U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB AMENDMENT NO.1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
BF Acquisition Group IV, Inc.
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(Name of Small Business Issuer in its charter)
Florida 65-0913586
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(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
319 Clematis Street, Suite 812, West Palm Beach, Florida 33401
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(Address of principal executive offices) (Zip
Code)
Issuer's telephone number, (561) 655-0665
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
---------------------------------
(Title of class)
(Title of class)
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
THE COMPANY DOES NOT RECOMMEND INVESTMENT BY ANY INDIVIDUAL OR
ENTITY THAT CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
<PAGE> 2
INFORMATION REQUIRED IN REGISTRATION STATEMENT
DESCRIPTION OF BUSINESS.
GENERAL
BF Acquisition Group IV, Inc. (the "Company"), was incorporated under
the laws of the State of Florida on April 15, 1999 and is in its early
developmental and promotional stages. The Company is a "shell" company
conducting virtually no business operation, other than its efforts to seek
merger partners or acquisition candidates. The Company does not engage in any
substantive commercial business or other business operations. The Company has
no full time employees and owns no real estate.
The Company is a corporate vehicle created to seek to effect a merger,
exchange of capital stock, asset acquisition or other similar business
combination (a "Business Combination") with an operating or development stage
business (the "Target Business") which desires to employ the Company to become
a reporting corporation under the Securities Exchange Act of 1934 ("Exchange
Act"). Pursuant to a resolution of the Company's board of directors dated
April 15, 1999, the Company elected to register the Company's common stock,
par value $0.001 (the "Common Stock") pursuant to this Form 10-SB registration
statement on a voluntary basis in order to create a reporting "shell" company.
The Company has a shareholder base of approximately eight shareholders and
785,000 shares of Common Stock outstanding, all of which are restricted
pursuant to Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"). See "Description of Securities". Pursuant to resolution
of the Company's board of directors, no Business Combination may occur prior
to the Company obtaining the requisite audited financial statements required
pursuant to Form 8-K (or its equivalent) promulgated under the Exchange Act.
Upon the effectiveness of this registration statement, the Company
intends to seek potential business opportunities and effectuate a Business
Combination with a Target Business with significant growth potential which,
in the opinion of management, could provide a profit to the Company and its
shareholders. The Company intends to seek opportunities demonstrating the
potential of long term growth as opposed to short term earnings. The
Company's efforts in identifying a prospective Target Business are expected
to emphasize businesses primarily located in the United States; however, the
Company reserves the right to acquire a Target Business located primarily
elsewhere. While the Company may, under certain circumstances, seek to
effect Business Combinations with more than one Target Business, as a result of
its limited resources, the Company will, in all likelihood, have the ability to
effect only a single Business Combination. The Company may effect a Business
Combination with a Target Business which may be financially unstable or in its
early stages of development or growth. The Company will not restrict its
search to any specific business, industry or geographical location, and the
Company may participate in a business venture of virtually any kind or nature.
Present management of the Company may become involved in management of the
Target Business and/or may hire qualified but as yet unidentified
individuals to manage such Target Business. Presently, the Company has no
plan, proposal, agreement,
<PAGE> 3
understanding or arrangement to acquire or merge with any specific business
or company, and the Company has not identified any specific business or
company for investigation and evaluation. The Company's officers and
directors have previously been involved in transactions involving mergers
between an established company and a shell corporation, and they have
numerous contacts within the field of corporate finance (See "Directors,
Executive Officers, Promoters and Control Persons - Other Blank Check
Activities"). As a result, they have had preliminary contacts with
representatives of numerous companies concerning the general possibility of a
merger or acquisition with a shell company. However, none of these
preliminary contacts or discussions involved the possibility of a Business
Combination with the Company.
The discussion of the proposed business under this caption and
throughout this registration statement is purposefully general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities.
RISK FACTORS THAT AFFECT THE COMPANY'S BUSINESS
The following risk factors are inherent to and affect the Company's
plan of business. The number and nature of all possible risks related to the
Company cannot be ascertained. Many kinds of unanticipated events and
circumstances may preclude the achievement of the Company's stated
objectives, preclude positive operating results and/or result in a total
loss of investment.
Forward Looking Statements.
This registration statement contains forward-looking statements. The
words "anticipate," "believe," "expect," "plan," "intend," "estimate,"
"project," "will," "could," "may" and similar expressions are intended to
identify forward-looking statements. Such statements reflect the Company's
current views with respect to future events and financial performance and
involve risks and uncertainties, including without limitation the risks
described in this section "Risk Factors that Affect the Company's Business."
Should one or more of these risks or uncertainties occur, or should
underlying assumptions prove incorrect, actual results may vary materially
and adversely from those anticipated, believed, expected, planned, intended,
estimated, projected or otherwise indicated. The following risk factors
should be carefully considered, in addition to the other information contained
in this registration statement.
Recently Organized Company; No Operating History; Limited Resources; No
Present Source of Revenues.
The Company, which was incorporated on April 15, 1999, is a development
stage company and has not, as of the date hereof, attempted to seek a Business
Combination. The Company has no operating history and, accordingly, there is
only a limited basis upon which to evaluate the Company's prospects for
achieving its intended business objectives.
Shareholders must rely primarily on the Company's officers' and
directors' ability to
<PAGE> 4
attempt to select a Target Business which will be profitable. To date, the
Company's efforts have been limited primarily to organizational activities.
The Company has limited resources and has had no revenues to date. In addition,
the Company will not achieve any revenues until the consummation of a Business
Combination, if at all. Moreover, there can be no assurances that any Target
Business, at the time of the Company's consummation of a Business
Combination, or at any time thereafter, will derive any material revenues
from its operations or operate on a profitablebasis. See "Description of
Business - Shell Corporation".
Penny Stock Regulation.
The Company's securities, if and when available for trading, could be
subject to the SEC's rules that regulate broker-dealer practices in connection
with transactions in "penny stocks". Generally, penny stocks are equity
securities with a price of less than $5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system,
provided that current price and volume information with respect to transactions
in such securities is provided by the exchange or system). The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer
also must provide the customer with bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
such rules the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. If the
Company's Common Stock becomes subject to the penny stock rules, shareholders
may find it more difficult to sell their shares. See "Description of Business
- - Shell Corporation - Penny Stock Regulations - State Blue Sky Restrictions -
Restrictions on Marketability" and Part II "Market for Common Equity and
Related Stockholder Matters - Market Information".
No Assurance of Public Market.
No public trading market for the Common Stock exists. There can be no
assurances that a regular trading market will develop for the shares of
Common Stock or that, if developed, any such market will be sustained.
Trading of the Common Stock will likely be conducted through what is
customarily known as the Over-The-Counter Bulletin Board. Any market for the
Common Stock which may result will likely be less well developed than if the
Common Stock were traded in NASDAQ or an exchange. See "Description of
Business - Shell Corporation - Penny Stock Regulations - State Blue Sky
Restrictions - Restrictions on Marketability" and Part II "Market for
Common Equity and Related Stockholder Matters - Market Information".
Dependence upon Key Personnel; No Requirement to Commit Full Time to Affairs
of the Company.
<PAGE> 5
The ability of the Company to successfully effect a Business
Combination will be largely dependent upon the efforts of its officers and
directors. It is anticipated that the Company's officers and directors are
the only persons whose activities will be material to the operations of the
Company pending the Company's identification and consummation of a Business
Combination and such individuals are the only persons who have been
instrumental in arranging the capitalization of the Company to date. The Company
has not entered into employment agreements with its officers and directors.
The loss of the services of such key personnel before suitable replacements
are obtained could have a material adverse effect on the Company's capacity to
successfully achieve its business objectives. None of the Company's key
personnel are required to commit their full time to the affairs of the Company
and, accordingly, such personnel may have conflicts of interest in
allocating management time among various business activities. It is
anticipated that the Company's officers and directors will devote
approximately 5% of their time to the affairs of the Company. Additionally,
the success of the Company may be dependent upon its ability to retain
additional personnel with specific knowledge or skills necessary to assist
the Company in evaluating a potential Business Combination. There can be no
assurances that the Company will be able to retain such necessary additional
personnel. See "Directors and Executive Officers, Promoters and Control
Persons".
