U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB/A1
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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MANNA CAPITAL, INC.
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(Name of Small Business Issuer in its charter)
Nevada 33-0847997
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Venture
Suite 207
Irvine, California 92618
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (949) 435-9262
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Forty Two Pages
Exhibit Index is Located at Page Thirty Nine
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . 11
Item 3. Description of Property. . . . . . . . . . . . . . 18
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . 18
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . 19
Item 6. Executive Compensation . . . . . . . . . . . . . . 24
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 25
Item 8. Description of Securities. . . . . . . . . . . . . 25
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . 26
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . 28
Item 3. Changes in and Disagreements with Accountants. . . 28
Item 4. Recent Sales of Unregistered Securities. . . . . . 29
Item 5. Indemnification of Directors and Officers. . . . . 29
PART F/S
Financial Statements . . . . . . . . . . . . . . . 30
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . 39
Item 2. Description of Exhibits. . . . . . . . . . . . . . 41
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Manna Capital, Inc. (the "Company") was incorporated on September 9, 1982,
under the laws of the State of Nevada, to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage since inception and has
undertaken no business operations to date. Other than issuing shares to its
original shareholders, the Company has never commenced any operational
activities. As such, the Company can be defined as a "shell" company, whose sole
purpose at this time is to locate and consummate a merger or acquisition with a
private entity. The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described below
under "Item 2 - Plan of Operation."
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a public company. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company. A business
combination or transaction will likely result in the shareholders of the Company
losing a controlling interest in the Company.
The Company has been in the developmental stage since inception and has had
no operations to date. The Company does not have "day-to-day" operations since
the officers and directors are allocating only a portion of their working time
for the benefit of the Company. See "Item 2 - Plan of Operation" and "Item 5 -
Directors, Executive Officers, Promoters and Control Persons."
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any offering of the
Company's securities, either debt or equity, until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
each shareholder of the Company has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company. In order to provide further assurances that no trading
will occur in the Company's securities until a merger or
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acquisition has been consummated, each shareholder has agreed to place their
respective stock certificate with the Company's legal counsel, Bryan A.
Gianesin, who will not release these respective certificates until such time as
legal counsel has confirmed that a merger or acquisition has been successfully
consummated. Bryan A. Gianesin is also a shareholder of the Company. However,
while management believes that the procedures established to preclude any sale
of the Company's securities prior to closing of a merger or acquisition will be
sufficient, there can be no assurances that the procedures established relevant
herein will unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
Mr. Gianesin, legal counsel and a shareholder of the Company is also legal
counsel for and a minority shareholder of the following blank check companies:
Guideline Capital Corporation, a Delaware corporation ("Guideline"),
which filed its Form 10-SB Registration Statement on or about November
13, 1998, which became effective as a fully reporting company in
January 1999;
The Czech Connection, Inc., a Nevada corporation ("Czech"), which filed
its Form 10-SB Registration Statement on or about February 10, 1999,
which is not yet effective; and
N.T. Properties, Inc., a Nevada corporation, ("NTP"), which filed its
Form 10-SB Registration Statement on or about February 10, 1999 and
which became effective as a fully reporting company on June 17, 1999.
Mr. Gianesin is not an officer, director, or controlling shareholder of
Guideline, Czech or NTP. Mr. Gianesin does provide the use of his conference
room at his offices at 6 Venture, Suite 207, Irvine, California, for meetings
for the officers and directors of Guideline, Czech and NTP at no charge. Mr.
Gianesin also provides corporate and securities advice at no charge to
Guideline, Czech and NTP and devotes approximately 10 hours per month to these
blank check companies. However, other than providing such advice, Mr. Gianesin
is not involved in the day-to-day operations of Guideline, Czech or NTP.
No officer or director of the Company is an officer or director of Czech.
However, George Unwin, President and a Director of the Company, is a principal
shareholder and Director of Guideline and a minority shareholder of NTP; Cleora
Louey, Secretary and a Director of the Company, is a principal shareholder and
an officer and director of NTP and a minority shareholder of Guideline; and Adam
Stull, a Director of the Company, is a principal shareholder and an officer and
Director of Guideline and a minority shareholder of NTP and Czech. See "Item 5 -
Directors, Executive Officers, Promoters and Control Persons."
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The following table sets forth all of the shareholders of the Company and
any shareholder (i) who presently hold at least 5% of the outstanding shares of
other "blank check" companies and the identity of such companies, and (ii) such
shareholders relationship with such other "blank check" companies:
Shareholder At Least 5% Shareholder of Other Relationship
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Cleora Louey Guideline Capital Corporation Secretary, Treasurer and
and N.T. Properties, Inc. Director of N.T.
Properties, Inc.
George Unwin Guideline Capital Corporation Director of Guideline
and N.T. Properties, Inc. Capital Corporation
Bryan A. Gianesin Guideline Capital Corporation, None
N.T. Properties, Inc. and Czech
Connection, Inc.
