Utah recognized the reorganization as exempt from registration pursuant to
Section 61-1-4(2)(p) of the Utah Uniform Securities Act.
On June 8, 1990, the shareholders of the Company approved a change
of the Company's name to "Vegas Gaming Services, Inc." Articles of Amendment
reflecting this change were filed with the State of Utah on July 18, 1990, and
a copy of these Articles of Amendment is attached hereto and is incorporated
herein by this reference. See the Exhibit Index, Part III of this
Registration Statement.
On March 2, 1992, the shareholders of the Company resolved to change
the name of the Company to "Nature Talks Corporation." Articles of Amendment
effecting this name change were filed with the State of Utah on April 15,
1992; a copy of these Articles of Amendment is attached hereto and is
incorporated herein by this reference. See the Exhibit Index, Part III of
this Registration Statement.
The Company was dissolved on March 1, 1994 for failure to file an
Annual Report with the Utah Division of Corporation. On February 8, 1996 the
Third Judicial District Court of the State of Utah ordered an annual meeting
of the stockholders to allow the election of a Board of Directors and to
complete the Company's reinstatement. The annual meeting of the stockholders
was held on February 27, 1996. On March 14, 1996 the Court entered an Order
Confirming Election of Directors for the Corporation and the Company was
reinstated on February 27, 1996.
The Company's shareholders approved a 1 for 300 reverse split of its
common voting stock on November 18, 1997. The Company retained its authorized
capital at 100,000,000 shares of common stock and its par value at $0.001 per
share, while making the necessary adjustments to the additional paid in
capital account and stated capital accounts. No stockholder's share holdings
were reduced below 50 shares as a result of this reverse split. The
shareholders also resolved to change the name of the Company to "Sierra
International, Inc." Articles of Amendment reflecting these changes were
filed with the State of Utah on November 26, 1997. A copy of these Articles
of Amendment is attached hereto and is incorporated herein by this reference.
See the Exhibit Index, Part III of this Registration Statement.
On February 9, 1998, the shareholders of the Company ratified a 10
for 1 reverse split of its $0.001 par value common stock, with no certificate
to be reduced below 50 shares as a result of this reverse split, while
retaining the present par value of $0.001 per share and authorized capital of
100,000,000 shares, and with appropriate adjustments being made in the stated
capital and additional paid in capital accounts of the Company. The
shareholders also ratified a change of domicile from the State of Utah to the
State of Nevada by merging the Company into its wholly-owned subsidiary,
Sierra Holdings Group, Inc, a Nevada corporation, ("Sierra Holdings"), which
had been formed on February 3, 1998 for the sole purpose of changing the
Company's domicile. The Articles of Incorporation of Sierra Holdings and the
Articles of Amendment whereby the Company effected these changes were filed
with the State of Utah on February 12, 1998. A copy of these Articles of
Amendment is attached hereto and is incorporated herein by reference. See the
Exhibit Index, Part III of this Registration statement.
Unless otherwise noted, all subsequent share computations in this
Registration Statement retroactively reflect the above-referenced reverse
splits.
The merger of the company into Sierra Holdings became effective on
February 13, 1998, the date that the Articles of Merger were filed in the
State of Nevada. Unless otherwise indicated all references in this
Registration Statement to the "Company" shall refer to Sierra Holdings. A
copy of the Articles of Merger effecting the change of the Company's domicile
is attached hereto and is incorporated herein by reference. See the Exhibit
Index, Part III of this Registration Statement.
Business.
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The Company has never engaged in any substantive business
operations. 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, the Company is essentially a "blank check" company. Because
the Company has virtually no assets, conducts no business and has no
employees, management anticipates that any such acquisition would require the
Company to issue shares of its common stock as the sole consideration for the
acquisition; such an issuance would almost certainly result in a change in
control of the Company. This may also 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, the Company's Articles of Incorporation or Bylaws, or
contract. Even if stockholder approval is sought, Steven D. Moulton
beneficially owns approximately 57% of the outstanding shares of common stock
of the Company, and could approve any acquisition, reorganization or merger he
deemed acceptable. 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 because of its total lack
of resources, the number of suitable potential business ventures which may be
available to it will be extremely limited, and may be restricted to entities
who desire to avoid what these entities may deem 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
public investors will suffer to the benefit of 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"), an issuer must have
such securities registered under the 1934 Act. Upon the effective date of
this Registration Statement, the Company's common stock will become 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 Securities
Exchange Act of 1934.
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
analyze without referring to any objective criteria.
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 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, since the Company has extremely limited current assets
and cash reserves, these activities may be limited, and if undertaken, the
cost and expense thereof will be advanced by management, and may further
dilute the interest of the stockholders of the Company.
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. See the caption "Conflicts of
Interest; Related Party Transactions," below.
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 transact
on is currently contemplated, it is impossible to estimate the potential
pecuniary benefits to these persons.
Although it currently has no plans to do so, depending on the nature
and extent of services rendered, the Company may compensate members of
management in the future for services that they may perform for the Company.
Because the Company currently has extremely limited resources, and is unlikely
to have any significant resources until it has completed a merger or
acquisition, management expects that any such compensation would take the form
of an issuance of the Company's stock to these persons; this would have the
effect of further diluting the holdings of the Company's other stockholders.
However, due to the minimal amount of time devoted to management by any person
other than Mr. Moulton, there are no preliminary agreements or understandings
with respect to management compensation.
