As filed with the Securities and Exchange Commission on November 18, 1999
File No. 333-80429
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASSET SERVICING CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 522200 75-2823489
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(State or jurisdiction of (Primary Industrial I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.
709 B West Rusk, Suite 580, Rockwall, Texas 75087 (214) 212-2307
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(Address, including the ZIP code & telephone number, including area code of
Registrant's principal executive office)
Charles E. Smith
709 B West Rusk, Suite 580, Rockwall, Texas 75087 (214)212-2307
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(Name, address, including zip code, and telephone number, including area code of
agent for service)
Copies to:
French & Hamilton
Attorneys at Law
14651 Dallas Parkway, Suite 434
Dallas, Texas 75248
(972) 404-1414
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of Each Amount Proposed Maximum Proposed Amount of
Class of Securities To be Offering Price Maximum Aggregate Registration
to be Registered Registered Per Unit Offering Price Fee
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Common Stock,
$0.001 par value
Minimum 50,000 $1.00 $ 50,000 $278
Maximum 1,000,000 $1.00 $1,000,000 $278
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the registration statement
shall hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Initial Public Offering
Prospectus
Asset Servicing Corporation
Minimum of 50,000 shares of common stock, and a
Maximum of 1,000,000 shares of common stock
$1.00 per share
The Offering:
Per Share Minimum Maximum
---------
Public Price . . . $1.00 $ 50,000 $1,000,000
Underwriting
discounts . . 0.06 3,000 60,000
Proceeds to
Issuer . . . . . . $0.94 $ 47,000 $ 940,000
Underwriting discounts/commissions are only payable if registered broker-dealers
participate in the offering. Charles Smith is the sole officer and director and
he is offering the securities to investors. The funds will be held in escrow by
an attorney until the minimum amount is sold and the offering will end 180 days
after the effective date of this registration statement.
There is currently no market for our securities.
----------------------------
This Investment Involves a High Degree of Risk. You should Purchase Shares Only
If You Can Afford A Complete Loss. See "Risk Factors" Beginning on Page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
-----------------------------
This Prospectus is dated November 18, 1999
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PROSPECTUS SUMMARY
OUR COMPANY
We were incorporated in Nevada on May 27, 1998. The founder, Charles
Smith is our sole director, officer and employee and holds 200,000 shares of
common stock which we issued to him for $2,500, composed of $500 cash and $2,000
of his services.
We are engaged in the leasing of manufacturing and transportation
equipment to businesses. We plan to focus on businesses who are financially
sound but might have a difficult time getting financing at a bank or other
traditional sources. We will lease to these type of businesses since we will be
able to charge a higher lease rate than to businesses with unblemished credit
histories. We will concentrate on equipment and vehicles that are an integral
part of the business which will help further to secure our financial position
and secure our payment stream.
THE OFFERING
Minimum Maximum
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Common stock offered 50,000 1,000,000
Total shares outstanding after this offering 250,000 1,200,000
USE OF PROCEEDS:
Most of the money you invest will represent proceeds to the company. We will use
the proceeds from this offering to:
o pay expenses of this offering
o purchase equipment or vehicles to lease out, and for
o marketing and general working capital
In order to ensure we use our capital efficiently, we will not purchase
equipment without a lease contract in place.
DILUTION: You will suffer substantial dilution if you invest in this offering.
The dilution is described below:
o assuming the minimum is sold, you will suffer a dilution of $0.89 for every
dollar you invest. In other words, a one dollar investment will have a book
value of $0.11 (eleven cents) after the offering;
o assuming the maximum is sold, you will suffer a dilution of $0.33 for every
dollar you invest. In other words, a one dollar investment will have a book
value of $0.67 (sixty-seven cents) after the offering.
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RISK FACTORS
You should carefully consider the risks described below and all other
information contained in this prospectus before making an investment decision.
If any of the following risks, as well as other risks and uncertainties that are
not yet identified or that we currently think are immaterial, actually occur,
our business and our expected results of operations could be materially and
adversely affected. In that event, the price you may be able to sell your shares
for could decline, and you may lose part or all of your investment.
Risks Related to Our Business
Having no operating history makes evaluating our business difficult.
Having no operating history makes it difficult to forecast our future
operating results. You must consider the numerous risks and uncertainties a
start up company like ours faces. These risks include our inability to:
o increase awareness of our leasing services to build a client base;
o develop strategic partnerships and relationships;
o respond effectively to competitive pressures; and
o continue to develop and improve our marketing and servicing to meet the
needs of our future clients.
If we are unsuccessful in addressing these risks, our ability to enter into
lease contracts and service leases, as well as our ability to increase our
client base, will be substantially diminished.
Our future business prospects depend in part on our ability to maintain and
service clients and failing to do so could cause our client base to decline.
We believe that our future business prospects depend in large part on
our ability to institute and keep improving our current leasing contracts,
incentives and services. We may not be successful in developing and marketing
those improvements on a timely and cost effective basis. Delays in our response
to industry changes could have a material adverse effect on our business,
financial condition and results of operations.
We may not be able to obtain adequate financing to implement our growth
strategy.
Successful implementation of our growth strategy will require continued
access to capital which will be done mainly through leveraging our assets. See
'Description of Our Business'. If we do not generate sufficient cash flow and
lease contracts from operations and leverage them, our growth could be limited
unless we can obtain capital through debt or equity offerings. Even if financing
is available, it may not be on terms that are favorable to us or sufficient for
our needs. If we are unable to obtain sufficient capital or financing, we may be
unable to fully implement our
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growth strategy.
Year 2000 issues may adversely affect our business.
Many computer systems and software products are coded to understand
only dates that have two digits for the relevant year. These systems and
products need upgrading to accept four digit entries in order to distinguish
21st century dates from 20th century dates. Without upgrading, many computer
applications could fail or create erroneous results beginning in the Year 2000.
If this should happen to any company that we enter into a lease
contract with, payments on that contract could be delayed, or worse, the company
could have significant computer problems adversely affecting their business and
causing them to default on their lease contract.
Risks Related to this Offering
We are reliant on our sole officer and director; if he leaves, the business
could suffer adversely..
We depend upon the continued services of our executive officer. The
loss of his services could have a material impact on our business, financial
condition and results of operations.
We will institute management and operational procedures which we have not been
proved and should the procedures be inadequate, the company could adversely
suffer from slow collections.
The procedures we will institute will be for the marketing and
servicing of lease contracts. Although they are based upon the procedures used
in other financial or lending institutions, they have not been implemented in
our company. Our cash flow will be dependent on the successful implementation of
these procedures and if they are not implemented or not followed properly, the
business could suffer from poor collections and service of its lese contracts,
which could adversely affect our financial position and results of operations.
Only a small amount may be sold in our offering, causing slow growth for our
company.
If we sell only a small amount in this offering, for example - the
minimum, it is our opinion that we will be able to use the lease contracts
generated with that capital and, coupled with the remaining capital, leverage
those assets to provide additional capital. See 'Description of Our Business'.
However, if we raise only a small amount in the offering and we are unable to
leverage those assets, our rate of growth will be slow and it could have a
material impact on the way our company does business, as well as on the
financial condition and results of operations, and also adversely affect the
price someone may be willing to pay for your common shares.
When we leveraging our assets to obtain additional financing, we put our assets
at risk..
