U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_____________________________
FORM 10-SB/A 2
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
_____________________________
MATHY CORPORATION
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(Name of Small Business Issuer in its charter)
Colorado 84-1463449
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2851 S. Parker Road
Suite 720
Aurora, Colorado 80014
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (303) 671-8920
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Forty Pages
Exhibit Index is Located at Page Thirty Eight
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . 8
Item 3. Description of Property. . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . 16
Item 6. Executive Compensation . . . . . . . . . . . . . . 20
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . 22
Item 8. Description of Securities. . . . . . . . . . . . 22
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . 23
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . 25
Item 3. Changes in and Disagreements with Accountants. . . 25
Item 4. Recent Sales of Unregistered Securities. . . . . . 25
Item 5. Indemnification of Directors and Officers. . . . . 26
PART F/S
Financial Statements . . . . . . . . . . . . . . . 27
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . 38
Item 2. Description of Exhibits. . . . . . . . . . . . . . 40
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PART I
Item 1. Description of Business
Mathy Corporation (the "Company"), was incorporated on January
30, 1996 under the laws of the State of Colorado, to engage in any
lawful corporate undertaking, including, but not limited to,
selected mergers and acquisitions. The Company has been in the
developmental stage since inception and has no operations to date.
Other than issuing shares to its original shareholders, the Company
never commenced any operational activities. As such, the Company
can be defined as a "shell" company, whose sole purpose at this
time is to locate and consummate a merger or acquisition with a
private entity. The Board of Directors of the Company has elected
to commence implementation of the Company's principal business
purpose, described below under "Item 2 - Plan of Operation".
The Company is filing this Registration Statement on a
voluntary basis because the primary attraction of the Company as a
merger partner or acquisition vehicle will be its status as a
public company. Any business combination or transaction will
likely result in a significant issuance of shares and substantial
dilution to present stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any
offering of the Company's securities, either debt or equity, until
such time as the Company has successfully implemented its business
plan described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. Andrew I. Telsey is
also an officer, director and principal shareholder of the Company.
However, while management believes that the procedures established
to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no
assurances that the procedures established relevant herein will
unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
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The Company's business is subject to numerous risk factors,
including the following:
Going Concern; No Operating History or Revenue and
Minimal Assets. The Company's financial statements accompanying
this Registration Statement have been prepared assuming that the
Company will continue as a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal
course of business. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
The Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain
operating expenses without corresponding revenues, at least until
the consummation of a business combination. This may result in the
Company incurring a net operating loss which will increase
continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity
and consummate such a business combination.
Speculative Nature of Company's Proposed Operations. The
success of the Company's proposed plan of operation will depend to
a great extent on the operations, financial condition and
management of the identified business opportunity. While
management intends to seek business combination(s) with entities
having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting
such criteria. In the event the Company completes a business
combination, of which there can be no assurance, the success of the
Company's operations may be dependent upon management of the
successor firm or venture partner firm and numerous other factors
beyond the Company's control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with,
joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the
Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small
public companies.
No Agreement for Business Combination or Other Transaction-No
Standards for Business Combination. The Company has no arrangement,
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agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public
entity. There can be no assurance the Company will be successful
in identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified
any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will
be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business
opportunity to have achieved, and without which the Company would
not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity having no significant
operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative
characteristics.
Continued Management Control, Limited Time Availability.
While seeking a business combination, management anticipates
devoting up to twenty hours per month to the business of the
Company. None of the Company's officers has entered into a written
employment agreement with the Company and none is expected to do so
in the foreseeable future. The Company has not obtained key man
life insurance on any of its officers or directors. Notwithstanding
the combined limited experience and time commitment of management,
loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood of
continuing operations. See "Item 5 - Directors, Executive
Officers, Promoters and Control Persons."
Conflicts of Interest - General. Officers and directors of
the Company may in the future participate in business ventures
which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. Management has adopted a policy that
the Company will not seek a merger with, or acquisition of, any
entity in which management serve as officers, directors or
partners, or in which they or their family members own or hold any
ownership interest.
Reporting Requirements May Delay or Preclude Acquisition.
Sections 13 and 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), require companies subject thereto to provide
certain information about significant acquisitions, including
certified financial statements for the company acquired, covering
one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly
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delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited statements
may not be appropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
Lack of Market Research or Marketing Organization. The
Company has neither conducted, nor have others made available to
it, results of market research indicating that market demand exists
for the transactions contemplated by the Company. Moreover, the
Company does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger
or acquisition contemplated by the Company, there is no assurance
the Company will be successful in completing any such business
combination.
Lack of Diversification. The Company's proposed operations,
even if successful, will in all likelihood result in the Company
engaging in a business combination with a business opportunity.
Consequently, the Company's activities may be limited to those
engaged in by business opportunities which the Company merges with
or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore
increase the risks associated with the Company's operations.
