U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
STATESIDE FUNDINGS, INC.
(Name of Small Business Issuer)
Delaware 11-3462369
(State or Other I.R.S. Employer
Jurisdiction of Identification
Incorporation or Number
Organization)
1040 East 22nd Street, Brooklyn, New York 11210
(Address of Principal Executive Offices including Zip Code)
(718) 692-2743
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under
Section 12(g) of the Act: Common Stock, $.0001 Par Value
(Title of Class)
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PART I
ITEM 1. BUSINESS.
Stateside Fundings, Inc. (the "Company"), was incorporated on December 19,
1997 under the laws of the State of Delaware to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the development stage since inception and has no
operations to date. Other than issuing shares to its original shareholders, the
Company has not commenced any operational activities.
The Company will attempt to locate and negotiate with a business entity for
the merger of that target company into the Company. In certain instances, a
target company may wish to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No assurances can be given
that the Company will be successful in locating or negotiating with any target
company.
The Company has been formed to provide a method for a foreign or domestic
private company to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include the
following:
* the ability to use registered securities to acquire assets or
businesses;
* increased visibility;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital markets.
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for whom a primary purpose of becoming public is the use of
its securities for the acquisition of assets or businesses;
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* a company which is unable to find an underwriter of its securities or
is unable to find an underwriter of securities on terms acceptable to
it;
* a company which wishes to become public with less dilution of its
common stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment
capital on more favorable terms after it has become public;
* a foreign company which may wish an initial entry into the United
States securities market;
* a special situation company, such as a company seeking a public market
to satisfy redemption requirements under a qualified Employee Stock
Option Plan;
* a company seeking one or more of the other perceived benefits of
becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target business of its
own management and board of directors.
No assurances can be given that the Company will be able to enter into a
business combination, as to the terms of a business combination, or as to the
nature of the target company.
The proposed business activities described herein classify the Company as a
"blank check" company. See "GLOSSARY". The Securities and Exchange Commission
and many states have enacted statutes, rules and regulations limiting the sale
of securities of blank check companies. Management does not intend to undertake
any efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934.
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The Company's business is subject to numerous risk factors, including the
following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had no
operating history nor any revenues or earnings from operations. The Company has
no significant assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of a business combination. This may result in the Company
incurring a net operating loss which will increase continuously until the
Company can consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and consummate
such a business combination.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the target company. While
management intends to seek business combinations with entities having
established operating histories, there can be no assurance that the Company will
be successful in locating candidates meeting such criteria. In the event the
Company completes a business combination, of which there can be no assurance,
the success of the Company's operations, most likely, will be dependent upon
management of the target company and numerous other factors beyond the Company's
control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A large
number of established and well-financed entities, including venture capital
firms, are active in mergers and acquisitions of companies which may be merger
or acquisition target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION-NO STANDARDS FOR
BUSINESS COMBINATION. The Company has no arrangement, agreement or understanding
with respect to engaging in a merger with or acquisition of a business entity.
There can be no assurance the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation by the Company. There is no assurance
the Company will be able to negotiate a business combination on terms favorable
to the Company.
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The Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it will
require a target business opportunity to have achieved, or without which the
Company would not consider a business combination with such business entity.
Accordingly, the Company may enter into a business combination with a business
entity having no significant operating history, losses, limited or no potential
for earnings, limited assets, negative net worth or other negative
characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
business combination, management anticipates devoting up to ten hours per month
to the business of the Company. The Company's sole officer and director has not
entered into a written employment agreement with the Company and he is not
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on its sole officer and director. Notwithstanding the
combined limited experience and limited time commitment of management, loss of
the services of this individual would adversely affect development of the
Company's business and its likelihood of continuing operations. See
"MANAGEMENT."