Unspecified Industry and Target Business; Unascertainable Risks.
To date, the Company has not selected any particular industry or any
Target Business in which to concentrate its Business Combination efforts.
Accordingly, there is presently no current basis for the Company to evaluate
the possible merits or risks of the Target Business or the particular industry
in which the Company may ultimately operate. To the extent the Company
effects a Business Combination with a financially unstable company
or an entity in its early stage of development or growth (including entities
without established records of sales or earnings), the Company will become
subject to numerous risks inherent in the business operations of financially
unstable and early stage or potential emerging growth companies. In addition,
to the extent that the Company effects a Business Combination with an entity in
an industry characterized by a high level of risk, the Company will become
subject to the currently unascertainable risk of that industry. An extremely
high level of risk frequently characterizes certain industries which
experience rapid growth. Although management will endeavor to evaluate the risks
inherent in a particular industry or Target Business, there can be no assurances
that the Company will properly ascertain or assess all such significant risk
factors. Accordingly, management could identify and acquire a Target
Business which could fail, resulting in the total loss of a shareholder's
investment in the Company's Common Stock. See "Description of Business -
Shell Corporation- Unspecified Industry and Target Business.
Probable Lack of Business Diversification.
While the Company may, under certain circumstances, seek to effect
Business Combinations with more than one Target Business, it is likely that
the Company will have the ability to effect only a single Business Combination.
Accordingly, the prospects for the Company's success will be entirely
dependent upon the future performance of a single business. Unlike certain
entities
<PAGE> 6
which have the resources to consummate several Business Combinations of entities
operating in multiple industries or multiple areas of a single industry, it is
highly likely that the Company will not have the resources to diversify its
operations or benefit from the possible spreading of risks or offsetting of
losses. In addition, by consummating a Business Combination with only a
single entity, the prospects for the Company's success may become dependent upon
the development or market acceptance of a single or limited number of
products, processes or services. Consequently, there can be no assurances
that the Target Business will prove to be commercially viable. See "Description
of Business - Shell Corporation- Probable Lack of Business Diversification".
Uncertain Structure of Business Combination; Probable Change in Control and
Management.
The structure of a Business Combination with a Target Business, which
may take the form of, among other structures, a merger, exchange of capital
stock or asset acquisition, cannot be presently determined since neither the
Company's officers or directors nor any of their affiliates have had any
preliminary contacts, discussions or understandings with representatives of any
potential Target Business regarding the possibility of a Business
Combination. The Company will most likely issue additional shares of Common
Stock, in addition to preferred stock, as part of the consideration for the
Business Combination and may incur debt, or, engage in a Business Combination
involving any combination thereof. The successful completion of such a
transaction will most likely result in a change in control of the Company.
This could result from the issuance of a large percentage of the Company's
authorized securities or the sale by the present shareholders of all or a
portion of their stock or a combination thereof in connection with a Business
Combination. Any change in control will most likely also result in the
resignation or removal of the Company's present officers and directors.
Accordingly, investors will be relying, in some significant respects, on the
abilities of the management and directors of the Target Business who are
unidentifiable as of the date hereof. If there is a change in management in
connection with a Business Combination, which is likely to occur, no assurances
can be given as to the experience or qualifications of the persons who replace
present management respecting either the operation of the Company's activities
or the operation of the business, assets or property being acquired. See
"Description of Business- Shell Corporation - Limited Ability to Evaluate
Target Business'Management".
Limited Ability to Evaluate Target Business' Management; No Independent
Analysis or Audits to Be Performed.
While the Company's ability to successfully effect a Business
Combination will be dependent upon certain of its key personnel, the future role
of such personnel in the Target Business cannot presently be stated with any
certainty. It is unlikely that any of the Company's key personnel will remain
associated in any operational capacity with the Company following a Business
Combination. Moreover, there can be no assurances that such personnel will
have significant experience or knowledge relating to the operations of the
particular Target Business. Furthermore, although the Company intends to closely
scrutinize the management of a prospective Target Business in connection with
evaluating the desirability of effecting a Business Combination, there can be
no assurances that the Company's assessment of such management will prove to be
correct, especially
<PAGE> 7
in light of the possible inexperience of current key personnel of the Company in
evaluating certain types of businesses. In addition, there can be no
assurances that such future management will have the necessary skills,
qualifications or abilities to manage a public company. The Company may also
seek to recruit additional managers to supplement the incumbent management of
the Target Business. There can be no assurances that the Company will have the
ability to recruit such additional managers, or that such additional
managers will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management. Additionally, there can be no assurances
that the Company will hire an independent company to perform any analysis or
audit of a potential Target Business or perform any type of background check on
any of the management of such Target Business. See "Description of Business -
Shell Corporation - Limited Ability to Evaluate Target Business' Management".
Opportunity for Shareholder Evaluation or Approval of Business
Combinations.
Non-affiliate shareholders of the Company will, in all likelihood,
neither receive nor otherwise have the opportunity to evaluate any financial
or other information which will be made available to the Company in connection
with selecting a potential Business Combination until after the Company has
entered into an agreement to effectuate a Business Combination. Such agreement
to effectuate a Business Combination, however, will be subject to
shareholder approval pursuant to applicable law. As a result, non-affiliate
shareholders of the Company will be almost entirely dependent on the
judgment and experience of management in connection with the selection and
ultimate consummation of a Business Combination. In addition, under Florida law,
the form of Business Combination could impact upon the availability of
dissenters' rights (i.e., the right to receive fair payment with respect to
the Company's Common Stock) to shareholders disapproving the proposed
Business Combination. See "Description of Business - Shell Corporation -
Opportunity for Shareholder Evaluation or Approval of Business Combinations".
Possible Need for Additional Financing.
The Company has had no revenues to date and it will not receive any
revenues until, at the earliest, the consummation of a Business Combination.
Although the Company believes that it will have sufficient capital to effect a
Business Combination, inasmuch as the Company has not yet identified any
prospective Target Business candidates, the Company cannot ascertain with any
degree of certainty the capital requirements for any particular transaction.
The Company may be required to seek additional financing, and there can be no
assurances that such financing would be available on acceptable terms, if at
all. In the event no Business Combination is identified, negotiations are
incomplete or no Business Combination has been consummated, and all of the
Company's cash resources have been expended, the Company currently has no
plans or arrangements with respect to the possible acquisition of additional
financing which may be required to continue the operations of the Company. To
the extent that such additional financing proves to be unavailable when needed
to consummate a particular Business Combination, the Company would, in all
likelihood, be compelled to restructure the transaction or abandon that
particular Business Combination and seek an alternative Target Business
candidate. See "Description of Business -
<PAGE> 8
Shell Corporation - Selection of a Target Business and Structuring of a
Business Combination".
In the event of a consummation of a Business Combination, the
Company cannot ascertain with any degree of certainty the capital
requirements for any particular Target Business inasmuch as the Company has
not yet identified any prospective Target Business candidates. To the extent the
Business Combination results in the Target Business requiring additional
financing, such additional financing (which, among other forms, could be derived
from the public or private offering of securities or from the acquisition of
debt through conventional bank financing), may not be available, due to, among
other things, the Target Business not having sufficient (i) credit or
operating history; (ii) income stream; (iii) profit level; (iv) asset base
eligible to be collateralized; or (v) market for its securities. See
"Description of Business - Shell Corporation - Selection of a Target Business
and Structuring of a Business Combination".
As no specific Business Combination or industry has been targeted,
it is not possible to predict the specific reasons why conventional private or
public financing or conventional bank financing might not become available.