When we use our assets to leverage additional financing, we will be
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putting our cash and cash flowing lease contracts up as collateral on the
additional financing. A rise in market interest rates which we would be paying
could cause us to be paying a higher rate than we will be receiving on our lease
contracts. This could materially adversely affect our company's operating
performance and its overall financial condition, or worse, cause our company to
lose all of its assets should it default on its interest or loan obligations. If
that should happen, your investment in our common stock would become worthless.
If interest rates rise, the value of your investment may decline.
When we enter into lease contracts, we do so at a fixed rate of
interest. As interest rates rise in the market in general, that means we are
getting a lower rate of interest on our prior leases than we could today. This
could cause the value of your investment to decline.
Our share price could be highly volatile and could drop unexpectedly.
Following this offering, the price for our common shares could be highly
volatile and subject to wide fluctuations in response to the following factors:
o quarterly variations in our operating results due to the timing of closing
lease contracts;
o announcements of new lease features or services by us or our competitors;
o changes in investor perception of us or the market for our industry;
o changes in financial estimates by market makers and securities analysts,
either for our company or the industry in general; and
o changes in general economic and market conditions.
The stocks of many companies experience significant fluctuations in
trading price and volume. Sometimes these fluctuations have been unrelated to
operating performance. Declines in the market price of our common shares could
also materially and adversely affect employee morale and retention, our access
to capital and other aspects of our business.
If our share price is volatile, we may become subject to securities litigation,
which is expensive and could divert our resources.
In the past, following periods of market volatility in the price of a
company's securities, security holders have instituted class action litigation.
If the market value of our common shares experience adverse fluctuations, and we
become involved in this type of litigation, regardless of the outcome, we could
incur substantial legal costs and our management's attention could be diverted,
causing our business to suffer.
No public market has existed for our shares and an active trading market may not
develop or be sustained.
There has been no public market for our common shares. We cannot assure
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you that an active trading market will develop or be sustained after this
offering. You may not be able to resell your shares at or above the initial
public offering price. The initial public offering price has been determined
arbitrarily and may not be indicative of the market price for our common shares
after this offering.
Our executive officer is our principal shareholder and he controls us and may
make decisions that you do not consider to be in your best interest.
Immediately after this offering, our sole officer and director will
hold approximately 80% of our outstanding shares if the minimum offering is sold
and 16.67% if the maximum offering is sold. Accordingly, he will be able to
control us through his ability to determine the outcome of the election of our
directors, amend our articles of incorporation and bylaws and take other actions
requiring the vote or consent of shareholders, including mergers, going private
transactions and other extraordinary transactions, and the terms of any of these
transactions. His ownership position may have the effect of delaying, deterring
or preventing a change in control or a change in the composition of our board of
directors.
The sale of a substantial number of our common shares after this offering may
affect our share price.
The market price of our common shares could decline as a result of
sales of substantial amounts of common shares after the closing of this offering
or the perception that substantial sales could occur. These sales also might
make it difficult for us to sell equity securities in the future at a time and
at a price that we deem appropriate.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements are not historical facts but rather are based on
current expectations, estimates and projections about our industry, our beliefs
and our assumptions. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks" and "estimates", and variations of these words and similar
expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward-looking statements. In
addition, the forward-looking events discussed in this prospectus might not
occur. These risks and uncertainties include, among others, those described in
"Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus. Except as required by
law, we undertake no obligation to update any forward-looking statement, whether
as a result of new information, future events or otherwise.
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PLAN OF DISTRIBUTION
This is a direct participation offering of the common stock of the
Company and is being sold on behalf of the Company by the sole officer and
director of our Company, who will receive no commission on such sales.
The money we raise in this offering before the minimum amount is sold
will be held under an escrow agreement with T. Alan Owen & Associates, P.C.,
Attorneys at Law. Such funds will be refunded immediately if the minimum amount
is not sold within 180 days.
We will also invite licensed soliciting broker-dealers that are members
of the National Association of Securities Dealers, Inc. to participate, who may
hereafter be engaged by us to sell the common stock since at this time we have
no underwriting agreement with any licensed broker-dealer. We will pay a 6%
commission to the registered broker dealers. In addition, the shares may be
offered and sold by Our offering will continue for a maximum of 180 days from
the effective date of this registration statement. Since we have no underwriting
agreement with a licensed broker-dealer, the success of this offering is based
on the efforts of the sole officer and director of the Company at this time. We
anticipate selling our common stock to investors in the United States, Canada
and in some foreign countries.
Mr. Smith or his associates/affiliates may not purchase securities in
this offering in order to reach the minimum. They may purchase shares after the
minimum has been met but that amount is limited to ten percent (10%) of the
total number of shares sold.
Certificates for shares of common stock sold in this offering will be
delivered to the purchasers by Signature Transfer Company the stock transfer
company chosen by the company as soon as the Minimum subscription amount is
raised. See the section titled "TRANSFER AGENT".
USE OF PROCEEDS
The total cost of the minimum offering, exclusive of any sales
commissions paid to participating broker dealers, is estimated to be $14,128
($31,128 if the maximum is sold) consisting primarily of legal, accounting and
blue sky fees. There are no agreements or arrangements in place as of the date
of this Prospectus for participation of any broker dealers in this offering.
The following table sets forth how we anticipate using the proceeds
from selling common stock in this offering, reflecting the Minimum and Maximum
subscription amounts:
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$50,000 $500,000 $1,000,000
Minimum Midpoint Maximum
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Legal, Accounting & Printing Expenses 8,000 12,000 25,000
Other Offering Expenses 6,128 6,128 6,128
Marketing Expenses & Due Diligence 3,000 30,000 60,000
Net Proceeds to Company 32,872 451,872 908,872
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TOTAL $ 50,000 $ 500,000 $1,000,000
The following describes each of the expense categories:
o legal, accounting and printing expense amount is the estimated costs
associated with this offering;
o other offering expenses includes SEC registration fee, Blue Sky fees and
miscellaneous expenses with regards to this offering.
o marketing expenses & due diligence is the amount we will pay to registered
broker-dealers who might help us raise money in this offering. This
represents a commission of six percent (6%) of the offering amount ($3,000
if brokers raise the minimum amount for us and $60,000 if brokers raise the
maximum amount for us). If registered broker dealers do not help us raise
funds, this amount will represent additional proceeds to the company.
The following table sets forth how we anticipate using the net proceeds
to the company:
$50,000 $500,000 $1,000,000
Minimum Midpoint Maximum
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Purchase of equipment $ 2,500 $ 20,000 $ 45,000
Purchase of software -0- 30,000 60,000
General corporate overhead 5,372 40,000 80,000
Funding of lease contracts 25,000 361,872 723,872
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Proceeds to company $ 32,872 $ 451,872 $ 908,872
The company may raise an amount between the minimum and midpoint which
would allow it to purchase software and some equipment, but put most of the
funds, the company would net approximately $225,000 of which about $180,000
would be used to fund around 15 lease contracts, with the additional amount
being used for general corporate overhead. The emphasis will be to put as much
money into funding leases in order to generate as much cash flow and assets as
possible.
Should the company raise an amount between the midpoint and the
maximum, the company would net approximately $696,500 of which about $557,500
would be used to finance around 45 lease contracts with the balance for
software, equipment and general corporate overhead. Again, the emphasis will be
to minimize expenses for corporate overhead in order to build assets and cash
flow.
