U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities
Exchange Act of 1934
NATIONAL CMA, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1474838
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7331 S. Meadow Court,
Boulder, Colorado 80301
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 530-3353
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered - N/A
Name of each exchange on which each class is to be
registered - N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
PART I -
Item 1. DESCRIPTION OF BUSINESS
Background
The Company was incorporated under the laws of the State of
Colorado on December 30, 1994. It was formed with the intent that it
would become a public "blind pool" or "blank check" company through
the voluntary filing of a registration statement under the Securities
Exchange Act of 1934, and that it would thereafter seek, investigate,
and, if warranted, acquire one or more properties or businesses through
a reverse merger or other similar type of transaction.
The Company was organized by two individuals, J.A. Garcia
and Mark DiSalvo, and Mr. DiSalvo was its sole initial shareholder. At
the time that they formed the Company, Mr. DiSalvo and Mr. Garcia
also organized four other corporations with the same business plan
(See "Description of Business - Other Entities").
Except for its organizational activities, from the date of its
incorporation in December, 1994, until September, 1997, the Company
was inactive. During this period, Mr. DiSalvo remained as the sole
shareholder of the Company, and Mr. DiSalvo and his spouse, Leah
DiSalvo, acted as the Company's sole officers and directors. Although
it had been intended that Mr. Garcia would supervise the
implementation of the Company's business plan, during the period
from December, 1994 until September, 1997, he had many other
business dealings related to blind pool or blank check companies, and
was unable to devote time to the Company or to the four other
corporations formed at the same time as the Company.
In September, 1997, Mr. DiSalvo sold or transferred 80% of
the issued and outstanding capital stock of the Company, and of each
of the four corporations which were formed simultaneously with the
Company, to three individuals, Gary S. Joiner, Grant W. Peck and
Dean F. Sessions. These transfers were made in consideration of the
agreement of the transferees to assist with implementation of the
business plan for the Company and the other entities. Concurrently
with the sale or transfer of a controlling interest, Mr. DiSalvo and his
spouse resigned as officers and directors of the Company and each of
the four other corporations and appointed Grant Peck and Dean
Sessions as successor officers and directors.
Following the change of control in September, 1997, the
Company and the four other corporations again became inactive for
approximately eighteen months because Mr. Joiner, Mr. Peck and Mr.
Sessions were each involved with several other blind pool or blank
check companies during this time period and did not want to create a
conflict of interest between the various entities. Finally in
approximately March, 1999, the Company decided to proceed with the
process of raising capital and obtaining the audited financial statements
required for filing of its registration statement on Form 10-SB. During
the first quarter of 1999, Mr. Joiner, Mr. Peck and Mr. Sessions each
made gift transfers of a portion of the shares he had acquired from Mr.
DiSalvo, but such transfers did not result in a further change in control
of the Company or of the four other corporations formed
simultaneously with the Company.
Except for the organizational activities described above, the
Company has not engaged in any other business activities since the
date of its incorporation. The Company has no full-time employees,
owns no real estate and has not commenced any commercial
operations.
Other Entities
The officers, directors and principal shareholders of the
Company are also the officers, directors and principal shareholders of
four other corporations which were formed at the same time as the
Company. Each of these other corporations has the same business
plan as the Company and each has also voluntarily filed a registration
statement on Form 10-SB. (See "Directors, Executive Officers,
Promoters and Control Persons - Other Blind Pool Activities").
The experience of Company management is that when a blind
pool or blank check entity such as the Company begins the process of
seeking a business acquisition opportunity, it is very likely to find
more than one such opportunity which it may consider to be attractive.
The existence of several identical blind pool corporations with the
same officers, directors and principal shareholders would then be
advantageous because it may create the potential for participation in
more than one such opportunity. At the same time, however, the
existence of several substantially identical corporations also creates the
potential for the occurrence of conflicts of interest for Company
management (See "Risk Factors - Conflicts of Interest" and Directors,
Executive Officers, Promoters and Control Persons - Conflicts of
Interest").
Management has adopted certain policies to assist in resolution
of potential conflicts, but may also be required to resolve certain
conflicts in an arbitrary manner without the benefit of arms length
negotiation or the existence of a stated policy.
General
THE COMPANY HAS ELECTED TO FILE THIS FORM 10-SB
REGISTRATION STATEMENT ON A VOLUNTARY BASIS IN
ORDER TO BECOME A REPORTING COMPANY UNDER THE
SECURITIES EXCHANGE ACT OF 1934. BECOMING A
REPORTING COMPANY IS A PREREQUISITE TO
QUALIFICATION OF THE COMPANY'S SHARES FOR
TRADING ON THE OTC BULLETIN BOARD.
The Company is a "blind pool" or "blank check" company,
whose business plan is to seek, investigate, and, if warranted, acquire
one or more properties or businesses, and to pursue other related
activities intended to enhance shareholder value. The acquisition of a
business opportunity may be made by purchase, merger, exchange of
stock, or otherwise, and may encompass assets or a business entity,
such as a corporation, joint venture, or partnership. The Company
has very limited capital, and it is unlikely that the Company will be
able to take advantage of more than one such business opportunity.
The Company intends to seek opportunities demonstrating the potential
of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any
business opportunity that it plans to pursue, nor has the Company
reached any agreement or definitive understanding with any person
concerning an acquisition. The Company's officers, directors and
non-management principal shareholders named herein, have previously
been involved in several transactions involving mergers between an
established company and a blind pool or blank check entity, and they
have numerous contacts within the field of corporate finance (See Item
5 "Directors, Executive Officers, Promoters and Control Persons -
Other Blind Pool Activities"). As a result, they have had preliminary
contacts with representatives of numerous companies concerning the
general possibility of a merger or acquisition with a blind pool or
blank check company. However, none of these preliminary contacts
or discussions involved the possibility of a merger or acquisition
transaction with the Company.
Prior to the effective date of this registration statement, it is
anticipated that the Company's officers, directors, and
non-management principal shareholders named herein will contact
broker-dealers and other persons with whom they are acquainted who
are involved in corporate finance matters to advise them of the
Company's existence and to determine if any companies or businesses
they represent have a general interest in considering a merger or
acquisition with a blind pool or blank check entity. No direct
discussions regarding the possibility of a merger with the Company
are expected to occur until after the effective date of this registration
statement. However, no assurance can be given that the Company
will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available
for acquisitions, or that any acquisition that occurs will be on terms
that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and
medium-sized enterprises which have a desire to become public
corporations and which are able to satisfy, or anticipate in the
reasonably near future being able to satisfy, the minimum asset
requirements in order to qualify shares for trading on NASDAQ or on
an exchange such as the American Stock Exchange. (See
"Investigation and Selection of Business Opportunities"). The
Company anticipates that the business opportunities presented to it will
(i) either be in the process of formation or, be recently organized with
limited operating history, or a history of losses attributable to
under-capitalization or other factors; (ii) be experiencing financial or
operating difficulties; (iii) be in need of funds to develop a new
product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a
combination of the characteristics mentioned in (i) through (iv). The
Company intends to concentrate its acquisition efforts on properties or
businesses that it believes to be undervalued or that it believes may
realize a substantial benefit from being publicly owned. Given the
above factors, investors should expect that any acquisition candidate
may have little or no operating history, or a history of losses or low
profitability.
The Company does not propose to restrict its search for
investment opportunities to any particular geographical area or
industry, and may, therefore, engage in essentially any business, to
the extent of its limited resources. This includes industries such as
service, finance, natural resources, manufacturing, high technology,
product development, medical, communications and others. The
Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
As a consequence of this registration of its securities, any
entity which has an interest in being acquired by, or merging into the
Company, is expected to be an entity that desires to become a public
company and establish a public trading market for its securities. In
connection with such a merger or acquisition, it is highly likely that
an amount of stock constituting control of the Company would either
be issued by the Company or be purchased from the current principal
shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to be a private transaction rather than a public distribution
of securities, but is also likely to result in substantial gains to the
current shareholders relative to their purchase price for such stock. In
the Company's judgment, none of its officers and directors would
thereby become an "underwriter" within the meaning of the Section
2(11) of the Securities Act of 1933, as amended as long as the
transaction is a private transaction rather than a public distribution of
securities. The sale of a controlling interest by certain principal
shareholders of the Company could occur at a time when the other
shareholders of the Company remain subject to restrictions on the
transfer of their shares.
Depending upon the nature of the transaction, the current
officers and directors of the Company may resign their management
positions with the Company in connection with a change in control of
the Company or its acquisition of a business opportunity (See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of
Continuity in Management"). In the event of such a resignation, the
Company's current management would not have any control over the
conduct of the Company's business following the change in control or
the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its officers and
directors, its other stockholders, professional advisors such as
attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may
present unsolicited proposals. The Company has no plans,
understandings, agreements, or commitments with any individual for
such person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a
merger or acquisition transaction with any business with which its
officers or directors are currently affiliated. Should the Company
determine in the future, contrary to the foregoing expectations, that a
transaction with an affiliate would be in the best interests of the
Company and its stockholders, the Company is in general permitted
by Colorado law to enter into such a transaction if:
(1) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the Board of Directors, and the Board in good faith
authorizes, approves or ratifies the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even
though the disinterested directors constitute less than a quorum; or
(2) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically authorized, approved or ratified in good
faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Company as of
the time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific
business opportunity may be made upon management's analysis of the
quality of the other company's management and personnel, the
anticipated acceptability of new products or marketing concepts, the
merit of technological changes, the perceived benefit the business
opportunity will derive from becoming a publicly held entity, and
numerous other factors which are difficult, if not impossible, to
analyze through the application of any objective criteria. In many
instances, it is anticipated that the historical operations of a specific
business opportunity may not necessarily be indicative of the potential
for the future because of the possible need to shift marketing
approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make
other changes. The Company will be dependent upon the owners of a
business opportunity to identify any such problems which may exist
and to implement, or be primarily responsible for the implementation
of, required changes. Because the Company may participate in a
business opportunity with a newly organized firm or with a firm
which is entering a new phase of growth, the Company will incur
further risks, because management in many instances will not have
proven its abilities or effectiveness, the eventual market for the
products or services of the business opportunity will likely not be
established, and the business opportunity may not be profitable when
acquired.