Adam Stull Guideline Capital Corporation, President and Director
N.T. Properties, Inc. and Czech of Guideline Capital
Connection, Inc. Corporation
Mary Jackson Guideline Capital Corporation, None
N.T. Properties, Inc. and Czech
Connection, Inc.
Zochimo Diaz Czech Connection, Inc. None
Katheryn Hefler N.T. Properties, Inc. and Czech None
Connection, Inc.
Alberto Lugo N.T. Properties, Inc.. and Czech None
Connection, Inc.
Chris Moat None None
Clement Smith None None
Mr. Gianesin, legal counsel and a shareholder of the Company, has in the
past been legal counsel to Pascal Ventures, Inc., a Delaware blank check
corporation ("Pascal"), which consummated a merger with Southern States Power
Company, Inc., a Louisiana corporation, on or about July 13, 1998. Additionally,
Mr. Gianesin was also legal counsel to E-Net Corporation, a Nevada blank check
corporation ("E-Net"), which consummated a merger with E-Net Mortgage Corp., a
Nevada corporation, and City Pacific International, Inc., a Nevada corporation,
on or about March 25, 1999. However, Mr. Gianesin was not an officer, director
or shareholder of either Pascal or E-Net, and upon effectiveness of the mergers,
was replaced as counsel by new management.
If the Company identifies a business opportunity, the Company will, as
required by Sections 92A.100 to 92A.190 of the Nevada Revised Statues or Federal
Securities Laws, or its Bylaws, obtain the consent (or dissent) of the Company's
shareholders
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respecting the particular business opportunity. In addition, the Company may, in
its own discretion where no consent is required by Nevada law, obtain a vote of
the Company's shareholders respecting the particular business opportunity.
However, in some instances where no shareholder approval is required, the
officers and directors acting in their fiduciary capacity on behalf of the
shareholders, may make such decisions without submitting the issue to the
shareholders for their consideration. A decision in this regard, will be made by
a majority vote of the Directors of the Company. In the event that shareholder
approval is required or sought voluntarily by management of the Company, the
Company will deliver to each shareholder complete disclosure documentation of
the transaction, including audited financial statements, if available, prior to
the consummation of any merger or acquisition.
FORWARD LOOKING STATEMENTS
The Company cautions readers regarding certain forward looking statements
in the following discussion and elsewhere in this registration statement or any
other statement made by, or on the behalf of the Company, whether or not in
future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company. The Company
disclaims any obligation to update forward looking statements.
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 profitable business
opportunity. There is no assurance that the Company can identify such a business
opportunity and consummate such a business combination.
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Speculative Nature of Company's Proposed Operations. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance that
the Company will be successful in locating candidates meeting such criteria. In
the event the Company completes a business combination, of which there can be no
assurance, the success of the Company's operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond the Company's control.
Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private and public entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
No Agreement for Business Combination or Other Transaction- No Standards
for Business Combination. The Company has no arrangement, agreement or
understanding with respect to engaging in a merger with, joint venture with or
acquisition of, a private or public entity. There can be no assurance the
Company will be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the Company. The Company
has not established a specific length of operating history or a specified level
of earnings, assets, net worth or other criteria which it will require a target
business opportunity to have achieved, and without which the Company would not
consider a business combination in any form with such business opportunity.
Accordingly, the Company may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or other negative
characteristics.
Continued Management Control, Limited Time Availability. While seeking a
business combination, management anticipates
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devoting up to twenty hours per month to the business of the Company. None of
the Company's officers has entered into a written employment agreement with the
Company and none is expected to do so in the foreseeable future. The Company has
not obtained key man life insurance on any of its officers or directors.
Notwithstanding the combined limited experience and time commitment of
management, loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood of continuing
operations. See "Item 5 - Directors, Executive Officers, Promoters and Control
Persons."
Conflicts of Interest - General. Officers and directors of the Company may
in the future participate in business ventures which could be deemed to compete
directly with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the Company
transacts business. Management has adopted a policy that the Company will not
seek a merger with, or acquisition of, any entity in which management serve as
officers, directors or partners, or in which they or their family members own or
hold any ownership interest.
Reporting Requirements May Delay or Preclude Acquisition. Sections 13 and
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare such statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the 1934 Act are applicable.
Lack of Market Research or Marketing Organization. The Company has neither
conducted, nor have others made available to it, results of market research
indicating that market demand exists for the transactions contemplated by the
Company. Moreover, the Company does not have, and does not plan to establish, a
marketing organization. Even in the event demand is identified for a merger or
acquisition contemplated by the Company, there is no assurance the Company will
be successful in completing any such business combination.
Lack of Diversification. The Company's proposed operations,
even if successful, will in all likelihood result in the Company
engaging in a business combination with a business opportunity.
Consequently, the Company's activities may be limited to those
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engaged in by business opportunities which the Company merges with or acquires.
The Company's inability to diversify its activities into a number of areas may
subject the Company to economic fluctuations within a particular business or
industry and therefore increase the risks associated with the Company's
operations.
Regulation. Although the Company will be subject to regulation under the
Securities Exchange Act of 1934, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940, insofar as the
Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences.