Discussion of the proceeds and the business is included in the following
section.
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DESCRIPTION OF BUSINESS
We are in the business of originating, underwriting, documenting,
closing, funding, and servicing leases for manufacturing and transportation
equipment for businesses. As the company has just been organized, there exists
no historical operating performance.
LENDING ACTIVITIES:
There are two types of leases: capital leases and operating leases.
Generally, companies who market lease financing will have a higher interest rate
than a bank will charge. However, one of the biggest advantages of lease
financing is that a borrower does not have to tie up his credit line at the bank
and if it is an operating lease, it is not reflected as a liability on a
company's balance sheet. A capital lease is a lease where the buyer pays a
certain amount for a defined number of months and then has the option to buy the
equipment for some nominal amount, like ten dollars. An operating lease is
similar to a capital lease except that at the end of the term of the lease, the
buyout is at a higher amount - for example, ten percent or fair market value.
PRODUCT OFFERINGS:
The issuers plan of operation for the twelve months following the
commencement of the proposed offering will be to market and originate leases
while setting up a set of procedures to fund and service the leases, although
those procedures have not been formally formulated. The structure of the leases
themselves will not allow for variable rate provisions, rather only fixed rate
leases will be offered. In addition, no lease will exceed 60 months in term with
the minimum lease to be originated being $12,000.
SELLING (ORIGINATING)/SERVICING LEASES:
In recent years, leasing has become an attractive option to traditional
bank borrowing. The benefits of leasing are numerous and it has been the
experience of this company that more companies are reviewing all their options
prior to purchasing their equipment needs. This is due to the benefits of
leasing. Such benefits include:
Use of equipment: Leasing provides the use of the equipment for an agreed
upon monthly payment. A company is therefore able to pay
as they use.
Tax benefits: Under an operating lease the lease payments are tax
deductible.
Flexibility: Payments can be structured to fit most any budget.
100% cost coverage: Many "soft" costs such as shipping, software and
installation can be rolled up into the lease total.
Conservation of
capital: If your companies' money is not tied up in equipment costs,
you then have that money to employ elsewhere.
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Easier cash flow
Forecasting: Fixed monthly payments help in the budgetary process.
Preserves credit: Leasing does not tie up room under a bank line of credit,
so more capital is available.
Longer terms: Many banks only lend money on a short term basis, usually
12 to 36 months. Leasing allows for terms up to 60 days.
Purchase or renewal
Option: At the end of the lease, an option may exist to purchase
the equipment, upgrade to new equipment or continue
leasing.
Generally, equipment loses value or depreciates over time. When a
equipment is leased for two years, one is paying for two years of depreciation
in monthly payments plus interest. At the end of the lease term, the vehicle can
either be sold to you or someone else for its value at that time.
Servicing the lease contracts involves setting up a payment schedule
for the leases and collecting the payments. The main objective in this area is
to ensure the payments are collected on time. Servicing leases is software
driven. The primary costs are borne on the front end. Once documented and
funded, the administrative costs are simply posting monthly payments unless the
lessee becomes delinquent. It is at this point the company will become active
and intimate with the lessee to ensure the lease does not become "past due".
Such activities will include daily conversations with the lessee, requesting
additional collateral to secure the lease, even renegotiating the lease in some
form so that it remains performing. Such additional collateral to be requested
and secured includes the pledging of unencumbered personal assets the lessee may
own, the execution of a full, unconditional personal guarantee, and/or the
attachment through financing statements to available business assets.
When we have received timely payments on a lease contract for six
months or twelve months, depending on the buyer, it is then categorized as
"seasoned" to a buyer, this means the lease contract can reasonably be ensured
to pay timely in the future. This is why it is so important to qualify a
potential borrower in the first phase of the process.
Once a company has seasoned lease contracts, they may keep the lease
contracts in their own portfolio or sell them to someone else. A company may
keep the lease contracts in their own portfolio (not sell them) if it has a
large amount of funds available or designated for that purpose and they are
satisfied with the return on their funds. A company may sell the lease contracts
in order to make a profit and turn the funds over into new lease contracts and
repeat that cycle over and over again.
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Brokering lease financing is another aspect of the leasing business which small
companies fill who don't have a large pool of capital of their own. They are
basically marketers who obtain customers who need and wish lease financing and
enter into relationships with large finance companies and put together the
financing and the lessee. Essentially they are putting together the buyer
(lessee) and the seller (finance company). For this they build in a fee and can
"fund" leases without concern about running out of capital.
POTENTIAL CUSTOMERS:
Consolidation in the financial services industry allows for low
barriers of entry. In addition, due to consolidation, many B and C tier credits
are being neglected in favor of larger, more established companies as financial
institutions lean more toward "asset growth" than to individual transactions.
This is a positive for the company as a market for selling lease portfolios is
enhanced as those same financial institutions become buyers rather than
originators.
Principally, the market for leases is broad, defined more by industry
and need rather than by "type" of lease. Consequently, to narrow the focus of
the company, secured transactions targeting B and C credit rated customers is
contemplated. B and C rated customer's means they are of sound credit risk but
are not considered "bankable". Such ratings are typically applied based on the
company's net worth in conjunction with their credit pay history. The
terminology of a B or C rated credit, as understood by this company, is a
company that is not an attractive credit risk to a traditional lender, such as a
bank, due to a bank's regulatory requirements but which has an established
history of operations (over 2 years) and a verifiable paid as agreed borrowing
history. It is the opinion of the company that such credits are sound risks
principally because they have paid as agreed.
It is this company's intention to lend to businesses that meet the following
criteria:
o have at least a one to one current ratio (the ratio of current assets to
current liabilities);
o have at least a two to one asset to debt ratio;
o have a debt coverage ratio of at least 120%; and
o have been in business for at least two full years.
MARKET AREA:
We will transact business in the Dallas/Fort Worth Metroplex in North
Central Texas. Rockwall, Texas, the primary physical address of the company, is
a bedroom community 20 miles east of Dallas, Texas. The 1990's have been a
period of consolidation and steady employment growth for the area. The Metroplex
is the third largest hub for corporate headquarters and high tech companies in
the country. According to information derived from the US Census by the Texas
State Data Center at Texas A&M University, Texas ranks as the fastest growing
state (numerically) in the nation, it's population increasing 12.6% from 1990 to
1996. In addition, it is the second most populous state in the nation with 19.1
million people, second only to California's 31.9 million. In fact, in a Wall
Street Journal article published earlier this year, the Dallas/Fort Worth
Metroplex was identified as the third fastest growing area in the country for
the next five years. This will give the Metroplex area an approximate population
of 5.6 million people. This area then provides a significant base of businesses
from which to solicit business for our company and provides an economic base
conducive to growth because of the number of potential lessees.
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COMPETITORS:
The vehicle and equipment leasing industry is a non-regulated industry
(except for the general issue of usury) and has become much more widely accepted
in the recent past as more and more individuals and businesses have turned to
leasing as an alternative financing method. There are numerous companies in the
equipment leasing business performing some function, whether it be of lender,
broker, marketer or leasing company.
The leasing industry is very fragmented because there are a large
number of companies, both big and small, which service different segments of the
market. Many specialize in particular products, for example, automobiles or
computers. In general, the key to the building of a business is in the marketing
and obtaining of leases. Any company with funds can set up an operation to lend
those funds out but the keys are:
o being able to attract the type of leases you want to finance and qualify
them;
o servicing those leases; and
o if the company should sell those lease contracts - their portfolio - to
sell them at a favorable rate so that a profit is made.