It is anticipated that the Company will not be able to diversify,
but will essentially be limited to one such venture because of the
Company's limited financing. This lack of diversification will not
permit the Company to offset potential losses from one business
opportunity against profits from another, and should be considered an
adverse factor affecting any decision to purchase the Company's
securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the Company's
management to complete acquisitions without submitting any proposal
to the stockholders for their consideration. Holders of the Company's
securities should not anticipate that the Company necessarily will
furnish such holders, prior to any merger or acquisition, with financial
statements, or any other documentation, concerning a target company
or its business. In some instances, however, the proposed
participation in a business opportunity may be submitted to the
stockholders for their consideration, either voluntarily by such
directors to seek the stockholders' advice and consent or because state
law so requires.
The analysis of business opportunities will be undertaken by or
under the supervision of the Company's officers, directors and
non-management principal shareholders, none of whom are
professional business analysts (See "Management"). Although there
are no current plans to do so, Company management might hire an
outside consultant to assist in the investigation and selection of
business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or
advisors to assist in the investigation and selection of business
opportunities, no policies have been adopted regarding use of such
consultants or advisors, the criteria to be used in selecting such
consultants or advisors, the services to be provided, the term of
service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely
that any such fee the Company agrees to pay would be paid in stock
and not in cash. Otherwise, the Company anticipates that it will
consider, among other things, the following factors:
(1) Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
(2) The Company's perception of how any particular business
opportunity will be received by the investment community and by the
Company's stockholders;
(3) Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a
significant prospect in the foreseeable future of becoming sufficient to
enable the securities of the Company to qualify for listing on an
exchange or on a national automated securities quotation system, such
as NASDAQ, so as to permit the trading of such securities to be
exempt from the requirements of Rule 15c2-6 adopted by the
Securities and Exchange Commission (See "Risk Factors - The
Company - Regulation of Penny Stocks").
(4) Capital requirements and anticipated availability of
required funds, to be provided by the Company or from operations,
through the sale of additional securities, through joint ventures or
similar arrangements, or from other sources;
(5) The extent to which the business opportunity can be
advanced;
(6) Competitive position as compared to other companies of
similar size and experience within the industry segment as well as
within the industry as a whole;
(7) Strength and diversity of existing management, or
management prospects that are scheduled for recruitment;
(8) The cost of participation by the Company as compared to
the perceived tangible and intangible values and potential; and
(9) The accessibility of required management expertise,
personnel, raw materials, services, professional assistance, and other
required items.
In regard to the possibility that the shares of the Company
would qualify for listing on NASDAQ, the current standards for initial
listing include, among other requirements, that the Company (i) have
net tangible assets of at least $4,000,000, or a market capitalization of
$50,000,000, or net income of not less than $750,000 in its latest
fiscal year or in two of the last three fiscal year; (ii) have a public
float (i.e. shares that are not held by any officer, director or 10%
shareholder) of at least 1,000,000 shares; (iii) have a minimum bid
price of at least $4.00; (iv) have at least 300 round lot shareholders
(i.e. shareholders who own not less than 100 shares); and (v) have an
operating history of at least one year or a market capitalization of at
least $50,000,000. Many, and perhaps most, of the business
opportunities that might be potential candidates for a combination with
the Company would not satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to
analyze all factors appropriate to each opportunity and make a
determination based upon reasonable investigative measures and
available data. Potentially available business opportunities may occur
in many different industries and at various stages of development, all
of which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's
limited capital available for investigation and management's limited
experience in business analysis, the Company may not discover or
adequately evaluate adverse facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a
business opportunity. It expects, however, that the analysis of specific
proposals and the selection of a business opportunity may take several
months or more.
Prior to making a decision to participate in a business
opportunity, the Company will generally request that it be provided
with written materials regarding the business opportunity containing
such items as a description of products, services and company history;
management resumes; financial information; available projections,
with related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions
between such company and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risks and
competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable
assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 60 days
following completion of a merger transaction; and other information
deemed relevant.
As part of the Company's investigation, the Company's
executive officers and directors may meet personally with management
and key personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information provided,
check references of management and key personnel, and take other
reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might
be available for consideration by the Company could be limited by the
impact of Securities and Exchange Commission regulations regarding
purchase and sale of "penny stocks." The regulations would affect,
and possibly impair, any market that might develop in the Company's
securities until such time as they qualify for listing on NASDAQ or on
an exchange which would make them exempt from applicability of the
"penny stock" regulations. See "Risk Factors - Regulation of Penny
Stocks."
Company management believes that various types of potential
merger or acquisition candidates might find a business combination
with the Company to be attractive. These include acquisition
candidates desiring to create a public market for their shares in order
to enhance liquidity for current shareholders, acquisition candidates
which have long-term plans for raising capital through the public sale
of securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of
development of a public market for their securities will be of
assistance in that process. Acquisition candidates which have a need
for an immediate cash infusion are not likely to find a potential
business combination with the Company to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company
may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and
desires of the Company and the promoters of the opportunity and,
upon the basis of that review and the relative negotiating strength of
the Company and such promoters, the legal structure or method
deemed by management to be suitable will be selected. Such structure
may include, but is not limited to leases, purchase and sale
agreements, licenses, joint ventures and other contractual
arrangements. The Company may act directly or indirectly through an
interest in a partnership, corporation or other form of organization.
Implementing such structure may require the merger, consolidation or
reorganization of the Company with other corporations or forms of
business organization. In addition, the present management and
stockholders of the Company most likely will not have control of a
majority of the voting shares of the Company following a merger or
reorganization transaction. As part of such a transaction, the
Company's existing directors may resign and new directors may be
appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such
transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an
acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders
of the acquired company of a controlling interest (i.e. 80% or more)
of the common stock of the combined entities immediately following
the reorganization. If a transaction were structured to take advantage
of these provisions rather than other "tax free" provisions provided
under the Internal Revenue Code, the Company's current stockholders
would retain in the aggregate 20% or less of the total issued and
outstanding shares. This could result in substantial additional dilution
in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might
also be done simultaneously with a sale or transfer of shares
representing a controlling interest in the Company by the current
officers, directors and principal shareholders. (See "Description of
Business - General").
It is anticipated that any new securities issued in any
reorganization would be issued in reliance upon exemptions, if any are
available, from registration under applicable federal and state
securities laws. In some circumstances, however, as a negotiated
element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, or under
certain conditions at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only
after the negotiation and execution of a written agreement. Although
the terms of such agreement cannot be predicted, generally such an
agreement would require specific representations and warranties by all
of the parties thereto, specify certain events of default, detail the
terms of closing and the conditions which must be satisfied by each of
the parties thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed, set forth remedies upon default,
and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business
opportunity prior to signing a binding agreement. Such a letter of
intent will set forth the terms of the proposed acquisition but will not
bind any of the parties to consummate the transaction. Execution of a
letter of intent will by no means indicate that consummation of an
acquisition is probable. Neither the Company nor any of the other
parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the
acquisition as described in the preceding paragraph is executed. Even
after a definitive agreement is executed, it is possible that the
acquisition would not be consummated should any party elect to
exercise any right provided in the agreement to terminate it on
specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for
accountants, attorneys and others. If a decision is made not to
participate in a specific business opportunity, the costs theretofore
incurred in the related investigation would not be recoverable.
Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate
future time may make it impossible to procure goods and services.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by
purchasing, trading or selling the securities of such business. The
Company does not, however, intend to engage primarily in such
activities. Specifically, the Company intends to conduct its activities
so as to avoid being classified as an "investment company" under the
Investment Company Act of 1940 (the "Investment Act"), and
therefore to avoid application of the costly and restrictive registration
and other provisions of the Investment Act, and the regulations
promulgated thereunder.
The Company's plan of business may involve changes in its
capital structure, management, control and business, especially if it
consummates a reorganization as discussed above. Each of these
areas is regulated by the Investment Act, in order to protect
purchasers of investment company securities. Since the Company will
not register as an investment company, stockholders will not be
afforded these protections.
Any securities which the Company might acquire in exchange
for its Common Stock will be "restricted securities" within the
meaning of the Securities Act of 1933, as amended (the "Act"). If the
Company elects to resell such securities, such sale cannot proceed
unless a registration statement has been declared effective by the
Securities and Exchange Commission or an exemption from
registration is available. Section 4(1) of the Act, which exempts sales
of securities not involving a public distribution by persons other than
the issuer, would in all likelihood be available to permit a private sale.
Although the plan of operation does not contemplate resale of
securities acquired, if such a sale were to be necessary, the Company
would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry
which is regulated or licensed by federal, state or local authorities.