Probable Change in Control and Management. A business combination involving
the issuance of the Company's Common Shares will, in all likelihood, result in
shareholders of a private company obtaining a controlling interest in the
Company. Any such business combination may require management of the Company to
sell or transfer all or a portion of the Company's Common Shares held by them,
or resign as members of the Board of Directors of the Company. The resulting
change in control of the Company could result in removal of one or more present
officers and directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of the Company.
Reduction of Percentage Share Ownership Following Business Combination. The
Company's primary plan of operation is based upon a business combination with a
private concern which, in all likelihood, would result in the Company issuing
securities to shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company would result in
reduction in percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of the
Company.
Disadvantages of Blank Check Offering. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it deems
to be adverse consequences of undertaking its own public offering by seeking a
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business combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process, significant expenses to
be incurred in such an offering, loss of voting control to public shareholders
and the inability or unwillingness to comply with various federal and state laws
enacted for the protection of investors.
Taxation. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
Reliance on Management to Seek Business Combination. The Company will rely
on its management to analyze new business opportunities. However, no officer or
director is a professional business analyst.
Failure to File Federal Income Tax Returns. The Company has not filed
Federal Income Tax Return for the years 1982 through 1998 and, due to the late
filing of these tax returns, a minimum penalty of $1,850.00 has been accrued.
Should the Company fail to file in the years 1999 and subsequent years, the
penalty may be increased by $250 per calendar year for each unfiled return after
1998. The Company is in the process of obtaining the information for filing all
such returns. However, even if the Company files the delinquent returns prior to
the consummation of a merger or share exchange, it will have insufficient funds
to pay any penalties assessed thereon. Because the Company has no capital with
which to pay this obligation, the anticipated penalty will need to be paid by
the prospective merger/acquisition candidate as a successor to the Company, and
such assumption of this obligation will be a part of the negotiations with the
prospective merger/acquisition candidate.
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The Company failed to file such returns because former management incorrectly
believed that such returns were unnecessary due to the fact that the Company had
no income.
ITEM 2. PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the Company and
such other company as of the date of this Registration Statement.
The Company has no full time employees. The Company's President and
Secretary have agreed to allocate a portion of their time to the activities of
the Company, without compensation. These officers anticipate that the business
plan of the Company can be implemented by their devoting minimal time per month
to the business affairs of the Company and, consequently, conflicts of interest
may arise with respect to the limited time commitment by such officers. See
"Item 5 Directors, Executive Officers, Promoters and Control Persons Resumes."
The Company's officers and directors may, in the future, become involved
with other companies who have a business purpose similar to that of the Company.
As a result, additional potential conflicts of interest may arise in the future.
If such a conflict does arise and an officer or director of the Company is
presented with business opportunities under circumstances where there may be a
doubt as to whether the opportunity should belong to the Company or another
"blank check" company they are affiliated with, they will disclose the
opportunity to all such companies. If a situation arises in which more than one
company desires to merge with or acquire that target company and the principals
of the proposed target company has no preference as to which company will merger
or acquire such target company, the company which first filed a registration
statement with the Securities and Exchange Commission will be entitled to
proceed with the proposed transaction.
The Bylaws of the Company provide that the Company shall possess and may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities subject to such
indemnification. See "Part II - Item 5 - Indemnification of Directors and
Officers."
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The Company will only be able to satisfy its present and future nominal
cash requirements prior to a business combination, including payment of legal
and accounting costs associated with filing requisite reports under the
Securities and Exchange Act, if present management of the Company pays such
expenses with their personal funds, as interest free loans to the Company. The
Company may borrow funds from unrelated third parties to make payments to
Company management, affiliates, associates or promoters, although it is unlikely
that such proceeds would be available to a Company with nominal assets. Bryan A.
Gianesin, legal counsel to the Company and a shareholder, has provided corporate
and securities advice to the Company at no charge to the Company. As of the date
of this Registration Statement, such services have an approximate monetary value
of $2,000.00; however, the Company is not obligated to pay for these services
nor is it anticipated that Mr. Gianesin will be compensated by the Company in
either cash or stock for such services or any future services rendered by him on
behalf of the Company.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See "Part F/S -
Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological
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advances being made in some industries and shortages of available capital,
management believes that there are numerous firms seeking the perceived benefits
of a publicly registered corporation. Such perceived benefits may include
facilitating or improving the terms on which additional equity financing may be
sought, providing liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions of applicable
statutes) for all shareholders and other factors. Potentially, available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant legal and accounting costs in
connection with acquisition of a business opportunity, including the costs of
preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related reports and
documents. The Securities Exchange Act of 1934 (the "34 Act") specifically
requires that any merger or acquisition candidate comply with all applicable
reporting requirements, which include providing audited financial statements to
be included within the numerous filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to
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impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition of
acceptance of products, services, or trades; name identification; and other
relevant factors. Officers and directors of the Company expect to meet
personally with management and key personnel of the business opportunity as part
of their investigation. To the extent possible, the Company intends to utilize
written reports and personal investigation to evaluate the above factors. The
Company will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own efforts
and, to a much lesser extent, the efforts of the Company's shareholders, in
accomplishing the business purposes of the Company. It is not anticipated that
any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, management will review such
consultant or advisor's credentials as well as his or her experience and
reputation in providing advice to management in implementing its business plan,
which services will be limited to analysis of a prospective merger or
acquisition candidate to assist management in evaluating a particular candidate
and any cash fee earned by such party will need to be paid by the prospective
merger/acquisition candidate, as the Company has no cash assets with which to
pay such obligation. There have been no contracts or agreements with any outside
consultants and none are anticipated in the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company. However, the only opportunity which
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management has to have these loans repaid will be from a prospective merger or
acquisition candidate. Management has agreed among themselves that the repayment
of any loans made on behalf of the Company will not impede, or be made
conditional in any manner, to consummation of a proposed transaction.