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. Such fees may become a factor in negotiations regarding
any potential acquisition by the Company and, accordingly, may present a
conflict of interest for such individuals. See the caption "Conflicts of
Interest; Related Party Transactions."
Involvement in Other "Blank Check" Companies.
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From 1984 to 1990, Steven D. Moulton, a director and the
Secretary/Treasurer of the Company, served as a director and executive officer
of several publicly-held development stage companies including Safron, Inc.
(director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." Since 1995, he has served as director and executive officer of
the Company (director and Secretary/Treasurer) and Wasatch International
Corporation (formerly "Java, Inc.")(director and President). Mr. Moulton
resigned from his positions with Wasatch International Corporation in July,
1996. Mr. Moulton was the President and a director of Icon Systems, Inc.
("Icon") from its inception to July 31, 1991. In addition, Mr. Moulton has
been its Secretary/Treasurer and a director since October, 1995, and its
limited business operations are conducted from his house. Each of these
companies may be deemed to have been a "blind pool" or "blank check" company
at these times.
Safron, Inc., a Utah corporation, sold 3,000,000 units of its
securities at a price of $0.10 per unit, pursuant to a Registration Statement
on Form S-18 that was filed with the Securities and Exchange Commission with
an effective date of July 17, 1985. A total of $300,000 was raised under this
offering for the purpose of acquiring or participating in a then-unidentified
business opportunity. Mr. Moulton resigned his position with Safron, Inc. in
November, 1987.
Sagitta Ventures, Inc., a Utah corporation, filed a Registration
Statement on Form S-18, effective date April 30, 1987, with the Securities and
Exchange Commission. This Registration Statement provided for the sale of
12,000,000 units at a price of $0.02 per unit. The offering was closed on
July 8, 1987, after 7,479,500 units were sold for an aggregate price of
$149,590. Sagitta acquired all of the issued and outstanding common stock of
Onyx Holding Corporation, with the proceeds from its offering, and
subsequently distributed the Onyx shares as a partial liquidating dividend to
its stockholders. Mr. Moulton was the President and a director of Onyx from
July 10, 1987 through May 1, 1989.
On August 19, 1987, Jasmine Investments completed the sale of
2,338,390 units to the public pursuant to a Registration Statement on Form
S-18, at a price of $0.10 per share. A total of $233,839 was raised under
this offering. After Mr. Moulton's resignation, Jasmine consummated a merger
transaction and became known as "Audioventures Corporation."
Java, Inc. sold 1,320,350 shares of its common stock at $0.10 per
share pursuant to a Registration Statement on Form S-18, which became
effective on April 22, 1986. On November 7, 1986, the stockholders of Java
approved the acquisition of Quazon Communications, Inc., an Illinois
corporation, which was engaged in the business of manufacturing and marketing
computer terminals. Mr. Moulton resigned his position as Secretary/Treasurer
on November 7, 1986, and resigned from the Board of Directors in August, 1987.
Mr. Moulton resigned his positions with Omni International
Corporation before its securities offering and had no involvement therein.
In addition to the Company, Michelle Wheeler and Jeff Taylor are
also involved as directors, executive officers and/or five percent
stockholders of Icon, which is also deemed to be a "blank check" company.
This involvement may create a conflict of interest in the event that
management is presented with a merger or acquisition transaction that may be
beneficial to both "blank check" companies. See the Risk Factor "Conflicts of
Interest; Related Party Transactions" of this Registration Statement.
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 in either of its two most recent
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.
The Company can provide no assurance that any acquired business will produce
any material revenues for the Company or its stockholders or that any such
business will operate on a profitable basis.
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.
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 whether or
not 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 highly
risky 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 the caption "Management's
Discussion and Analysis or Plan of Operation," Part I, Item 2 of this
Registration Statement.
Auditor's 'Going Concern' Opinion. The Independent Auditor's Report
issued in connection with the audited financial statements of the Company for
the fiscal years ended October 31, 1997, and 1996, and the period ended
November 30, 1997, expresses "substantial doubt about its ability to continue
as a going concern," due to the Company's status as a development stage
company and its lack of significant operations. See the Index to Financial
Statements, Part F/S of this Registration Statement.
State Restrictions on "Blank Check" Companies. A total of 36 states
prohibit or substantially restrict the registration and sale of "blank check"
companies within their borders. Additionally, 36 states use "merit review
powers" to exclude securities offerings from their borders in an effort to
screen out offerings of highly dubious quality. See paragraph 8221, NASAA
Reports, CCH Topical Law Reports, 1990. Although it has no present plans to
register or qualify its securities in any state, 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, eight states (Idaho, Maryland,
Missouri, Nevada, New Mexico, Pennsylvania, Utah and Washington), some of
which are included in the group of 36 states mentioned above, 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. Because the Company does
not intend to make any offering of its securities in the foreseeable future,
management does not believe that any state restriction on "blank check"
offerings will have any effect on the Company.
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.
All states (with the exception of Alabama, Delaware, Florida, Hawaii,
Illinois, Minnesota, Nebraska and New York) 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 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.
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 an insignificant
amount of time to the activities of the Company, at least until such time as
the Company has identified a suitable acquisition target. It is expected that
members of management, other than Steven D. Moulton, will devote approximately
five to 10 hours per month to corporate maintenance. Mr. Moulton expects to
devote approximately 50 hours per month to the Company, including preparation
of periodic reports under the 1934 Act and, when management deems it
appropriate, seeking a quotation on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD") and seeking a candidate
for a merger or acquisition transaction.