Compliance with such regulations can be expected to be a
time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in
its efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than the Company and will therefore be in a
better position than the Company to obtain access to attractive
business opportunities. The Company also will experience competition
from other public "blind pool" companies, many of which may have
more funds available than does the Company, as well as from the four
other blind pool companies which were formed simultaneously with
the Company. Management has adopted certain policies for dealing
with potential conflicts of interest between related or affiliated entities
(See "Directors, Executive Officers, Promoters and Control Persons -
Conflicts of Interest").
Administrative Offices
The Company currently maintains a mailing address at 7331 S.
Meadow Court, Boulder, Colorado 80301, which is the office address
of its President, Grant Peck. The Company's telephone number there
is (303) 530-3353. Other than this mailing address, the Company
does not currently maintain any other office facilities, and does not
anticipate the need for maintaining office facilities at any time in the
foreseeable future. The Company pays no rent or other fees for the
use of this mailing address.
Employees
The Company is in the development stage and currently has no
employees. Management of the Company expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a need
to engage any full-time employees so long as it is seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether
or not to acquire or participate in specific business opportunities.
Risk Factors
A. Conflicts of Interest. Certain conflicts of interest exist
between the Company and its officers and directors. They have other
business interests to which they currently devote attention, and are
expected to continue to do so. As a result, conflicts of interest may
arise that can be resolved only through their exercise of judgment in a
manner which is consistent with their fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
In particular, the Company's officers and directors formed four
other blind pool or blank check companies simultaneously with the
formation of the Company, Capmacco Corp., First CMA, Inc.,
Second CMA, Inc. and Pacific CMA, Inc. Each of these entities has
a structure and a business plan identical to that of the Company,
They are currently also officers and directors of one other blind pool
or blank check company, formed in 1997, which has shareholders and
a capital structure similar, but not identical, to that of the Company,
and which has previously a filed registration statements under the
Securities Exchange Act of 1934. Finally, it is likely that the
Company's officers and directors will form additional blind pool or
blank check companies in the future, with a business plan similar or
identical to that of the Company. The four other blind pool or blank
check companies which were formed at the same time as the Company
and have an identical structure and business plan do not currently
create a conflict of interest with the Company because they have the
same shareholders. However, the blind pool or blank check company
formed in 1997, and any additional blind pool or blank check
companies formed in the future, which do not have the same
shareholders and an identical capital structure as the Company, would
also be in direct competition with the Company for available business
opportunities (See Item 5 - "Directors, Executive Officers, Promoters
and Control Persons - Conflicts of Interest").
It is anticipated that the Company's principal shareholders may
actively negotiate or otherwise consent to the purchase of a portion of
their common stock as a condition to, or in connection with, a
proposed merger or acquisition transaction. In this process, the
Company's principal shareholders may consider their own personal
pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders are not expected to
be afforded the opportunity to approve or consent to any particular
stock buy-out transaction. See "Conflicts of Interest."
B. Possible Need for Additional Financing. The Company
has very limited funds, and such funds may not be adequate to take
advantage of any available business opportunities. Even if the
Company's funds prove to be sufficient to acquire an interest in, or
complete a transaction with, a business opportunity, the Company may
not have enough capital to exploit the opportunity. The ultimate
success of the Company may depend upon its ability to raise
additional capital. The Company has not investigated the availability,
source, or terms that might govern the acquisition of additional capital
and will not do so until it determines a need for additional financing.
If additional capital is needed, there is no assurance that funds will be
available from any source or, if available, that they can be obtained
on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
C. Regulation of Penny Stocks. The Company's securities,
when available for trading, will be subject to a Securities and
Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons
other than established customers or accredited investors. For purposes
of the rule, the phrase "accredited investors" means, in general terms,
institutions with assets in excess of $5,000,000, or individuals having
a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income,
exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the rule may affect the
ability of broker-dealers to sell the Company's securities and also may
affect the ability of purchasers in this offering to sell their securities in
any market that might develop therefor.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and
15g-7 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks"
within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability of the
Company's shareholders to sell their shares in any public market
which might develop.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or
issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii)
"boiler room" practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv)
excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to
a desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses. The Company's
management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be
in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the
confines of practical limitations to prevent the described patterns from
being established with respect to the Company's securities.
D. No Operating History. The Company was formed in
December of 1994 for the purpose of registering its common stock
under the 1934 Act and acquiring a business opportunity. The
Company has no operating history, revenues from operations, or
assets other than cash from private sales of stock, and as explained
elsewhere in this registration statement, the delay of approximately 5
years in filing of this registration statement was the result of a change
in control and the fact that the persons designated as officers and
directors were unable to devote time to the business affairs of the
Company (See "Description of Business - Background"). The
Company faces all of the risks of a new business and the special risks
inherent in the investigation, acquisition, or involvement in a new
business opportunity. The Company must be regarded as a new or
"start-up" venture with all of the unforeseen costs, expenses,
problems, and difficulties to which such ventures are subject.
E. No Assurance of Success or Profitability. There is no
assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a
business opportunity, there is no assurance that it will generate
revenues or profits, or that the market price of the Company's
outstanding shares will be increased thereby. In addition, in the event
that management elects to capitalize the other companies which are
under common control and which were formed simultaneously with
the Company prior to capitalizing the Company, there could be a
substantial delay before the Company has any operations.
F. Possible Business - Not Identified and Highly Risky.
The Company has not identified and has no commitments to enter into
or acquire a specific business opportunity. As a result, it is only able
to make general disclosures concerning the risks and hazards of
acquiring a business opportunity, rather than providing disclosure with
respect to specific risks and hazards relating to a particular business
opportunity. As a general matter, prospective investors can expect
any potential business opportunity to be quite risky. See Item 1
"Description of Business."
G. Type of Business Acquired. The type of business to be
acquired may be one that desires to avoid effecting its own public
offering and the accompanying expense, delays, uncertainties, and
federal and state requirements which purport to protect investors.
Because of the Company's limited capital, it is more likely than not
that any acquisition by the Company will involve other parties whose
primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be
currently unprofitable or present other negative factors.
H. Impracticability of Exhaustive Investigation. The
Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a business opportunity before the
Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility
studies, independent analysis, market surveys and the like which, if
the Company had more funds available to it, would be desirable. The
Company will be particularly dependent in making decisions upon
information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related
to preliminary aspects of completing an acquisition transaction,
whether or not any business opportunity investigated is eventually
acquired.
I. Lack of Diversification. Because of the limited
financial resources that the Company has, it is unlikely that the
Company will be able to diversify its acquisitions or operations. The
Company's probable inability to diversify its activities into more than
one area will subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks
associated with the Company's operations.
J. Possible Reliance upon Unaudited Financial Statements.
The Company generally will require audited financial statements from
any business that it proposes to acquire. No assurance can be given,
however, that audited financials will be available to the Company. In
cases where audited financials are unavailable, the Company will have
to rely upon unaudited information that has not been verified by
outside auditors. The lack of the type of independent verification
which audited financial statements would provide, increases the risk
that the Company, in evaluating an acquisition with such a target
company, will not have the benefit of full and accurate information
about the financial condition and operating history of the target
company. This risk increases the prospect that the acquisition of such
a company might prove to be an unfavorable one for the Company or
the holders of the Company's securities.
Moreover, the Company will be subject to the reporting
provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thus will be required to furnish certain
information, including audited financial statements, for any existing
business it may acquire. Consequently, acquisition prospects that do
not have, or are unable to provide reasonable assurances that they will
be able to obtain, the required audited statements would not be
considered by the Company to be appropriate for acquisition so long
as the reporting requirements of the Exchange Act are applicable.
Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition of
an entity for which audited financial statements prove to be
unobtainable, the Company would be exposed to enforcement actions
by the Securities and Exchange Commission (the "Commission") and
to corresponding administrative sanctions, including permanent
injunctions against the Company and its management. The legal and
other costs of defending a Commission enforcement action are likely
to have material, adverse consequences for the Company and its
business. The imposition of administrative sanctions would subject
the Company to further adverse consequences.
In addition, the lack of audited financial statements would
prevent the securities of the Company from becoming eligible for
listing on NASDAQ, the automated quotation system sponsored by the
National Association of Securities Dealers, Inc., or on any existing
stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to
serve as market makers in the securities of the Company. Without
audited financial statements, the Company would almost certainly be
unable to offer securities under a registration statement pursuant to the
Securities Act of 1933, and the ability of the Company to raise capital
would be significantly limited until such financial statements were to
become available.
K. Other Regulation. An acquisition made by the
Company may be of a business that is subject to regulation or
licensing by federal, state, or local authorities. Compliance with such
regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the
Company.
L. Dependence upon Management; Limited Participation of
Management. The Company will be heavily dependent upon the
skills, talents, and abilities of its officers and directors to implement
its business plan, and may, from time to time, find that the inability of
such persons to devote their full time attention to the business of the
Company results in a delay in progress toward implementing its
business plan. Furthermore, the Company will be entirely dependent
upon the experience of its officers and directors in seeking,
investigating, and acquiring a business and in making decisions
regarding the Company's operations. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the
information concerning the Company's officers and directors.