The Company is subject to the assessment of penalties in the minimum amount
of $1,850 for failure to file federal income tax returns since its inception
(see Note 2 to Financial Statements). Because the Company has no capital with
which to pay this obligation, the anticipated penalty will need to be paid by
the prospective merger/acquisition candidate as a successor to the Company, and
such assumption of this obligation will be a part of the negotiations with the
prospective merger/acquisition candidate.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms of sale of the shares presently held
by officers and/or directors of the Company will be also afforded to all other
shareholders of the Company on similar terms and conditions. Any and all such
sales will only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until such time as this occurs, the Company
will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on the value of the Company's securities in the future, if such a market
develops, of which there is no assurance.
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While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's
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attorneys and accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated herein above, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 34 Act. Included
in these requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters necessary to
insure the Company's compliance with the requirements of the 34 Act, or if the
audited financial statements provided do not conform to the representations made
by the candidate to be acquired in the closing documents, the closing documents
will provide that the proposed transaction will be voidable, at the discretion
of the present management of the Company. If such transaction is voided, the
agreement will also contain a provision providing for the acquisition entity to
reimburse the Company for all costs associated with the proposed transaction.
YEAR 2000 DISCLOSURE
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. As a result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets, including any
personal property such as computers, it is not anticipated that the Company will
incur any negative impact as a result of this potential problem. However, it is
possible that this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management intends to address
this potential problem with any prospective merger or acquisition candidate.
There can be no assurances that new management of the Company will be able to
avoid a problem in this regard after a merger or acquisition is so consummated.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and
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personnel resources and technical expertise than the Company. In view of the
Company's combined extremely limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company intends to attempt to acquire assets or a business
in exchange for its securities which assets or business is determined to be
desirable for its objectives.
The Company operates from its offices at 6 Venture, Suite 207, Irvine,
California 92618. This space is provided to the Company on a rent free basis by
Bryan A. Gianesin, a shareholder of and legal counsel to the Company, and it is
anticipated that this arrangement will remain until such time as the Company
successfully consummates a merger or acquisition. Management believes that this
space will meet the Company's needs for the foreseeable future.
Mr. Gianesin has offered the use of his conference room at his offices at 6
Venture, Suite 207, Irvine, California, for meetings for the officers and
directors of the Company at no charge and as a convenient repository for the
books and records of the Company. Further, as legal counsel, Mr. Gianesin will
advise the Company on material issues pertinent to its business opportunities.
However, the Company is not obligated to pay for these services nor is it
anticipated that Mr. Gianesin will be compensated by the Company in either cash
or stock for such services or any future services or advice rendered by him on
behalf of the Company.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as the securities of the Company
beneficially owned by all directors and officers of the Company. Unless
otherwise indicated, the shareholders listed possess sole voting and investment
power with respect to the shares shown.
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NAME AND AMOUNT AND
ADDRESS OF NATURE OF
BENEFICIAL BENEFICIAL PERCENT OF
TITLE OF CLASS OWNER OWNER CLASS
- -----------------------------------------------------------------
Common George Unwin(1) 125,000 25%
23721 Arjay Way
Laguna Niguel, CA 92677
Common Cleora Louey(1) 100,000 20%
6 Venture, Ste. 207
Irvine, CA 92618
Common Adam Stull(1) 100,000 20%
8895 Town Center Dr.#105
San Diego, CA 92122
Common All Officers and
Directors as a
Group (3 persons) 325,000 65%
- -------------------------
(1) Officer and/or Director of the Company.
The balance of the Company's securities are held by seven persons.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The directors and officers of the Company are as follows:
Name Age Position
------------- --- -------------------
George Unwin 53 President, Director
Cleora Louey 49 Secretary, Director
Adam Stull 36 Director
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors.
The Company does not presently intend to issue any additional stock to
management or promoters or their affiliates
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or associates in exchange for their services or for any other consideration.
However, if a business opportunity is found which meet the criteria for the
Company, incentive stock options may be considered for management only by the
Board of Directors, but only under a strict set of criteria based upon the
performance of the Company.