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 and management
does not believe that there is any "present potential" for such a transaction,
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. Although there is
no formal bylaw, stockholder resolution or agreement authorizing any such
transaction, corporate policy does not forbid it and 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. 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. In addition, members of management also serve in a similar
capacities for another company that may be deemed to be a "blank check"
company. 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 any "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.
Voting Control. Due to his ownership of a majority of the shares of
the Company's outstanding common stock, Steven D. Moulton 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.
No Market for Common Stock; No Market for Shares. Although the
Company intends to submit for quotation of its common stock on the OTC
Bulletin Board of the NASD before any merger or acquisition transaction, and
to seek a broker-dealer to act as market maker for its securities (without the
use of any consultant), there is currently no market for such shares, there
have been no discussions with any broker-dealer or any other person in this
regard, and no market maker has been identified; 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.
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.
There has been no "established public market" for the Company's
common stock in the last five years. At such time as the Company completes a
merger or acquisition 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.
Section 15(g) of the 1934 Act, 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".
- -----------
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 extremely limited business operations of the Company, as now
contemplated, involve those of a "blank check" company. The only activity to
be conducted by the Company is 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.
- --------------------------------
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. There is no reasonable way to predict
the competitive position of the Company or any other entity in the these
endeavors; however, the Company, having virtually no assets or 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
operating histories when compared with the complete lack of any substantive
operations by the Company.
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.
- ---------------------------------------------------------------------
On the effectiveness of the Company's Registration Statement on Form
10-SB, the Company will become subject to Regulation 14A regarding proxy
solicitations promulgated by the Securities and Exchange Commission under the
1934 Act. Section 14(a) of the 1934 Act requires all companies with
securities registered pursuant to Section 12(g) thereof to comply with the
rules and regulations of the Securities and Exchange Commission regarding
proxy solicitations outlined in Regulation 14A. Matters submitted to
stockholders of the Company at a special or annual meeting thereof or pursuant
to a written consent shall require the Company to provide its stockholders
with the information outlined in Schedules 14A or 14C of Regulation 14;
preliminary copies of this information must be submitted to the Securities and
Exchange Commission at least 10 days prior to the date that definitive copies
of this information are forwarded to stockholders.
Management intends to conduct a full evaluation of the worthiness of
any business proposal presented to it; nonetheless, it believes this process
may provide additional time within which to evaluate any business proposal
presented to it, and may eliminate proposals from entities not willing to
undergo the public and agency scrutiny involved in providing and filing
information required under Regulation 14. Management recognizes that this
filing process may deter other potential business venturers by reason of their
inability to predict the timeliness of their potential acquisition,
reorganization or merger due to the uncertainty related to the time involved
in reviewing Regulation 14A filings by the Securities and Exchange Commission;
however, acquisitions or reorganizations not requiring stockholder approval
may be completed by management, in its sole discretion, with the submission by
management of an Information Statement pursuant to Regulation 14C outlining
any remedial proposals attendant to any such acquisition or reorganization,
including changing the name of the Company or increasing or decreasing the
number of authorized or outstanding shares of the Company's common stock.
Costs associated with filings required by the Company under Section
12(g) of the 1934 Act and Regulation 14A of the Securities and Exchange
Commission will have to be advanced by management, the Company's principal
stockholders or any potential business venturer, and may further dilute the
interest of the public stockholders. In the case of a merger requiring prior
stockholder approval and the submission of financial statements of the Company
and other party or parties to the merger, legal and accounting costs will be
significantly higher, even though the adoption, ratification and the approval
of any such merger will be virtually assured if recommended by Steven D.
Moulton, the principal stockholder of the Company.
Effect of Existing or Probable Governmental Regulations on Business.
- --------------------------------------------------------------------
Since the Company was initially incorporated, federal and state
securities laws, rules and regulations have made the participation in or the
conducting of an IPO substantially easier for certain small and developmental
stage companies, reducing the time constraints previously involved, the legal
and accounting costs and the financial periods required to be included in the
financial statements. Rule 504 of Regulation D of the Securities and Exchange
Commission no longer requires the filing of a Registration Statement with any
state or territory as a condition to its use; however, this Rule is no longer
available to "blank check" companies. Accordingly, because the Company is
presently deemed to be a "blank check" company, this method of raising funds
is foreclosed to it. Rule 504 is also not available to "reporting issuers,"
which the Company will become on the effectiveness of this Registration
Statement.
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.
A number of state securities commissions have adopted the use of
Form U-7 for SCOR, which also substantially simplifies the registration
process for IPO's; Form U-7 is primarily used in connection with offerings
conducted pursuant to Rule 504 of the Securities and Exchange Commission, but
is not limited to this use. To the extent that Rule 504 and the use of SCOR
are unavailable to the Company due to its status as a "blank check"
company, the use of Form U-7 will also be unavailable in this regard.
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 for the small business issuer to 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 last two 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 such
acquisition.