CONFLICTS OF INTEREST-GENERAL. The Company's sole officer and director
participates in other ventures which may compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may also arise
in the future. Management has adopted a policy that the Company will not seek a
merger with, or acquisition of, any entity in which the Company's sole officer
and director serves as officer, director or partner, or in which he or his
family members own or hold any ownership interest. See "ITEM 5. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13 of the
Securities Exchange Act of 1934 (the "Exchange Act") requires companies subject
thereto to provide certain information about significant acquisitions including
certified financial statements for the company acquired covering one or two
years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target companies to prepare such
statements may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with only one business opportunity. Consequently, the Company's
activities will be limited to those engaged in by the business which the Company
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merges with or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
REGULATION. Although the Company will be subject to regulation under the
Exchange Act, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In the event the
Company engages in business combinations which result in the Company holding
passive investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of 1940. In such event,
the Company would be required to register as an investment company and could be
expected to incur significant registration and compliance costs . The Company
has obtained no formal determination from the Securities and Exchange Commission
as to the status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject the Company to material
adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving
the issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Any such business combination may require the Company's sole officer
and director to sell or transfer all or a portion of the Company's common stock
held by him, and to resign as a member of the Board of Directors and an officer
of the Company. The resulting change in control of the Company will likely
result in removal of the present sole officer and director of the Company and a
corresponding reduction in or elimination of his participation in the future
affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION. The
Company's primary plan of operation is based upon a business combination with a
business entity which, in all likelihood, will result in the Company issuing
securities to shareholders of such business entity. The issuance of previously
authorized and unissued common stock of the Company would result in reduction in
the percentage of shares owned by the present shareholders of the Company and
would most likely result in a change in control or management of the Company.
ASPECTS OF BLANK CHECK OFFERING. The Company may enter into a business
combination with a business entity that desires to establish a public trading
market for its shares. A target company may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process,
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significant expenses to be incurred in such an offering, loss of voting control
to public shareholders or the inability to obtain an underwriter or to obtain an
underwriter on terms satisfactory to the Company.
DELAWARE ANTI-TAKEOVER STATUTES. The Board of Directors has elected to opt
out of the Delaware Anti-Takover Statutes as reflected in the Delaware Code
Annotated and specifically in Sections 203 and 228 of such Code. This would make
it easier for parties presently unaffiliated with the Company to obtain control
of the Company without approval of the shareholders.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization or
that the parties will obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
YEAR 2000. The Year 2000 problem is the result of computer programs being
written using two digits (rather than four) to define the applicable year. Any
programs that have date-sensitive software or equipment that has time-sensitive
embedded components may recognize a date using "00" as the year 1900 rather than
the Year 2000. This could result in a major system failure or miscalculations.
The Company has not computers and will not face any Year 2000 related problems.
The Company will not enter into an acquisition transaction with any business
that has an unresolved Year 2000 problem.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company will request that any potential
business opportunity provide audited financial statements. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company rather than incur the expenses associated
with preparing audited financial statements. Such audited financial statements
may not be available. In such case, the Company intends to obtain certain
assurances as to the target company's assets, liabilities, revenues and expenses
prior to consummating a business combination, with further assurances that an
audited financial statement would be provided after closing of such a
transaction. Closing documents relative thereto may include representations that
the audited financial statements will not
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materially differ from the representations included in such closing documents.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in exchange
for the Company's securities. The Company has no particular acquisitions in mind
and has not entered into any negotiations regarding any acquisition. The
Company's sole officer and director has not engaged in any negotiations with any
representative of any company regarding the possibility of an acquisition or
merger between the Company and any other company.
The Company anticipates seeking out a target business through solicitation.
Such solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited.
The Company has no full time employees. The Company's sole officer and
director has agreed to allocate a portion of his time to the activities of the
Company, without compensation. He anticipates that the business plan of the
Company can be implemented by his devoting approximately 10 hours per month to
the business affairs of the Company. Consequently, conflicts of interest may
arise with respect to the limited time commitment by him. See "ITEM 5.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
The Company's sole officer and director expects in the future to become
involved with other companies which have a business purpose similar to that of
the Company. A conflict may arise in the event that another blank check company
with which management is affiliated is formed and actively seeks a target
business. Management anticipates that target businesses will be located for the
Company and other blank check companies in chronological order of the date of
formation of such blank check companies or the order in which such companies
commence seeking acquisitions. However, other blank check companies that may be
formed may differ from the Company in certain respects such as place of
incorporation, number of shares and shareholders, working capital, types of
authorized securities, or other items. It may be that a target business may be
more suitable for or may prefer a certain blank check company formed after the
Company. In such case, a business combination might be negotiated on behalf of
the more suitable or preferred blank check company regardless of date of
formation or commencement of operations. See "ITEM 5, DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS--Current Blank Check Companies"
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The Certificate of Incorporation of the Company provides that the Company
may indemnify officers and/or directors of the Company for liabilities, which
can include liabilities arising under the securities laws. Therefore, assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity presented to it by persons or
firms who or which desire to seek the perceived advantages of a corporation
which has a class of securities registered under the Exchange Act. The Company
will not restrict its search to any specific business, industry, or geographical
location and the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is not meant to be
restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. The Company's sole officer and
director anticipates that it will be able to participate in only one business
venture because the Company has nominal assets and limited financial resources.