There are no agreements or understanding for any officer or director to
resign at the understanding of any other person and none of the officers or
directors are acting on behalf or will act at the direction of any other person.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition of acceptance of products, services, or trades;
name identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Only the participation of the named officers and directors will be material
to the operations of the Company and no promoters (as that term is defined in
Regulation C, Rule 405) exist, other than the officers and directors of the
Company, who will act on behalf of the Company. There exist no agreements or
understandings for any officer or director to resign at the request of another
person and none of the officers or directors will act on the behalf of, or at
the direction of, any other person.
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The following persons are promoters of the Company as defined in Regulation
C, Rule 405: George Unwin, Cleora Louey and Adam Stull. Ms. Louey is the
Secretary, Treasurer and Director of N.T. Properties, Inc., another blank check
company, which filed a Form 10-SB Registration Statement with the Commission on
or about February 10, 1999. Mr. Stull is the President and a Director of
Guideline Capital Corporation and Mr. Unwin is a Director of Guideline Capital
Corporation, which became effective in January 1999. Although neither Ms. Louey,
nor Mr. Stull, nor Mr. Unwin are not expected to unilaterally promote or seek
potential business opportunities on behalf of either the Company or N.T.
Properties, Inc. or Guideline Capital Corporation, in the event that such a
situation arises which poses an individual conflict of interest for Ms. Louey or
Mr. Stull or Mr. Unwin, the party with the conflict will disclose the existence
of the conflict to management of the Company, N.T. Properties, Inc. and
Guideline Capital Corporation, and, if the target entity does not have a
preference as to which blank check company it wishes to pursue a business
combination with, the opportunity will first belong to the entity which was the
earlier filer of a registration statement with the Securities and Exchange
Commission. See "Item 2 - Plan of Operation."
RESUMES
George Unwin, President and Director. Mr. Unwin has held his positions with
the Company since January 7, 1999. Since 1993, Mr. Unwin has been a
self-employed, free-lance writer of advertising and marketing materials in
Southern California. He creates advertising and marketing materials for a host
of private clients and has written advertising copy for numerous local newspaper
and magazine publishers. Mr. Unwin will devote approximately 20 hours per month
to the business of the Company.
Cleora Louey, Secretary and Director. Ms. Louey held the positions of
President, Secretary and as a Director of the Company since its inception until
January 6, 1999. On January 6, 1999, Ms. Louey was re-elected as Secretary and
as a Director of the Company by a vote of a majority of the board and the
holders of a majority of the issued and outstanding shareholders, but did not
stand for re-election as President of the Company. Since December 1998, Ms.
Louey has been employed as a fitness consultant for Leo Fessenden Adult Day Care
Center, San Clemente, California. Prior to that, and from February 1983 to
December 1998, Ms. Louey was a self-employed certified personal trainer in
Lancaster, California. Ms. Louey has various certifications in health and
fitness. Ms. Louey will devote approximately 10 hours per month to the business
of the Company.
Adam Stull, Director. Mr. Stull has held his position with the Company
since January 7, 1999. From October 1997 through the present, Mr. Stull has been
a partner of Goldberg Burke & Stull,
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LLP, Attorneys, Irvine, California, engaged in the practice of law, emphasizing
criminal law and general business matters. Prior to that, Mr. Stull was a
partner in the firm of Stull & Stull, Bakersfield, California from January 1994
to September 1997. From 1993 to 1994, Mr. Stull was an assistant at Pacific
Coast Chemicals, Berkeley, California. Mr. Stull received a Juris Doctor degree
from California Western School of Law, San Diego in 1988 and a Bachelor of Arts
degree from the University of California, Santa Barbara in 1984. Mr. Stull will
devote approximately 10 hours per month to the business of the Company.
PRIOR "BLANK CHECK" EXPERIENCE
Cleora Louey is presently an officer and director of N.T. Properties, Inc.
("NTP"), a "blank check" public reporting company whose Form 10-SB Registration
Statement became effective on June 17, 1999, wherein it registered its common
stock pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended. amended.
George Unwin is presently a director of Guideline Capital Corporation
("GCC"), a "blank check" public reporting company. GCC filed a Registration
Statement on Form 10-SB in August 1998, which became effective in January 1999,
wherein it registered its common stock pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended.
Adam Stull is presently an officer and director of Guideline Capital
Corporation ("GCC"), a "blank check" public reporting company. GCC filed a
Registration Statement on Form 10-SB in August 1998, which became effective in
January 1999, wherein it registered its common stock pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended.
The foregoing is a complete description of all "blank check" companies with
whom management of the Company has been, or is, involved.
CONFLICTS OF INTEREST
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may be
formed for the purpose of engaging in business activities similar to those
conducted by the Company.