Upon the effectiveness of its Registration Statement on Form 10-SB,
the Company will become subject to the periodic reporting obligations of
Section 13 of the 1934 Act. This will require the Company to file (i) an
annual report on Form 10-KSB with the Securities and Exchange Commission
within 90 days of the close of each fiscal year (Reg. Sections 240.13a-1 and
249.310b); (ii) a quarterly report on Form 10-QSB within 45 days of the end of
each of the first three quarters of its fiscal year (Reg. Sections 240.13a-13
and 249.308b); and (iii) a current report on Form 8-K within 15 days of the
occurrence of certain material events (e.g., changes in accountants,
acquisitions or dispositions of a substantial amount of assets not in the
ordinary course of business) (Reg. Sections 240.13a-11 and 249.308). In
addition, annual reports on Form 10-KSB must be accompanied by audited
financial statements as of the end of the issuer's most recent fiscal year.
These reporting requirements may deter potential reorganization candidates
that are not willing to undergo the public and agency scrutiny resulting
therefrom.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing;
making the requisite filings with the Securities and Exchange Commission or
the payment of expenses associated with reviewing or investigating any
potential business venture; paying its monthly office rental of $50 and the
monthly salary of Steven D. Moulton ($750 per month); and principal and
interest on the $10,000 loan from a stockholder in the event that such
stockholder makes demand therefor. Management believes that its cash on hand
of $20,353 as of February 28, 1998, will be sufficient to meet these expenses
for the next 12 months; however, in the event that additional funding is
required, it 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, 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. Management does not
intend to raise any required funds through any private placement of
"unregistered" and "restricted" securities or any public offering of its
common stock. Nor does the Company intend to undertake any offering of its
securities under Regulation S of the Securities and Exchange Commission. As
of the date of this Registration Statement, the Company has not begun seeking
any acquisition and there are no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities
by the Company prior to the location of any acquisition or merger candidate.
Because the Company is not currently making any offering of its
securities, and does not anticipate making any such offering in the
foreseeable future, management does not believe that Rule 419 promulgated by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, concerning offerings by blank check companies, will have any effect
on the Company or any activities in which it may engage in the foreseeable
future.
Liquidity.
- ----------
The Independent Auditors' Report, dated January 8, 1998,
accompanying the Company's audited financial statements for the period ended
November 30, 1997, express substantial doubt as to the Company's ability to
continue as a going concern. This is due to the fact that the Company is a
development stage company with no significant operating results to date. See
the Risk Factor "Auditor's 'Going Concern' Opinion" of this Registration
Statement.
Results of Operations.
- ----------------------
The Company has never engaged in any substantive business
operations. Losses from discontinued operations during the fiscal year ended
October 31, 1997, and the four months ended February 28, 1998, were $114 and
$19,958, respectively. Shares issued to directors and executive officers in
consideration of services rendered were the major expenses incurred during the
four months ended February 28, 1998, representing $18,000 of the $19,958 loss
from discontinued operations during that period. Expenses incurred until the
Company identifies a potential merger or acquisition candidate have been and
will be characterized as discontinued operations because such expenses have
been used exclusively to keep the Company in good standing and for related
administrative matters.
Item 3. Description of Property.
- ---------------------------------
Other than cash in the amount of approximately $20,000, the Company
has no appreciable assets, property or business. The Company rents office
space from a non-affiliated individual for $50 per month, which is paid in one
$300 payment every six months. Other than this arrangement, there are no
preliminary agreements or understandings with respect to any office facility.
Because the Company has no business, its activities have been limited to
keeping itself in good standing in the State of Utah and, recently, in the
State of Nevada, and with preparing this Registration Statement, the
accompanying financial statements and the Company's periodic reports under the
1934 Act. These activities have consumed an insignificant amount of
management's time.
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 February
27, 1998. Each of these persons has sole investment and sole voting power
over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Steven D. Moulton 5,307,679(1) 57%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Jeff Taylor 2,000,334 21%
1879 Siggard Drive
Salt Lake City, Utah 84106
Michelle Wheeler 2,000,334 21%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
--------- -----
TOTALS 9,308,347 99%
</TABLE>
(1) Steven D. Moulton is the President, director and 9% shareholder of
Wasatch Consulting Group, which is the record holder of 7,667 shares of the
Company's common stock. These shares have been added to the ownership totals
for Mr. Moulton. Wasatch Consulting is a business consultant specializing is
mergers and acquisitions consulting. It assisted the Company with its court-
ordered stockholder meeting in 1996, and has also rendered consulting services
to Icon Systems, Inc. There are no preliminary understandings or agreements
between the Company and Wasatch Consulting with respect to consulting services
to be rendered in the future. See the heading "Business Development" of this
Registration Statement.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's
directors and executive officers as of February 27, 1998. Each of these
persons has sole investment and sole voting power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Steven D. Moulton 5,307,679(1) 57%
4848 S. Highland Dr., #353
Salt Lake City, Utah 84117
Jeff Taylor 2,000,334 21%
1879 Siggard Drive
Salt Lake City, Utah 84106
Michelle Wheeler 2,000,334 21%
4817 S. Fortuna Way
Salt Lake City, Utah 84127
--------- -----
All directors and executive
officers as a group (3) 9,308,347 99%
</TABLE>
(1) Steven D. Moulton is the President, director and 9% shareholder of
Wasatch Consulting Group, which is the record holder of 7,667 shares of the
Company's common stock. These shares have been added to the ownership totals
for Mr. Moulton.