See PART F/S, "FINANCIAL STATEMENTS." This lack of diversification should be
considered a substantial risk to the shareholders of the Company because it will
not permit the Company to offset potential losses from one venture against gains
from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, and providing liquidity for
shareholders and other factors. Business opportunities may be available 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 difficult and complex.
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The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities. However, management believes the
Company will be able to offer owners of acquisition candidates the opportunity
to acquire a controlling ownership interest in a publicly registered company
without incurring the cost and time required to conduct an initial public
offering. The officer and director of the Company has not conducted market
research and is not aware of statistical data to support the perceived benefits
of a merger or acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the sole officer and director of the Company, who is not a
professional business analyst. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trades; name identification; and other
relevant factors. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Exchange
Act requires that any merger or acquisition candidate comply with certain
reporting requirements, which include providing audited financial statements to
be included in the reports to be filed under the Exchange Act. The Company will
not acquire or merge with any company for which audited financial statements
cannot be obtained at or within a reasonable period of time after closing of the
proposed transaction.
The sole officer and director of the Company, which in all likelihood will
not be experienced in matters relating to the business of a target company, will
rely upon his own efforts in accomplishing the business purposes of the Company.
It is anticipated that outside consultants or advisors may be utilized by the
Company to assist in the search for qualified target companies. If the Company
does retain such an outside consultant or advisor, any cash fee earned by such
party will need to be paid by the prospective merger/acquisition candidate, as
the Company has limited cash assets with which to pay such obligation. The
Company may pay all or some of such consultant's or advisor's fee with
previously authorized but unissued shares.
The Company will not restrict its search for any specific type of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or
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in any stage of its business life. It is impossible to predict at this time the
status of any business in which the Company may become engaged, in that such
business may need to seek additional capital, may desire to have its shares
publicly traded, or may seek other perceived advantages which the Company may
offer. However, the Company does not intend to obtain funds to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present Management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
sole officer and director may, as part of the terms of the acquisition
transaction resign and be replaced by one or more new directors without a vote
of the Company's shareholders or may sell his stock in the Company.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it may be undertaken by the surviving entity after the Company has
entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. The issuance of substantial additional securities and their potential
sale into any trading market which may develop in the Company's securities may
have a depressive effect on the market value of the Company's securities in the
future if such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a "tax-free" reorganization under Sections
351 or 368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which target
company shareholders would acquire in exchange for all of their shareholdings in
the target
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company. Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties, will specify certain events of
default, will detail the terms of closing and the conditions which must be
satisfied by the parties prior to and after such closing, will outline the
manner of bearing costs, including costs associated with the Company's attorneys
and accountants, and will include other terms.
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at a closing of the proposed transaction or
represent that it will provide audited financial statements within a reasonable
period of time after closing of the proposed transaction. The Company is subject
to all of the reporting requirements included in the Exchange Act. Included in
these requirements is the duty of the Company to file audited financial
statements as part of its Form 8-K to be filed with the Securities and Exchange
Commission upon consummation of a merger or acquisition, as well as a
requirement to file audited financial statements in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.
The Company's sole officer and director has agreed that he may advance to
the Company additional funds which the Company may need for operating capital
and for costs in connection with searching for or completing an acquisition or
merger. Such advances will be made without expectation of repayment unless the
owners of the business which the Company acquires or merges with agree to repay
all or a portion of such advances. There is no minimum or maximum amount such
shareholder will advance to the Company. The Company will not borrow any funds
for the purpose of repaying advances made by such shareholder, and the Company
will not borrow any funds to make any payments to the Company's
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promoters, management or their affiliates or associates.
The Board of Directors has passed a resolution which contains a policy that
the Company will not seek an acquisition or merger with any entity in which the
Company's sole officer and director or any affiliate or associate serves as an
officer or director or holds any ownership interest.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company currently uses the offices of its sole officer and
director at no cost to the Company. The sole officer and director has agreed to
continue this arrangement until the Company completes an acquisition or merger.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 1, 1998, each person known
by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all directors individually and all directors and
officers of the Company as a group. Each person has sole voting and investment
power with respect to the shares shown.