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Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this requirement will be
a breach of the fiduciary duties of the officer or director. If the Company or
the companies in which the officers and directors are affiliated with both
desire to take advantage of an opportunity, then said officers and directors
would abstain from negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if the Company
should decline to do so. Except as set forth above, the Company has not adopted
any other conflict of interest policy with respect to such transactions.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act
of 1933 and the Securities Exchange Act of 1934, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences. The Company's Board
of Directors unanimously approved a resolution stating that it is the Company's
desire to be exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
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ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Company has generated revenues from operations after consummation of a
merger or acquisition. As of the date of this Registration Statement, the
Company has no funds available to pay directors. Further, none of the directors
are accruing any compensation pursuant to any agreement with the Company and the
Company does not intend to issue any securities to its officers and/or directors
in consideration for their services.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this Registration Statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either
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directly or indirectly, as a result of their respective efforts to implement the
Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's authorized capital stock consists of 15,000,000 shares, all
of which are Common Shares, par value $0.001 per share. There are 500,000 Common
Shares issued and outstanding as of the date of this filing. There are no
preferred shares authorized, issued or outstanding.
Common Stock. All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
as fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
each shareholder of the
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Company has executed and delivered a "lock-up" letter agreement, affirming that
they shall not sell their respective shares of the Company's common stock until
such time as the Company has successfully consummated a merger or acquisition
and the Company is no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the Company's
securities until a merger or acquisition has been consummated, each shareholder
has agreed to place their respective stock certificate with the Company's legal
counsel, Bryan A. Gianesin, who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or acquisition has
been successfully consummated. Mr. Gianesin is also a shareholder of the
Company. However, while management believes that the procedures established to
preclude any sale of the Company's securities prior to closing of a merger or
acquisition will be sufficient, there can be no assurances that the procedures
established relevant herein will unequivocally limit any shareholder's ability
to sell their respective securities before such closing.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. Management has not undertaken any
discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a merger or
acquisition. There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at the present
time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and
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objectives of the person; and (ii) make a reasonable determination that the
transactions in penny stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public
offering and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers NASDAQ, has established criteria for continued NASDAQ eligibility.
In order to continue to be included on NASDAQ, a company must maintain
$2,000,000 in total assets, a $200,000 market value of its publicly traded
securities and $1,000,000 in total capital and surplus. In addition, continued
inclusion requires two market-makers and a minimum bid price of $1.00 per share,
provided, however, that if a company falls below such minimum bid price it will
remain eligible for continued inclusion on NASDAQ if the market value of its
publicly traded securities is at least $1,000,000 and the Company has $2,000,000
in capital and surplus. The NASD is presently considering increasing these
standards, but as of the date of this Registration Statement, no definitive
action has been taken in this regard.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result, a shareholder
may find it more difficult to
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dispose of, or to obtain accurate quotations as to the market value of, the
Company's securities.
b. Holders. There are ten (10) holders of the Company's Common Stock. In
September 1982, the Company issued 500 of its Common Shares for an aggregate of
$500 in cash ($1.00 per share). On January 6, 1999, the Company authorized a
forward split of 1,000 to 1 and increased its authorized Common Stock to
15,000,000 shares with a par value of $.001. Presently there are 500,000 shares
of the Company's common stock outstanding with 15,000,000 common shares
authorized. All of the issued and outstanding shares of the Company's Common
Stock were issued pursuant to exemption from the registration requirements
included under Rule 504 of Regulation D of the Securities Act of 1933, as
amended. The holders of the Common Stock were either "accredited investors" (as
that term is defined in the 1933 Act) or were provided all information necessary
in order to allow each investor to exercise their respective business judgment
as to the merits of the investment.
As of the date of this Registration Statement, 500,000 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations included
in said Rule. In general, under Rule 144, a person (or persons whose shares are
aggregated), who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
c. Dividends. The Company has not paid any dividends to date and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
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ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In September 1982, the Company issued 500 shares of its common stock to 10
persons at a price of $1.00 per share. All of the shares of Common Stock of the
Company previously issued have been issued for investment purposes in a "private
transaction" and are "restricted" shares as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Act"). These shares may not be offered
for public sale except under Rule 144, or otherwise, pursuant to the Act.
As of the date of this Registration Statement, all of the issued and
outstanding shares of the Company's Common Stock are eligible for sale under
Rule 144 promulgated under the Securities Act of 1933, as amended, subject to
certain limitations included in said Rule. However, all of the shareholders of
the Company have executed and delivered a "lock-up" letter agreement which
provides that each such shareholder shall not sell their respective securities
until such time as the Company has successfully consummated a merger or
acquisition. Further, each shareholder has placed their respective stock
certificate with the Company's legal counsel, Bryan A. Gianesin, who has agreed
not to release any of the certificates until the Company has closed a merger or
acquisition. Mr. Gianesin is also a shareholder of the Company. Any liquidation
by the current shareholders after the release from the "lock-up" selling
limitation period may have a depressive effect upon the trading prices of the
Company's securities in any future market which may develop.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws include provisions providing for the indemnification
of officers and directors and other persons against expenses, judgments, fines
and amounts paid in settlement in connection with threatened, pending or
completed suits or proceedings against such persons by reason of serving or
having served as officers, directors or in other capacities, except in relation
to matters with respect to which such persons shall be determined not to have
acted in good faith and in the best
29
<PAGE>
interests of the Company. With respect to matters as to which the Company's
officers and directors and others are determined to be liable for misconduct or
negligence, including gross negligence in the performance of their duties to the
Company, Nevada law provides for indemnification only to the extent that the
court in which the action or suit is brought determines that such person is
fairly and reasonably entitled to indemnification for such expenses which the
court deems proper.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to officers, directors or persons controlling the Company pursuant
to the foregoing, the Company has been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
In accordance with the laws of the State of Nevada, the Company's Bylaws
authorize indemnification of a director, officer, employee, or agent of the
Company for expenses incurred in connection with any action, suit, or proceeding
to which he or she is named a party by reason of his having acted or served in
such capacity, except for liabilities arising from his own misconduct or
negligence in performance of his or her duty. In addition, even a director,
officer, employee, or agent of the Company who was found liable for misconduct
or negligence in the performance of his or her duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers, or
persons controlling the issuing Company pursuant to the foregoing provisions,
the Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
PART F/S
FINANCIAL STATEMENTS.