See the caption "Directors, Executive Officers, Promoters and Control
Persons," below, 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 persons 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>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Steven D. Moulton President 11/97 *
Secretary/ 2/96 11/97
Treasurer 2/96 11/97
Director 2/96 *
Jeff Taylor Vice President 2/96 *
Director 2/96 *
Michelle Wheeler President 2/96 11/97
Secretary/ 11/97 *
Treasurer 11/97 *
Director 2/96 *
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Steven D. Moulton, Director and President. Mr. Moulton is
36 years of age. He graduated from Olympus High School in Salt Lake City,
Utah in 1980. From 1984 to 1990, he served as a director and executive
officer of several publicly-held development stage companies including Safron,
Inc. (director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From
1991 to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." Since 1995, he has served as director and Secretary/Treasurer
of Icon Systems, Inc. Since 1996, he has served as director and executive
officer of the Company (director and Secretary/Treasurer and later as
President) and Wasatch International Corporation (director and President).
Mr. Moulton resigned from his positions with Wasatch International Corporation
in July, 1996. With the exception of Sagitta Ventures, Omni International
Corporation and Wasatch International Corporation, none of these companies was
subject to the reporting requirements of the Securities and Exchange
Commission. Mr. Moulton owned and operated a Chem-Dry carpet cleaning
franchise from 1991 to 1995. See the heading "Involvement in Other Blank
Check Companies," Part I, Item 1, of this Registration Statement.
Jeff Taylor, Director and Vice President. Mr. Taylor is 32 years of
age. He graduated from Hiram Johnson High School in Sacramento, California,
in 1983. From 1988 to 1991, he was employed as an auto painter at Fabrication
Specialties in Sacramento. In 1991, Mr. Taylor moved his family to Utah. Mr.
Taylor has an A.S. degree from Utah Valley State College and is currently
enrolled in the College of Nursing at the University of Utah. He plans to
pursue a masters degree in Nurse Anesthesia. Since 1996, Mr. Taylor has
served as Vice President of Icon Systems, Inc. See the heading "Involvement
in Other Blank Check Companies," Part I, Item 1, of this Registration
Statement.
Michelle Wheeler, Director and Secretary/Treasurer. Ms. Wheeler,
age 31, is a 1991 graduate of the University of Utah, where she received a
B.S. degree in Communications. From July, 1991 through January, 1994, she was
a reservation agent for Delta Airlines in Salt Lake City, Utah. Since then,
she has been a homemaker. Ms. Wheeler has NASD series 6 and 63 licenses.
Since 1996, Ms. Wheeler has served as President of Icon Systems, Inc. See the
heading "Involvement in Other Blank Check Companies," Part I, Item 1, of this
Registration Statement.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who
are expected to make a significant contribution to the Company's business. It
is expected that current members of management and the Board of Directors will
be the only persons whose activities will be material to the Company's
operations. Members of management are the only persons who may be deemed to
be promoters of the Company.
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>
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($)
($)
- ------------------------------------------------------------------------------
- -------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Steven D. Moulton 10/30/96 0 0 0 0 0
0 0
President 10/30/97 0 0 0 0 0
0 0
Director 2/28/98 0 0 0 2000000(2) 0
0 0
Jeff Taylor 10/30/96 0 0 0 0 0
0 0
Vice President 10/30/97 0 0 0 334(1) 0
0 0
Director 2/28/98 0 0 0 2000000(2) 0
0 0
Michelle Wheeler 10/30/96 0 0 0 0 0
0 0
Sec./Treasurer, 10/30/97 0 0 0 334(1) 0
0 0
Director 2/28/97 0 0 0 2000000(2) 0
0 0
</TABLE>
(1) In February, 1996, 8,334 post-split "unregistered and
"restricted" shares of the Company's common stock were issued to
these persons in consideration for services rendered: 7,667
shares to Wasatch Consulting Group, Inc.; and, 334 shares to each
Michelle Wheeler and Jeff Taylor. These shares have been
arbitrarily valued at par value per share.
(2) In February, 1998, 2,000,000 post-split "unregistered" and
"restricted" shares of the Company's common stock were
issued to each of these persons in consideration of
services rendered. These shares have been arbitrarily valued at
$0.003 per share.
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 October 30, 1997, or 1996. Further, no member of the
Company's management has been granted any option or stock appreciation right;
accordingly, no tables relating to such items have been included within this
Item. Starting on March 1, 1998, Steven D. Moulton receives $750 per month
salary as President of the Company; Mr. Moulton and the Company have not
entered into any written agreement with respect to Mr. Moulton's services or
the compensation that he receives therefor.
There are no plans whereby the Company would issue any of its
securities to management, promoters, their affiliates or associates in
consideration of services rendered or otherwise.
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.
There are no arrangements pursuant to which any of the Company's
directors was compensated during the Company's last completed fiscal year for
any service provided as director.
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.
Nor are there any agreements or understandings for any director or
executive officer to resign at the request of another person; none of the
Company's directors or executive officers is acting on behalf of or will act
at the direction of any other person.
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, each of the current
directors and executive officers has received "unregistered" and "restricted"
shares of the Company's common stock in consideration of services rendered.
Steven D. Moulton has received an aggregate of 5,300,012 "unregistered" and
"restricted" post-split shares in consideration of services rendered and the
sum of $10,000. See the captions "Executive Compensation" of this Registration
Statement. In addition, Wasatch Consulting Group, Inc., which may be deemed
to be an affiliate of Mr. Moulton, has loaned the Company the sum of $10,000.