Name and Address Amount of Beneficial Percentage
of Beneficial Owner Ownership of Class
- ------------------- -------------------- ----------
Nachum Blumenfrucht 4,100,000 82%
1040 East 22nd Street
Brooklyn, New York 11210
Amy Lau 450,000 9%
18 Monroe Street
New York, New York 10002
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Barbara R. Mittman 450,000 9%
277 Broadway, Suite 801
New York, New York 10007
All Executive Officers
and Directors as a
Group (1 Person) 4,100,000 82%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has one Director and Officer as follows:
Name Age Positions and Offices Held
- ---- --- ---------------------------
Nachum Blumenfrucht 42 President, Secretary,
Treasurer and Director
There are no agreements or understandings for the officer of director to
resign at the request of another person and the above-named officer and director
is not acting on behalf of nor will he act at the direction of any other person.
Set forth below is the name of the sole director and officer of the
Company, all positions and offices with the Company held, the period during
which he has served as such, and his business experience during at least the
last five years:
Nachum Blumenfrucht, CPA, MBA (age 42), received a Bachelor of Science in
Accounting from Brooklyn College in 1978, and a Masters in Business
Administration from Bernard Baruch College in 1981. From 1984 to the present,
Mr. Blumenfrucht has been self-employed as a New York State certified public
accountant. Mr. Blumenfrucht has been a member of the New York State Society of
CPA's since 1981.
CURRENT BLANK CHECK COMPANIES
Mr. Blumenfrucht anticipates being involved with other blank check
companies which will file Forms 10-SB under the Securities Act.
CONFLICTS OF INTEREST
The Company's sole officer and director expects to organize other companies
of a similar nature and with a similar purpose as the Company. Consequently,
there are potential inherent conflicts of interest in acting as an officer and
director of the Company. Insofar as the officer and director is engaged in other
business activities, Management anticipates that it will devote
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only a minor amount of time to the Company's affairs. The Company does not have
a right of first refusal pertaining to opportunities that come to Management's
attention insofar as such opportunities may relate to the Company's proposed
business operations.
A conflict may arise in the event that another blank check company with
which Management is affiliated is formed and actively seeks a target business.
It is anticipated that target businesses will be located for the Company and
other blank check companies in chronological order of the date of formation of
such blank check companies or the order in which such companies commence seeking
acquisitions. However, any blank check companies that may be formed may or may
not differ from the Company in certain respects such as place of incorporation,
number of shares and shareholders, working capital, types of authorized
securities, or other items. It may be that a target business may be more
suitable for or may prefer a particular blank check company. In such case, a
business combination might be negotiated on behalf of the more suitable or
preferred blank check company regardless of date of formation or commencement of
operations.
Mr. Blumenfrucht is a certified public accountant and sole practitioner. As
such, demands may be placed on his time which will detract from the amount of
time he is able to devote to the Company. Mr. Blumenfrucht intends to devote as
much time to the activities of the Company as required. However, should a
conflict arise, there is no assurance that Mr. Blumenfrucht would not attend to
other matters prior to those of the Company. Mr. Blumenfrucht projects that
initially approximately ten hours per month of his time may be spent locating a
target business which amount of time would increase when the analysis of, and
negotiations and consummation with, a target business are conducted.
The terms of a business combination may provide for payment by cash or
otherwise to the current shareholders of the Company for the purchase of their
common stock of the Company by a target business. The current shareholders would
directly benefit from such payment. Such benefits may influence Management's
choice of a target business.
The Company's sole officer and director owns 82% of the outstanding shares
of common stock of the Company. The Company does not expect to issue other
securities or rights to securities of the Company to the sole officer and
director or promoters, or their affiliates or associates, prior to the
completion of a business combination. At the time of a business combination,
management expects that some of the common stock owned by the sole officer and
director will be purchased by the target business. The amount of common stock
sold or continued to be owned by the sole officer and director cannot be
determined at this time.
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Management may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target business to the Company where that
referral results in a business combination. The amount of any finder's will be
subject to negotiation, and cannot be estimated at this time. No finder's fee of
any kind will be paid to the management or promoters of the Company or to their
associates or affiliates. No loans of any type have, or will be, made to
management or promoters of the Company or to any of their associates or
affiliates.