MARKET PLAN:
We, as a company, will initially market our lease financing to small
sized companies that are available from existing relationships through our
President. The company believes the potential for these contracts are expected
to total more in value than the proceeds from this offering if the maximum
amount were raised. The company believes from its relationships with other
businesses that there are a large number of businesses that need financing that
cannot get it through traditional sources, but have good cash flow, integrity in
management and that we can achieve a higher interest rate and therefore a higher
return through lease financing to these businesses. We will choose to specialize
in leasing manufacturing and/or transportation equipment. After we have
exhausted all the opportunities from our contacts, we will then move to some
sort of marketing campaign to generate new business.
Initially, our marketing and distribution will be operated by our
President, Charles Smith, who is a certified public accountant. It is the
opinion of the company that he will receive requests for leases from customers
and associates. It is therefore the opinion of the company that the company will
be highly dependent on his ability to leverage personal and professional
relationships that then translate into lease business for the company. Given
such personal referrals, deal flow is anticipated to come from existing
relationships. However, it is our opinion the lease portfolio will grow rapidly
and will not be dominated by a few customers.
As our company grows, our marketing and method of distribution is
planned to be through a centralized management team that will market, document,
police and service the leases. Through centralization, efficiencies, consistency
in product and credit underwriting, and uniformity, integrity in the lease
portfolio is achieved.
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LEVERAGE PLANS:
After securing lease contracts, we will season the leases and then make
a decision whether or not to sell them. After we have used all the funds
available for leasing, we anticipate being able to secure a line of credit with
a bank or other institution that will provide us additional capital to create
lease contracts with where we will then make a "spread" ; "spread" is the
difference between what interest rate we charge in our lease contracts and the
rate we will pay to the bank.
If we are unable to secure a loan with a bank or other institution, we
will continue to service our current portfolio while looking for some
alternative capital sources. We will also broker leases if our funds run out
before we can arrange for some alternate financing arrangement within our
company. However, we believe that when we can show a track record, that many
financial institutions will want to partake of our success.
One way to enhance our success is to buy the equipment we lease at
wholesale prices and lease it based upon the retail value. This enhances our
rate of return.
As an example of a lease we might make, Company A may come to us and
say they want to lease a shuttle bus, it doesn't have to be new, but has to have
low miles and be in good condition. We would buy a used, but relatively new
shuttle bus say for $20,000 and lease it to Company A for $650 per month with a
10% buyout at the end of the lease. This will give us an effective yield of over
thirty percent (30%). The lease in this case is based upon us being able to buy
the vehicle at a lower price because we have cash in hand.
We would consider selling our lease portfolio if interest rates fell
well below the average rate we had charged on our leases. If this situation
developed, it could give the company a windfall profit on the portfolio of
leases i.e. the principal amount of funds used to finance those particular
leases.
USE OF PROCEEDS:
Assuming we raise the minimum amount in this offering, we will not have
a large surplus of cash. However, we will be able to finance approximately two
(2) contracts with the net $32,872 proceeds to the company. We will not pay
salaries until such time as the company is generating revenue from contracts
and/or fees; our overhead will be minimal because we will be using the resources
of our President, Mr. Smith. We will then leverage performing leases by pledging
them as collateral against a working capital line of credit to be negotiated at
a future date. No such agreement is in place as of the date of this filing. This
cycle of using our available capital from this offering and or lines of credit
to secure lease contracts and leveraging those to secure access to additional
capital will continue as a cycle so that we can build our portfolio base and
finance the growth of the company.
13
<PAGE>
Assuming we raise $500,000 in this offering, a midpoint between the
minimum and maximum, we will be able to secure approximately 25 lease contracts
and have a more diversified portfolio. With the $451,872 net cash proceeds to
the company from this midpoint offering, we will purchase some software unique
to servicing the contracts, start some marketing through professional
organizations and place funds into funding lease contracts. We will then use
those contracts and any, if any exists, remaining capital we have to leverage
our financial position by pledging them against a working capital line of credit
to provide us additional funds to secure more lease contracts. This cycle of
using our available capital from this offering and any cash generated from
entering into line of credit arrangements subsequent to this.
Assuming we raise the maximum offering which would result in proceeds
to the company of $908,872, with which we should be able to fund approximately
50 lease contracts, we believe we will have sufficient funds to fund contracts
while we season the initial contracts. It is the opinion of the company that it
will always be able to take its existing contracts and remaining capital and
leverage them to satisfy the cash requirements to finance the growth of the
company. We will purchase software unique to this industry to enable us to
service the contracts, but the major portion of all funds will be used to fund
lease contracts since that is the way we will build up our revenue and asset
base (portfolio). Of course, if we raise the maximum amount in this offering, we
will have plenty funds to create a diversified portfolio where credit problems
with any one contract will not cause a material problem with our company as a
whole. The real key is marketing and obtaining good lease contracts and after
that infrastructure is in place, to obtain some sort of additional financing
like a line of credit to continue our growth.
POSTAMBLE:
We have made no public announcements to date and have no additional or
new products or services. In addition:
o we don't intend to spend funds in the field of research and development;
o no money has been spent or is contemplated to be spent on customer
sponsored research activities relating to the development of new products,
services or techniques; and
o We don't anticipate spending funds on improvement of existing products,
services or techniques.
As of the filing date, the company has no paid employees. As necessary
due to lease volume, work load, and the like, employees will be brought on
board.
The company does not expect nor has it encountered any material effect
from the discharge of materials, environmental agencies, capital expenditures
for environmental control facilities, nor does it anticipate having to deal with
any such issue in the future.
No segmented data is required for this offering.
In summary then, the lease financing business is a non-regulated
business where we will market for lease contracts, obtain them, service them and
14
<PAGE>
possibly sell them. If we can obtain lines of credit, we will be able to grow as
fast as our marketing efforts can bring good lease contracts to us.
DESCRIPTION OF PROPERTY
We lease our corporate facilities from our sole officer and director
which includes the use of telephones and equipment for $50.00 per month. This
arrangement started in April 1999 when the business plan outline was written.
This arrangement will continue until such time as the Company needs and can
afford to lease its own office facilities.
MANAGEMENT OF THE COMPANY
The directors and officers of the Company, their ages and principal
positions are as follows:
Name Age Position
- --------------------------------------------------------------------------------
Charles Smith 42 President; Secretary and Director
Background of Directors and Executive Officers:
Charles Smith. Mr. Smith formed the Company and at this time is its only officer
and director. His term as a director expires in May 2000. He graduated from
Boston University, Boston, Massachusetts in 1979 and since that time has been a
Certified Public Accountant involved in all phases of business including the
audit of companies and tax matters. He is a consultant to various companies
ranging from an art distribution company to a junior resource company which is
developing a gold property in Sinaloa State, Mexico.
Mr. Smith's business affiliations during the last five years follow:
Chairman - Dynacap Group, Ltd. - a consulting and management firm - 1992 to the
present.
Sole proprietor as a Certified Public Accountant - 1983 to the present.
Sole officer and Director - MC Cambridge, Inc. - a financial consulting firm -
1997 to present.