M. Lack of Continuity in Management. The Company
does not have an employment agreement with any of its officers or
directors, and as a result, there is no assurance that they will continue
to manage the Company in the future. In connection with acquisition
of a business opportunity, it is likely the current officers and directors
of the Company may resign. A decision to resign will be based upon
the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
N. Indemnification of Officers and Directors. The
Company's Articles of Incorporation provide for the indemnification
of its directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by
them in any litigation to which they become a party arising from their
association with or activities on behalf of the Company. The
Company will also bear the expenses of such litigation for any of its
directors, officers, employees, or agents, upon such person's promise
to repay the Company therefor if it is ultimately determined that any
such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by the
Company which it will be unable to recoup.
O. Director's Liability Limited. The Company's Articles
of Incorporation exclude personal liability of its directors to the
Company and its stockholders for monetary damages for breach of
fiduciary duty except in certain specified circumstances. Accordingly,
the Company will have a much more limited right of action against its
directors than otherwise would be the case. This provision does not
affect the liability of any director under federal or applicable state
securities laws.
P. Dependence upon Outside Advisors. To supplement the
business experience of its officers and directors, the Company may be
required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such
advisors will be made by the Company's officers without any input
from stockholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the
officers of the Company consider it necessary to hire outside advisors,
they may elect to hire persons who are affiliates, if those affiliates are
able to provide the required services.
Q. Leveraged Transactions. There is a possibility that any
acquisition of a business opportunity by the Company may be
leveraged, i.e., the Company may finance the acquisition of the
business opportunity by borrowing against the assets of the business
opportunity to be acquired, or against the projected future revenues or
profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity
acquired through a leveraged transaction is profitable only if it
generates enough revenues to cover the related debt and expenses.
Failure to make payments on the debt incurred to purchase the
business opportunity could result in the loss of a portion or all of the
assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
R. Competition. The search for potentially profitable
business opportunities is intensely competitive. The Company expects
to be at a disadvantage when competing with many firms that have
substantially greater financial and management resources and
capabilities than the Company. These competitive conditions will
exist in any industry in which the Company may become interested.
S. No Foreseeable Dividends. The Company has not paid
dividends on its Common Stock and does not anticipate paying such
dividends in the foreseeable future.
T. Loss of Control by Present Management and
Stockholders. The Company may consider an acquisition in which the
Company would issue as consideration for the business opportunity to
be acquired an amount of the Company's authorized but unissued
Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result
of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the
Company's management could be replaced by persons unknown at this
time. Such a merger would result in a greatly reduced percentage of
ownership of the Company by its current shareholders. In addition, in
conjunction with such a transaction, the Company's current officers,
directors and principal shareholders could sell their controlling block
of stock at a premium price to the acquired company's stockholders.
U. No Public Market Exists. There is no public market
for the Company's common stock, and no assurance can be given that
a market will develop or that a shareholder ever will be able to
liquidate his investment without considerable delay, if at all. If a
market should develop, the price may be highly volatile. Factors such
as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered
hereby. Owing to the low price of the securities, many brokerage
firms may not be willing to effect transactions in the securities. Even
if a purchaser finds a broker willing to effect a transaction in these
securities, the combination of brokerage commissions, state transfer
taxes, if any, and any other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such
securities as collateral for any loans.
V. Rule 144 Sales. All of the outstanding shares of
Common Stock held by present stockholders are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933, as
amended. As restricted shares, these shares may be resold only
pursuant to an effective registration statement or under the
requirements of Rule 144 or other applicable exemptions from
registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has
held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a
company's outstanding common stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There is no
limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner
for a period of at least two years. A sale under Rule 144 or under
any other exemption from the Act, if available, or pursuant to
subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the price of the
Common Stock in any market that may develop. Of the total
12,000,000 shares of common stock held by present stockholders of
the Company, a total of approximately 2,119,750 shares are currently
available for immediate resale in accordance with the provisions of
Rule 144(k), without compliance with the volume restrictions and
other limitations imposed by Rule 144. The remaining 9,880,250
shares are currently eligible for resale in accordance with the
provisions of Rule 144.
Z. Blue Sky Considerations. Because the securities registered
hereunder have not been registered for resale under the blue sky laws
of any state, the holders of such shares and persons who desire to
purchase them in any trading market that might develop in the future,
should be aware that there may be significant state blue-sky law
restrictions upon the ability of investors to sell the securities and of
purchasers to purchase the securities. Some jurisdictions may not
allow the trading or resale of blind-pool or "blank-check" securities
under any circumstances. Accordingly, investors should consider the
secondary market for the Company's securities to be a limited one.
Item 2. Management's Discussion and Analysis or Plan of
Operations.
Liquidity and Capital Resources
The Company remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources or stockholder's equity other than the receipt of proceeds in
the amount of $255 from its inside capitalization funds. The
Company also received additional cash contributed by Company
shareholders in the amount of $5,699 which was charged to additional
paid-in capital. Consequently, the Company's balance sheet for the
period of December 30, 1994 (inception) through December 31, 1998,
and through September 30, 1999, reflects a current asset value of
$258 and $5,000 respectively, and a total asset value of $298 and
$5,000 respectively, which is all in the form of cash.
The Company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its liquidity and
capital resources will be diminished prior to the consummation of a
business combination or whether its capital will be further depleted by
the operating losses (if any) of the business entity which the Company
may eventually acquire.
Results of Operations
During the period from December 30, 1994 (inception) through
December 31, 1998, and through the interim period ended September
30, 1999, the Company has engaged in no significant operations other
than organizational activities, acquisition of capital and preparation for
registration of its securities under the Securities Exchange Act of
1934, as amended. No revenues were received by the Company
during this period.
For the current fiscal year, the Company anticipates incurring a
loss as a result of organizational expenses, expenses associated with
registration under the Securities Exchange Act of 1934, and expenses
associated with locating and evaluating acquisition candidates. The
Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues other than
limited interest income. The Company may also continue to operate
at a loss after completing a business combination, depending upon the
performance of the acquired business.
Need for Additional Financing
The Company believes that its existing capital will be sufficient
to meet the Company's cash needs, including the costs of compliance
with the continuing reporting requirements of the Securities Exchange
Act of 1934, as amended, for a period of approximately one year.
Accordingly, in the event the Company is able to complete a business
combination during this period, it anticipates that its existing capital
will be sufficient to allow it to accomplish the goal of completing a
business combination. There is no assurance, however, that the
available funds will ultimately prove to be adequate to allow it to
complete a business combination, and once a business combination is
completed, the Company's needs for additional financing are likely to
increase substantially.
No commitments to provide additional funds have been made
by management or other stockholders, and the Company has no plans,
proposals, arrangements or understandings with respect to the sale or
issuance of additional securities prior to the location of a merger or
acquisition candidate. Accordingly, there can be no assurance that
any additional funds will be available to the Company to allow it to
cover its expenses. In the event the Company does elect to raise
additional capital prior to location of a merger or acquisition
candidate, it expects to do so through the private placement of
restricted securities rather than through a public offering. The
Company does not currently contemplate making a Regulation S
offering.
Another issue which may arise in conjunction with the question
of whether additional funds will be available to the Company in the
future, is the issue of establishing priorities for funding between the
Company and the four other corporations which are under common
control and which were formed simultaneously with the Company.
Management does have a stated policy of presenting business
opportunities to the blind pool or blank check company under common
control which has had its securities registered under the Securities
Exchange Act of 1934 for the longest period of time. In the event
that none of the entities under common control is more mature than
the others, the policy of Management is to arbitrarily assign business
opportunities to such entities. (See "Directors, Executive Officers,
Promoters and Control Persons - Conflicts of Interest"). Management
intends to apply the same policies to issues related to obtaining
additional funding for the Company or for the other blind pools under
common control.
In the event additional funding is required for the Company
and for one or more of the other entities which are under common
control, Management will first seek to obtain funding for the
Company which has had its securities registered under the Securities
Exchange Act of 1934 for the longest period of time. In the event
none of the entities is more mature than the others, Management will
arbitrarily determine which entity should receive the first funding
which is available.
Regardless of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company
might seek to compensate providers of services by issuances of stock
in lieu of cash. For information as to the Company's policy in regard
to payment for consulting services, see "Certain Relationships and
Transactions."
Item 3. Description of Property.
The Company currently maintains a mailing address at 7331 S.
Meadow Court, Boulder, Colorado 80301, which is the address of its
President. The Company pays no rent for the use of this mailing
address. The Company does not believe that it will need to maintain
an office at any time in the foreseeable future in order to carry out its
plan of operations described herein. The Company's telephone
number is (303) 530-3353.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of the date of this
Registration Statement, the number of shares of Common Stock owned
of record and beneficially by executive officers, directors and persons
who hold 5% or more of the outstanding Common Stock of the
Company. Also included are the shares held by all executive officers
and directors as a group.
<TABLE>
<CAPTION>
%
Number of of
Name and Shares Owned Class
Address Beneficially Owned
<S> <C> <C>
Grant W. Peck <F1>
7331 S. Meadow Court
Boulder, CO 80301 2,491,500<F2> 20.76%
Dean F. Sessions <F1>
P. O. Box 17881
Boulder, CO 80308 2,491,000<F3> 20.76%
Gary S. Joiner
4750 Table Mesa Drive
Boulder, CO 80303 2,491,000<F4> 20.76%
Mark DiSalvo
192 Searidge Court
Shell Beach, CA 93449 2,400,000 20.00%
All directors and executive
officers (2 persons) 4,989,250 41.58%
<FN>
<F1> The person listed is an officer, a director, or both, of the Company.