The Company's sole officer and director has not had any negotiations with
and there are no present arrangements or understandings with any representatives
of the owners of any business or company regarding the possibility of a business
combination.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management of the Company or any
affiliates or associates have any interest, direct or indirect.
The Company's sole officer and director anticipates that it will actively
negotiate the purchase of a portion of his 4,100,000 shares of Common Stock by a
target business, and anticipates that a target business will purchase a part of
the sole officer's and director's common stock of the Company.
Management has adopted certain policies involving possible conflicts of
interest, including prohibiting any of the following transactions involving
management or promoters or their affiliates or associates:
(i) Any lending by the Company to such persons;
(ii) The issuance of any additional securities to such persons prior to a
business combination;
(iii) The entering into any business combination or acquisition of assets
in which such persons have any interest, direct or indirect; or
(iv) The payment of any finder's fees to such persons.
These policies have been adopted by the Board of Directors of the Company,
and any changes in these provisions would require the approval of the Board of
Directors. Management does not intend to propose any such action and does not
anticipate that any such action will occur.
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There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest in
favor of the Company could result in liability of management to the Company.
However, any attempt by shareholders to enforce a liability of management to the
Company would most likely be prohibitively expensive and time consuming.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act
of 1933 and the Securities Exchange Act of 1934, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities the Company could be subject to regulation under the Investment Company
Act of 1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940. Any violation of such Act would subject the
Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's sole officer and director does not receive any compensation
for his services rendered to the Company, nor has he received such compensation
in the past. As of the date of this registration statement, the Company has no
funds available to pay the sole officer and director. Further, the sole officer
and director is not accruing any compensation pursuant to any agreement with the
Company.
The sole officer and director of the Company will not receive any finders
fee, either directly or indirectly, as a result of his efforts to implement the
Company's business plan.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
17
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 1, 1997, the Company issued a total of 5,000,000 shares of
Common Stock to the following persons for a total of $1,500.00 in cash ($.0003
per share):
NAME NUMBER OF TOTAL SHARES CONSIDERATION
- ---- ---------------------- -------------
Nachum Blumenfrucht 4,100,000 $1,230.00
Amy Lau 450,000 135.00
Barbara R. Mittman 450,000 135.00
The proposed business activities described herein classify the Company as a
"blank check" company. See "GLOSSARY". The Securities and Exchange Commission
and many states have enacted statutes, rules and regulations limiting the sale
of securities of blank check companies. Management does not intend to undertake
any efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $.0001 per share, and 10,000,000 shares of Preferred
Stock, par value $.0001 per share. The following statements relating to the
capital stock are summaries and do not purport to be complete. Reference is made
to the more detailed provisions of, and such statements are qualified in their
entirety by reference to, the Certificate of Incorporation and the By-laws,
copies of which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are,
fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase the Company's
common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.
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PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
10,000,000 shares of preferred stock, $.0001 par value per share, of which no
shares have been issued. The Board of Directors is authorized to provide for the
issuance of shares of preferred stock in series and, by filing a certificate
pursuant to the applicable law of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof without any further vote or
action by the shareholder. Any shares of preferred stock so issued would have
priority over the common stock with respect to dividend or liquidation rights.
Any future issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the shareholder and may adversely affect the voting and other rights
of the holders of common stock. At present, the Company has no plans to issue
any preferred stock nor adopt any series, preferences or other classification of
preferred stock.
The issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
Preferred Stock could adversely affect the voting power of the holders of the
Common Stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of the Company, the Board of Directors could act in a manner
that would discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
market price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules. The Board of Directors
has also elected to opt out of the Delaware Anti-Takeover Statutes. This would
make it easier for parties presently not associated with the Company to obtain
control of the Company without approval of the shareholders. The Company has no
present plans to issue any Preferred Stock.
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DIVIDENDS
The Company does not expect to pay dividends. Dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of the Company's Board of Directors. The Company presently
intends to retain all earnings, if any, for use in its business operations and
accordingly, the Board of Directors does not anticipate declaring any dividends
in the foreseeable future.
20
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GLOSSARY
"Blank Check" Company As defined in Section 7(b)(3) of the
Securities Act, a "blank check" is a
development stage company that has no
specific business plan or purpose or has
indicated that its business plan is to
engage in a merger or acquisition with
an unidentified company or companies and
is issuing "penny stock" securities as
defined in Rule 3a51-1 of the Exchange
Act.