Initially, Mr. Smith will not initially spend full time on the
activities of the company and that his current activities would take up some of
his time. These activities include the financial and management consulting
responsibilities and the accounting services he performs at this time. He can
devote more and more time to the activities of the company as time goes on since
the financial and management consulting can be cut back and even dropped at any
time. Initially, he expects to spend ten to fifteen hours per week and increase
that weekly time as the activities of the company require. Mr. Smith fully
expects that the company will raise sufficient funds in this offering so that he
will devote himself full time to the success of the company's plan of business.
DIRECTOR AND EXECUTIVE COMPENSATION
Our sole officer and director has received no compensation other than
the 160,000 shares of common stock he received for services in May 1998 and has
no employment contract with the company.
15
<PAGE>
Name of Person Capacity in which he served Aggregate
Receiving compensation to receive remuneration remuneration
- --------------------------------------------------------------------------------
Charles Smith President, Secretary 160,000 shares
and Treasurer of common stock
The common stock was issued soon after formation of the company and it
is impracticable to determine the cash value. The stock was issued over one year
ago for services performed which we cannot estimate the value since that work
continues through the filing and effectiveness of this registration statement,
with no other compensation to be granted for the work done on this filing.
As of the date of this offering, there are no plans to pay any
remuneration to anyone in or associated with the company. When the company has
funds and/or revenue, the Board of Directors will determine any remuneration at
that time.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
Our Articles of Incorporation and our Bylaws limit the liability of
directors to the maximum extent permitted by Nevada law. We carry no director or
executive liability insurance.
<TABLE>
<CAPTION>
PRINCIPAL SHAREHOLDERS
The following table lists the persons who, at the date hereof, own of
record or beneficially, directly or indirectly, more than 10% of the outstanding
Common Stock, and all officers and directors of the Company:
Name and Address Amount owned
Title of Owner before offering Percent
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President, Secretary Charles Smith 200,000 100.00%
And Director 709 B West Rusk
Suite 580
Rockwall, Texas 75087
After offering: Minimum 200,000 80.00%
- -------------- Maximum 200,000 16.67%
</TABLE>
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
In May 1998, the President of the company received 200,000 shares of
common stock which we issued to him for $2,500, composed of $500 cash and $2,000
of his services.
As of the date of this filing, there are no agreements or proposed
transactions, whether direct or indirect, with anyone, but more particularly
with any of the following:
16
<PAGE>
o a director or officer of the issuer;
o any principal security holder;
o any promoter of the issuer;
o any relative or spouse, or relative of such spouse, of the above referenced
persons.
<TABLE>
<CAPTION>
SUMMARY FINANCIAL DATA
The following table sets forth certain of our summary financial
information. This information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this prospectus. See
"Description of Business."
Unaudited Audited Audited
Balance Sheet: Sept 30, 1999 April 30, 1999 Dec 31, 1998
-------------------- ------------- ----------------- ------------
<S> <C> <C> <C>
Working Capital $ 116 $ 116 $ 177
Total Assets $ 116 $ 116 $ 177
Total Liabilities $ 4,648 $ -0- $ -0-
Stockholders' Equity $(4,532) $ 116 $ 116
May 27,1998
(date of
inception)
Statement of Operations: Sept 30, 1999 April 30, 1999 Dec 31, 1998
------------------------ ------------- ---------------- ------------
Revenue $ -0- $ -0- $ -0-
Operating Expense $ 4,709 $ 61 $ 2,323
Operating Income (Loss) $(4,709) $ ( 61) $ (2,323)
Other Expenses $ -0- $ -0- $ -0-
Net Income (Loss) $(4,709) $ ( 61) $ (2,323)
</TABLE>
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our common
stock. We do not intend to declare or pay any dividends on our common stock in
the foreseeable future, but rather to retain any earnings to finance the growth
of our business. Any future determination to pay dividends will be at the
discretion of our Board of Directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.
CAPITALIZATION
The following table sets forth our capitalization as of September 30,
1999. Our capitalization is presented on:
o an actual basis;
o a pro forma basis to give effect to net proceeds from the sale of the
minimum number of shares (50,000) we plan to sell in this offering; and
17
<PAGE>
o a pro forma basis to give effect to the net proceeds from the sale of the
maximum number of shares (1,000,000) we plan to sell in this offering.
After After
Actual Minimum Maximum
Sept 30, 1999 Offering Offering
------------- -------- --------
Stockholders' equity
Common Stock, $0.001 par value;
50,000,000 shares authorized; 200 250 1,200
Additional Paid In Capital 2,300 35,122 806,172
Retained deficit (7,032) (7,032) (7,032)
Total Stockholders' Equity (4,532) 28,340 800,340
Total Capitalization (4,532) 28,340 800,340
Number of shares outstanding 200,000 250,000 1,200,000
The company has only one class of stock outstanding. The common stock
sold in this offering will be fully paid and non assessable, having voting
rights of one vote per share, have no preemptive or conversion rights, and
liquidation rights as is common to a sole class of common stock. The company has
no sinking fund or redemption provisions on any of the currently outstanding
stock and will have none on the stock sold in this offering.
DILUTION
If you purchase the common stock, you will experience an immediate and
substantial dilution in the pro forma net tangible book value of the common
stock from the initial offering price.
The pro forma net tangible book value (deficit) of the common stock as of
September 30, 1999 was $(4,532) or $(0.02) per share. Pro forma net tangible
book value per share is equal to our total tangible assets, less total
liabilities, divided by the number of shares of common stock outstanding.
After giving effect to the sale of common stock offered by us in this offering,
and the receipt and application of the estimated net proceeds therefrom (at an
assumed initial public offering price of $1.00 per share, after deducting the
underwriting discounts and commissions, and estimated offering expenses), our
pro forma tangible book value as of September 30, 1999 would have been
approximately $28,340 or $0.11 per share, if the minimum is sold, and $800,340
or $0.67 per share, if the maximum is sold.
This represents an immediate increase in net tangible book value per common
18
<PAGE>
share to our current stockholders and an immediate and substantial dilution to
new stockholders purchasing shares in this offering. The decrease in net
tangible book value is:
o $21,660 or $0.89 per share if we sell the minimum number of shares (50,000)
in this offering; and
o $199,660 or $0.33 per share if we sell the maximum number of shares
(1,000,000) in this offering.
<TABLE>
The following table illustrates this per share dilution:
Minimum Maximum
<S> <C> <C>
Assumed initial public offering price $1.00 $1.00
Pro forma net tangible book value as of Sept 30, 1999 ($0.02) ($0.02)
Pro forma net tangible book value after this offering $0.11 $0.67
Increase attributable to new stockholders: $0.13 $0.69
Pro forma net tangible book value
as of September 30, 1999 after this offering $0.11 $0.67
Decrease to new stockholders ($0.89) ($0.33)
The following table summarizes on a pro forma basis as of September 30,
1999, shows the differences between the number of shares of common stock
purchased, the total consideration paid and the total average price per share
paid by the existing stockholders and the new investors purchasing shares of
common stock in this offering:
After After
Actual Minimum Maximum
Sept 30, 1999 Offering Offering
------------- -------- --------
Existing stockholders:
Consideration paid per share 0.0125
New stockholders:
Consideration paid per share 1.00
Dilution to new stockholders ( $0.89) ( 0.33)
</TABLE>
DESCRIPTION OF COMMON STOCK
We have authorized capital in our Company consisting of 50,000,000
shares of Common Stock, $0.001 par value per share. As of September 30, 1999,
there were 200,000 shares of Common Stock issued and outstanding.