There can be no assurances that, in the event of a consummation of a Business
Combination, sufficient financing to fund the operations or growth of the Target
Business will be available upon terms satisfactory to the Company, nor can
there be any assurances that financing would be available at all. See
"Description of Business - Shell Corporation - Selection of a Target Business
and Structuring of a Business Combination".
Authorization of Additional Securities.
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, par value $.001 per share. The Company will,
in all likelihood, issue a substantial number of additional shares of Common
Stock in connection with a Business Combination. To the extent that
additional shares of Common Stock are issued, dilution to the interests of the
Company's shareholders will occur. Additionally, if a substantial number of
shares of Common Stock are issued in connection with a Business Combination, a
change in control of the Company is likely to occur which may impact, among
other things, the utilization of net operating losses, if any. Furthermore,
the issuance of a substantial number of shares of Common Stock may cause
dilution and adversely affect prevailing market prices, if any, for the Common
Stock, and could impair the Company's ability to raise additional capital
through the sale of its equity securities. See "Description of Business -
Shell Corporation - Selection of a Target Business and Structuring of a Business
Combination" and "Description of Securities".
Tax Considerations.
As a general rule, federal and state tax laws and regulations have a
significant impact upon the structuring of Business Combinations. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure the Business Combination so as to
achieve the most favorable tax treatment to the Company, the Target Business
and their respective shareholders. There can be no assurances, however, that the
Internal Revenue Service (the
<PAGE> 9
"IRS") or appropriate state tax authorities will ultimately assent to the
Company's tax treatment of a consummated Business Combination. To the extent the
IRS or state tax authorities ultimately prevail in recharacterizing the tax
treatment of a Business Combination, there may be adverse tax consequences to
the Company, the Target Business and their respective shareholders. See
"Description of Business - Shell Corporation - Selection of a Target
Business and Structuring of a Business Combination".
Dependence upon Outside Advisors.
To supplement the business experience of its officers and directors, the
Company may be required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such advisors
will be made by the Company's officers without any input from shareholders.
Furthermore, it is anticipated that such persons may be engaged on an "as
needed" basis without a continuing fiduciary or other obligation to the
Company. In the event the officers of the Company consider it necessary to hire
outside advisors, they may elect to hire persons who are affiliates, if those
affiliates are able to provide the required services. See "Description of
Business - Shell Corporation - Selection of a Target Business and Structuring of
a Business Combination".
Conflicts of Interest.
None of the Company's key personnel are required to commit their full
time to the affairs of the Company and, accordingly, such personnel may have
conflicts of interest in allocating management time among various business
activities. Certain of these key personnel may in the future become affiliated
with entities, including other "blank check" companies, engaged in business
activities similar to those intended to be conducted by the Company. Certain
activities which may be performed by such individuals in connection with their
other business affiliations may be deemed competitive with the business of the
Company.
In the course of their other business activities, including private
investment activities, the Company's officers and directors may become aware
of investment and business opportunities which may be appropriate for
presentation to the Company as well as the other entities with which they are
affiliated. Such persons may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. In general,
officers and directors of corporations incorporated under the laws of the State
of Florida are required to present certain business opportunities to such
corporations. Accordingly, as a result of multiple business affiliations,
the Company's officers and directors may have similar legal obligations
relating to presenting certain business opportunities to the various entities
upon which they serve as directors. In addition, conflicts of interest may arise
in connection with evaluations of a particular business opportunity by the
board of directors with respect to the foregoing criteria. There can be no
assurances that any of the foregoing conflicts will be resolved in favor of
the Company. See "Description of Business - Shell Corporation -'Selection of a
Target Business and Structuring of a Business Combination' and 'Conflicts of
Interest'".
<PAGE> 10
Although it is not anticipated, it is possible that the Company's
principal shareholders may actively negotiate or otherwise consent to the
purchase of a portion of their common stock as a condition to, or in
connection with, a proposed merger or acquisition transaction. In this process,
the Company's principal shareholders may consider their own personal pecuniary
benefit rather than the best interests of other Company shareholders, and
the other Company shareholders are not expected to be afforded the opportunity
to approve or consent to any particular stock buy-out transaction. See
"Description of Business - Shell Corporation - 'Conflicts of Interest; and
'Selection of a Target Business and Structuring of a Business Combination'".
No Disinterested Members of the Board of Directors.
All members of the Company's current board of directors are significants
shareholders of the Company and own, in the aggregate, approximately 89.17%
of the Company's outstanding Common Stock. The board of directors currently
has no formal committees, such as a compensation committee or an audit
committee, and most likely will not form such committes until some time after
the consummation of a Business Combination. See "Security Ownership of Certain
Beneficial Owners and Management".
Intense Competition From Other Blank Check Companies.
The Company expects to encounter intense competition from other entities
having a business objective similar to that of the Company. Many of these
entities, including venture capital partnerships and corporations, blind
pool companies, large industrial and financial institiutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifyin and effecting Business
Combinations directly or through affiliates. Many of these competitors
possess greater financial, marketing, technical, personnel and other resources
than the Company and there can be no assurances that the Company will have the
ability to compete successfully. The Company's financial resources will be
relatively limited when contrasted with those of many of its competitors. This
inherent competitive limitation may compel the Company to select certain less
attractive Business Combination prospects. See "Description of Business-
Intense Competition from Other Blank Check Companies".
Uncertainty of Competitive Environment of Target Business.
In the event that the Company succeeds in effecting a Business Combination,
the Company will, in all likelihood, become subject to intense competition from
competitors of the Target Business. In particlar, certain industries which
experience rapid growth frequently attract an increasingly larger number of
competitors, including competitors with increasingly greater financial,
marketing, technical and other resources than the initial competitors in the
industry. The degree of competition characterizing the industry of any
prospective Target Business cannot presently be ascertained. There can be no
assurances that, subsequent to a Business Combination, the Company will have the
resources to compete effectively, especially to the extent that the Target
Business is in a high-growth industry. See "Description of Business -
Uncertainty of Competitive Environment of
<PAGE> 11
Target Business".
Management's Discussion and Analysis or Plan of Operation.
The Company is a development stage entity formed in April 1999 to
serve as a vehicle to effect a Business Combination with a Target Business
which the Company believes has significant growth potential. The Company has
neither engaged in any operations nor generated any revenues to date. Its entire
activity since its inception has been to prepare for its proposed plan of
business.
Most of the Company's working capital needs will be attributable to the
identification of a suitable Target Business, and thereafter to effectuate a
Business Combination with such Target Business. Although no assurances can
be made, the Company believes it can satisfy its cash requirements until a
Business Combination is consummated. However, due to the possible indefinite
period of time to consummate a Business Combination and the nature and cost of
the Company's expenses related to the Company's search and analysis of a
Business Combination, there can be no assurances that until a Business
Combination is consummated, the Company cash requirements will be sufficient.
The Company believes, however, that the Company's has sufficient cash to meet
its cash requirements for the next twelve months. See "Management's Discussion
and Analysis or Plan of Operation".
Certain Provisions of Company's Articles of Incorporation; Indemnification of
Officers and Directors and Election out of Anti-takeover Statutes.
The Company's Articles of Incorporation provide, among other things,
that (i) officers and directors of the Company will be indemnified to the
fullest extent permitted under Florida law; and (ii) the Company has elected not
to be governed by Sections 607.0901 and 607.0902 of the Florida Business
Corporation Act and other laws relating thereto (the "Anti-Takeover Sections").
Because of the Company's election not to be governed by the Anti-
Takeover Sections, the Company will not be subject to the provisions of
Florida law which provide that certain transactions between the Company and an
"interested shareholder" or any affiliate of the "interested shareholder" be
approved by two-thirds of the Company's outstanding shares. An "interested
shareholder" as defined in Section 607.0901 of the Florida Business
Corporation Act is any person who is the beneficial owner of more than 10% of
the outstanding shares of the company who is entitled to vote generally in the
election of directors. In addition, because of the Company's election not to
be governed by the Anti-Takeover Sections, the Company will not have the alleged
assistance against unfriendly take-over attempts purportedly provided by that
statute. See "Description of Business - 'Selection of a Target Business and
Structuring of a Business Combination' and 'Conflicts of Interest'".