The following financial statements are attached to this Registration
Statement and filed as a part thereof. See page 31.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheets
4) Statement of Revenues and Expenses
5) Statement of Cash Flows
6) Statement of Changes in Stockholders' Equity
7) Notes to Financial Statements
30
<PAGE>
MANNA CAPITAL, INC.
(a Development Stage Company)
(A Nevada corporation)
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
For the Years Ended December 31, 1998
and December 31, 1997
and for the Period September 9, 1982 (inception)
through December 31, 1998
31
<PAGE>
INDEX
PAGE
Independent Auditor's Report 1
Balance Sheets 2
Statements of Revenues and Expenses 3
Statements of Cash Flows 4
Statements of Changes in Stockholders' Equity/(Deficit) 5
Notes to Financial Statements 6
32
<PAGE>
GARY A. CASE
CERTIFIED PUBLIC ACCOUNTANT
Brea Corporate Plaza
3230 E. Imperial Highway, Ste. 200
Brea, California 92821-6734
Telephone: (714)986-1850
Facsimile: (714)986-1855
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS
OF MANNA CAPITAL, INC.
We have audited the accompanying balance sheets of MANNA CAPITAL, INC. (a
Development Stage Company) as of December 31, 1998 and December 31, 1997, the
related statements of Revenues and Expenses, Changes in Stockholders'
Equity/(Deficit) and Cash Flows for the Years ended December 31, 1998, December
31, 1997, and the period September 9, 1982 (inception) through 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 audit.
We conducted the audit in accordance with generally accepted audit 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 the audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage of operations and
has not generated revenues from operations. Because the Company is in the
development stage of operations, substantial doubt is raised about its ability
to continue as a going concern. The Company's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MANNA CAPITAL, INC. as of
December 31, 1998 and December 31, 1997 and the results of its operations and
its cash flows for the Years ended December 31, 1998, December 31, 1997, and the
period September 9, 1982 (inception) through December 31, 1998 in conformity
with generally accepted accounting principles.
s/Gary A. Case
- -------------------------------------
GARY A. CASE, CPA
Brea, California
March 19, 1999
1
33
<PAGE>
<TABLE>
MANNA CAPITAL, INC.
(a Development Stage Company)
(A Nevada corporation)
BALANCE SHEETS
<CAPTION>
ASSETS: December 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
Current Assets $ 0 $ 0
Organization Costs 500 500
-------- -------
Total Assets $ 500 500
======== =======
LIABILITIES
Current Liabilities
Accounts Payable $ 1,600 $ 1,500
-------- -------
Total Current Liabilities 1,600 1,500
-------- -------
Total Liabilities 1,600 1,500
STOCKHOLDERS' EQUITY
Common Stock - Par Value $.001 per shares;
15,000,000 Shares Authorized
500 Shares Issued and Outstanding 500 500
Additional Paid-In Capital 0 0
Retained Deficit, accumulated in the
development stage (1,600) (1,500)
-------- -------
Total Stockholders' Equity (1,100) (1,000)
Total Liabilities and Stockholders' Equity $ 500 $ 500
======== =======
See accompanying notes and accountant's report.
</TABLE>
2
34
<PAGE>
<TABLE>
MANNA CAPITAL, INC.
(a Development Stage Company)
(A Nevada corporation)
STATEMENT OF REVENUES AND EXPENSES
<CAPTION>
Period
9/9/82
(Inception)
Year Ended Year Ended to
12/31/98 12/31/97 12/31/98
------- ------- --------
<S> <C> <C> <C>
REVENUE:
Total Revenue $ 0 $ 0 $ 0
------- ------- --------
EXPENSES:
Taxes and Licenses 100 100 1,600
------- ------- --------
Total Expenses 100 100 1,600
Net Income/(Loss) $ (100) $ (100) $ (1,600)
======= ======= ========
Net loss per share $ (.20) $ (.20) $ (3.20)
======= ======= ========
See accompanying notes and accountant's report.
</TABLE>
3
35
<PAGE>
<TABLE>
MANNA CAPITAL, INC.