<F2> Includes 3,500 shares owned by family members, of which Mr. Peck
may be deemed to be the beneficial owner.
<F3> Includes 10,000 shares owned by Mr. Sessions' spouse, of which he
may be deemed to be the beneficial owner.
<F4> Includes 5,000 shares owned by family members, of which Mr.
Joiner may be deemed to be the beneficial owner.
</FN>
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The directors and executive officers currently serving the Company
are as follows:
<TABLE>
<CAPTION>
Positions Held
and
Name Age Tenure
<S> <C> <C>
Grant W. Peck 45 President and a Director
since September, 1997
Dean F. Sessions 49 Secretary, Treasurer, and a
Director since September, 1997
</TABLE>
The directors named above will serve until the first annual
meeting of the Company's stockholders. Thereafter, directors will be
elected for one-year terms at the annual stockholders' meeting.
Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding
between any of the directors or officers of the Company and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer, and there is no arrangement, plan or
understanding as to whether non-management shareholders will
exercise their voting rights to continue to elect the current directors to
the Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management shareholders may directly
or indirectly participate in or influence the management of the
Company's affairs.
The directors and officers will devote their time to the
Company's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within
the range of five to ten hours per month. There are no agreements or
understandings for any officer or director to resign at the request of
another person, and none of the officers or directors are acting on
behalf of, or will act at the direction of, any other person.
Biographical Information
Grant W. Peck.
Mr. Peck has served as President and a Director of the
Company since September, 1997. He is also currently the President
and a Director of four other blind pool or blank check companies (i.e.
Capmacco Corp., First CMA, Inc., Second CMA, Inc. and Pacific
CMA, Inc.) which were formed at the same time as the Company and
have a capital structure which is identical to that of the Company.
From 1994 to the present, Mr. Peck has been engaged in the
business of managing commercial real estate which he owns and in
the business of mergers or acquisitions involving blind pool or blank
check companies. Mr. Peck was the principal shareholder, the
President and a Director of J. S. Grant's, Inc., doing business as Just
Squeezed Juices, from its inception in 1985 until January, 1995, when
the Company was sold. J.S. Grant's distributed fresh juices from
Denver, Colorado, to five states, and had approximately $3.5 million
in annual sales and 36 employees. Between 1977 and 1984, Mr. Peck
was an owner and Director of Operations for the Harvest Restaurant
and Bakery, a restaurant company that catered to the then emerging
health-conscious market. During his tenure with Harvest Restaurant
and Bakery, Mr. Peck was responsible for the growth and daily
operation of the restaurant company, employing over 385 employees
and staffing 28 managers.
Mr. Peck is also currently the President and a director of
Buffalo Capital VIII, Ltd (formed September 1997), which is a blind
pool or blank check company, and has been an officer and director of
several other blind pool or blank check companies. For further
information about these other entities, see "Other Blind Pool
Activities").
Mr. Peck attended the University of Colorado and Macalester
College in St. Paul, Minnesota, but did not receive a degree from
either institution.
Dean F. Sessions.
Mr. Sessions has served as Secretary and Treasurer, and as a
Director of the Company since September 1997. He is also currently
the Secretary, Treasurer and a Director of four other blind pool or
blank check companies (i.e. Capmacco Corp., First CMA, Inc.,
Second CMA, Inc., and Pacific CMA, Inc.) which were formed at the
same time as the Company and have a capital structure which is
identical to that of the Company.
From 1973 through 1982 Mr. Sessions was employed as an
investment broker by E.F. Hutton & Co., in its Boulder, Colorado
office. From 1982 through 1986 Mr. Sessions was an officer,
director and principal shareholder of A. S. Food Company, Inc., a
Colorado corporation formed to acquire the franchise rights for Round
The Corner restaurants in Oregon, Washington and British Columbia.
A. S. Food Company, Inc., opened and operated two Round The
Corner restaurants in the Seattle, Washington area, but in 1986 it filed
bankruptcy and ceased operations.
In October 1986, Mr. Sessions renewed his securities license
with the NASD and simultaneously joined the Boulder, Colorado
office of E. F. Hutton as an account executive. From June of 1987
through March of 1988, Mr. Sessions was a registered representative
of L. T. Securities, the securities division of Lincoln Trust
Corporation of Denver, Colorado. From March, 1988, to August,
1990, Mr. Sessions was a registered representative with Cohig
Securities, Inc. of Denver, Colorado, and from January, 1991 to
June, 1994, Mr. Sessions was a registered representative with
Walford and Company, of Boulder, Colorado.
From 1994 to the present, Mr. Sessions has been engaged in
the business of mergers and acquisitions involving blind pool or blank
check companies. In addition, from August, 1990, to the present,
Mr. Sessions has been actively engaged in attempting to acquire his
Professional Golf Association (PGA) tour card.
Mr. Sessions is also currently the Secretary, Treasurer and a
director of Buffalo Capital VIII (formed in September, 1997), Ltd,
which is a blind pool or blank check company, and has been an
officer and director of several other blind pool or blank check
companies. For further information about these other entities, see
"Other Blind Pool Activities").
Mr. Sessions has a B.S. degree from the University of
Colorado.
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of
Incorporation provide that the Company will indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on
account of their being or having been Company directors or officers
unless, in any such action, they are adjudged to have acted with gross
negligence or willful misconduct. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and
is, therefore, unenforceable.
Exclusion of Liability
Pursuant to the Colorado Business Corporation Act, the
Company's Articles of Incorporation exclude personal liability for its
directors for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any breach of
the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts in
violation of Section 7-106-401 of the Colorado Business Corporation
Act, or any transaction from which a director receives an improper
personal benefit. This exclusion of liability does not limit any right
which a director may have to be indemnified and does not affect any
director's liability under federal or applicable state securities laws.
Other Blind Pool Activities
Each of the Company's executive officers, directors, and
principal shareholders holds an identical officer, director and/or
shareholder position with several other companies (i.e. Buffalo Capital
VIII, Ltd., Capmacco Corp., Inc., First CMA, Inc., Second CMA,
Inc., and Pacific CMA, Inc., all of which are Colorado corporations.
The Company and each of these other entities will be in competition
with each other for prospective companies to acquire. See "Conflicts
of Interest" below.
In addition, the Company's officers, directors and certain of its
principal shareholders have been affiliated in the past with other blind
pool companies. Such other companies and such affiliations are set
forth in this section below.
Messrs. Joiner, Peck, and Sessions were founders and officers
and directors of two blind pool companies established in 1993, Dakota
Equities, Ltd. ("Dakota"), and Cumberland Capital Corporation
("Cumberland"). They were also founders and officers and directors
of three blind pool companies established in 1995, Alchemy Equities,
Ltd. ("Alchemy"), Chelmsford Capital, Ltd. ("Chelmsford"), and
Global Capital Access Corporation ("Global"), and were founders of
four other blind pool companies established in 1996, Buffalo Capital
I, Ltd. ("Buffalo I"), Buffalo Capital II, Ltd. ("Buffalo II"), Buffalo
Capital III, Ltd. ("Buffalo III") and Buffalo Capital IV, Ltd. ("Buffalo
IV"), and were founders of four other blind pool companies
established in 1997, Buffalo Capital V, Ltd. ("Buffalo V"), Buffalo
Capital VI, Ltd. ("Buffalo VI"), Buffalo Capital VII, Ltd. ("Buffalo
VII"), Buffalo Capital VIII, Ltd. ("Buffalo VIII").
Dakota filed a registration statement under the Securities
Exchange Act of 1934, which became effective on or about January
24, 1994. On December 14, 1994, the controlling shareholders of
Dakota sold stock representing approximately 87.5% of the
outstanding shares to California Brokerage Services, Inc., for an
aggregate purchase price of $60,000.00. Thereafter, on or about
February 1, 1995, Dakota completed a merger transaction with
Sel-Drum International, Inc., which, through its wholly owned
subsidiaries Sel-Drum Corp (Canada), Sel-Drum Corporation
(U.S.A.), Inc., and Micron Imaging Technologies, is engaged in the
distribution of copier photoreceptors, high mortality parts for copy
machines, and copier accessories. The shares of Sel-Drum (formerly
Dakota Equities), trade in the over the counter market on the NASD
Bulletin Board (SDUM).
On or about October 8, 1993, Cumberland filed a registration
statement under the Securities Act of 1933. The registration statement
was subsequently withdrawn, and until its investment in Alchemy,
Chelmsford and Global, Cumberland did not engage in any business
activities. Cumberland Capital subsequently sold its interests in
Alchemy, Chelmsford and Global, and the corporation did not engage
in any other business operations. The company was dissolved in June,
1999.
Alchemy filed a registration statement under the Securities
Exchange Act of 1934, on April 3, 1995, which became effective on
or about June 2, 1995. On January 15, 1996, the controlling
shareholders of Alchemy sold stock representing approximately
74.69% of the outstanding shares to California Brokerage Services,
Inc., for an aggregate purchase price of $25,000, and all of the
existing officers and directors resigned and nominated replacements
designated by the purchaser. Thereafter, on or about March 6, 1996,
Alchemy completed a merger transaction with Heritage Mines, Ltd.,
which is engaged in the gold mining business. The shares of Heritage
Mines, Ltd (formerly Alchemy), trade in the over the counter market
on the NASD Bulletin Board (HMIL).