Dividends Unlikely.
The Company has not paid any dividends on its Common Stock to date and does
not presently intend to pay cash dividends prior to the consummation of a
Business Combination. See "Description of Securities - Dividends".
Voting Control of Management.
Management of the Company owns approximately 89.17% of the issued and
outstanding shares of the Company's common stock. The Company's Articles of
Incorporation do not provide for cumulative voting for the election of
directors. Consequently, management of the Company is able to elect all of the
Company's directors, appoint officers and otherwise control the Company's
affairs and operations. See "Security Ownership of Certain Beneficial Owners
and Management" and "Description of Securities".
Loss from Analysis and Investigation of Business Prospects.
The Company will be required, in all probability, to expend funds
in the preliminary internal investigation or examination of assets, business
or properties, whether or not an investment occurs. Additionally, the Company
may expend additional funds if it hires an independent company to perform an
analysis or audit of a potential Target Business or perform background checks
on the management of such Target Business. To the extent management
determines that the potential investment has little or no value, the monies
spent on internal investigations and independent company consultation
services will be a total loss.
Shares Eligible for Future Sale.
Presently, all of the 785,000 shares of Common Stock issued and
outstanding are "restricted securities", as that term is defined under Rule
144 ("Rule 144"), promulgated under the Securities Act. So long as all of the
conditions of Rule 144 are met; in (i) April, 2000, 700,000 shares; (ii) May,
2000, 35,000 shares; and (iii) June/July, 2000, 50,000 shares of Common Stock
will be eligible for sale under Rule 144, as currently in effect. No
assurances are made; however, that Rule 144 will be available at any time for
any shareholder's shares. No prediction can be made as to the effect, if
any, that sales of "restricted" shares of Common Stock or the availability of
such shares for sale will have on the market prices prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock may
be sold in the public market may adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities. See "Security Ownership of Certain Beneficial
Owners and Management" and Part II "Market For Common Equity and Related
Stockholder Matters".
"SHELL" CORPORATION
Background.
Since the Company conducts virtually no business operations, other than
its efforts to effectuate a Business Combination, the Company can be
characterized as a "shell" corporation. As
<PAGE> 13
a shell corporation, the Company faces special risks inherent in the
investigation, acquisition, or involvement in a new business opportunity.
Further, as a new or "start-up" company, the Company faces all of the
unforeseen costs, expenses, problems, and difficulties related to new
companies. The Company is dependent upon its officers and directors and their
efforts to effectuate a Business Combination. Accordingly, the Company's
shareholders will not have an opportunity to evaluate the specific merits or
risks of any one or more Business Combinations and will have no control over
the decision making relating to such. In the event the Company loses the
services of any of these officers or directors, the Company could be adversely
affected.
Due to the limited capital available to the Company, the consummation
of a Business Combination will likely involve the acquisition of, or merger or
consolidation with, a company that does not need substantial additional
capital but which desires to establish a public trading market for its shares,
while avoiding what it might deem to be the adverse consequences of
undertaking a public offering itself, such as the time delays and significant
expenses incurred to comply with the various federal and state securities laws
that regulate initial public offerings. A Target Business might desire, among
other reasons, to create a public market for their shares in order to enhance
liquidity for current shareholders, facilitate raising capital through the
public sale of securities of which a prior existence of a public market for its
securities exists, and/or acquire additional assets through the issuance of
securities rather than for cash.
No trading market in the Company's securities presently exists. In light
of the restrictions concerning shell companies contained in many state blue
sky laws and regulations, it is not likely that a trading market will be created
in the Company's securities until such time as a Business Combination occurs
with a Target Business. No assurances are given that subsequent to such a
Business Combination that a trading market in the Company's securities will
develop. Presently, all of the Company's outstanding securities, which includes
all shares of its Common Stock, are restricted pursuant to Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). So long as all of the
conditions of Rule 144 are met; in (i) April, 2000, 700,000 shares; (ii) May,
2000, 35,000 shares; and (iii) June/July, 2000, 50,000 shares of Common Stock
will be eligible for sale under Rule 144, as currently in effect. No
assurances are made; however, that Rule 144 will be available at any time for
any shareholder's shares. See "Description of Securities".
The Company cannot estimate the time that it will take to effectuate a
Business Combination. It could be time consuming; possibly in excess of
many months or years. Additionally, no assurance can be made that the Company
will be able to effectuate a Business Combination on terms favorable to the
Company. The Company might identify and effectuate a Business Combination with
a Target Business which proves to be unsuccessful for any number of reasons,
many of which are due to the fact that the Target Business is not identified
at this time. If this occurs, the Company and its shareholders might not
realize any type of profit.
Unspecified Industry and Target Business.
The Company will seek to acquire a Target Business without limiting
itself to a particular
<PAGE> 14
industry. Most likely, the Target Business will be primarily located in the
United States, although the Company reserves the right to acquire a Target
Business primarily located outside the United States. In seeking a Target
Business, the Company will consider, without limitation, businesses which (i)
offer or provide services or develop, manufacture or distribute goods in the
United States or abroad, including, without limitation, in the following
areas: health care and health products, educational services, environmental
services, consumer-related products and services (including amusement,
entertainment and/or recreational services), personal care services, voice and
data information processing and transmission and related technology
development or (ii) as engaged in wholesale or retail distribution. To date,
the Company has not selected any particular industry or any Target Business in
which to concentrate its Business Combination efforts. Accordingly, the Company
is only able to make general disclosures concerning the risks and hazzards of
effectuating a Business Combination with a Target Business since there is
presently no current basis for the Company to evaluate the possible merits or
risks of the Target Business or the particular industry in which the Company
may ultimately operate. Any Target Business that is selected will be
required to have audited financial statements prior to the commencement of the
Business Combination. To the extent the Company effects a Business
Combination with a financially unstable company or an entity in its early stage
of development or growth (including entities without established records of
sales or earnings), the Company will become subject to numerous risks inherent
in the business and operations of financially unstable and early stage or
potential emerging growth companies. In addition, to the extent that the
Company effects a Business Combination with a Target Business in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
industry or Target Business, there can be no assurances that the Company will
properly ascertain or assess all significant risk factors.
Probable Lack of Business Diversification.
As a result of the limited resources of the Company, the Company, in
all likelihood, will have the ability to effect only a single Business
Combination. Accordingly, the prospects for the Company's success will be
entirely dependent upon the future performance of a single business. Unlike
certain entities that have the resources to consummate several Business
Combinations or entities operating in multiple industries or multiple segments
of a single industry, it is highly likely that the Company will not have the
resources to diversify its operations or benefit from the possible spreading
of risks or offsetting of losses. The Company's probable lack of diversification
could subject the Company to numerous economic, competitive and regulatory
developments, any or all of which may have a material adverse impact upon the
particular industry in which the Company may operate subsequent to
consummation of a Business Combination. The prospects for the Company's
success may become dependent upon the development or market acceptance of a
single or limited number of products, processes or services. Accordingly,
notwithstanding the possibility of management assistance to the Target
Business by the Company, there can be no assurance that the Target Business will
prove to be commercially viable.
<PAGE> 15
Limited Ability to Evaluate Target Business' Management.
