As filed with the Securities and Exchange Commission on January 18, 2000
File No. 333-80429
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 4 to
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
- ------------------ -------------------------- ----------------
(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
(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
(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.
<TABLE>
<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 on July 10, 2000.
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 January 18, 2000
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PROSPECTUS SUMMARY
OUR COMPANY
We will be engaged in the leasing of manufacturing and transportation
equipment to businesses. We plan to focus on businesses who in our judgement are
financially sound but who 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
------- ---------
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.
We rely on our sole officer and director, and since we have no other employees,
if we lose his services, we will cease operations causing your investment to be
worthless.
We depend upon the continued services of our executive officer. Since we have no
other executive officers and no capital with which to attract others at this
time, the loss of his services could cause our company to go dormant or to close
down, which would cause the value of your common stock purchased in this
offering to become worthless.
Our sole officer has no experience in operating a leasing company, and this lack
of experience could cause our company to fail in its business
We are reliant on our sole officer to start and operate our company in an
industry in which he has no experience. At this time he has no commitments for
leases and may not be able to generate lease contracts in the future. If he is
unable to generate lease contracts, the value of your investment may decline or
become totally worthless.
If we sell only a small amount in this offering, we will only be able to fund
two or three leases which causes us to have a portfolio which is not diversified
and subject to material losses if one of those lease contracts defaults
Should we raise only a small amount in this offering and are able to fund only a
few leases, there is a risk from having a portfolio that is not diversified.
Each of those lease contracts makes up a large or material percent of our
portfolio and in the event of default or loss of one of those lease contracts,
the damage to the performance of our portfolio will be significant as a
percentage.
We have no operating history and have not proved we can operate successfully. If
we fail, your investment in our common stock will become worthless.
Having no operating history makes it difficult to evaluate our business
and forecast our future operating results. We have not proved that we can market
so as to originate leases and then service those leases satisfactorily to
implement our plan of operations. Our cash flow will be dependent on the
successful implementation of procedures to originate, underwrite and service
leases; if these procedures are not implemented properly, the business could
suffer from poor collections and servicing of its lease contracts, which will
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cause the value of your investment in our common stock to decline or become
worthless.
We may not be able to obtain additional financing to finance a fast rate of
growth, causing us to grow at a slower rate which will cause your investment to
be worth less than it would be if we have a fast rate of growth.
Successful implementation of our growth strategy will require us to
pledge our lease contracts as collateral to obtain additional financing to fund
more lease contracts. We currently have no arrangements for leveraging our
assets to obtain additional financing. See 'Description of Our Business'. If we
do not generate sufficient cash flow and lease contracts from operations and
leverage them, our growth will be limited unless we can obtain capital through
some other form such as 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 growth strategy which could cause the value of
your investment in our common stock to decline.
When we leverage our assets to obtain additional financing, we put our assets at
risk by putting them up as collateral to gain the additional financing and if we
default on that financing, we would lose our assets and your investment would
become worthless..
When we use our assets to leverage additional financing, we will be
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 cause the rate of return on our portfolio as it relates to
the interest we pay on our financing to decline causing a decline in the value
of your common stock, 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 will 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.
No public market has existed for our shares and an active trading market may not
develop or be sustained; if that happens, you may not be able to sell the shares
purchased in this offering.
There has been no public market for our common shares. We cannot assure
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.
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Our opinion from our independent certified public accountant has a paragraph
that states that we do not have sufficient capital to continue as a going
concern
A 'going concern opinion' which was expressed by our auditor means that
we do not have sufficient capital resources to operate for the next twelve
months in a manner similar to other companies in our industry. The risk to you
should you purchase common stock in this offering is that we do not raise
sufficient capital and do not continue as a going concern and the amount you can
sell your common stock purchased in this offering is lower than the amount you
paid for it.
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.
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 by July 10, 2000. .
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. Our offering will continue until
July 10, 2000. 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.
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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:
$50,000 $500,000 $1,000,000
Minimum Midpoint Maximum
- --------------------------------------------------------------------------------
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
---------- ---------- ----------
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.
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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
- --------------------------------------------------------------------------------
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
---------- ---------- ----------
Proceeds to company $ 32,872 $ 451,872 $ 908,872
We may raise an amount between the minimum and midpoint which would
allow us to purchase software and some corporate computer equipment, but use
most of the funds, $180,000 of the $225,000 estimated net proceeds, to fund
around 15 lease contracts. Our priority will be to put as many funds as possible
into leases to build our portfolio, asset base and cash flow and use as little
as possible for overhead.
Should we raise an amount between the midpoint and the maximum, our net
proceeds would be 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 our portfolio, asset base and cash
flow.
Discussion of the proceeds and the business is included in the following
section.