This loan, which is not evidenced by any promissory note or other writing, is
payable on demand and bears interest at the rate of 12% per year. The purpose
of the loan is to fund the Company's operating expenses for the next 12
months, including payment of legal and accounting fees incurred in connection
with the preparation of this Registration Statement and the reports that are
to be filed under the 1934 Act, and payment of Mr. Moulton's salary and office
rental.
Certain Business Relationships.
- -------------------------------
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 caption
"Transactions with Management and Others" of this Registration Statement.
Indebtedness of Management.
- ---------------------------
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 caption
"Transactions with Management and Others" of this Registration Statement.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that Mr. Moulton
may be deemed to be a parent by virtue of his stock holdings. See the caption
"Security Ownership of Certain Beneficial Owners and Management" Part I, Item
4 of this Registration Statement.
Transactions with Promoters.
- ----------------------------
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 caption
"Transactions with Management and Others" of this Registration Statement.
Item 8. Description of Securities.
- -----------------------------------
The Company has one class of securities authorized, consisting of
100,000,000 authorized shares of one mill ($0.001) par value common voting
stock. 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.
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, Inc.
(the "NASD"); however, management does not expect any public market to develop
unless and until the Company completes an acquisition 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 of the Securities and Exchange Commission by members of
management may have a substantial adverse impact on any such public market.
See the caption "Recent Sales of Unregistered Securities" Part II, Item 4 of
this Registration Statement.
There are no outstanding options, warrants or calls to purchase any
of the authorized securities of the Company.
The issuances of an aggregate of 9,300,680 "unregistered" and
"restricted" post-split shares of common stock to certain current directors
and executive officers of the Company, B.W. Blackstone, Ltd. and Wasatch
Consulting Group, were the only issuances of any securities of the Company
during the past three years. Future sales of any of these securities or any
securities of the Company issued in any acquisition, reorganization or merger
may have a future adverse effect on any "public market" that may develop in
the common stock of the Company. See the caption "Recent Sales of
Unregistered Securities" Part II, 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 191.
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.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
Michelle Wheeler 2/26/98 2,000,000(1) Services
2/27/96 334(1) Services
Jeff Taylor 2/26/98 2,000,000(1) Services
2/27/96 334(1) Services
Steven D. Moulton 2/26/98 2,000,000(1) Services
2/26/98 3,000,000 $10,000
Wasatch Consulting 2/27/96 7,667 Services
B. W. Blackstone, Ltd.2/27/96 1,667 Services(2)
(1) These shares were valued at fair market value of $0.003 per
share.
(2) B.W. Blackstone, Ltd., is the "doing business as" name of an
individual who is not affiliate of the Company, and who assisted the Company
with its court-ordered stockholder meeting in 1996. B.W. Blackstone is not
affiliated with any director, executive officer or principal stockholder of
the Company. See the heading "Business Development" of this Registration
Statement.
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 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 in connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful."
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 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 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
corporate role.
Article VIII of the Company's Bylaws restates the above-referenced
indemnification provisions of the NRS. This right to indemnification
continues as to persons who have ceased to be agents of the Company and inures
to the benefit of such persons' heirs, executors and administrators.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
Financial Statements
February 28, 1998 (unaudited),
October 31, 1997 and 1996 (audited)
-----------------------------------
Independent Accountants' Report
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity (Deficit)
Statements of Cash Flows
Notes to the Financial Statements
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>
3.1 Articles of Incorporation of Celebrity Video
Incorporated, filed on December 26, 1986**
3.2 Revised Articles of Incorporation of Celebrity
Videos Incorporated, filed on December 31, 1986**
3.3 Articles of Amendment to Articles of
Incorporation, filed on July 18, 1990**
3.4 Articles of Amendment to Articles of
Incorporation, filed on April 15, 1992**
3.5 Articles of Amendment to Articles of
Incorporation, filed on November 26, 1997**
3.6 Articles of Incorporation of Sierra Holding
Group Inc., a Nevada corporation, filed on
February 3, 1998**
3.7 Articles of Amendment to Articles of
Incorporation, filed February 12, 1998**
3.8 Articles of Merger of Sierra International, Inc.
(Utah) and Sierra Holdings Group, Inc. (Nevada)**
3.9 Bylaws of Sierra Holding Group, Inc., a Nevada
corporation**
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 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.
SIERRA HOLDINGS GROUP, INC.
Date: 7-13-98 By /s/ Steven D. Moulton
---------- ------------------------
Steven D. Moulton,
Director and President
Date: 7-13-98 By /s/ Jeff Taylor
---------- ------------------------
Jeff Taylor, Director and Vice
President
Date: 7-13-98 By /s/ Michelle Wheeler
---------- ------------------------
Michelle Wheeler, Director
and Secretary/Treasurer
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Sierra Holdings Group, Inc.
(Formerly Sierra International, Inc.)
Salt Lake City, Utah
We have audited the accompanying balance sheets of Sierra Holdings Group, Inc.
(Formerly Sierra International, Inc.) (a development stage company) as of
October 31, 1997 and 1996, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the years ended October 31,
1997, 1996 and 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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 Sierra International, Inc.
(Formerly Sierra International, Inc.) (a development stage company) as of
October 31, 1997 and 1996, and the results of its operations and cash flows
for the years ended October 31, 1997, 1996, and 1995, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raise substantial matters are
also described in the Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
January 8, 1998
<PAGE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(Formerly Sierra International, Inc.)