While the Company's ability to successfully effect a Business
Combination will be dependent upon certain key personnel, the future role of
such personnel in the Target Business cannot presently be stated with any
certainty. It is unlikely that any of the Company's key personnel will remain
associated in any operational capacity with the Company following a Business
Combination. Moreover, there can be no assurances that such personnel will
have any experience or knowledge relating to the operations of the particular
Target Business. Furthermore, although the Company intends to closely scrutinize
the management of a prospective Target Business in connection with evaluating
the desirability of effecting a Business Combination, there can be no
assurances that the Company's assessment of such management will prove to be
correct, especially since none of the Company's current key personnel are
professional business analysts. See "Directors, Executive Officers, Promoters
and Control Persons". Accordingly, the Company will be dependant, in some
significant respects, on the ability of the management of the Target Business
who are unidentifiable as of the date hereof. In addition, there can be no
assurances that such future management will have the necessary skills,
qualifications or abilities to manage a public company. The Company may also
seek to recruit additional managers to supplement the incumbent management of
the Target Business. There can be no assurances that the Company will have the
ability to recruit such additional managers, or that such additional managers
will have the requisite skill, knowledge or experience necessary or desirable to
enhance the incumbent management.
Opportunity for Shareholder Evaluation or Approval of Business
Combinations.
Non-affiliate shareholders of the Company will, in all likelihood,
neither receive nor otherwise have the opportunity to evaluate any financial
or other information which will be made available to the Company in connection
with selecting a potential Business Combination until after the Company has
entered into an agreement to effectuate a Business Combination. Such agreement
to effectuate a Business Combination, however, will be subject to shareholder
approval pursuant to applicable law. As a result, non-affiliate shareholders
of the Company will be almost entirely dependent on the judgment and experience
of management in connection with the selection and ultimate consummation of a
Business Combination. In addition, under Florida law, the form of Business
Combination could impact upon the availability of dissenters' rights (i.e.,
the right to receive fair payment with respect to the Company's Common Stock)
to shareholders disapproving the proposed Business Combination.
Selection of a Target Business and Structuring of a Business
Combination.
The Company's management anticipates that the selection of a Target
Business will be complex and risky because of competition for such business
opportunities among all segments of the financial community. The nature of the
Company's search for the acquisition of a Target Business requires maximum
flexibility inasmuch as the Company will be required to consider various factors
and circumstances which may preclude meaningful direct comparison among the
various business enterprises, products or services investigated. Investors
should recognize that the
<PAGE> 16
possible lack of diversification among the Company's acquisitions may not
permit the Company to offset potential losses from one venture against
profits from another. Management of the Company will have virtually unrestricted
flexibility in identifying and selecting a prospective Target Business. In
addition, in evaluating a prospective Target Business, management will consider,
among other factors, the following factors which are not listed in any
particular order:
- financial condition and results of operation of the
Target Business;
- growth potential and projected financial performance
of the Target Business and the industry in which it operates;
- experience and skill of management and availability
of additional personnel of the Target Business;
- capital requirements of the Target Business;
- the availability of a transaction exemption from
registration pursuant to the Securities Act for the Business
Combination;
- the location of the Target Business;
- competitive position of the Target Business;
- stage of development of the product, process or service of the
Target Business;
- degree of current or potential market acceptance of
the product, process or service of the Target Business;
- possible proprietary features and possible other
protection of the product, process or service of the Target
Business;
- regulatory environment of the industry in which the
Target Business operates;
- costs associated with effecting the Business Combination; and
- equity interest in and possible management participation in
the Target Business.
The foregoing criteria are not intended to be exhaustive; any
evaluation relating to the merits of a particular Business Combination will
be based, to the extent relevant, on the above
<PAGE> 17
factors as well as other considerations deemed relevant by management of the
Company in connection with effecting a Business Combination consistent with
the Company's business objective. In many instances, it is anticipated that
the historical operations of a Target Business may not necessarily be indicative
of the potential for the future because of the possible need to shift marketing
approaches substantially, expand significantly, change product emphasis,
change or substantially augment management, or make other changes. The Company
will be dependent upon the owners of a Target Business to identify any such
problems which may exist and to implement, or be primarily responsible for the
implementation of, required changes. Because the Company may engage in a
Business Combination with a newly organized firm or with a firm which is
entering a new phase of growth, the Company will incur further risks, because in
many instances, management of the Target Business will not have proven its
abilities or effectiveness, the eventual market for the products or services of
the Target Business will likely not be established, and the Target Business
may not be profitable subsequent to a Business Combination.
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a Target Business before the Company commits its
capital or other resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent analysis, market
surveys and the like which, if the Company had more funds available to it, would
be desirable. The Company will be particularly dependent in making decisions
upon information provided by the promoter, owner, sponsor, or others associated
with the business opportunity seeking the Company's participation. In
connection with its evaluation of prospective Target Business, management
anticipates that it will conduct a due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of
facilities, as well as review of financial or other information which will be
made available to the Company. The time and costs required to select and
evaluate a Target Business (including conducting a due diligence review) and to
structure and consummate the Business Combination (including negotiating
relevant agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state "blue sky" and corporation laws) cannot
presently be ascertained with any degree of certainty. The Company's management
intends to devote only a small portion of their time, approximately 5%, to the
affairs of the Company and, accordingly, consummation of a Business Combination
may require a greater period of time than if the Company's management devoted
their full time to the Company's affairs. However, each officer and director of
the Company will devote such time as they deem reasonably necessary, up to 100%,
to carry out the business and affairs of the Company, including the evaluation
of potential Target Businesses and the negotiation of a Business Combination
and, as a result, the amount of time devoted to the business and affairs of
the Company may vary significantly depending upon, among other things, whether
the Company has identified a Target Business or is engaged in active negotiation
of a Business Combination. Any costs incurred in connection with the
identification and evaluation of a prospective Target Business with which a
Business Combination is not ultimately consummated will result in a loss to
the Company and reduce the amount of capital available to otherwise complete a
Business Combination or for the resulting entity to utilize. In the event
the Company depletes its present cash reserves, the Company might be forced to
cease operations and a Business Combination might not occur.
<PAGE> 18
The Company anticipates that it will locate and make contact with
Target Businesses primarily through the reputation and efforts of its
management, who will meet personally with existing management and key personnel,
visit and inspect material facilities, assets, products and services belonging
to such prospects, and undertake such further reasonable investigation as
management deems appropriate. The Company's management has a network of
business and personal contacts in the States of Florida, New York, California
and Pennsylvania, stemming from their employment, schooling and residence in
these areas, and will most likely concentrate its search efforts for a Target
Business in these geographic areas. Management does not intend to actively
solicit or contact prospective Targets directly. Rather, management believes
that prospective Target Businesses will be referred to the Company through
management's network of contacts. The officers and directors of the Company's
primary businesses include business and management consulting and a securities
law practice. See "Directors, Executive Officers, Promoters and Control
Persons". As a result of the field of their primary present occupations and
reputations therein, management believes that the Company will be made aware
of numerous unsolicited potential Target Businesses, since, this already occurs
on an almost weekly basis. Existing and potential clientele of the officers and
directors of the Company may be considered potential Target Businesses; however,
the Company will not engage in any discussions regarding the possibility a
Business Combination with the Company until after the effective time of this
registration statement. The Company also expects that many prospective Target
Businesses will be brought to its attention from various other
non-affiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, and other members of the
financial community. The Company has neither the present intention, nor does the
present potential exist for the Company, to consummate a Business Combination
with a Target Business in which the Company's management, promoters, or their
affiliates or associates directly or indirectly have a pecuniary interest,
although no existing corporate policies of the Company would prevent this
from occurring. The Company will not advertise or promote itself in any
financial or trade publications, or any other type of written publications or
other type of media, to seek potential Target Businesses. Although there are
no current plans to do so, the Company may engage the services of professional
firms that specialize in finding business acquisitions and pay a finder's
fee or other compensation. Since the Company has no current plans to utilize
any outside consultants or advisors to assist in a Business Combination, no
policies have been adopted regarding use of such consultants or advisors, the
criteria to be used in selecting such consultants or advisors, the services to
be provided, the term of service, or regarding the total amount of fees that
may be paid. However, because of the limited resources of the Company, it is
likely that any such fee the Company agrees to pay would be paid in stock and
not in cash. In no event will the Company pay a finder's fee or commission to
officers or directors of the Company or any entity with which they are
affiliated for such service. Moreover, in no event shall the Company issue
any of its securities to any officer, director or promoter of the Company, or
any of their respective affiliates or associates, in connection with
activities designed to locate a Target Business.