Regulation. Although the Company will be subject to
regulation under the Securities Exchange Act of 1934, management
believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In
the event the Company engages in business combinations which result
in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would
be required to register as an investment company and could be
expected to incur significant registration and compliance costs.
The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company
under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
Probable Change in Control and Management. A business
combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private
company obtaining a controlling interest in the Company. Any such
business combination may require management of the Company to sell
or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of
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the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present
and prospective shareholders of the Company and may result in a
change in control or management of the Company.
Disadvantages of Blank Check Offering. The Company may enter
into a business combination with an entity that desires to
establish a public trading market for its shares. A business
opportunity may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may
include, but are not limited to, time delays of the registration
process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders and the inability or
unwillingness to comply with various federal and state laws enacted
for the protection of investors.
Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the
Company may undertake. Currently, such transactions may be
structured so as to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such
business combination will meet the statutory requirements of a tax-
free reorganization or that the parties will obtain the intended
tax-free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both
parties to the transaction.
Requirement of Audited Financial Statements May Disqualify
Business Opportunities. Management of the Company believes that
any potential business opportunity must provide audited financial
statements for review, for the protection of all parties to the
business combination. One or more attractive business
opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
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Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues, in
exchange for its securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations
regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this Registration
Statement.
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their
time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be
implemented by their devoting minimal time per month to the
business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by
such officers. See "Item 5 - Directors, Executive Officers,
Promoters and Control Persons - Resumes."
The Company's officers and directors were formerly involved
with other "blank check" companies. The Company's officers and
directors may, in the future, become involved with other companies
who have a business purpose similar to that of the Company. As a
result, additional potential conflicts of interest may arise in the
future. If such a conflict does arise and an officer or director of
the Company is presented with business opportunities under
circumstances where there may be a doubt as to whether the
opportunity should belong to the Company or another "blank check"
company they are affiliated with, they will disclose the
opportunity to all such companies. If a situation arises in which
more than one company desires to merge with or acquire that target
company and the principals of the proposed target company has no
preference as to which company will merger or acquire such target
company, the company which first filed a registration statement
with the Securities and Exchange Commission will be entitled to
proceed with the proposed transaction. See "Item 5 - Directors,
Executive Officers, Promoters and Control Persons - Prior 'Blank
Check' Experience."
The Articles of Incorporation of the Company provides that the
Company shall possess and may indemnify officers and/or directors
of the Company for liabilities, which can include liabilities
arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities
subject to such indemnification. See "Part II - Item 5 -
Indemnification of Directors and Officers."
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General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter
into potential business opportunities. Management anticipates that
it may be able to participate in only one potential business
venture because the Company has nominal assets and limited
financial resources. See "Part F/S - "Financial Statements." This
lack of diversification should be considered a substantial risk to
shareholders of the Company because it will not permit the Company
to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities
which have recently commenced operations, or which wish to utilize
the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new
product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking
the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms
on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with
which to provide the owners of business opportunities with any
significant cash or other assets. However, management believes the
Company will be able to offer owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the
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business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 (the "34 Act"), specifically
requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings
relevant to complying with the 34 Act. Nevertheless, the officers
and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of
a business opportunity.
The analysis of new business opportunities will be undertaken
by, or under the supervision of, the officers and directors of the
Company, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary
prospective business opportunities which may be brought to its
attention through present associations of the Company's officers
and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such
matters as the available technical, financial and managerial
resources; working capital and other financial requirements;
history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of
management services which may be available and the depth of that
management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition of acceptance of products,
services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to meet
personally with management and key personnel of the business
opportunity as part of their investigation. To the extent
possible, the Company intends to utilize written reports and
personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited
financial statements cannot be obtained within a reasonable period
of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, shall rely
upon their own efforts and, to a much lesser extent, the efforts of
the Company's shareholders, in accomplishing the business purposes
of the Company. It is not anticipated that any outside consultants
or advisors will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee earned
by such party will need to be paid by the prospective merger/
acquisition candidate, as the Company has no cash assets with which
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to pay such obligation. There have been no contracts or agreements
with any outside consultants and none are anticipated in the
future.
The Company will not restrict its search for any specific kind
of firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially
any stage of its corporate life. It is impossible to predict at
this time the status of any business in which the Company may
become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully
consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses
in the implementation of its business plan described herein.
Because the Company has no capital with which to pay these
anticipated expenses, present management of the Company will pay
these charges with their personal funds, as interest free loans to
the Company. However, the only opportunity which management has to
have these loans repaid will be from a prospective merger or
acquisition candidate. Management has agreed among themselves that
the repayment of any loans made on behalf of the Company will not
impede, or be made conditional in any manner, to consummation of a
proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and
shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any terms of sale of the shares
presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar
terms and conditions. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of its
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transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, of
which there can be no assurance, it will be undertaken by the
surviving entity after the Company has successfully consummated a
merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, the Company will
not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any
trading market which may develop in the Company's securities may
have a depressive effect on the value of the Company's securities
in the future, if such a market develops, of which there is no
assurance.