DESCRIPTION OF BUSINESS
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 in the business of originating, underwriting, documenting,
closing, funding, and servicing leases for manufacturing and transportation
equipment for businesses. We will solicit many kinds of businesses and depending
upon which businesses we process lease applications for will depend upon what
kind of equipment we will lease. Examples of the type of business we might lease
to and the type of property we might lease are:
o Bakery - donut making equipment
o Wholesale art gallery sales - mobile truck showroom
o Delivery company - delivery van or trailer
o Crane manufacturer - punch press and molding equipment
As we have recently been organized, there exists no historical
operating performance and no track record of types of property leased.
Leases:
- ------
Companies who market lease financing will generally achieve a higher
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rate of return than a bank. The higher rate of return is possible because
leasing companies are not regulated like banking institutions, allowing them to
offer lease financing to a greater pool of clients and offer terms that can be
structured as operating leases or capital leases. Offering operating leases are
one of the most significant advantages a leasing company has. The two types of
leases are capital leases and operating leases:
o Capital leases - a capital lease is similar to purchasing the equipment.
The lessee 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. From the lessee's standpoint, it may be easier to pass the
underwriting procedures of a leasing company than a bank, soley because of
the additional regulatory requirements of a bank.
o Operating leases - 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. Since the buyout is
greater, the payment is usually less so it is easier to qualify for an
operating lease. One of the biggest advantages of an operating lease is
that a company does not have to reflect the lease contract as a liability
on the company's balance sheet.
A significant selling point for lease financing is a lessee does not have to tie
up its credit line at its bank. We plan to make both capital and operating
leases.
Leasing activities:
- -------------------
There are two phases of the leasing business that we will be engaged in:
o As a full service leasing company - where we will originate, underwrite and
service lease contracts. We may also sell all or part of our portfolio of
lease contracts.
o As a lease brokering company - where we will originate lease contracts but
submit them to a third party funding source for underwriting approval,
funding and servicing. As a broker of a lease, we will be able to generate
fee income without any liability. The fee income can range anywhere from 1%
to 6% of the cost of the equipment leased. One of the benefits of brokering
leases is that we could originate leases continually and have them funded
so there is not a need for capital to fund lease contracts, only to market
for new contracts.
We plan to engage in both the originating and funding of leases as well
as the brokering of leases. Once we have located a lessee, we will determine
their credit worthiness, their equipment needs and the cost of the equipment,
determine whether we can buy the equipment at some discount and then make the
decision whether we will fund the lease ourselves or take fees and have a third
party financing company fund the lease. Either way, we will create revenue for
our company.
Brokering lease transactions permits us to service customers and
participate actively in the marketplace and industry without investing company
resources. In doing so, we will earn a fee from the eventual funding party of
the lease transaction which can range from two to eight percent. Such an
arrangement will benefit us in that it will serve the purpose of generating fee
based revenue while conserving our capital as we will not have to fund the lease
out of our own capital.
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Product offerings:
- -----------------
Our plan of operation for the twelve months following the commencement
of the proposed offering will be to market and originate both capital and
operating leases while instituting our set of procedures to fund and service the
leases and procedures to broker leases. Such procedures will include but shall
not be limited to documentary review and follow up, tickler systems for late pay
notification, and early resolution of late pay customers. Although these
procedures have been formulated, they have not been reduced to a formal set of
written procedures. 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 and funded by us being $12,000; however, we will broker any size
lease as we will not have to fund those leases.
Marketing /originating 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 our sole officer 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 months.
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
equipment is leased under an operating lease, say for two years, one is paying
for two years of depreciation in monthly payments plus interest. At the end of
the lease term, the equipment can either be sold to the lessee or someone else
for its value at that time.
Underwriting leases:
- --------------------
To assist in the appraisal of credit risk assessment and to ensure a
non-biased, non- discriminatory approach, we will employ industry accepted
credit scoring systems. A credit scoring system speeds and simplifies the credit
application/approval process.
Credit scores are statistical models located at the major credit
bureaus weighing and measuring many pieces of information. The net result is an
objective evaluation of a customers credit history and instills the likelihood
that the customer will pay as agreed. What goes into a scoring model is the
following:
o recent payment history
o the amount of credit a customer has access to and is using
o how long the customers credit history is
o whether a customer has been shopping for credit
o notification of collection and public record items such as liens and
bankruptcies.
A customer's history of the above factors determines the credit rating
applied to the customer. For example, a customer who has late payments but has
always paid without a default may be categorized as a C credit.
The credit scoring industry is dominated by two companies - Fair Isaac
and Equifax Beacon. Scoring by these two companies are numeric and referred to
as either Fair Isaac or Beacon score. For purposes of example, the Beacon score
will be presented to demonstrate credit tiers such as an A, B or C rated credit.
Such tiers indicate credit risk with A being the least risky and C being
moderate risk. D credits and lower will not be considered or underwritten by us
and therefore are not part of this narrative.