The Company Stateside Fundings, Inc., the company
whose common stock is the subject of
this registration statement.
Exchange Act The Securities Exchange Act of 1934, as
amended.
"Penny Stock" Security As defined in Rule 3a51-1 of the
Exchange Act, a "penny stock" security
is any equity security other than a
security (i) that is a reported security
(ii) that is issued by an investment
company (iii) that is a put or call
issued by the Option Clearing
Corporation; (iv) that has a price of
$5.00 or more (except for purposes of
Rule 419 of the Securities Act); (v)
that is registered on a national
securities exchange; (vi) that is
authorized for quotation on the Nasdaq
Stock Market, unless other provisions of
Rule 3a51-1 are not satisfied; or (vii)
that is issued by an issuer with (a) net
tangible assets in excess of $2,000,000,
if in continuous operation for more than
three years or $5,000,000 if in
operation for less than three years or
(b) average revenue of at least
$6,000,000 for the last three years.
Securities Act The Securities Act of 1933, as amended.
21
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Small Business Issuer As defined in Rule 12b-2 of the Exchange
Act, a "Small Business Issuer" is an
entity (i) which has revenues of less
than $25,000,000 (ii) whose public float
(the outstanding securities not held by
affiliates) has a value of less than
$25,000,000 (iii) which is a United
States or Canadian issuer (iv) which is
not an Investment Company and (v) if a
majority-owned subsidiary, whose parent
corporation is also a small business
issuer.
22
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PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue.
(a) Market Price. The Company's Common Stock is not quoted at the present
time.
The Securities and Exchange Commission has adopted Rule 15g-9 which
established the definition of a "penny stock." For purposes relevant to the
Company, a penny stock is any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers the Nasdaq Stock Market, has established certain criteria for
initial and continued eligibility for listing on the Nasdaq Stock Market. In
order to qualify for listing on the Nasdaq SmallCap Market, a company must have
at least
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(i) net tangible assets of $4,000,000 or market capitalization of $50,000,000 or
net income for two of the last three years of $750,000; (ii) public float of
1,000,000 shares with a market value of $5,000,000; (iii) a bid price of $4.00;
(iv) three market makers; (v) 300 shareholders and (vi) an operating history of
one year or, if less than one year, $50,000,000 in market capitalization. For
continued listing on the Nasdaq SmallCap Market, a company must have at least
(i) net tangible assets of $2,000,000 or market capitalization of $35,000,000 or
net income for two of the last three years of $500,000; (ii) a public float of
500,000 shares with a market value of $1,000,000; (iii) a bid price of $1.00;
(iv) two market makers; and (v) 300 shareholders.
There can be no assurances that, upon a successful merger or acquisition,
the Company will qualify its securities for listing on the Nasdaq SmallCap
Market or a national or regional exchange, or be able to maintain the
maintenance criteria necessary to insure continued listing. The failure of the
Company to qualify its securities or to meet the relevant maintenance criteria
after such qualification may result in the discontinuance of the inclusion of
the Company's securities. In such events, trading, if any, in the Company's
securities may then continue in the over-the-counter market. In such case, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's securities.
(b) Holders. There are three holders of the Company's Common Stock. On
December 1, 1997, the Company issued a total of 5,000,000 of its Common Shares
to three individuals for cash at $.0003 per share for a total price of
$1,500.00. All of the issued and outstanding shares of the Company's Common
Stock were issued in accordance with the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder.
(c) Dividends. The Company has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
24
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which were not
registered as follows:
DATE NAME NUMBER OF CONSIDERATION
SHARES
Nachum Blumenfrucht (1) 4,100,000 $1,230.00
Amy Lau 450,000 $ 135.00
Barbara R. Mittman 450,000 $ 135.00
(1) Mr. Blumenfrucht is the sole officer and director of the Company and
the beneficial owner of such shares.
With respect to the sales made, the Company relied on Section 4(2) of the
Securities Act of 1933, as amended and Rule 506 promulgated thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents,
against expenses incurred in any action, suit or proceeding. The Certificate of
Incorporation and the by-laws of the Company provide for indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock) of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. The
Company's Certificate of Incorporation contains such a provision.
25
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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.
STATESIDE FUNDINGS, INC.
By: /s/ Nachum Blumenfrucht
Nachum Blumenfrucht
March 17, 1999
26
<PAGE>
PART F/S
Financial Statements.