While the actual terms of a transaction to which the Company
may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to avoid
the creation of a taxable event and thereby structure the
acquisition in a so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors
of the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity and the relative negotiation strength of the Company
and such other management.
With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of
the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold
a substantially lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
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significant dilutive effect on the percentage of shares held by the
Company's then shareholders.
The Company will participate in a business opportunity only
after the negotiation and execution of appropriate written
agreements. Although the terms of such agreements cannot be
predicted, generally such agreements will require some specific
representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing
and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing
costs, including costs associated with the Company's attorneys and
accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's
audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable, at the
discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision
providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
Forward Looking Statements
This registration statement contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") concerning the Company's operations,
economic performance and financial condition , including, in
particular, the likelihood of the Company's success in merging with
an established privately held company or acquiring assets. These
statements are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company
and reflect future business decisions which are subject to change.
Some of these assumptions inevitably will not materialize and
unanticipated events will occur which will affect the Company's
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results. Consequently, actual results will vary from the
statements contained herein and such variance may be material.
Prospective investors should not place undue reliance on this
information. However, the relevant legislation (the Litigation
Reform Act) does not apply to initial public offerings. This
registration statement, while not intending to raise any capital
for the Company, could be construed as the Company's initial public
offering.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a
result of this potential problem. However, it is possible that
this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management
intends to address this potential problem with any prospective
merger or acquisition candidate. There can be no assurances that
new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is so consummated.
Competition
The Company will remain an insignificant participant among the
firms which engage in the acquisition of business opportunities.
There are many established venture capital and financial concerns
which have significantly greater financial and personnel resources
and technical expertise than the Company. In view of the Company's
combined extremely limited financial resources and limited
management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's
competitors.
Item 3. Description of Property
The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to
attempt to acquire assets or a business in exchange for its
securities which assets or business is determined to be desirable
for its objectives.
The Company operates from its offices at 2851 S. Parker Road,
Suite 720, Aurora, Colorado 80014. This space is provided to the
Company on a rent free basis by Andrew I. Telsey, an officer and
director of the Company and it is anticipated that this arrangement
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will remain until such time as the Company successfully consummates
a merger or acquisition. Management believes that this space will
meet the Company's needs for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The table below lists the beneficial ownership of the
Company's voting securities by each person known by the Company to
be the beneficial owner of more than 5% of such securities, as well
as the securities of the Company beneficially owned by all
directors and officers of the Company. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power
with respect to the shares shown.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class
- ------------------------------------------------------------------
Common Andrew I. Telsey 325,000 65%
6198 S. Moline Ct.
Englewood, CO 80111
Common Darlene D. Kell 25,000 5%
2851 S. Parker Rd., #720
Aurora, CO 80014
Common All Officers and 350,000 70%
Directors as a
Group (2 persons)
The balance of the Company's outstanding Common Shares are
held by 8 persons.
(b) Security Ownership of Management.
The following table sets forth the beneficial ownership for
each class of equity securities of Mathy Corporation beneficially
owned by all directors and officers of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- ---------------------------------------------------------------
Common Andrew I. Telsey 325,000 65%
6198 S. Moline Ct.
Englewood, CO 80111
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Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------------------------------------------------------------
Common Darlene D. Kell 25,000 5%
2851 S. Parker Rd., #720
Aurora, CO 80014
Common All Officers and 350,000 70%
Directors as a
Group (2 persons)
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The directors and officers of the Company are as follows:
Name Age Position
Andrew I. Telsey 45 President, Director
Darlene D. Kell 52 Secretary, Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the will
of the Board of Directors. There is no family relationship between
any executive officer and director of the Company.
Resumes
Andrew I. Telsey, President and a director. Mr. Telsey has
held his positions with the Company since its inception. From 1984
through the present, Mr. Telsey has been employed by Andrew I.
Telsey, P.C., Aurora, Colorado, a professional corporation engaged
in the practice of law, emphasizing securities law, mergers,
acquisitions and general business matters. This firm is also legal
counsel to the Company. Mr. Telsey received a Juris Doctor degree
from Syracuse University College of Law in 1979 and a Bachelor of
Arts degree from Ithaca College in 1975. He devotes only such time
as necessary to the business of the Company, which time is expected
to be nominal.