Every investor who purchases common stock is entitled to one vote at
meetings of the shareholders of the Company and to participate equally and
ratably in any dividends declared by us and in any property or assets that may
be distributed by us to the holders of Common Stock in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the Company.
19
<PAGE>
The existing stockholders have no preemptive rights to purchase common
stock offered for sale by us, and no right to cumulative voting in the election
of our directors.
LEGAL PROCEEDINGS
We are not involved in any legal proceedings at this time.
YEAR 2000 ISSUE
At this time the company has no systems and the Year 2000 issues
associated with them do not apply.
However, we plan to purchase computer hardware and software with the
proceeds of this offering, and when evaluating software to purchase, we will
purchase software that is year 2000 compliant. When we purchase this hardware
and software, we will be one hundred percent (100%) Year 2000 compliant. As part
of our purchase, we will require proof that the hardware and software is Year
2000 compliant so we will be one hundred percent ready. The costs associated
with this will be minimal because we will be purchasing new hardware and
software and therefore have no cost of conversion or cost to be in a state of
readiness.
The above also causes the company to have a zero risk for problems at
the Year 2000 and consequently the company has no contingency plans. The company
will not be interfacing with any other company or service to process and service
its leases so no Year 2000 problems will arise with respect to interfacing with
service providers or others.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
There are no special federal tax implications associated with this
business enterprise.
LEGAL MATTERS
Certain matters relating to the legality of the Common Stock offered
hereby will be passed upon for the Company by French & Hamilton, Attorneys at
Law, 14651 Dallas Parkway, Suite 434, Dallas, Texas 75248.
EXPERTS
The financial statements as of April 30, 1999 and December 31, 1998,
and for the four months ended April 30, 1999 and for the fiscal period from
inception (May 27, 1998) to December 31, 1998, of the Company included in this
Prospectus have been audited by Mark L. Cleland, independent certified public
accountant, as set forth in his report. The financial statements have been
included in reliance upon the authority of him as an expert in accounting and
auditing.
20
<PAGE>
The financial statements dated September 30, 1999 included in this
offering were prepared by management, are unaudited and have not been audited by
Mark L. Cleland.
TRANSFER AGENT
We will serve as out own transfer agent and registrar for the common
stock until such time as our registration on Form SB-1 is effective and then we
intend to retain Signature Transfer Company, 14675 Midway Road, Suite 221,
Dallas, Texas 75244.
21
<PAGE>
MARK L. CLELAND
CERTIFIED PUBLIC ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035
------------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Asset Servicing Corporation
Rockwall, Texas
I have audited the accompanying balance sheets of Asset Servicing Corporation (a
Nevada corporation in the development stage) as of April 30, 1999 and December
31, 1998 and the related statements of operations and accumulated deficit
accumulated during the development stage, stockholders' equity and accumulated
deficit, and cash flows for the four month period ending April 30, 1999, and the
period May 27, 1998 (date of inception) to December 31, 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 audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those 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 audits provide a reasonable basis for my opinion.
In my opinion, based on my audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Asset
Servicing Corporation as of April 30,1999 and December 31, 1998, and the results
of their operations and their cash flows for the four month period ended April
30, 1999, and the period May 27, 1998 (date of inception) to December 31, 1998
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note D to the
financial statements, the Company has incurred net losses since its inception
which raises substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustment that might
result from the outcome of this uncertainty.
/s/ Mark L. Cleland
---------------
Dallas, Texas
November 15, 1999
1
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
April 30, 1999 and December 31, 1998
ASSETS
------
April 30, 1999 Dec 31, 1998
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 116 $ 177
-------------- -------------
TOTAL ASSETS $ 116 $ 177
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable $ 0 $ 0
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value 200 200
Additional paid-in-capital 2,300 2,300
Deficit accumulated during the development stage (2,384) (2,323)
-------------- -------------
Total Stockholders' Equity 116 177
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116 $ 177
============== =============
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS AND ACCUMULATED
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to April 30, 1999
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec. 31, 1998 May 27, 1998
------------- ------------- ------------
<S> <C> <C> <C>
REVENUE: $ 0 $ 0 $ 0
OPERATING EXPENSE:
Labor 0 2,000 2,000
Licenses and fees 0 290 290
Office expense 61 33 94
-------------------------------- ------------
Total Operating Expense 61 2,323 2,384
-------------------------------- ------------
NET LOSS $ (61) (2,323) $ (2,384))
================================ ============
Weighted average shares outstanding 200,000 200,000 200,000
================================ ============
LOSS PER SHARE $ (0.00) $ (0.01) $ (0.01)
================================ ============
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from May 27, 1998 (date of inception) to December 31, 1998
Deficit
Accumulated
during
Common Paid in Development
Shares Amount Capital Stage Total
-------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C>
Balance,
May 27, 1998
(date of inception) 0 $ 0 $ 0 $ 0 $ 0
Shares issued on
May 29, 1998 for:
Services $0.0125 per share 160,000 160 1,840 2000
Cash $0.0125 per share 40,000 40 460 500
Net Loss (2,323) (2,323)
------------------------------------------------ -----------
Balance
December 31, 1998 200,000 $ 200 $ 2,300 $ (2,323) $ 177
================================================ ===========
Net Loss (61) (61)
------------------------------------------------ -----------
Balance
April 30, 1999 200,000 $ 200 $ 2,300 $ (2,384) $ 116
================================================ ===========
</TABLE>
See accompanying notes
4
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to April 30, 1999
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec 31,1998 May 27,1998
-------------- ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (61) $ (2,323) $ (2,384)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Stock issued for services 2,000 2,000
------------------------------- --------------
NET CASH (USED) BY OPERATING ACTIVITIES: (61) (323) (384)
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 500 500
------------------------------- --------------
NET (DECREASE) INCREASE IN CASH: (61) 177 116
CASH AT BEGINNING OF PERIOD 177 0 0
------------------------------- --------------
CASH AT END OF PERIOD $ 116 177 $ 116
=============================== ==============
</TABLE>
See accompanying notes.
5
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to April 30, 1999
SUPPLEMENTAL DISCLOSURE OF
--------------------------
CASH FLOW AND NON-CASH INVESTING ACTIVITIES
-------------------------------------------
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec 31, 1998 May 27, 1998
-------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOW INFORMATION:
- ----------------------
Interest Paid $ 0 $ 0 $ 0
Income Taxes Paid 0 0 0
NON-CASH FINANCING ACTIVITIES:
- ------------------------------
Common Stock Issued For:
Services $ 0 $ 2,000 $ 2,000
</TABLE>
See accompanying notes.
6
<PAGE>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 and December 31, 1998
Note A - Nature of Business and Summary of Significant Accounting Policies:
- ---------------------------------------------------------------------------
History:
- --------
The Company was organized May 27, 1998 under the name of Asset Servicing
Corporation to engage in any lawful act or activity under the general
corporation law of the state of Nevada. The Company's business plan outlines its
plan of operations, which is to lease vehicles and equipment to businesses with
a class B or class C credit rating. The Company is in the development stage and
has had no income.
Basis of Accounting:
- --------------------
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in conformity with generally accepted accounting principles.