Beacon scoring ranges from less than 500 to over 800, increasing from
500 in increments of 10 up to the 800 mark. Statistically, only 1% of all
credits will score an 800. We define all credits scoring below 500 as
undesirable and will not consider them as customers. We define the following
credit ratings:
o all credits scoring between 500 and 600 on the Beacon system are given a
"C" credit rating. Statistically, based on historical information, 49% of
all credits will score higher than 500.
o all credits scoring between 600 and 700 on the Beacon system are given a
"B" credit rating. Statistically, based on historical information, 38% of
all credits will score higher than 600.
o all credits scoring between 700 and 800 on the Beacon system are given an
"A" credit rating. Statistically, based on historical information, 8% of
all credits will score higher than 700.
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We will utilize an industry standardized outside validation of credit
appraisal. For definition purposes, the following will apply:
o B credit
o Proven history of debt repayment
o Tenured credit history o A minimum of three personal credit references
o No prior history of defaults on debt repayment.
o C credit
o Proven credit repayment history with an occasional late payment in that
history o A minimum of three year credit history of full payment o No
default on debt obligations in the last five years.
Collateral requirements for leases - The collateral for a lease will be
the equipment leased and the credit of the company leasing the equipment. In
addition, we will generally require a personal guarantee of the principals of
the company leasing the equipment. All collateral equipment will be physically
inspected by us prior to consummating the lease, and all necessary UCC forms
will be filed with the state in order to perfect our lien on the leased
equipment. We will generally lease new equipment but there is a possibility we
lease a used piece of equipment - for example, refurbished bakery equipment has
a life similar to that of new bakery equipment, the only difference being the
production volume of the equipment.
Servicing the lease contracts:
- -----------------------------
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 we 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 who we sell our portfolio to, it is then
categorized as "seasoned", which 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 lessee in the underwriting phase of the leasing process.
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Once we have seasoned lease contracts, we may keep the lease contracts
in our own portfolio or sell them to someone else. We 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.
Potential customers:
- -------------------
Consolidation in the financial services industry allows for low
barriers of entry. 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.
We will lease to businesses that at a minimum 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 initially 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 Dallas/Fort
Worth Metroplex is our market area because that is where our officer has most of
his contacts and where it will be most cost efficient to solicit lessees for
lease contracts.
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 Dallas Morning News article
published on Friday, December 17, 1999 titled "DFW Leads Largest Metro Areas in
Growth", the DFW metroplex is the ninth largest metropolitan area in the
country, with more than 4.8 million residents in 1998., and the Dallas/Fort
Worth Metroplex was identified as the fastest growing area in the country from
1990 to 1998. At the current rate of growth, the Metroplex area will have 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 fund
lease contracts 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. 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.
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.
Leverage plans:
- --------------
After securing lease contracts, we will season the leases and then make
a decision whether or not to sell our portfolio. After we have used all the
funds available for leasing, we will pursue securing 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. The amount of additional financing will be based
upon the amount of collateral we are able to pledge, in our case, the amount of
lease contracts and cash we can pledge as collateral to obtain that additional
capital. A line of credit is a loan facility benefitting us in that a lender
will extend credit to us based upon the collateral we pledge to secure that
credit; in our case, we will pledge our corporate assets and specifically, our
lease contract portfolio.
13
<PAGE>
The process of leveraging our lease portfolio will include utilizing
monies raised in this offering and our portfolio of lease contracts, taking
those leases to a bank, and securing a collateralized line of credit. The
collateral would be the existing funded leases and our other assets through a
general corporate guarantee. Typically, the bank would lend a percentage of the
assets collateralizing the line of credit; our goal is to achieve at least a
seventy-five percent (75%) leverage. Consequently, our goal will be to initially
leverage our assets to create 75% more capital which in turn will be able to be
used to fund more leases. As we use up the funds from the line of credit to fund
more leases, we will then take the new lease contracts and pledge them to secure
an increased line of credit, used again to fund more lease contracts. This is a
cycle which can continue indefinitely, as long as the lease contracts continue
to be good, performing leases.
We anticipate being able to secure a line of credit when we have used
up our funds raised in this offering to fund lease contracts. However, when we
ledge our assets - our cash and our lease contracts - as collateral, a default
in the repayment terms of our line of credit could cause the lender to foreclose
on its collateral - our assets - and leave us with no assets and no cash flow.
Should this happen we would be put out of business.
If we are unable to secure a loan or line of credit with a bank or
other institution, we will continue to broker leases and service our current
portfolio while looking for some alternative capital sources.
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.
Wholesale purchases:
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.