Darlene D. Kell, Secretary and Director. Ms. Kell has held
her position with the Company since its inception. Since September
1994, Ms. Kell has been employed as a paralegal and office manager
for Andrew I. Telsey, P.C., Aurora, Colorado. Prior, from October
1993 to August 1994, Ms. Kell was employed as a paralegal/office
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manager for Wherry & Wherry, P.C., a law firm located in Denver,
Colorado. From May 1993 to September 1993, Ms. Kell was self-
employed, offering free-lance secretarial, paralegal and
bookkeeping services in Denver, Colorado. Prior thereto, from
January 1993 through May 1993, Ms. Kell was employed as a
paralegal/office manager for A. Thomas Tenenbaum, P.C., Denver,
Colorado and with Dihle & Co., P.C., Denver, Colorado, from July
1991 through December 1992. She devotes only such time as
necessary to the business of the Company, which time is expected to
be nominal.
Prior "Blank Check" Experience
Mr. Telsey and Ms. Kell are presently officers and directors
of Tarcyn Corporation ("Tarcyn"), a "blank check" public reporting
company. Tarcyn filed a Registration Statement on Form 10-SB in
May 1997, which became effective in July 1997, wherein it
registered its common stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended. In May 1998, Tarcyn
executed a non-binding letter of intent with Access Communications
Corp. ("ACC"), a privately held Delaware corporation, wherein the
ACC shareholders would exchange all of the issued and outstanding
ACC stock owned by them for an aggregate of 4,500,000 "restricted"
Common Shares of Tarcyn, with Tarcyn emerging as the surviving
company and ACC being dissolved by operation of law. These terms
were subsequently amended to reflect that Tarcyn would undertake a
forward split of its issued and outstanding common stock, whereby
2 shares of common stock would be issued in exchange for each 1
share then issued and outstanding and thereafter, tarcyn would
issue an aggregate of 9,000,000 shares of its common stock in
exchange for all of the issued and outstanding common shares of
ACC. As of the date of this Registration Statement, Tarcyn and ACC
are engaged in due diligence activities and reviewing the books and
records of the other and it is expected that this transaction will
close in July 1998. However, there can be no assurances that the
transaction between Tarcyn and ACC will close within the time
parameters referenced herein, or at all. See "Conflicts of
Interest."
Mr. Telsey and Ms. Kell were also officers and directors of
Euro-Tel, Inc. ("ETI"), a "blank check" public reporting company.
ETI filed a Registration Statement on Form 10-SB in December 1996,
which became effective in February 1997, wherein it registered its
common stock pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended. In June 1997, ETI consummated a merger
with PharmaSystems Cost Containment Corp., a Florida corporation
("Pharma"), engaged in the delivery of pharmacy contract services,
including mail service and retail pharmacy networks. The terms of
this transaction included ETI undertaking a forward split of its
issued and outstanding Common Stock, whereby 4 shares of Common
Stock were issued in exchange for each share of Common Stock then
issued and outstanding, and thereafter, the Pharma shareholders
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<PAGE>
exchanged all of the issued and outstanding Pharma Stock owned by
them for an aggregate of 18,000,000 "restricted" Common Shares of
ETI (post forward split), with ETI emerging as the surviving
company and Pharma being dissolved by operation of law. As of the
date of this Registration Statement management of Pharma has caused
the Company to become non-reporting under the Securities Exchange
Act of 1934, as amended. To the best knowledge of Mr. Telsey and
Ms. Kell, there is no active market for the securities of Pharma as
of the date of this Registration Statement.
For the three month period ended March 31, 1997, the unaudited
financial statements of Pharma showed assets of $1,564,003,
liabilities of $2,605,052, revenues of $1,179,487 and a net loss of
$(703,401).
Mr. Telsey and Ms. Kell were also officers and/or directors of
SDT Holding Corporation ("SDT"), a "blank check" public reporting
company. SDT filed a Registration Statement on Form 10-SB in July
1994, which became effective in December 1994, wherein it
registered its common stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended. Effective October 30,
1996, SDT successfully consummated a share exchange agreement with
European Business Group (UK), Plc., an English corporation ("EBG")
with its principal place of business located in Surrey, England.
The terms of the transaction involved the Company undertaking a
forward split of its issued and outstanding common shares whereby
8 shares of common stock were issued in exchange for every one (1)
share of common stock and thereafter, the Company issued an
aggregate of 18,000,000 shares of its "restricted" common stock
(post forward split) to the former shareholders of EBG in exchange
for all of the issued and outstanding stock of EBG. EBG remains in
existence as a wholly owned foreign subsidiary of the Company.
EBG is a leasing company doing business through 16 wholly
owned subsidiary companies. For purposes herein, all references to
EBG shall include EBG and its subsidiaries. EBG's business is
centered around two specific segments of the leasing industry,
including (i) marine containers; and (ii) the sale of licensing
rights to city information billboards worldwide (primarily in the
U.S.). On an unaudited basis and as of August 31, 1996, EBG's
consolidated balance sheet showed assets of approximately $415.8
million (US), liabilities of approximately $320.6 million (US) and
shareholder equity of approximately $95.2 million (US). During
EBG's fiscal year ended August 31, 1996, it had consolidated gross
revenues of approximately $54.4 million (US) and net pre-tax
profits of approximately $19.6 million. As of the date of this
Registration Statement, there is no active market for the company's
securities.