(a Development Stage Company)
(A Nevada corporation)
STATEMENT OF CASH FLOWS
<CAPTION>
Period
9/9/82
(Inception)
Year Ended Year Ended to
12/31/98 12/31/97 12/31/98
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Operating Activities $ 0 $ 0 $ 0
Cash Paid for Operating Activities 0 0 0
------- ------- -------
Net Cash Used By Operating Activities 0 0 0
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash Used in Investing Activities 0 0 (500)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash From Financing Activities 0 0 500
------- ------- -------
Net Decrease in Cash and Cash Equivalents 0 0 0
Cash and Cash Equivalents at
Beginning of Period 0 0 0
------- ------- -------
Cash and Cash Equivalents at End of Period $ 0 $ 0 $ 0
======= ======= =======
Reconciliation of Net Profit to Net Cash
Provided by Operating Activities:
Net Income/(Loss) $ (100) $ (100) $ (1,600)
------- ------- --------
Adjustments to Reconcile Net Income
to Net Provided by Operating Activities:
Increase in Accounts Payable 100 100 1,600
------- ------- --------
Total Adjustments 100 100 1,600
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 0 $ 0 $ 0
======= ======= ========
See accompanying notes and accountant's report.
</TABLE>
4
36
<PAGE>
<TABLE>
MANNA CAPITAL, INC.
(a Development Stage Company)
(A Nevada corporation)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)
<CAPTION>
Number of Additional Retained
Common Common Paid-In Earnings
Shares Stock Capital (Deficit) Total
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Balance as at September 9, 1982 0 0 0 0 0
Issuance of Common Stock 500 $ 500 $ 500
Net Income (Loss)
from September 9, 1982 (inception)
to December 31, 1996 (1,400) (1,400)
------- -------- -------- -------- -------
Balance as at December 31, 1996 500 500 0 (1,400) ( 900)
Net Income (Loss)
from December 31, 1997 (100) (100)
------- -------- -------- -------- -------
Balance as at December 31, 1997 500 500 0 (1,500) (1,000)
Net Income (Loss)
December 31, 1998 (100) (100)
------- -------- -------- -------- -------
Balance as at December 31, 1998 500 500 0 (1,600) (1,100)
See accompanying notes and accountant's report.
</TABLE>
5
37
<PAGE>
MANNA CAPITAL, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
as of December 31, 1998 and December 31, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Manna Capital, Inc., a Nevada Corporation, was incorporated on September 9,
1982. The Company intends to engage in one or more mergers with or acquisitions
of target entities which may be private companies, partnerships, or sole
proprietorship.
The Company is in the development stage, not yet commencing its planned
principal operations. The company has not yet generated revenue. The Company is
currently negotiating to merge or acquire certain target entities with
profitable operations or substantial capital.
Net loss per common share is based on the weighted average of common shares
outstanding during the period. As of December 31, 1998 and December 31, 1997,
there were 500 outstanding shares of common stock.
NOTE 2: INCOME TAXES
The Company has not filed required federal income tax returns from inception
through 1997. Due to the late filing of these tax returns a minimum penalty of
$1,600.00 has been accrued and included in accounts payable on the balance
sheet.
NOTE 3: CAPITALIZATION
Manna Capital, Inc. initially authorized 2,500 shares of common stock at a no
par value. On September 9, 1982, Manna Capital, Inc. issued 500 shares of stock
at $1.00 per share for $500.
NOTE 4: RELATED PARTY EVENTS
The Company maintains its principal offices in space provided by a shareholder
of the company on a rent free basis. The office is located 6 Venture, Suite 207,
Irvine, California.
NOTE 5: YEAR END DATE
The Company's year end is December 31.
NOTE 6: SUBSEQUENT EVENTS
The Company, on January 6, 1999, authorized a 1,000 to 1 forward stock split.
The Company also increased the total number of authorized common stock to
15,000,000 shares at a $.001 par value.
6
38
<PAGE>
PART III
ITEM 1. EXHIBIT INDEX
No. Sequential
Page No.
(3) Certificate of Incorporation and Bylaws
3.1 Certificate of Incorporation
and Amendments Thereto *
3.2 Bylaws *
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreements Executed
by the Company's Shareholders *
(27) Financial Data Schedule
27.1 Financial Data Schedule 41
- ------------------
* Previously filed as part of the Registrant's initial filing of its
Registration Statement on Form 10-SB on or about April 1, 1999.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
MANNA CAPITAL, INC.
(Registrant)
Date: July 9, 1999
s/George Unwin
------------------------------
George Unwin, President
40
<PAGE>
MANNA CAPITAL, INC.
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
41
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED DECEMBER 31, 1998, AND DECEMBER
31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 500 500
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 500 500
<CURRENT-LIABILITIES> 1,600 1,500
<BONDS> 0 0
0 0
0 0
<COMMON> 500 500
<OTHER-SE> (1,600) (1,500)
<TOTAL-LIABILITY-AND-EQUITY> 500 500
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 100 100
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (100) (100)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (100) (100)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (100) (100)
<EPS-BASIC> (.20) (.20)
<EPS-DILUTED> 0 0
</TABLE>