Sales are recorded as income in the period in which they are earned and expenses
are recognized in the period in which the related liability is incurred.
Revenue Recognition:
- --------------------
Revenue is recognized when service is performed and amounts invoiced.
Cash and Cash Equivalents:
- --------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
Loss per Common Share:
- ----------------------
Loss applicable to common share is based on the weighted average number of
shares of common stock outstanding during the year.
Accounting Estimates:
- ---------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Tax:
- -----------
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative minimum tax (AMT) system.
The Company uses an asset and liability approach for the accounting and
financial reporting of income tax. Under this method, deferred tax assets and
liabilities are determined based on temporary differences between the financial
carrying amounts and the tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the temporary differences are expected to
reverse.
7
<PAGE>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 and December 31, 1998
Note B - Stockholders' Equity:
- ------------------------------
Common Stock:
- -------------
The Company is authorized to issue 50,000,000 common shares of stock at a par
value of $0.001 per share. These shares have full voting rights. At April 30,
1999 and December 31, 1998, there were 200,000 shares outstanding.
The Company has not paid a dividend to its shareholders.
Note C - Income Taxes:
- ----------------------
The Company has net tax operating loss carryforward of approximately $2,384 that
is available to offset its future income tax liability. The net operating loss
carryforward expire as follows:
Year 2013 $2,323
Year 2119 61
No deferred tax asset has been recognized for the operating loss, as any
valuation allowance would reduce the benefit to zero.
Note D - Going Concern:
- -----------------------
The Company has minimal capital resources available to meet obligations expected
to be incurred given that it is a start up enterprise. Accordingly, the
Company's continued existence is dependent upon the successful operation of the
Company's business plan of operations, selling common stock in the Company, or
obtaining financing. Unless these conditions among others are met, the Company
may be unable to continue as a going concern.
8
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
BALANCE SHEETS
September 30, 1999 and December 31, 1998
ASSETS
------
Sept 30, 1999 Dec 31, 1998
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 116 $ 177
------------- ------------
TOTAL ASSETS $ 116 $ 177
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable $ 2,730 $ -0-
Advances from shareholder 1918
------------- ------------
Total Current Liabilities 4648 -0-
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value 200 200
Additional paid-in-capital 2300 2300
Accumulated Deficit (7032) (2,323)
------------- ------------
Total Stockholders' Equity (4532) 177
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116 $ 177
============= ============
</TABLE>
9
<PAGE>
ASSET SERVICING CORPORATION
STATEMENT OF OPERATTIONS
Period from inception (May 27, 1998) to December 31, 1998, and
Nine months ended September 30, 1999
Nine months Period thru
Sept 30, 1999 Dec 31, 1998
------------- ------------
REVENUE: $ -0- $ -0-
OPERATING EXPENSE:
Labor 0 2,000
Licenses and fees 2,956 290
Office expense 153
Professional fees 1,000
Rent 600 33
-------- ----------
Total Operating Expense 4,709 2323
-------- ----------
NET LOSS $ (4,709) $ (2,323)
======== ==========
Weighted average shares outstanding 200,000 200,000
======== ==========
LOSS PER SHARE ($ 0.02) $ (0.01)
======== ==========
10
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from inception (May 27, 1998) to December 31, 1998, and
Nine months ended September 30, 1999
Common Paid In Accumulated
Shares Amount Capital Deficit Total
------------------------------------------------ ---------
<S> <C> <C> <C> <C> <C>
Balance,
May 27, 1998
(date of inception) -0- -0- -0- -0- -0-
Shares issued on
May 29, 1998 for:
Services 160,000 160 1,840 2,000
Cash 40,000 40 460 500
Net Loss (2,323) (2,323)
---------------------------------------------- ---------
Balance
December 31, 1998 200,000 200 2,300 (2323) 177
============================================== =========
Net Loss (4,709) (4,709)
Balance
September 30, 1999 200,000 200 2,300 (7,032) (4,532)
============================================== =========
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
STATEMENT OF CASH FLOWS
Period frominception (May 27, 1998) to December 31, 1998
Nine months ended Sept 30, 1999
Nine months Period thru
Sept 30, 1999 Dec 31, 1998
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (4,709) (2,323)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Increase in accounts payable 2,730
Advances from shareholder 1,918
Stock issued for services 2,000
-------- --------
NET CASH (USED) BY OPERATING ACTIVITIES: (61) (323)
CASH FLOWS FROM INVESTING ACTIVITIES: -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock -0- 500
-------- --------
NET INCREASE IN CASH (61) 177
CASH, BEGINNING OF PERIOD 177 -0-
-------- --------
CASH, END OF PERIOD $ 116 $ 177
======== ========
</TABLE>
12
<PAGE>
No dealer, salesman or any other person has been authorized to give any
quotation or to make any representations in connection with the offering
described herein, other than those contained in this Prospectus. If given or
made, such other information or representation, must not be relied upon as
having been authorized by the Company or by any Underwriter. This Prospectus
does not constitute an offer to sell, or a solicitation of an otter to buy any
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such an offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
Prospectus Summary 2
Corporate Information 2
Risk Factors 3
Forward Looking Statements 6
Plan of Distribution 7
Use of Proceeds 7
Management's Discussion and Analysis of Financial Condition 8
Description of Property 15
Management of the Company 15
Director and Executive Compensation 15
Director's and Officers' Indemnification and Insurance 16
Principal Shareholders 16
Interest of Management and Others in Certain Transactions 16
Summary Financial Data 17
Dividend Policy 17
Capitalization 17
Dilution 18
Description of Common Stock 19
Legal Proceedings 20
Year 2000 Issue 20
Certain Federal Income Tax Considerations 20
Legal Matters 20
Experts 20
Transfer Agent 21
Financial Statements F-1
Until the (90th day after the later of (1) the effective date of the
registration statement or (2) the first date on which the securities are offered
publicly), all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Indemnification of Directors and Officers
If applicable, the Broker-Dealer Selling Agreement will provide for
indemnification of the Company, and its officers, directors and employees
against certain liabilities. **If applicable.
Item 14. Other Expenses of Issuance and Distribution
All expenses. including all allocated general administrative and overhead
expenses. related to the offering or the organization of the Company will be
borne by the Company. The following table sets forth a reasonable itemized
statement of all anticipated out-of-pocket and overhead expenses (subject to
future contingencies) to be incurred in connection with the distribution of the
securities being registered, reflecting the minimum and maximum subscription
amounts.
Minimum Maximum
------------------------
SEC Registration Fee $ 278 $ 278
Printing and Engraving Expenses 2,000 19,000
Legal Fees and Expenses 5,000 5,000
Edgar Fees 1,800 1,800
Marketing and Due Diligence Expenses 3,000 60,000
Accounting Fees and Expenses 1,000 1,000
Blue Sky Fees and Expenses 3,850 3,850
Miscellaneous 200 200
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TOTAL $ 17,128 $ 95,128
Item 15. Recent Sales of Unregistered Securities
The Company sold to its founder 200,000 shares of common stock which was
issued to him for $2,500, composed of $500 cash and $2,000 of his services. This
stock was issued under the exemption under the Securities Act of 1933, section
4(2); this section states that transactions by an issuer not involving any
public offering is an exempted transaction. The company relied upon this
exemption because in a private transaction during May 1998, the founder, sole
officer and director purchased stock for a combination of $500 cash and $2,000
of services.