(A Development Stage Company)
Balance Sheets
<CAPTION>
ASSETS
February 28, October 31,
1998 1997 1996
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 20,353 $ - $ -
Total Current Assets 20,353 - -
TOTAL ASSETS $ 20,353 $ - $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ - $ 489 $ 475
Taxes payable - 200 100
Shareholder loan payable
(Note 2) 10,000 - -
Total Liabilities 10,000 689 575
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 100,000,000
shares authorized of $0.001
par value, 9,326,744, 18,132
and 18,132 shares issued and
outstanding, respectively 9,327 19 19
Capital in excess of par value 78,950 57,258 57,258
Deficit accumulated during the
development stage (77,924) (57,966) (57,852)
Total Stockholders'
Equity (Deficit) 10,353 (689) (575)
TOTAL LIABILITIES, AND
STOCKHOLDERS' EQUITY (DEFICIT)$ 20,353 $ - $ -
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(Formerly Sierra International, Inc.)
(A Development Stage Company)
Statements of Operations
<CAPTION>
From
For the Inception on
Four Months December 26,
Ended 1986 Through
February 28, For the Years Ended October 31, February 28,
1998 1997 1996 1995 1998
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES - - - - -
LOSS FROM DISCONTINUED
OPERATIONS (Note 5) (19,958) (114) (30,160) (107) (77,924)
NET LOSS $ (19,958) $ (114) $ (30,160) $ (107) $ (77,924)
LOSS PER SHARE $ (0.02) $ (0.01) $ (2.03) $ (0.01)
WEIGHTED AVERAGE
NUMBER OF SHARES 822,733 18,132 14,844 8,132
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(Formerly Sierra International, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
Balance at inception
on December 26, 1986 - $ - $ - $ -
Shares issued for cash
at $7.50 per share 667 1 4,999 -
Partial liquidating
dividend - April 17, 1987 - - (2,484) -
Net loss for the year ended
October 31, 1987 - - - (910)
Balance, October 31, 1987 667 1 2,515 (910)
Net loss for the year ended
October 31, 1988 - - - (1,701)
Balance, October 31, 1988 667 1 2,515 (2,611)
Net income for the year ended
October 31, 1989 - - - 251
Balance, October 31, 1989 667 1 2,515 (2,360)
Contribution and cancellation of
shares by officers of the Company (465) - - -
Shares issued for services
valued at $3.00 per share 1,697 2 5,088 -
Expenses paid on behalf of the
Company by a shareholder - - 304 -
Net loss for the year ended
October 31, 1990 - - - (5,650)
Balance, October 31, 1990 1,899 3 7,907 (8,010)
Net loss for the year ended
October 31, 1991 - - - (100)
Balance, October 31, 1991 1,899 3 7,907 (8,110)<PAGE>
Shares issued for services
valued at $3.00 per share 2,900 3 8,697 -
Shares issued in acquisition of
Nature Talks Corp. valued at
$3.00 per share 3,333 3 9,997 -
Net loss for the year ended
October 31, 1992 - - - (19,275)
Balance, October 31, 1992 8,132 9 26,601 (27,385)
Net loss for the year ended
October 31, 1993 - - - (100)
Balance, October 31, 1993 8,132 9 26,601 (27,485)
Net loss for the year ended
October 31, 1994 - - - (100)
Balance, October 31, 1994 8,132 9 26,601 (27,585)
Net loss for the year ended
October 31, 1995 - - - (107)
Balance, October 31, 1995 8,132 9 26,601 (27,692)
Shares issued for services
valued at $3.00 per share 10,000 10 29,990 -
Expenses paid on behalf of the
company by a shareholder - - 667 -
Net loss for the year ended
October 31, 1996 - - - (30,160)
Balance, October 31, 1996 18,132 19 57,258 (57,852)
Net loss for the year ended
October 31, 1997 - - - (114)
Balance, October 31, 1997 18,132 19 57,258 (57,966)
Issuance of fractional shares for
1-for-300 reverse stock split 7,375 7 (7) -
Shares issued for cash at $0.01
per share 300,000 300 2,700 -
Issuance of fractional shares for
1-for-10 reverse stock split 1,237 1 (1) -
Shares issued for services valued
at $0.003 per share 6,000,000 6,000 12,000 -
Shares issued for cash at
approximately $0.003 per
share 3,000,000 3,000 7,000 -
Net loss for the four months ended
February 28, 1998 - - - (19,958)
Balance, February 28, 1998 9,326,744 $9,327 $ 78,950 $ (77,924)
</TABLE>
<TABLE>
SIERRA HOLDINGS GROUP, INC.
(Formerly Sierra International, Inc.)