Mr. Telsey was also formerly an officer and director of
Ashland Capital Group, Inc. ("Ashland"), a public reporting
company. Ashland obtained effectiveness of a registration
statement filed with the Securities and Exchange Commission
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pursuant to the Securities Act of 1933, as amended, in May 1989.
The company successfully closed its initial public offering on
February 16, 1990, whereby 5,000,000 units were sold to the public
at a price of $.01 per unit. The Company derived approximately
$41,000 in net proceeds as a result of the offering.
On October 9, 1990, pursuant to a definitive agreement,
Ashland acquired all of the issued and outstanding shares of Visual
Presentation Products, Inc., a Florida corporation ("VPP"), in
exchange for the issuance of common stock equal to approximately
80% of the Company's issued and outstanding common shares. At the
closing of the transaction, Ashland had available approximately
$37,000 in cash, remaining from the proceeds derived from its
initial public offering. Mr. Telsey resigned his positions with
Ashland upon the closing of this agreement and was replaced by the
then management of VPP pursuant to the affirmative vote of the
Ashland shareholders.
After closing of the transaction with VPP, Ashland changed its
name to "Visual Design Industries, Inc." ("VDI"). VDI subsequently
filed a registration statement with the SEC, undertaking a
secondary offering of its securities. Prior to effectiveness of
the registration statement, VDI's underwriter, Nutmeg Securities,
Inc., abandoned the proposed offering. To date, no market in the
company's securities has ever developed.
Additionally, Mr. Telsey's practice of law emphasizes
corporate and securities transactions, including mergers and
acquisitions. As a result, Mr. Telsey has had additional
experience in identifying private merger candidates. Other than as
disclosed hereinabove, no other member of the Company's management
has had any experience in identifying and examining private
business candidates.
The foregoing is a complete description of all "blank check"
companies with whom management of the Company has been, or is,
involved.
Conflicts of Interest
Members of the Company's management are associated with other
firms involved in a range of business activities. Consequently,
there are potential inherent conflicts of interest in their acting
as officers and directors of the Company. Insofar as the officers
and directors are engaged in other business activities, management
anticipates it will devote only a minor amount of time to the
Company's affairs.
The officers and directors of the Company are now and may in
the future become shareholders, officers or directors of other
companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in
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the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to the
attention of such individuals in the performance of their duties or
otherwise. The Company does not currently have a right of first
refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's
proposed business operations.
The officers and directors are, so long as they are officers
or directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties
or in any other manner, will be considered opportunities of, and be
made available to the Company and the companies that they are
affiliated with on an equal basis. A breach of this requirement
will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers
and directors are affiliated with both desire to take advantage of
an opportunity, then said officers and directors would abstain from
negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if
the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy
with respect to such transactions.
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company
will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such
event, the Company would be required to register as an investment
company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination
from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously
approved a resolution stating that it is the Company's desire to be
exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
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They all have agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation
of a merger or acquisition. As of the date of this Registration
Statement, the Company has no funds available to pay directors.
Further, none of the directors are accruing any compensation
pursuant to any agreement with the Company.
It is possible that, after the Company successfully
consummates a merger or acquisition with an unaffiliated entity,
that entity may desire to employ or retain one or a number of
members of the Company's management for the purposes of providing
services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to
members of management will not be a consideration in the Company's
decision to undertake any proposed transaction. Each member of
management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation to be
paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member
of the Company's Board of Directors is offered compensation in any
form from any prospective merger or acquisition candidate, the
proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may
refer a prospective merger or acquisition candidate to the Company.
In the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form of
cash consideration. However, if such compensation is in the form
of cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has insufficient cash available.
The amount of such finder's fee cannot be determined as of the date
of this Registration Statement, but is expected to be comparable to
consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either
directly or indirectly, as a result of their respective efforts to
implement the Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by
the Company for the benefit of its employees.
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Item 7. Certain Relationships and Related Transactions.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 125,000,000
shares, of which 25,000,000 shares are Preferred Shares, par value
$0.001 per share, and 100,000,000 are Common Shares, par value
$0.001 per share. There are 500,000 Common Shares issued and
outstanding as of the date of this filing. There are no preferred
shares issued or outstanding.
Common Stock. All shares of Common Stock have equal voting
rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by shareholders.