Chelmsford filed a registration statement under the Securities
Exchange Act of 1934, on April 6, 1995, which became effective on
or about June 6, 1995. On November 6, 1996, the controlling
shareholders of Chelmsford sold stock representing approximately
86.86% of the outstanding shares to Capital Twain, Inc., a Nevada
corporation, for an aggregate purchase price of $70,000, and all of
the existing officers and directors resigned and nominated
replacements designated by the purchaser. On or about November 13,
1997, Chelmsford changed its name to Worldwide Internet Marketing,
Inc.("Worldwide") Thereafter, on or about January 16, 1998,
Worldwide formally completed the acquisition of a controlling interest
in Futurenet Online International, Inc., a Colorado corporation (FNI),
which holds the rights to engage in the network marketing business in
countries outside the United States using the name and business
system developed by Futurenet Online, Inc., a California corporation.
No public market current exists for the shares of Worldwide.
Global filed a registration statement under the Securities
Exchange Act of 1934, on April 11, 1995, which became effective on
or about June 12, 1995. On July 12, 1996, the controlling
shareholders of Global sold stock representing approximately 71.03%
of the outstanding shares to The Rally Group, Ltd., for an aggregate
purchase price of $30,000, and all of the existing officers and
directors resigned and nominated replacements designated by the
purchaser. Thereafter, Global changed its name to Controlled
Environment Aquaculture Technology, Inc. ("CEA Tech"), and
commenced activities related to intensive land-based aquaculture. The
shares of CEA Tech (formerly Global), trade in the over the counter
market on the NASD Bulletin Board (CEAT).
Buffalo I filed a registration statement under the Securities
Exchange Act of 1934 on January 9, 1997, which became effective on
or about March 10, 1997. On June 25, 1997, Buffalo I acquired all
of the issued and outstanding stock of Multiple Dimensional Laser
Technologies, Inc., a Nevada corporation ("MDLT Nevada"), in
exchange for the issuance of 4,800,000 shares of common stock. As
part of that transaction, Buffalo I also changed its name to Multiple
Dimensional Laser Technologies, Inc., and cancelled all previously
issued and outstanding Class A and Class B Warrants. In conjunction
with this transaction, Wilmington Capital, LLC, an investment
consulting firm representing MDLT Nevada, agreed to pay the
principal shareholders of Buffalo I a consulting fee of $75,000, but
only paid a total of $25,000 and thereafter defaulted in payment of the
balance of that obligation. There is not currently a public trading
market for the shares of Multiple Dimensional Laser Technologies,
Inc. (formerly Buffalo I).
Buffalo II filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on January 9, 1997, which
became effective on or about March 10, 1997. On August 21, 1997,
the controlling shareholders of Buffalo II sold stock representing
approximately 70.04% of the outstanding shares to Golden Age
Development Corporation, an Ohio corporation, for an aggregate
purchase price of $75,000. In conjunction with the change of control
all of existing officers and directors resigned and were replaced by
successors designated by the purchaser, the previously issued and
outstanding Class A and Class B Warrants were cancelled and the
Company changed its name to Cincinnati Regional Initiative, Inc.
("CRI"). There is not currently any public market for the shares of
CRI.
Buffalo III filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on January 10, 1997, which
became effective on or about March 11, 1997. On April 22, 1999,
the controlling shareholders of Buffalo III sold stock representing
approximately 94.4% of the outstanding shares to Steadfast
Investments, LP, a Delaware limited partnership ("Steadfast") and
GMK Family Holdings, LLC, ("GMK") for an aggregate purchase
price of $335,000. Steadfast and GMK also purchased 12,740,000
newly issued shares for a purchase price of $1,000. In conjunction
with the change of control, all of the existing officers and directors
resigned and were replaced by successors designated by the purchaser
and the previously issued and outstanding Class A and Class B
Warrants were cancelled. There is not currently any public market
for the shares of Heritage.
Buffalo IV filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on January 10, 1997, which
became effective on or about March 11, 1997. On May 10, 1999, the
controlling shareholders of Buffalo IV sold stock representing
approximately 96% of the outstanding shares to M & A West, Inc., a
Nevada corporation ("MAWI") and Robert G. Bryan ("RGB") for an
aggregate purchase price of $150,000. In conjunction with the change
of control, the previously issued and outstanding warrants were
cancelled and the Company changed its name to M & A West, Inc.
("MAWI"). MAWI business activities include corporate structuring,
strategic planning, mergers, acquisitions, corporate finance, investor
relations, public relations, web site development and internet
marketing consulting. The shares of M & A West, Inc. (formerly
Buffalo IV). trade in the over the counter market of the NASD
Bulletin Board (MAWI).
Buffalo V filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on March 4, 1998, which
became effective on or about May 4, 1998. On June 22, 1999, the
controlling shareholders of Buffalo V sold stock representing
approximately 94% of the outstanding shares to Aladdin Oil
Corporation, a Nevada corporation ("Aladdin") for an aggregate
purchase price of $125,000. In conjunction with the change of
control, the previously issued and outstanding warrants were cancelled
and the Company changed its name to Aladdin Oil Corporation.
Aladdin is an independent oil and gas company engaged in the
acquisition and exploration of oil and gas within the United States.
The shares of Aladdin Oil Corporation (formerly Buffalo V) trade in
the over the counter market of the NASD Bulletin Board (ADDN).
Buffalo VI filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on March 4, 1998, which
became effective on or about May 4, 1998. On December 28, 1998,
the controlling shareholders of Buffalo VI sold stock representing
approximately 94.6% of the outstanding shares to Alan J. Setlin,
Donald G. Saunders, Gary Kornman, and Thomas K. Russell ("the
Purchasers") for an aggregate purchase price of $150,000. The
Purchasers then completed a business combination with isolver.com,
Inc., a Nevada corporation. In conjunction with the change of
control, the Company changed its name to isolver.com, Inc.
Isolver.com, Inc. operates an internet shopping mall and provides
customer services and merchant services on the web. The shares of
isolver. com, Inc. (formerly Buffalo VI) trade in the over the counter
market of the NASD Bulletin Board ("ISLV").
Buffalo VII filed a registration statement on Form 10-SB under
the Securities Exchange Act of 1934 on March 4, 1998, which
became effective on or about May 4, 1998. On June 18, 1999, the
controlling shareholders of Buffalo VII sold stock representing
approximately 94% of the outstanding shares to Workfire.com, Inc., a
Nevada corporation for an aggregate purchase price of $150,000. In
conjunction with the change of control, the previously issued and
outstanding warrants were cancelled and the Company changed its
name to Workfire.com, Inc. Workfire.com, Inc. has developed an
internet access acceleration technology which greatly reduces
browsing time on the web. The shares of Workfire.com, Inc.
(formerly Buffalo VII) trade in the over the counter market of the
NASD Bulletin Board ("WKFR"). There is not currently any public
market for the shares of Buffalo Capital VIII, Ltd.
Buffalo VIII filed a registration statement on Form 10-SB
under the Securities Exchange Act of 1934 on March 4, 1998, which
became effective on or about June 4, 1998. Buffalo VIII has not
acquired a business opportunity, and remains in the development
stage.
The officers and directors of the Company are also officers
and directors of Capmacco Corp., First CMA, Inc., Second CMA,
Inc., and Pacific CMA, Inc., each of which was formed at the same
time as the Company and has a capital structure identical to that of the
Company. The officers and directors of the Company may also
establish additional blind pool or blank check companies in the future.
See "Conflicts of Interest."
Conflicts of Interest
None of the officers of the Company will devote more than a
portion of his time to the affairs of the Company, and it is most likely
that the Company's officers will devote only a minimal portion of
their time to the affairs of the Company and the four other entities
which were formed simultaneously with the Company and are under
common control with the Company. There will be occasions when
the time requirements of the Company's business conflict with the
demands of the officers' other business and investment activities.
Such conflicts may require that the Company attempt to employ
additional personnel. There is no assurance that the services of such
persons will be available or that they can be obtained upon terms
favorable to the Company.
Each of the Company's officers and directors is also an officer
and a director of several other blind pool or blank check companies.
See "Other Blind Pool Activities." Although these other companies
will, in effect, be in direct competition with the Company for
acquisition of available business opportunities, the potential that such
competition will create a conflict of interest for the officers and
directors of the Company is minimized by the fact that each of the
entities currently has substantially the same shareholders, and is
expected to continue to have the same shareholders until a business
acquisition has been completed.
As a way of further minimizing any potential conflict of
interest in the process of acquisition of available business
opportunities, it is the stated policy of the persons who are officers
and directors of the Company and of other blind pool or blank check
companies, to present the opportunity to the available blind pool or
blank check company that has had its securities registered pursuant to
Section 12(g) of the 1934 Act for the longest period of time. In the
event that none of the pools is more mature than the others, the
officers and directors will arbitrarily assign the particular business
opportunity to one of the pool companies. Potential investors should
expect that, because of the policy that will be employed by the
Company's officers and directors as set forth above, whereby more
"mature" pool companies will have business opportunities presented to
them first, the Company and its shareholders may have to wait a
significant amount of time before an appropriate business opportunity
for the Company is identified.