Attached are audited financial statements for the Company for the period
ended November 30, 1998. The following financial statements are attached to this
report and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Report of Independent Certified Public Accountants
3) Balance Sheet
4) Stockholders' Equity
5) Statement of Cash Flows
6) Notes to Financial Statements
<PAGE>
INDEX TO FINANCIAL STATEMENTS
STATESIDE FUNDINGS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Report of Independent
Certified Public Accountants F-2
Financial Statements:
Balance Sheet F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statement F-6
<PAGE>
DON FUCHS
Certified Public Accountant
370 Brook Avenue
Passaic, New Jersey 07055
(973) 777-9895
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The Board of Directors
Stateside Fundings, Inc.
1040 East 22nd Street
Brooklyn, New York 11210
Gentlemen:
I have audited the accompanying balance sheet of Stateside Fundings, Inc.
(a development stage company) as of November 30, 1998, and the related
Statements of Cash Flows, and Stockholders' Equity for the period December 19,
1997 (inception) to November 30, 1998. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. These standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stateside Fundings, Inc. as
of November 30, 1998, and the Statements of Cash Flows, and Stockholders' Equity
for the period December 19, 1997 (inception) to November 30, 1998, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
company, and has no income since inception which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to this
matter, specifically the proposed public offering, are also described in Note 4.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
DON FUCHS
CERTIFIED PUBLIC ACCOUNTANT
March 15, 1999
<PAGE>
STATESIDE FUNDINGS, INC.
(A development stage company)
BALANCE SHEET
NOVEMBER 30, 1998
ASSETS
Current Assets:
Cash ........................................................... $1,500
------
Total Current Assets .................................... $1,500
------
Other Assets:
Organization Costs ............................................. 400
------
Total Other Assets ...................................... 400
------
TOTAL ASSETS ............................................ $1,900
------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accrued Expenses ............................................... $ 400
------
TOTAL CURRENT LIABILITIES ............................... 400
------
Stockholder's Equity - Note 3:
Common Stock, par value $.0001; authorized
50,000,000 shares, issued and outstanding
5,000,000 shares ............................................... 500
Preferred Stock, par value $.0001; authorized
10,000,000 shares, none issued and outstanding ................. 0
Additional Paid-In Capital ..................................... 1,000
------
TOTAL STOCKHOLDER'S EQUITY .............................. 1,500
------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY .............. $1,900
------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATESIDE FUNDINGS, INC.
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIODS INDICATED
Stock Additional
Common Issued Paid-In
Shares Amount Capital Total
--------- --------- ---------- ---------
Issuance of Shares
on December 19, 1997
at par value of
$.0001 per share 5,000,000 $ 500 $ 1,000 $ 1,500
--------- --------- --------- ---------
Total Stockholders'
Equity - November
30, 1998 5,000,000 $ 500 $ 1,000 $ 1,500
--------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATESIDE FUNDINGS, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
FROM INCEPTION TO NOVEMBER 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 0
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating Activities
Increase (Decrease) In Organization Expense $ (400)
Accrued Expenses 400
-------
Total 0
-------
Net Cash Provided By Operating Activities 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock For Cash 1,500
-------
Net Cash Provided By Financing Activities 1,500
-------
NET INCREASE IN CASH 1,500
CASH BALANCE - BEGINNING OF YEAR 0
-------
CASH BALANCE - END OF YEAR $ 1,500
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATESIDE FUNDINGS, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 1 - BASIS OF PRESENTATION
Stateside Fundings, Inc. was organized under the laws of the State of
Delaware on December 19, 1997 and has adopted a fiscal year ending November
30th. The Company has not yet begun operations and is therefore considered a
development stage company. Consequently, a Statement of Income and Expenses has
not been included.
NOTE 2 - ORGANIZATION COSTS
Expenses incurred in connection with the formation of the Company have been
capitalized and are being amortized over a period of five years on the
straight-line method.
NOTE 3 - CAPITALIZATION
The Company is authorized to issue 50,000,000 common shares with a par
value of $.0001, and 10,000,000 blank check preferred shares with a par value of
$.0001. On December 1, 1997, the Company issued a total of 5,000,000 shares of
its common stock to three individuals, for a total consideration of $1,500
($.0003 per share).