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of a Business Combination. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure a Business
<PAGE> 19
Combination so as to achieve the most favorable tax treatment to the Company,
the Target Business and their respective stockholders.There can be no
assurance that the Internal Revenue Service or relevant state tax authorities
will ultimately assent to the Company's tax treatment of a particular
consummated Business Combination. To the extent the Internal Revenue Service
or any relevant state tax authorities ultimately prevail in recharacterizing
the tax treatment of a Business Combination, there may be adverse tax
consequences to the Company, the Target Business and their respective
stockholders. Tax considerations as well as other relevant factors will be
evaluated in determining the precise structure of a particular Business
Combination, which could be effected through various forms of a merger,
consolidation or stock or asset acquisition.
Although the Company has no commitments as of the date of this
registration statement to issue any shares of Common Stock, preferred stock,
options or warrants, other than as described in this registration statement,
the Company will, in all likelihood, issue a substantial number of additional
shares in connection with the consummation of a Business Combination. To the
extent that such additional shares are issued, dilution to the interests of
the Company's stockholders will occur. Additionally, if a substantial number
of shares of Common Stock are issued in connection with the consummation of
a Business Combination, a change in control of the Company is likely to
occur which will likely affect, among other things, the Company's ability to
utilize net operating loss carry forwards, if any. Any such change in control
may also result in the resignation or removal of the Company's present
officers and directors. If there is a change in management, no assurance can be
given as to the experience or qualification of such persons, either in the
operation of the Company's activities or in the operation of the business,
assets or property being acquired. Management considers it likely that in order
to consummate a Business Combination, a change in control will occur; therefore,
management anticipates offering a controlling interest in the Company to a
Target Business in order to effectuate a Business Combination.
The officers and directors of the Company may actively negotiate for
or otherwise consent to the disposition of any portion of their Common Stock
as a condition to or in connection with a Business Combination. Therefore, it
is possible that the terms of any Business Combination will provide for the
sale of some shares of Common Stock held by management or affiliates of
management. It is likely that no other shareholder of the Company will be
afforded the right to sell their shares of Common Stock in connection with a
Business Combination pursuant to the same terms that such selling officers and
directors will be provided. See "Description of Business -Shell Corporation -
Conflicts of Interest".
Pursuant to Sections. 607.0901(5) and 607.0902(5) of the Florida
Business Corporation Act, the Company has inserted certain provisions in its
articles of incorporation which have the effect of removing the Company from the
purview of the affiliated transaction and control-share acquisition statutes
promulgated under Sections 607.0901 and 607.0902 of the Florida Business
Corporation Act and hence, the protections afforded by such statutes.
Section. 607.0901 of the Florida Business Corporation Act imposes
limitations on the exercise of corporate control, directly or indirectly, by
a beneficial owner of more than 10% of a
<PAGE> 20
corporation's outstanding voting stock (an "interested shareholder"). The
corporation's "disinterested directors" as defined therein, or a supermajority
of the corporation's shareholders (other than the interested shareholder and
related parties) are required to approve certain business combinations and
corporate transactions with the interested shareholder or any entity or
individual controlled by the interested shareholder ("affiliated transaction"
), unless certain statutory exemptions apply, or the corporation has opted
out of the affiliated transactions statute. The stated purpose of the
affiliated transactions statute is to assure that Florida shareholders who do
not tender their shares in a hostile takeover offer receive a fair price for
those shares in a second-step, freeze-out transaction. By removing the
Company from the purview of Florida's affiliated transaction statute, the
consideration received by selling shareholders in a "second-step" transaction
could be less than the consideration received by the selling shareholders in the
initial transaction. See "Certain Relationships and Related Transactions".
Section. 607.0902 of the Florida Business Corporation Act denies
corporate control to an acquirer of control shares by extinguishing the voting
rights of shares of an "issuing public corporation", as defined therein,
acquired in a "control share acquisition", as defined therein. Voting rights may
be reinstated to the extent provided in a shareholders' resolution approved by
(1) each class or series entitled to vote separately on the proposal by a
majority of all votes entitled to be cast by such class or series and (2) each
class or series entitled to vote separately on the proposal by a majority of all
votes entitled to be cast by such class or series, excluding all "interested
shares" (ie., generally speaking, those shares that may be voted by or at
the direction of a person who made a control-share acquisition or an officer
or employee/director of the subject "issuing public corporation"). The
acquisition of shares is not directly affected, only the voting rights attendant
to control shares. Other shares of the same corporation that are owned or
acquired by the same person are not affected. The stated purpose of the
control share acquisitions statute is to protect Florida shareholders by
affording them an opportunity to decide whether a change in corporate control is
desirable. By removing the Company from the purview of Florida's
control-share acquisition statute, shares of an "issuing public corporation"
acquired pursuant to a control acquisition are not deemed to be "control-share
acquisitions", which, in the Company's case, effectively denies non-management/
affiliate shareholders an opportunity to approve or consent to an acquirer's
purchase of such management or affiliate's stock pursuant to a Business
Combination. See "Description of Business - Shell Corporation - Conflicts of
Interest" and "Certain Relationships and Related Transactions".
There are currently no limitations relating to the Company's ability
to borrow funds to increase the amount of capital available to the Company to
effect a Business Combination or otherwise finance the operations of the
Target Business. However, the Company's limited resources and lack of operating
history could make it difficult for the Company to borrow additional funds from
other sources. The amount and nature of any borrowings by the Company will
depend on numerous considerations, including the Company's capital requirements,
potential lenders' evaluation of the Company's ability to meet debt service on
borrowings and the then prevailing conditions in the financial markets, as well
as general economic conditions. The Company does not have any
<PAGE> 21
arrangements with any bank or financial institution to secure additional
financing and there can be no assurance that such arrangements if required or
otherwise sought, would be available on terms commercially acceptable or
otherwise in the best interests of the Company. The inability of the Company
to borrow funds required to effect or facilitate a Business Combination, or to
provide funds for an additional infusion of capital into a Target Business,
may have a material adverse effect on the Company's financial condition
and future prospects, including the ability to effect a Business
Combination. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks
traditionally associated with indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Target Business may have already incurred debt
financing and, therefore, all the risks inherent thereto.
If securities of the Company are issued as part of an acquisition,
such securities are required to be issued either in reliance upon exemptions
from registration under applicable federal or state securities laws or
registered for public distribution. The Company intends to primarily target only
those companies where an exemption from registration would be available;
however, since the structure of the Business Combination has yet to be
determined, no assurances can be made that the Company will be able to rely on
such exemptions. Registration of securities typically requires significant
costs and time delays are typically encountered. In addition, the issuance of
additional securities and their potential sale in any trading market which might
develop in the Company's Common Stock, of which there is presently no trading
market and no assurances can be given that one will develop, could depress the
price of the Company's Common Stock in any market which may develop in the
Company's Common Stock. Further, such issuance of additional securities of
the Company would result in a decrease in the percentage ownership of the
Company's present shareholders.
Due to the Company's small size and limited amount of capital,
considerable business constraints could be imposed on the Company with
respect to its ability to raise additional capital if and when needed. Until
such time as any enterprise, product or service which the Company acquires
generates revenues sufficient to cover operating costs, it is conceivable
that the Company could find itself in a situation where it needs additional
funds in order to continue its operations. This need could arise at a time when
the Company is unable to borrow funds and when market acceptance for the
sale of additional shares of the Company's Common Stock does not exist.
Conflicts of Interest.
None of the Company's officers and directors are required to commit
their full time to the affairs of the Company and, accordingly, such persons
may have conflicts of interest in allocating management time among various
business activities. The officers and directors of the Company may engage in
other business activities similar and dissimilar to those engaged in by the
Company. To the extent that such persons engage in such other activities,
they will have possible conflicts of interest in diverting opportunities to
other companies, entities or persons with which they are or may be associated
or have an interest, rather than diverting such opportunities to the Company.