The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully-
paid and nonassessable shares. Cumulative voting in the election
of directors is not permitted, which means that the holders of a
majority of the issued and outstanding shares of Common Stock
represented at any meeting at which a quorum is present will be
able to elect the entire Board of Directors if they so choose and,
in such event, the holders of the remaining shares of Common Stock
will not be able to elect any directors. In the event of
liquidation of the Company, each shareholder is entitled to receive
a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All
shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are
entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of
Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued
from time to time in one or more series as may be determined by the
Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall
have preemptive rights. The Company has no shares of Preferred
Stock outstanding, and the Board of Directors does not plan to
issue any shares of Preferred Stock for the foreseeable future,
unless the issuance thereof shall be in the best interests of the
Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
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Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan
described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. Mr. Telsey is also
an officer, director and principal shareholder of the Company.
However, while management believes that the procedures established
to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no
assurances that the procedures established relevant herein will
unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
PART II
Item 1. Market Price for Common Equity and Related Stockholder
Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. Management
has not undertaken any discussions, preliminary or otherwise, with
any prospective market maker concerning the participation of such
market maker in the aftermarket for the Company's securities and
management does not intend to initiate any such discussions until
such time as the Company has consummated a merger or acquisition.
There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at
the present time.
The Securities and Exchange Commission adopted Rule 15g-9,
which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the rules
require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny
23
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stocks, the broker or dealer must (i) obtain financial information
and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth
the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a
signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited
market in penny stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has established criteria for
continued NASDAQ eligibility. In order to continue to be included
on NASDAQ, a company must maintain $2,000,000 in total assets, a
$200,000 market value of its publicly-traded securities and
$1,000,000 in total capital and surplus. In addition, continued
inclusion requires two market-makers and a minimum bid price of
$1.00 per share, provided, however, that if a company falls below
such minimum bid price it will remain eligible for continued
inclusion on NASDAQ if the market value of its publicly-traded
securities is at least $1,000,000 and the Company has $2,000,000 in
capital and surplus. The NASD is presently considering increasing
these standards, but as of the date of this Registration Statement,
no definitive action has been taken in this regard.
Management intends to strongly consider undertaking a
transaction with any merger or acquisition candidate which will
allow the Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure
continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such
qualification in the future may result in the discontinuance of the
inclusion of the Company's securities on a national exchange. In
such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result,
a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
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b. Holders. There are ten (10) holders of the Company's
Common Stock. In January 1996, the Company issued 500,000 of its
Common Shares for an aggregate of $500 in cash and services ($.001
per share). All of the issued and outstanding shares of the
Company's Common Stock were issued in accordance with the exemption
from registration afforded by Section 4(2) of the Securities Act of
1933.
As of the date of this Registration Statement, 500,000 shares
of the Company's Common Stock are eligible for sale under Rule 144
promulgated under the Securities Act of 1933, as amended, subject
to certain limitations included in said Rule. In general, under
Rule 144, a person (or persons whose shares are aggregated), who
has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of
shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
c. Dividends. The Company has not paid any dividends to date
and has no plans to do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the
Company.
Item 3. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
The Company has not changed accountants since its formation
and there are no disagreements with the findings of said
accountants.
Item 4. Recent Sales of Unregistered Securities.
In January 1996 the Company issued 500,000 shares of its
common stock to 10 persons at a price of $.001 per share. These
shares were issued pursuant to exemption from the registration
requirements included under the Securities Act of 1933, as amended,
including but not necessarily limited to Section 4(2) of said Act.
Each shareholder was either an "accredited investor" (as that term
is defined in the 1933 Act), or were provided all information
necessary in order to allow each investor to exercise their
respective business judgment as to the merits of the
investment. All of the shares of Common Stock of the Company
previously issued have been issued for investment purposes in a
"private transaction" and are "restricted" shares as defined in
Rule 144 under the Securities Act of 1933, as amended (the "Act").
These shares may
25
<PAGE>
not be offered for public sale except under Rule 144, or otherwise,
pursuant to the Act.
As of the date of this Registration Statement, all of the
issued and outstanding shares of the Company's Common Stock are
eligible for sale under Rule 144 promulgated under the Securities
Act of 1933, as amended, subject to certain limitations included in
said Rule. However, all of the shareholders of the Company have
executed and delivered a "lock-up" letter agreement which provides
that each such shareholder shall not sell their respective
securities until such time as the Company has successfully
consummated a merger or acquisition. Further, each shareholder has
placed their respective stock certificate with the Company's legal
counsel, Andrew I. Telsey, P.C., who has agreed not to release any
of the certificates until the Company has closed a merger or
acquisition. Mr. Telsey is also an officer, director and principal
shareholder of the Company. Any liquidation by the current
shareholders after the release from the "lock-up" selling
limitation period may have a depressive effect upon the trading
prices of the Company's securities in any future market which may
develop.