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
From
For the Inception on
Four Months December 26,
Ended 1986 Through
February 28, For the Years Ended October 31, February 28,
1998 1997 1996 1995 1998
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities:
Net loss from
discontinued
operations $(19,958) $ (114) $ (30,160) $ (107) $ (77,924)
Organization costs - - - - (1,065)
Depreciation and
amortization - - - - 3,496
Stock issued for
services 18,000 - 30,000 - 71,790
Increase (decrease)
in accounts payable (489) 14 - - -
Increase (decrease)
in taxes payable (200) 100 (507) 107 -
Cash Provided (Used) By
Operating Activities (2,647) - (667) - (3,703)
Cash Flows from Investing
Activities:
Purchase of equipment - - - - (4,887)
Cash Provided (Used) by
Investing Activities - - - - (4,887)
Cash Flows from Financing
Activities:
Disbursement of partial
liquidating dividend - - - - (2,484)
Capital contributed by
stockholders - - 667 - 971
Non-cash sale of
video cassettes - - - - (369)
Issuance of common
stock 13,000 - - - 18,000
Repayment of loan
from shareholder (2,000) - - - (2,000)
Proceeds of loan
from shareholder 12,000 - - - 14,825
Cash Provided (Used) by
Financing Activities $23,000 $ - $ 667 $ - $ 28,943
NET INCREASE (DECREASE)
IN CASH $20,353 $ - $ - $ - $ 20,353
CASH AT BEGINNING OF
PERIOD - - - - -
CASH AT END OF PERIOD $20,353 $ - $ - $ - $ 20,353
Cash Payments For:
Income taxes $ - $ - $ - $ - $ -
Interest $ 75 $ - $ - $ - $ 75
Non-Cash Financing Activities:
Exchange of video
cassettes in lieu
of note payable $ - $ - $ - $ - $ 369
</TABLE>
SIERRA HOLDINGS GROUP, INC.
(Formerly Sierra International, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
February 28, 1998, October 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Sierra Holdings Group,
Inc. (formerly Sierra International, Inc.) The Company was
incorporated as Celebrity Videos, Inc. under the laws of the State of
Utah on December 26, 1986. On April 17, 1987, the Company was "spun
off" of Loki Holding Corporation (formerly Dynamic Video, Inc.) in a
partial liquidating dividend. On July 18, 1990, the Company changed
its name to Vegas Gaming Services, Inc. On April 15, 1992, the
Company changed its name to Nature Talks Corporation.
At a meeting on November 18, 1997, the shareholders approved a
proposal to reverse stock split the outstanding common shares at a
rate of 1 share for every 300 shares outstanding, with no
stockholders' holdings to be reduced below 50 shares as a result of
such reverse split. All references to shares outstanding and earnings
per share have been retroactively restated to reflect the reverse
stock split. On November 26, 1997, the Company changed its name to
Sierra International, Inc.
At a meeting on February 9, 1998, the shareholders approved a proposal
to reverse stock split the outstanding common shares at a rate of 1
share for every 10 shares outstanding, with no stockholders' holdings
to be reduced below 50 shares as a result of such reverse split. All
references to shares outstanding and earnings per share have been
retroactively restated to reflect the reverse stock split.
On February 13, 1998, Sierra International, Inc. merged with Sierra
Holdings Group, Inc. changing the Company's state of incorporation
from Utah to Nevada and its name to Sierra Holdings Group, Inc. (SHG).
Accordingly, SHG became the continuing entity for accounting purposes,
and the transaction was accounted for as a recapitalization of the
Company with no adjustment to the basis of the Company's assets or
liabilities assumed by SHG. For legal purposes, SHG was the surviving
entity.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted an October 31 year end.
c. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares issued and outstanding at the date
of the financial statements.
d. 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 of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statement and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
e. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
f. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a
fair presentation. Such adjustments are of a normal, recurring
nature.
NOTE 2 - RELATED PARTY TRANSACTIONS
A shareholder loaned the Company $10,000 to cover operating expenses.
The note payable is unsecured, due on demand and accrues interest at
12% annually.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of
the Company to seek a merger with an existing, operating company. In
the interim, shareholders of the Company have committed to meeting its
minimal operating expenses.
NOTE 4 - ISSUANCE OF STOCK
During the year ended October 31, 1987, the Company issued 667 shares
of common stock for $5,000 cash.
During the year ended October 31, 1990, shareholders of the Company
contributed 465 shares of common stock back to the Company. In
addition, 1,697 shares of common stock were issued for services valued
at an average price of $3.00 per share.
During the year ended October 31, 1992, the Company issued 2,900
shares of common stock for services valued at an average price of
$3.00 per share. In addition, the Company issued 3,333 shares of
common stock in the acquisition of Nature Talks Corporation.
During the year ended October 31, 1996, the Company issued 10,000
shares of common stock for services valued at $3.00 per share.
During the four months ended February 28, 1998, the Company issued
7,375 fractional shares of common stock as a result of the 300-to-1
reverse stock split. The Company also issued 300,000 post 300-to-1
reverse stock split shares of common stock for $3,000 cash. In
addition, the Company issued 1,237 fractional shares of common stock
as a result of the 10-to-1 reverse stock split. Finally, 6,000,000
post-split shares of common stock were issued for services valued at
$18,000 and 3,000,000 post-split shares of common stock were issued
for $10,000 cash.
NOTE 5 - DISCONTINUED OPERATIONS
During 1989, the Company decided to terminate its operations of
selling video tapes. All subsequent expenses have been to clean up
the Company from the time it was in operations and to keep it in good
standing. As a result, subsequent expenditures by the Company have
been classified as loss from discontinued operations. The following
is a summary of the income (loss) from discontinued operations
account.
Revenue - 1987 $ 2,800
Revenue - 1988 -
Revenue - 1989 899
Total Revenue 3,699
Operating expenses - 1987 (3,710)
Operating expenses - 1988 (1,701)
Operating expenses - 1989 (648)
Total Operating Expenses (6,059)
Loss from discontinued operations - 1987 to 1989 (2,360)
Loss from discontinued operations - 1990 to 1998 (75,564)
Loss From Discontinued Operations $(77,924)