The officers, directors and principal shareholders of the
Company may actively negotiate for the purchase of a portion of their
common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. Members of management, and
other principal shareholders of the Company, acquired their shares for
consideration totalling $2,400, including $255 in cash, and services
relating to organization of the Company and developing its business
plan, which services were valued at a total of $2,145. This
consideration is the equivalent of $.0002 per share. It is anticipated
that a substantial premium may be paid by the purchaser in
conjunction with any sale of shares by the Company's officers,
directors and principal shareholders made as a condition to, or in
connection with, a proposed merger or acquisition transaction. The
fact that a substantial premium may be paid to members of Company
management to acquire their shares creates a conflict of interest for
them and may compromise their state law fiduciary duties to the
Company's other shareholders. In making any such sale, members of
Company management may consider their own personal pecuniary
benefit rather than the best interests of the Company and the
Company's other shareholders, and the other shareholders are not
expected to be afforded the opportunity to approve or consent to any
particular buy-out transaction involving shares held by members of
Company management.
Item 6. Executive Compensation.
No officer or director has received any remuneration or
compensation from the Company. Until the Company acquires
additional capital, it is not anticipated that any officer or director will
receive additional compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of the
Company. See "Certain Relationships and Related Transactions."
The Company has no stock option, retirement, pension, or
profit-sharing programs for the benefit of directors, officers or other
employees, but the Board of Directors may recommend adoption of
one or more such programs in the future.
The Company may employ a spouse of an officer or director,
or an employee of a company owned by an officer or director, to
perform administrative or secretarial services required by the
Company. Such individuals would be paid standard, "going rate"
hourly compensation for services rendered.
The Company has employed the law firm of Frascona, Joiner
& Goodman, P.C., in which one of its principal shareholders, Gary
S. Joiner, is a shareholder, to provide legal services in connection
with registration of the Company's shares. It may also employ the
same law firm to provide legal services in connection with the
acquisition of a business. Mr. Joiner and any other members of his
firm, if employed, would be paid their normal hourly rate for legal
services provided.
Item 7. Certain Relationships and Related Transactions.
During the two years preceding the date of this registration
statement on Form 10-SB, the officers, directors, and other principal
shareholders of the Company have contributed a total of
approximately $5,699 in additional capital to the Company for
working capital and payment of expenses.
No officer, director, promoter, or affiliate of the Company has
or proposes to have any direct or indirect material interest in any asset
proposed to be acquired by the Company through security holdings,
contracts, options, or otherwise.
The Company has adopted a policy under which any consulting
or finder's fee that may be paid to a third party for consulting services
to assist management in evaluating a prospective business opportunity
would be paid in stock rather than in cash. Any such issuance of
stock would be made on an ad hoc basis. Accordingly, the Company
is unable to predict whether, or in what amount, such a stock issuance
might be made.
It is not currently anticipated that any salary, consulting fee, or
finder's fee shall be paid to any of the Company's directors or
executive officers, or to any other affiliate of the Company except as
described under "Executive Compensation" above.
The Company does not maintain an office, but it does maintain
a mailing address at the residence of its President, for which it pays
no rent, and for which it does not anticipate paying rent in the future.
It is likely that the Company will not establish an office until it has
completed a business acquisition transaction, but it is not possible to
predict what arrangements will actually be made with respect to future
office facilities.
Although management has no current plans to cause the
Company to do so, it is possible that the Company may enter into an
agreement with an acquisition candidate requiring the sale of all or a
portion of the Common Stock or Warrants held by the Company's
current stockholders to the acquisition candidate or principals thereof,
or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring
the future employment of specified officers and payment of salaries to
them. It is more likely than not that any sale of securities by the
Company's current stockholders to an acquisition candidate would be
at a price substantially higher than that originally paid by such
stockholders. Any payment to current stockholders in the context of
an acquisition involving the Company would be determined entirely
by the largely unforeseeable terms of a future agreement with an
unidentified business entity.
Gary S. Joiner, who is a principal shareholder of the
Company, is also a shareholder of Frascona, Joiner & Goodman,
P.C., the law firm which has been engaged to represent the Company
in conjunction with preparation and filing of this registration statement
on Form 10-SB.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the
issuance of 100,000,000 shares of Common Stock. Each record
holder of Common Stock is entitled to one vote for each share held on
all matters properly submitted to the stockholders for their vote.
Cumulative voting for the election of directors is not permitted by the
Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to
such dividends as may be declared from time to time by the Board of
Directors out of legally available funds; and, in the event of
liquidation, dissolution or winding up of the affairs of the Company,
holders are entitled to receive, ratably, the net assets of the Company
available to stockholders after distribution is made to the preferred
stockholders, if any, who are given preferred rights upon liquidation.
Holders of outstanding shares of Common Stock have no preemptive,
conversion or redemptive rights. All of the issued and outstanding
shares of Common Stock are, and all unissued shares when offered
and sold will be, duly authorized, validly issued, fully paid, and
nonassessable. To the extent that additional shares of the Company's
Common Stock are issued, the relative interests of then existing
stockholders may be diluted.
Preferred Stock
The Company's Articles of Incorporation authorize the
issuance of 10,000,000 shares of preferred stock. The Board of
Directors of the Company is authorized to issue the preferred stock
from time to time in series and is further authorized to establish such
series, to fix and determine the variations in the relative rights and
preferences as between series, to fix voting rights, if any, for each
series, and to allow for the conversion of preferred stock into
Common Stock. No preferred stock has been issued by the Company.
The Company anticipates that preferred stock may be utilized in
making acquisitions.
Transfer Agent
As of the date hereof, the Company is serving as its own
Transfer Agent.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual
report for each fiscal year ending December 31 containing financial
statements audited by its independent certified public accountants. In
the event the Company enters into a business combination with
another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the
Company may, in its sole discretion, issue unaudited quarterly or
other interim reports to its stockholders when it deems appropriate.
The Company intends to comply with the periodic reporting
requirements of the Securities Exchange Act of 1934.
PART II
Item 1. Market Price and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
No public trading market exists for the Company's securities
and all of its outstanding securities are restricted securities as defined
in Rule 144. As of the date of this registration statement, there are
approximately 43 holders of record of the Company's common stock.
No dividends have been paid to date and the Company's Board of
Directors does not anticipate paying dividends in the foreseeable
future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings,
and no such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner
of record or beneficial owner of more than 5.0% of the securities of
the Company, or any associate of any such director, officer or
security holder is a party adverse to the Company or has a material
interest adverse to the Company in reference to pending litigation.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
The Company has not sold any Unregistered Securities during
the prior three years.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company,
filed as Exhibits 3.1 and 3.2, respectively, provide that the Company
will indemnify its officers and directors for costs and expenses
incurred in connection with the defense of actions, suits, or
proceedings where the officer or director acted in good faith and in a
manner he reasonably believed to be in the Company's best interest
and is a party by reason of his status as an officer or director, absent
a finding of negligence or misconduct in the performance of duty.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for National CMA, Inc., as and for
the year ending December 31, 1998 and for the nine months ending
September 30, 1999 and 1998, are attached. See following pages.
NATIONAL CMA, INC.
(A Development Stage Company)
Financial Statements
December 31, 1998 (audited)
September 30, 1999 (unaudited)
NATIONAL CMA, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
[C]
Report of Independent Certified Public Accountant 45
Balance Sheets 46
Statements of Operations 48
Statement of Stockholders' Equity 50
Statements of Cash Flows 54
Notes to Financial Statements 58
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT
The Board of Directors and Stockholders of National CMA, Inc.
We have audited the accompanying balance sheet of National CMA,
Inc. (a development stage company) as of December 31, 1998, and the
related statement of operations, stockholders' equity, and cash flows
for each of the two years then ended, and for the period from
inception (December 30, 1994) to December 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 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 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 National
CMA, Inc. as of December 31, 1998, and the results of its operations
and its cash flows for each of the two years then ended and for the
period from inception (December 30, 1994) to December 31, 1998, in
conformity with generally accepted accounting principles.
Comiskey & Company, P.C.