In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a one year holding period, under
certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent
of the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two
year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation incorporate the
provisions of the Colorado Business Corporation Act providing for
the indemnification of officers and directors and other persons
against expenses, judgments, fines and amounts paid in settlement
in connection with threatened, pending or completed suits or
proceedings against such persons by reason of serving or having
served as officers, directors or in other capacities, except in
relation to matters with respect to which such persons shall be
determined not to have acted in good faith and in the best
interests of the Company. With respect to matters as to which the
Company's officers and directors and others are determined to be
liable for misconduct or negligence, including gross negligence in
the performance of their duties to the Company, Colorado law
provides for indemnification only to the extent that the court in
which the action or suit is brought determines that such person is
fairly and reasonably entitled to indemnification for such expenses
which the court deems proper.
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Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company has
been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
In accordance with the laws of the State of Colorado, the
Company's Bylaws authorize indemnification of a director, officer,
employee, or agent of the Company for expenses incurred in
connection with any action, suit, or proceeding to which he or she
is named a party by reason of his having acted or served in such
capacity, except for liabilities arising from his own misconduct or
negligence in performance of his or her duty. In addition, even a
director, officer, employee, or agent of the Company who was found
liable for misconduct or negligence in the performance of his or
her duty may obtain such indemnification if, in view of all the
circumstances in the case, a court of competent jurisdiction
determines such person is fairly and reasonably entitled to
indemnification. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be
permitted to directors, officers, or persons controlling the
issuing Company pursuant to the foregoing provisions, the Company
has been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.
PART F/S
Financial Statements.
The following financial statements are attached to this
Registration Statement and filed as a part thereof. See page 28.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheet
4) Statement of Operations
5) Statement of Cash Flows
6) Statement of Shareholders' Equity
7) Notes to Financial Statements
27
<PAGE>
MATHY CORPORATION
Audited Financial Statements
For the Years Ended March 31, 1998 and 1997
and the Period January 30, 1996 (Inception)
through March 31, 1998
28
<PAGE>
Mathy Corporation
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flow F-4
Statement of Shareholders' Equity F-5
Notes to the Financial Statements F-6 to F-8
29
<PAGE>
Kish, Leake & Associates P.C.
Certified Public Accountants
J.D.Kish, C.P.A., M.B.A. 7901 E Belleview Ave - Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
----------------------------- Telephone (303) 779-5006
Facsimile (303) 779-5724
Independent Auditors' Report
----------------------------
We have audited the accompanying balance sheet of Mathy Corporation (a
Developmental Stage Company), as of March 31, 1998 and the related statements
of income, shareholders' equity, and cash flows for the fiscal years ended
March 31, 1998 and 1997 and period January 30, 1996 (Inception) through March
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mathy Corporation at March
31, 1998 and the results of its operations and its cash flows for the fiscal
years ended March 31, 1998 and 1997 and the period January 30, 1996
(Inception) through March 31, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the Company
is in the development stage and has no operations as of March 31, 1998. The
deficiency in working capital as of March 31, 1998 raises substantial doubt
about its ability to continue as a going concern. Management's plans
concerning these matters are described in Note 5. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
June 2, 1998
-1-
30
<PAGE>
<TABLE>
Mathy Corporation
(A Development Stage Company)
Balance Sheet
______________________________________________________________________________
<CAPTION>
March
31, 1998
--------
<S> <C>
ASSETS $ 0
========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Accounts Payable 0
--------
SHAREHOLDERS' EQUITY
Preferred Stock, .001 Par Value
Authorized 25,000,000 Shares; Issued 0
And Outstanding -0- Shares
Common Stock, $.001 Par Value
Authorized 100,000,000 Shares; Issued
And Outstanding 500,000 Shares 500
Additional Paid In Capital On Common Stock 0
Deficit Accumulated During The Development Stage (500)
TOTAL SHAREHOLDERS' EQUITY 0
--------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 0
========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-2
31
<PAGE>
<TABLE>
Mathy Corporation
(A Development Stage Company)
Statement Of Operations
______________________________________________________________________________
<CAPTION>
January
30, 1996
(Inception)
Through
March March March
31, 1998 31, 1997 31, 1998
-------- -------- --------
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
-------- -------- --------
Expenses:
Office 0 0 500
-------- -------- --------
Total 0 0 500
-------- -------- --------
Net (Loss) $ 0 $ 0 $ (500)
======== ======== ========
Basic (Loss) Per Common Share $ 0.00 $ 0.00 $ (0.00)
======== ======== ========
Basic Common Shares Outstanding 500,000 500,000 500,000
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-3
32
<PAGE>
<TABLE>
Mathy Corporation
(A Development Stage Company)
Statement Of Cash Flows
______________________________________________________________________________
<CAPTION>
January
30, 1996
(Inception)
Through
March March March
31, 1998 31, 1997 31, 1998