Purchasing equipment at wholesale prices can be done in a number of ways:
-------------------------------------------------------------------------
o When dealing with new equipment, we may be able to get set up as a dealer
for certain types of equipment, giving us the ability to purchase that
equipment at dealer/wholesale prices and then lease it out based upon
retail prices
o Having the cash, we can negotiate to bring down the cost we pay for the
equipment but lease it out based upon the retail price
o If we are purchasing used or refurbished equipment, we should be able to
negotiate the price we pay for the equipment
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.
14
<PAGE>
If we are unable to purchase at wholesale prices, it will cause our
yield to be lower than if we were able to purchase at wholesale prices. We will
still be able to make leases and pursue our growth plan; however, if we are able
to purchase at wholesale prices, our yield will be greater and our rate of
growth will be faster.
Additional information:
- ----------------------
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.
PLAN OF OPERATIONS
Following is our plan of operations based upon the amount of capital we
raise in this offering. We will be engaged in leasing activities as a full
service leasing company and as a lease broker. See 'Description of Business". In
order to operate as a full service lease broker, we have to have capital to fund
the leases that we originate and underwrite. In order to operate as a lease
broker, we need enough capital for general overhead but not for funding leases
since we are originating leases but using a third party to underwrite and fund
those leases.
Assuming we raise the minimum amount in this offering, we will be able
to finance approximately two or three lease contracts with the $32,872 net
proceeds to our company. Although we will not have to raise any additional cash
in the next six months if we only raise the minimum in this offering, our growth
will be slow since we will only be able to fund two or three lease contracts,
and will rely on our lease brokering business to create cash flow while we seek
additional capital or a line of credit. We will not pay salaries until such time
as we are generating revenue from contracts and/or fees; our overhead will be
minimal because we will be using the resources of our President. We will then
pursue leveraging our 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. We believe our ability to
take our assets - lease contracts and cash - and pledge them as collateral on a
working capital line of credit will continue over and over again as we build up
our portfolio of lease contracts, as long as we are successful in our activities
and loan financing is available to us.
15
<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 than we would have if we raised the
minimum offering amount. 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 use most
of the funds raised in this offering to fund lease contracts. With the funds
raised at this midpoint in the offering, we will have sufficient funds to fund
lease contracts and broker leases so that we will not have to raise additional
funds in the next six months. After we have used the funds raised in this
offering to fund lease contracts, we will then use those lease contracts, our
cash and other assets we have to leverage our financial position by pledging
them against a working capital line of credit to provide us with additional
capital to fund more lease contracts.
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 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). If we raise the maximum amount in this offering, we will
not need to raise additional funds in the next six months, and be able to create
a portfolio diversified enough where collection problems with any one contract
will not cause a material problem with our company as a whole.
We believe the key to building a good portfolio is marketing and
obtaining good lease contracts and after the infrastructure is in place, to
obtain additional financing in order to continue funding lease contracts to
sustain our growth.
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.
16
<PAGE>
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.
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 spend full time on the activities of the
company since 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 is prepared to devote
himself full time to the success of the company's plan of business.
17
<PAGE>
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.
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.
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
- --------------------------------------------------------------------------------
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%
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:
18
<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>
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
19
<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.
20
<PAGE>
This represents an immediate increase in net tangible book value per common
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>
<CAPTION>
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.
21
<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.
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.
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 our 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.
22
<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 OPERATIONS
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 5
Plan of Distribution 5
Use of Proceeds 6
Description of Business 7
Plan of Operations 15
Year 2000 Issue 16
Description of Property 17
Management of the Company 17
Director and Executive Compensation 18
Director's and Officers' Indemnification and Insurance 18
Principal Shareholders 18
Interest of Management and Others in Certain Transactions 18
Summary Financial Data 19
Dividend Policy 19
Capitalization 19
Dilution 20
Description of Common Stock 21
Legal Proceedings 22
Certain Federal Income Tax Considerations 22
Legal Matters 22
Experts 22
Transfer Agent 22
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
-------- ---------
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.
<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.
<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, being duly authorized, in the
City of Rockwall, State of Texas, on the 13th day of January, 2000.
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 January 13, 2000
ASSET SERVICING CORPORATION
SUBSCRIPTION AGREEMENT
January __, 2000
ASSET SERVICING CORPORATION
709 B West Rusk, Suite 580
Rockwall, Texas 75087
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 2000 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 _____________, 2000;
<PAGE>
[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. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
<PAGE>
11. ASSIGNABILITY. This Agreement is not transferable or assignable by the
undersigned except as may be provided herein.
12. 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
___________, 2000.
- ---------------------------------------------
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 _____________, 2000, 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: _____________
<PAGE>
ENTITY SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ______ day of
_________________, 2000.
- ------------------------------
Entity
- ------------------------------
Signed By
Its:
--------------------------
- ------------------------------
Date
STATE OF _______________)
) SS
COUNTY OF ______________)
On the _____day of _______________, 2000, 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
January 4, 2000