NOTE 4 - CONFLICTS OF INTEREST
Certain conflicts of interest have existed and will continue to exist
between management, their affiliates and the Company. Management have other
interests including business interests to which they devote their primary
attention. Management may continue to do so notwithstanding the fact that
management time should be devoted to the business of the Company and in
addition, management may negotiate an acquisition resulting in a conflict of
interest and possibly, a breach of directors' duty of loyalty to the Company.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Pursuant to oral agreement, the Company currently utilizes the office of
its sole officer and director, Nachum Blumenfrucht, at 1040 East 22nd Street,
Brooklyn, New York 11210, rent-free.
Management believes no material commitments or contingencies exist relating
to computer operations.
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
(2) Articles of Incorporation and By-laws:
2.2 By-laws
(10)(a) Consents - Experts:
10.1 Consent of Accountants
1
Exhibit 2.2
BY-LAWS
OF
STATESIDE FUNDINGS, INC.
ARTICLE I - OFFICES
The office of the Corporation shall be located in any City and State designated
by the Board of Directors. The Corporation may also maintain other offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held if called by the Board
of Directors within five months after the close of the fiscal year of the
Corporation, for the purpose of electing directors, and transacting such other
business as may properly come before the meeting.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than 10 per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
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4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than 10 nor more than 50 days before the
date of the meeting, either personally or by mail, by or at the direction of the
president, or the secretary, or the officer or persons calling the meeting, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, 30 days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least 15
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 45 days
and, in case of a meeting of stockholders, not less than 15 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof.
6. QUORUM.
At any meeting of stockholders 50% of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such
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<PAGE>
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
7. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the time
of the meeting.
8. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these bylaws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by majority vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of this State.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these bylaws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors shall be not less than one (1) nor more than seven
(7). All actions taken by the corporation requiring approval of the Board of
Directors, when the Board of Directors consists of only one director, shall be
valid. The directors shall be elected at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify. When the Board of Directors consists of only one director,
such director may accept his own resignation and appoint his successor. A
director need not be a stockholder.
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3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this bylaw immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least 3 days previously
thereto by written notice delivered personally, by telegram, telecopier or
mailed to each director at his business or home address. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed delivered when the telegram is delivered to the telegraph
company. If notice be given by telecopier, such notice shall be deemed delivered
upon completion of the telecopier transmission. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
6. QUORUM.
At any meeting of the directors a majority of the directors shall
constitute a quorum for the transaction of business, but if less than said
number is present at a meeting, a majority of the directors present may adjourn
the meeting from time to time without further notice. In the event the
corporation has only two directors, then one director will constitute a quorum.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
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8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors authorized by the board of directors or shareholders and vacancies
occurring in the board for any reason except the removal of directors without
cause may be filled by a vote of a majority of the directors then in office,
although lss than a quorum exists. Vacancies occurring by reason of the removal
of directors without cause shall be filled by vote of the stockholders. A
director elected to fill a vacancy caused by resignation, increase in the number
of directors, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
of such officer, and the acceptance of the resignation shall not be necessary to
make it effective. With the consent of a majority of the other members of the
board of directors, or without such consent if there are no other directors, any
director tendering his resignation to the board of directors may accept such
resignation and appoint a successor to complete the term of the resigning
director.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefore.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of
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the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors. Each
such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors. Any two or more offices may be held by the same
person.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected at a meeting of the directors held when determined by the directors.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. REMOVAL
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. SALARIES
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
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ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
2. LOANS
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the corporation
as the directors may prescribe.
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2. TRANSFERS OF SHARES
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the 30th day of November in
each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation and the words,
"Corporate Seal."
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholdr or director of the corporation under the provisions of
these bylaws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
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ARTICLE XI - AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting, or by a unanimous vote of the Board of Directors provided that
the amendment is not inconsistent with the powers provided the Board of
Directors by the Articles of Incorporation.
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Exhibit 10.1
DON FUCHS
Certified Public Accountant
370 Brook Avenue
Passaic, New Jersey 07055
(973) 777-9895
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors
Stateside Fundings, Inc.
I consent to the use in the Registration Statement on Form 10- SB of my
report dated March 15, 1999, relating to the audited financial statements of
Stateside Fundings, Inc. and any reference to my firm under the caption
"Experts" in the Registration Statement.
DON FUCHS
CERTIFIED PUBLIC ACCOUNTANT
March 15, 1999
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