11.1
<PAGE>
Item 16. Exhibits
The following Exhibits are filed as part of the Registration Statement:
Exhibit No. Identification of Exhibit
3.1* - Articles of Incorporation
3.2* - By Laws
4.2* - Specimen Stock Certificate
10.4* - Subscription Escrow Agreement
10.5** - Form of Broker-Dealer Selling Agreement
10.6 - Form of Subscription Agreement
23.1** - Consent of French & Hamilton, Attorneys at Law
23 2 - Consent of Mark L. Cleland, Certified Public Accountant
* Filed previously
** To be filed by amendment by Registrant if broker dealers are engaged to sell
Item 17. Undertakings
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act; and
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised 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.
11.2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form SB-1 and authorizes this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Rockwall, State of Texas, on the 17th day of November, 1999.
ASSET SERVICING CORPORATION
By: /s/ Charles Smith
----------------------------
Charles Smith, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity and on
the date indicated:
Signature Title Date
- ----------------- --------------------- -----------------
President, Secretary,
- ----------------- Treasurer; Director November 18, 1999
11.3
ASSET SERVICING CORPORATION
SUBSCRIPTION AGREEMENT
November __, 1999
ASSET SERVICING CORPORATION
709 B West Rusk, Suite 580
Rockwall, Texas75087
Ladies and Gentlemen:
1. PURCHASE OF COMMON STOCK. Intending to be legally bound , I hereby agree
to purchase ________ shares of voting, no par value common stock (the "Shares")
of Asset Servicing Corporation (the "Corporation") for ______________ U.S.
Dollars (number of Shares to be purchased multiplied by $1.00). This offer to
purchase is submitted in accordance with and subject to the terms and conditions
described in this Subscription Agreement (the "Agreement"). I acknowledge that
the Corporation reserves the right, in its sole and absolute discretion, to
accept or reject this subscription and the subscription will not be binding
until accepted by the Corporation in writing.
2. PAYMENT. I agree to deliver to the Corporation immediately available
funds in the full amount due under this Agreement, by certified or cashier's
check payable to the "ASC 1999 Public Offering Escrow Account." The Corporation
shall promptly deposit the funds into the Escrow Account.
3. ISSUANCE OF SHARES. The Shares subscribed for herein will only be issued
upon acceptance by the Corporation as evidenced by the Corporation returning to
the investor an executed Agreement acknowledging acceptance and upon
satisfaction of the terms and conditions of the Escrow Agreement.
4. REPRESENTATION AND WARRANTIES.
A. I understand that the offering and sale of the Shares is registered
under (i) the Securities Act of 1933, as amended (the "Securities Act"), and
(ii) various States' Divisions of Securities in compliance with their
administration and enforcement of the respective States' Blue Sky Laws and
Regulations. In accordance therewith and in furtherance thereof, I represent and
warrant to and agree with the Corporation as follows:
[1] I am a resident of the State of ________________ as of the date of
this Agreement and I have no present intention of becoming a resident of any
other state or jurisdiction;
[2] I have received and have reviewed the Corporation's Prospectus
dated _________________, 1999;
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[3] I have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Corporation concerning
this investment, including the terms and conditions of this offering, and all
such questions have been answered to my full satisfaction;
5. INDEMNIFICATION. I agree to indemnify and hold harmless the Corporation,
the officers, directors, agents, employees and affiliates of any thereof against
any and all loss, liability, claim or damage, (including attorney's fees and
disbursements) together with all costs and expense whatsoever arising out of or
based upon any false representation or warranty or breach or failure by me to
comply with any representation, warranty, covenant or agreement made by me
herein or in any other document furnished by me of the foregoing in connection
with this transaction.
6. IRREVOCABILITY; BINDING EFFECT. I hereby acknowledge and agree that the
purchase hereunder is irrevocable, that I am not entitled to cancel, terminate
or revoke this Agreement or any agreements of the undersigned hereunder and that
this Agreement and such other agreements shall survive my death or disability
and shall be binding upon and inure to the benefit of the parties and their
heirs, executor, administrators, successors, legal representatives and assigns.
If the undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several, and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and are binding upon each such person and his heirs, executors, administrators,
successors, legal representatives and assigns.
7. MODIFICATION. Neither this Agreement not any provisions hereof shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
8. NOTICES. Any notice, demand or other communication which any party hereto
may require, or may elect to give to anyone interested hereunder shall be
sufficiently given if [a] deposited, postage prepaid, in a United States mail
box, stamped registered or certified mail, return receipt requested addressed to
such address as may be listed on the books of the Corporation, [b] delivered
personally at such address, or [c] delivered (in person, or by a facsimile
transmission, telex or similar telecommunications equipment) against receipt.
9. COUNTERPARTS. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts, and each of such counterparts
shall, for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof, and there are no
representations, covenants or other agreements except as stated or referred to
herein.
<PAGE>
11. SEVERABILITY. Each provision of the Agreement is intended to be
severable from every other provision, and the invalidity or illegality of any
portion hereof shall not affect the validity or legality of the remainder
hereof.
12. ASSIGNABILITY. This Agreement is not transferable or assignable by the
undersigned except as may be provided herein.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas as applied to residents of that
state executing contracts wholly to be performed in that state.
INDIVIDUAL(S) SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ____ day of
___________, 1999
<PAGE>
- -------------------------------------------
Signature of Purchaser
- -------------------------------------------
Name(s) of Purchaser (Please print or type)
- -------------------------------------------
Purchaser(s) Social Security Number
STATE OF ________________)
) SS
COUNTY OF _______________)
On the ________day of _____________, 1999, before me personally appeared
___________________________________________, known to me to be the individual(s)
described herein and who acknowledged the foregoing instruments and swore and
acknowledged that (he)(she)(they) executed the same as (his)(her)(their) free
act and deed.
--------------------------------
Notary Public, State of
--------
My commission expires:
--------------
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ENTITY SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ______ day of
_________________, 1999.
- ----------------------------
Entity
- ------------------------------
Signed By
Its:
----------------------------
- ------------------------------
Date
STATE OF _______________)
) SS
COUNTY OF ______________)
On the _____day of _______________, 1999, before me personally appeared
___________________________________________, known to me to be the individual
described herein and who acknowledged the foregoing instruments and swore and
acknowledged that (he)(she) executed the same as (his)(her) free act and deed.
--------------------------------
Notary Public, State of
--------
My commission expires:
--------
PURCHASE ACCEPTED FOR _________ SHARES:
ASSET SERVICING CORPORATION
By: ________________________________
Charles Smith, President
Date: _______________________________
MARK L. CLELAND
CERTIFIED PUBLIC
ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035
---------------------------------
To the Board of Directors and Stockholders
of Asset Servicing Corporation
I consent to incorporation by reference in the registration statement on Form
SB-1 of Asset Servicing Corporation (a Nevada corporation in the development
stage) of my report dated May 28, 1999, relating to the balance sheets of Asset
Servicing Corporation as of April 30, 1999 and December 31, 1998 and the related
statements of operations and accumulated deficit accumulated during the
development stage, stockholders' equity and accumulated deficit, and cash flows
for the four month period ending April 30, 1999, and the period May 27, 1998
(date of inception) to December 31, 1998.
/s/ Mark L. Cleland
---------------
Dallas, Texas
November 15, 1999