<PAGE> 22
Presently, Mr. Bovi is the President of David M. Bovi, P.A., a private
practice securities law firm, and Mr. Colucci is a consultant with Harbor Town
Management Group, Inc., a privately held business management firm which
provides business and management consulting services. See "Directors, Executive
Officers, Promoters and Control Persons".
Further, the Company's officers and directors formed four other shell
corporations simultaneously with the formation of the Company, which have
a structure and a business plan identical to that of the Company. It is
likely that the Company's officers and directors will form additional shell
corporations in the future, with a business plan similar or identical to that
of the Company. The four other shell companies which were formed at the same
time as the Company have an identical structure and business plan as the
Company and do not currently create a conflict of interest with the Company
since they have the same shareholders. However, certain activities which may
be performed by such individuals in connection with their other business
affiliations may be deemed competitive with the business of the Company. See
"Directors, Executive Officers, Promoters and Control Persons - Other Blank
Check Activities". Also, the Company's officers and directors are presently
affiliated with, and may in the future become affiliated with, other
entities, including registered shell corporations, which may engage in
business activities similar to those intended to be conducted by the Company.
Such potential conflicts of interest include, among other things, time, effort
and corporate opportunity involved in their participation in other business
transactions. As no policy has been established for the resolution of such
a conflict, the Company could be adversely affected should such officers or
directors choose to place their other business interests before those of the
Company. No assurance can be given that such potential conflicts of interest
will not cause the Company to lose potential opportunities.
In the course of their other business activities, including private
investment activities, the Company's officers and directors may become aware
of investment and business opportunities which may be appropriate for
presentation to the Company as well as the other entities with which they are
affiliated. Such persons may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. A
director's duty of loyalty to a corporation includes an obligation not to usurp
business opportunities that, in fairness, should belong to the corporation.
In general, officers and directors of a corporation incorporated under the
laws of the State of Florida have a fiduciary duty to make available to such
corporation business opportunities that they become aware of through their
association with the corporation. If a Florida court finds that an officer or
director has violated this obligation, the court may require the director or
officer to pay over to the corporation all profits made from the transaction
or to convey to the corporation any assets that might have been acquired by
the corporation but for the disloyal act of the director or officer.
Accordingly, as a result of multiple business affiliations, the Company's
officers and directors may have similar legal obligations relating to presenting
certain business opportunities to multiple entities. In addition, conflicts
of interest may arise in connection with evaluations of a particular
business opportunity by the board of directors with respect to the foregoing
criteria. There can be no assurances that any of the foregoing conflicts will
be resolved in favor of the Company. In order to minimize potential conflicts
of interest which may arise from multiple corporate affiliations, the Company
shall not consider Business Combinations with entities owned or
<PAGE> 23
controlled by officers, directors, greater than 10% shareholders of the
Company or any person who directly or indirectly controls, is controlled by
or is under common control with the Company. The Company may consider Business
Combinations with entities owned or controlled by persons other than those
persons described above. There can be no assurances that any of the foregoing
conflicts will be resolved in favor of the Company.
The officers and directors of the Company may actively negotiate for or
otherwise consent to the disposition of any portion of their Common Stock as a
condition to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide for the sale
of some shares of Common Stock held by management or affiliates of
management. Pursuant to Section. 607.0902(5) of the Florida Business
Corporation Act, the Company has inserted certain provisions in its articles
of incorporation which has the effect of removing the Company from the
purview of the control-share acquisition statute promulgated under Section
607.0902 of the Florida Business Corporation Act, and hence, the protection
afforded by such statute. Thus, it is likely that no other shareholder of
the Company will be afforded the right to sell their shares of Common Stock in
connection with a Business Combination pursuant to the same terms that such
selling officers, directors or affiliates will be provided. Also, such
shareholders will not be afforded an opportunity to approve or consent to such
management or affiliate's stock purchase. See "Description of Business - Shell
Corporation - Selection of a Target Business and Structuring of a Business
Combination". It is more likely than not that any sale of securities by the
Company's current stockholders to an acquisition candidate would be at a price
substantially higher than that originally paid by such stockholders. Any
payment to current stockholders in the context of an acquisition involving the
Company would be determined entirely by the largely unforeseeable terms of
a future agreement with an unidentified business entity.
Investment Company Act and Other Regulation
The Company may participate in a Business Combination by purchasing,
trading or selling the securities of such Target Business. The Company does
not, however, intend to engage primarily in such activities. Specifically,
the Company intends to conduct its activities so as to avoid being classified
as an "investment company" under the Investment Company Act of 1940 (the
"Investment Act"), and therefore to avoid application of the costly and
restrictive registration and other provisions of the Investment Act, and the
regulations promulgated thereunder.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
Business Combination as discussed above. Each of these areas is regulated
by the Investment Act, in order to protect purchasers of investment company
securities. Since the Company will not register as an investment company,
stockholders will not be afforded these protections.
Any securities of a Target Business which the Company might
acquire pursuant to a Business Combination will be "restricted securities"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). If the Company elects to resell or "spin off" such
<PAGE> 24
securities, such a transaction cannot proceed unless a registration
statement has been declared effective by the Securities and Exchange
Commission or an exemption from registration is available. Section 4(1) of
the Securities Act, which exempts sales of securities not involving a public
distribution by persons other than the issuer, would in all likelihood be
available to permit a private sale of a Target Business' securities to a
limited number of third persons; but would not be available for a "spin off"
transaction which would likely require registration of such specific
securities or the class of such securities. Although the Company's plan of
operation does not contemplate the resale or "spin off" transaction of an
acquired Target Business' securities, if such a transaction were to be
necessary, the Company would be required to comply with the provisions of the
Securities Act to effect the transaction.
An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance with
such regulations can be expected to be a time-consuming and expensive process.
Penny Stock Regulations - State Blue Sky Restrictions - Restrictions on
Marketability.
The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define "penny stock" to be any equity security
that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. The Company's
securities may be covered by the penny stock rules, which impose additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals
with net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouse). For transactions covered by the rule,
the broker-dealers must make a special suitability determination for the
purchase and receive the purchaser's written agreement of the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-
dealers tosell the Company's securities and also may affect the ability of
shareholders of the Company to sell their shares of Common Stock in the
secondary market.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks", which include Section 3(a)(51)(A)
and Rules 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-9 under the
Securities Exchange Act of 1934, as amended. Because the securities of the
Company may constitute "penny stocks" within the meaning of the rules, the rules
would apply to the Company and to its securities. The rules may further
affect the ability of the Company's shareholders to sell their shares in any
public market which might develop.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few broker-
dealers that are often related to the promoter or issuer; (ii) manipulation of
prices through prearranged matching of purchases and sales and false and
misleading press releases; (iii) "boiler room" practices involving high-
pressure sales tactics and unrealistic price projections by
<PAGE> 25
inexperienced sales persons; (iv) excessive and undisclosed bid-ask
differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and broker-dealers after prices
have been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. The Company's
management is aware of the abuses that have occurred historically in the penny
stock market. Although the Company does not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to the
Company's securities.
The Company has 50,000,000 shares of authorized Common Stock with
785,000 shares of Common Stock outstanding. See "Description of Securities".
No trading market in the Company's securities presently exists. In light of
the restrictions concerning shell companies contained in many state blue sky
laws and regulations, it is not likely that a trading market will be created in
the Company's securities until such time as a Business Combination occurs with
a Target Business. No assurances are given that subsequent to such a Business
Combination that a trading market in the Company's securities will develop.
Presently, all of the Company's outstanding securities, which includes all
shares of its Common Stock, are restricted pursuant to Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). So long
as all of the conditions of Rule 144 are met; in (i) April, 2000, 700,000
shares; (ii) May, 2000, 35,000 shares; and (iii) June/July, 2000, 50,000
shares of Common Stock will be eligible for sale under Rule 144, as
currently in effect. No assurances are made; however, that Rule 144 will be
available at any time for any shareholder's shares. See "Description of
Securities".