Denver, Colorado
September 21, 1999
NATIONAL CMA, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1999 December 31
(unaudited) 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $5,000 $-
Prepaid expenses - 258
Total current assets 5,000 258
OTHER ASSETS
Organizational costs (net) - 40
TOTAL ASSETS 5,000 298
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 241 -
Total current liabilities 241 -
STOCKHOLDERS' EQUITY
Preferred stock, no par value
10,000,000 shares authorized;
no shares issued and outstanding - -
Common stock, no par value;
100,000,000 shares authorized;
12,000,000 shares issued and
outstanding 2,400 2,400
Additional paid-in capital 5,699 574
Deficit accumulated during
the development stage (3,340) (2,676)
Total stockholders' equity 4,759 298
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 5,000 298
</TABLE>
The accompanying notes are an integral part of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
page 1 of 2
<TABLE>
<CAPTION>
For the period
from inception
(December 30, 1994) For the nine months
to September 30, ended September 30,
1999 1999 1998
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES $ - $ - $-
EXPENSES
Accounting 111 111 -
Amortization 200 40 20
Consulting fees 2,145 - -
Legal fees 870 499 -
Office Supplies 14 14 -
Total expenses 3,340 664 20
NET LOSS (3,340) (664) (20)
Accumulated deficit
Balance, beginning of period - (2,676) (2,320)
Balance, end of period (3,340) (3,340) (2,340)
NET LOSS PER SHARE (NIL) (NIL) (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 12,000,000 12,000,000 12,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
PACIFIC CMA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
page 2 of 2
<TABLE>
<CAPTION>
For the period
from inception
(December 30, 1994) For the year ended
to December 31, December 31,
1998 1998 1997
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
Accounting - - -
Amortization 160 40 40
Consulting fees 2,145 - -
Legal fees 371 316 -
Office Supplies - - -
Total expenses 2,676 356 40
NET LOSS (2,676) (356) (40)
Accumulated Deficit
Balance,
beginning of period - (2,320) (2,280)
Balance,
end of period (2,676) (2,676) (2,320)
NET LOSS PER SHARE (NIL) (NIL) (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 12,000,000 12,000,000 12,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (December 30, 1994) to September 30, 1999
(Page 1 of 2)
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-in
shares Amount Capital
<S> <C> <C> <C>
Common stock issued for
cash and services, December
1994 at $0.0002 per 12,000,000 $ 2,400 $ -
Net loss for the year
ended December 31, 1994 - - -
Balance,
December 31, 1994 12,000,000 2,400 -
Net loss for the year
ended December 31, 1995 - - -
Balance,
December 31, 1995 12,000,000 2,400 -
Net loss for the year
ended December 31, 1996 - - -
Balance,
December 31, 1996 12,000,000 2,400 -
Net loss for the year
ended December 31, 1997 - - -
Balance,
December 31, 1997 12,000,000 2,400 -
Expenses paid on behalf of Company
by shareholders,
September, 1998 - - 574
Net loss for the year
ended December 31, 1998 - - -
Balance,
December 31, 1998 12,000,000 2,400 574
Expenses paid on behalf of Company
by shareholders,
August 1999 _ - 125
Cash contributed to Company
by shareholders, August 1999 - - 5,000
Net loss for the period
ended September 30, 1999 - - -
Balance,
September 30, 1999 12,000,000 2,400 5,699
</TABLE>
The accompanying notes are an integral part
of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception (December 30, 1994) to September 30, 1999
(Page 2 of 2)
<TABLE>
<CAPTION>
Deficit
accumulated
during the Total
development stockholder
stage equity
<S> <C> <C>
Common stock issued for
cash and services, December
1994 at $0.0002 per share $ - $ 2,400
Net loss for the year
ended December 31, 1994 (2,200) (2,200)
Balance,
December 31, 1994 (2,200) 200
Net loss for the year
ended December 31, 1995 (40) (40)
Balance,
December 31, 1995 (2,240) 160
Net loss for the year
ended December 31, 1996 (40) (40)
Balance,
December 31, 1996 (2,280) 120
Net loss for the year
ended December 31, 1997 (40) (40)
Balance,
December 31, 1997 (2,320) 80
Expenses paid on behalf of Company
by shareholders,
September 1998 - 574
Net loss for the year
ended December 31, 1998 (356) (356)
Balance,
December 31, 1998 (2,676) 298
Expenses paid on behalf of
Company by shareholders,
August 1999 - 125
Cash contributed to Company
by shareholders,
August 1999 - 5,000
Net loss for the period ended
September 30, 1999 (664) (664)
Balance,
September 30, 1999 $ (3,340) $ 4,759
</TABLE>
The accompanying notes are an integral part of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Page 1 of 2)
<TABLE>
<CAPTION>
For the period
from inception
(December 30, 1994) For the nine months
to September 30, ended September 30,
1999 1999 1998
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss (3,340) (664) (20)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Amortization 200 40 20
Stock issued for consulting
fees 2,145 - -
Increase in accounts payable 241 241 -
Increase in prepaid expenses - 258 -
Net cash flows from operating
activities (754) (125) -
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in organization costs (200) - -
Net cash flows from investing
activities (200) - -
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for expenses by
shareholders 699 125 -
Cash contributed to company
by shareholders 5,000 5,000 -
Issuance of common stock 255 - -
Net cash flows from financing
activities 5,954 5,125 -
NET CHANGE IN CASH AND CASH
EQUIVALENTS 5,000 5,000 -
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD - - -
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 5,000 $ 5,000 -
</TABLE>
The accompanying notes are an integral part of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Page 2 of 2)
<TABLE>
<CAPTION>
For the period
from inception
(December 30, 1994) For the year ended
to December 31, December 31,
1998 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss (2,676) (356) (40)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Amortization 160 40 40
Stock issued for consulting fees
fees 2,145 - -
Increase in accounts payable - - -
Increase in prepaid expenses (258) (258) -
Net cash flows from operating
activities (629) (574) -
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in organization costs (200) - -
Net cash flows from investing
activities (200) - -
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for expenses by
shareholders 574 574 -
Cash contributed to company
by shareholders - - -
Issuance of common stock 255 - -
Net cash flows from financing
activities 829 574 -
NET CHANGE IN CASH AND CASH
EQUIVALENTS - - -
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD - - -
CASH AND CASH EQUIVALENTS, END OF
PERIOD - - -
</TABLE>
The accompanying notes are an integral part of the financial statements.
NATIONAL CMA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development stage company
National CMA, Inc. (a development stage company) (the "Company")
was incorporated under the laws of the State of Colorado on
December 30, 1994. After engaging in minimal activity related to its
business plan, the Company's activities ceased in early 1995, and the
Company became inactive until its reinstatement by the Colorado
Secretary of State on September 25, 1998. The principal office of the
Company is 7331 South Meadow Court, Boulder, CO 80301.
The Company is a new enterprise in the development stage as defined
by Statement No. 7 of the Financial Accounting Standards Board and
has not engaged in any business other than organizational efforts. It
has no full-time employees and owns no real property. The Company
intends to operate as a capital market access corporation by registering
with the U.S. Securities and Exchange Commission under the
Securities Exchange Act of 1934. After this, the Company intends to
seek to acquire one or more existing businesses which have existing
management, through merger or acquisition. Management of the
Company will have virtually unlimited discretion in determining the
business activities in which the Company might engage.
The Company currently does not own any properties or an interest in
any business. Moreover, it has not identified any properties or
business opportunities that it shall seek to acquire, has no
understanding or arrangement to acquire any properties or business
interests, and has not identified any specific geographical area,
industry, or type of business in which it intends to operate.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal year
The fiscal year end of Company is December 31.
Loss per Share
Loss per share was computed using the weighted number of shares
outstanding during the period.
Organization Costs
Costs to incorporate the Company were capitalized and are being
amortized over a sixty month period.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities which represent financial instruments (none of which are
held for trading purposes) approximate the carrying values of such
amounts.
Statement of Cash Flows
For purposes of the Statement of Cash Flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three month or less to be cash equivalents.
Use of Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principals requires the Company's
management to make estimates and assumptions that effect the
amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
Consideration of Other Comprehensive Income Items
SFAF 130 - Reporting Comprehensive Income, requires companies to
present comprehensive income (consisting primarily of net income
plus other direct equity changes and credits) and its components as
part of the basic financial statements. For the year ended December
31, 1998, the Company's financial statements do not contain any
changes in equity that are required to be reported separately in
comprehensive income.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received
in exchange.
2. STOCKHOLDERS' EQUITY
As of December 31, 1998, 12,000,000 shares of the Company's no
par value common stock had been issued for a combination of cash
and consulting services provided. The services were converted to
shares at $0.0002 per share and valued at a total of $2,145.
3. RELATED PARTY TRANSACTIONS
As of the date hereof, there are two shareholders of the Company
acting as officers and directors who are the owners of 4,989,250
shares of common stock, constituting approximately 42% of the
Company's issued and outstanding shares.
4. INCOME TAXES
The Company has Federal net operating loss carryforwards of
approximately $2,700 expiring during the years 2009 and 2018. The
tax benefit of these net operating losses is approximately $500 and has
been offset by a full allowance for realization. This carryforward
may be limited upon the consummation of a business combination
under IRC Section 381. For the years ended December 31, 1998 and
1997, the valuation allowance increased by approximately $50 and $0,
respectively.
5. SUBSEQUENT EVENT
On August 13, 1999, the Company received $5,000 as a
capital contribution by its shareholders. No additional shares were
issued.
6. MANAGEMENT'S REPRSENTATION OF INTERIM
FINANCIAL INFORMATION
The accompanying interim financial statements have been prepared by
the Company without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted as allowed by such rules and regulations, and
management believes that the disclosures are adequate to make the
information presented not misleading. These financial statements
include all of the adjustments which, in the opinion of management,
are necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring
nature.
PART III
Item 1. INDEX TO EXHIBITS
The Exhibits listed below are incorporated by reference.
<TABLE>
<CAPTION>
Exhibit
No. Document
<S> <C>
3.1 Articles of Incorporation (incorporated by reference
from Registration Statement on Form 10SB/A filed with the Securities
and Exchange Commission on October 26, 1999).
3.2 Bylaws (incorporated by reference from Registration
Statement on Form 10SB/A filed with the Securities and Exchange
Commission on October 26, 1999).
4.1 Specimen Stock Certificate (incorporated by reference
from Registration Statement on Form 10SB/A filed with the Securities
and Exchange Commission on October 26, 1999).
27.1 Financial Data Schedule for fiscal year ending
December 31, 1998
27.2 Financial Data Schedule for nine months ending
September 30, 1999
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
NATIONAL CMA, INC.
By: /s/ ________________________________
Grant W. Peck, President and Director
Date: December 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 0 5,000
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 258 5,000
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 298 5,000
<CURRENT-LIABILITIES> 0 241
<BONDS> 0 0
0 0
0 0
<COMMON> 2,400 2,400
<OTHER-SE> 574 5,699
<TOTAL-LIABILITY-AND-EQUITY> 298 5,000
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 356 664
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (356) (664)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (356) (664)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