-------- -------- --------
<S> <C> <C> <C>
Net (Loss) Accumulated During
The Development Stage $ 0 $ 0 $ (500)
Issuance Of Common Stock For
Cash Advances & Services 0 0 500
-------- -------- --------
Cash Flows From Operations 0 0 0
-------- -------- --------
Cash Flows From Financing
Activities:
Issuance Of Common Stock 0 0 0
-------- -------- --------
Cash Flows From Financing 0 0 0
-------- -------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- -------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======== ========
Non - Cash Activities:
Stock Issued For Cash Advances & Services $ 0 $ 0 $ 500
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-4
33
<PAGE>
<TABLE>
Mathy Corporation
(A Development Stage Company)
Statement Of Shareholders' Equity
____________________________________________________________________________________
<CAPTION>
Deficit
Accumulated
Number Of Number Of During The
Common Preferred Common Preferred Development
Shares Shares Stock Stock Stage Total
------- ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance At
January 30, 1996 0 0 $ 0 $ 0 $ 0 $ 0
Issuance Of Common Stock:
January 30, 1996 for Cash
Advances Made on Behalf
of the Company &
Services at $.001
Per Share 500,000 0 500 0 0 500
Net (Loss) (500) (500)
------- ------ ------ ----- ----- -----
Balance At March 31,
1996, 1997, and 1998 500,000 0 $ 500 $ 0 $(500) $ 0
======= ====== ====== ===== ===== =====
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
F-5
34
<PAGE>
Mathy Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1998 and 1997
- --------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On January 30, 1996, Mathy Corporation (the Company) was incorporated under
the laws of Colorado to engage in any lawful business or activity for which
corporations may be organized under the laws of the State of Colorado.
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on
January 30, 1996. Its purpose is to evaluate, structure and complete a merger
with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal year ended March 31, 1998 and 1997 was $-0-.
Cash paid for income taxes in fiscal year ended March 31, 1998 and 1997 was $-
0-.
Basic (Loss) per Common Share:
Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at March 31, 1998
and March 31, 1997.(See Note 7)
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts. Actual results could differ from those
estimates.
F-6
35
<PAGE>
Mathy Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1998 and 1997
- --------------------------------------------------
Note 2 - Capital Stock and Capital in Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 100,000,000 shares of $.001 par value common
stock and 25,000,000 shares of $.001 par value preferred stock. On January
30, 1996, the company issued 500,000 shares of common stock for services
valued at $350 and for cash advances paid on behalf of the Company of $150 for
a total of $500.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at an officers place of business.
This address is located at 2851 S Parker Road, Suite 720, Aurora, Colorado.
At this time the Company has no need for an office. As of March 31, 1998
management has incurred a minimal amount of time and expense on behalf of the
Company.
Note 4 - Income Taxes
- ---------------------
At March 31, 1998, the company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately $500
which, if not used, will expire in the year 2010.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
March 31, 1998, the Company has a deferred tax asset of $10 primarily for its
net operating loss carryforward which has been fully reserved through a
valuation allowance. The change in the valuation allowance for 1998 is $-0-.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term, revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern is
dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
F-7
36
<PAGE>
Mathy Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1998 and 1997
- --------------------------------------------------
Note 6 - New Accounting Pronouncement
- -------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No. 128).
SFAS No. 128 specifies the computation, presentation , and disclosure
requirements of earnings per share and supersedes Accounting Principles Board
Opinion No. 15, Earnings Per Share. SFAS No. 128 requires dual presentation
of basic and diluted earnings per share. Basic earnings per share, which
excludes the impact of common stock equivalents, replaces primary earnings per
share. Diluted earnings per share, which utilizes the average market price
per share as opposed to the greater of the average market price per share or
ending market price per share when applying the treasury stock method in
determining common stock equivalents, replaces fully-diluted earnings per
share. SFAS No. 128 is effective for the Company for periods ending after
December 15, 1997. However, the Company has a simple capital structure for
the periods presented and therefore, there is no affect on the earnings per
share presented due to the Company's adoption of SFAS No. 128.
Note 7 - Subsequent Events
- --------------------------
The Company filed a Form 10 -SB with the Securities and Exchange
Commission to become a 34 Act reporting company.
F-8
37
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
- --- Page No.
--------
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation *
3.2 Bylaws *
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreements Executed
by the Company's Shareholders *
(27) Financial Data Schedule
27.1 Financial Data Schedule 40
__________________
* Previously filed as part of the Registrant's initial filing
of its Registration Statement on Form 10-SB on or about June 11,
1998.
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
MATHY CORPORATION
(Registrant)
Date: August 4, 1998
By:/s/ Andrew I. Telsey
---------------------------
Andrew I. Telsey,
President
39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED MARCH 31, 1998 AND MARCH 31,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 500 500
<OTHER-SE> (500) (500)
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