INTENSE COMPETITION FROM OTHER BLANK CHECK COMPANIES
The Company expects to encounter intense competition from other
entities having a business objective similar to that of the Company. Many of
these entities are well-established and have extensive experience in connection
with identifying and effecting Business Combinations directly or through
affiliates. Many of these competitors possess greater financial, marketing,
technical, personnel and other resources than the Company and there can be no
assurances that the Company will have the ability to compete successfully.
The Company's financial resources will be limited in comparison to those of
many of its competitors. This inherent competitive limitation could compel the
Company to select certain less attractive Target Businesses for a Business
Combination. There can be no assurances that such Target Businesses will
permit the Company to meet its stated business objective. Management
believes, however, that the Company's status as a reporting public entity
could give the Company a competitive advantage over privately held entities
having a similar business objective to that of the Company in acquiring a
Target Business with significant growth potential on favorable terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business
Combination, the Company
<PAGE> 26
will, in all likelihood, become subject to intense competition from
competitors of the Target Business. In particular, certain industries which
experience rapid growth frequently attract an increasingly larger number of
competitors, including competitors with increasingly greater financial,
marketing, technical and other resources than the initial competitors in the
industry. The degree of competition characterizing the industry of any
prospective Target Business cannot presently be ascertained. There can be no
assurances that, subsequent to a Business Combination, the Company
will have the resources to compete effectively, especially to the extent that
the Target Business is in a high-growth industry.
FEDERAL SECURITIES LAWS COMPLIANCE
Under the Federal securities laws, companies reporting under the
Exchange Act must furnish stockholders certain information about significant
acquisitions, which information may require audited financial statements for
a Target Business with respect to one or more fiscal years, depending upon the
relative size of the acquisition. Consequently, the Company's policy is to
only effect a Business Combination with a Target Business that has available
the requisite audited financial statements. "Description of Securities -
Securities Exchange Act of 1934".
FACILITIES
The executive and business office of the Company consists of office
space located at 319 Clematis Street, Suite 812, West Palm Beach, Florida
33401. Pursuant to a written lease, the Company sub-leases this office space
on a month-to-month basis at below fair market value rates from David M. Bovi,
P.A., a corporation controlled by David M. Bovi, a shareholder and director of
the Company and the Company's chief executive officer. The Company believes
this office space is adequate to serve its needs until such time as a Business
Combination occurs. The Company expects to be able to utilize these offices,
pursuant to the terms described above, until such time as a Business Combination
occurs. See "Description of Property" and "Certain Relationships and Related
Transactions".
EMPLOYEES
As of the date of this Prospectus, the Company is in the development stage
and currently has no full time employees. Management of the Company expects to
use consultants, attorneys and accountants as necessary, and does not anticipate
a need to engage any full-time employees so long as it is seeking and evaluating
Target Businesses. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in a specific Business Combination.
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company is presently a development stage company conducting
virtually no business operation, other than its efforts to effect a Business
Combination with a Target Business which the Company considers to have
significant growth potential. To date, the Company has neither engaged in any
operations nor generated any revenue. It receives no cash flow. The Company will
carry out its plan of business as discussed above. See "Description of
Business". The Company cannot predict to what extent its liquidity and capital
resources will be diminished prior to the consummation of a Business Combination
or whether its capital will be further depleted by the operating losses (if any)
of the Target Business which the Company effectuates a Business Combination
with.
Since inception, the Company has received a cash infusion of $3,500.
With the exception of certain other professional fees and costs related to a
Business Combination, the Company expects that it will incur minimal operating
costs and meet its cash requirements during the next 12 months. It is likely,
however, that a Business Combination might not occur during the next 12
months. In the event the Company depletes its present cash reserves prior to
the effectuation of a Business Combination, the Company may cease operations and
a Business Combination may not occur. David M. Bovi, P.A., the Company's sub-
lessor, has agreed to waive all of the Company's rent payments, if necessary,
in order to preserve the Company's cash reserves. See "Description of
Property". No commitments of any kind to provide additional funds have been
made by management, other present shareholders or any other third person.
There are no agreements or understandings of any kind with respect to any
loans from officers or directors of the Company on behalf of the Company.
Accordingly, there can be no assurance that any additional funds will be
available to the Company to allow it to cover its expenses. In the event the
Company elects to raise additional capital prior to the effectuation of a
Business Combination, it expects to do so through the private placement of
restricted securities rather than through a public offering. The Company
does not currently contemplate making a Regulation S offering.
Since inception, all of the Company's out of pocket expenses, which
approximated $2,000 were paid pursuant to a $1,000 capital infusion made to
the Company by the Company's promoters in exchange for 510,000 shares of
Common Stock and $2,500 capital infusion made to the Company pursuant to the
private sale of 50,000 shares of Common Stock. Additionally, services to the
Company valued at $441 were paid pursuant to the issuance of 225,000 shares of
Common Stock. See "Recent Sales of Unregistered Securities".
Since the Company's cash reserves are minimal, officers and director's
of the Company are compensated by the Company by issuances of stock in lieu of
cash. See "Executive Compensation". Presently, there are no arrangements or
anticipated arrangements to pay any type of additional compensation to any
officer or director in the near future. Regardless of whether the Company's
cash assets prove to be inadequate to meet the Company's operational needs,
the Company might seek to compensate providers of services by issuances of
stock in lieu of cash. See
<PAGE> 28
"Certain Relationships and Transactions".
COMPUTER TECHNOLOGIES AND YEAR 2000 COMPLIANCE.
The Company is aware of the issues associated with the programming
code in existing computer systems as the year 2000 approaches. Many existing
computer programs use only two digits to identify a year in the date field.
The Company has assessed the computer software that it utilizes and considers
such software to be year 2000 compliant; however, because of the many
uncertainties associated with the year 2000 compliance issues, the Company
cannot assure that its assessment is correct with respect to this matter.
DESCRIPTION OF PROPERTY.
The executive and business office of the Company consists of office
space located at 319 Clematis Street, Suite 812, West Palm Beach, Florida
33401. Pursuant to a written lease, the Company sub-leases this office space
on a month-to-month basis at below fair market value rates from David M. Bovi,
P.A., a corporation controlled by David M. Bovi, a shareholder and director of
the Company and the Company's chief executive officer. The Company believes
this office space is adequate to serve its needs until such time as a Business
Combination occurs. The Company expects to be able to utilize these offices,
pursuant to the terms described above, until such time as a Business
Combination occurs.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of each person or group known to the Company to be the beneficial
owner of more than five percent (5%) of Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership
<S> <C> <C>
David M. Bovi 400,000 50.95%
319 Clematis Street, Suite 812
West Palm Beach, Fl 33401
William R. Colucci 300,000 38.21%
120 S. Olive Avenue, Suite 705
West Palm Beach, Fl 33401
</TABLE>
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of the Company's Common Stock of each of the officers and directors
of the Company, and the officers and directors of the Company as a group:
<PAGE> 29
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership
<S> <C> <C>
David M. Bovi 400,000 (D) 50.95%
319 Clematis Street, Suite 812
West Palm Beach, Fl 33401
William R. Colucci 300,000 (D) 38.21%
120 S. Olive Avenue, Suite 705
West Palm Beach, Fl 33401
All Officers and Directors
as a Group (2 persons). 700,000 (D) 89.17%
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The current directors and executive officers of the Company are as
follows:
</TABLE>
<TABLE>
<CAPTION>
Name Age Position
- -------------- -------- ----------------
<S> <C> <C>
David M. Bovi 32 Director,Chief
Executive Officer
William R. Colucci 60 Director, President,
Treasurer, Secretary
_________________________
</TABLE>
Mr. Bovi has served as a director and chief executive officer of the
Company since its inception in April of 1999. Mr. Bovi is also presently the
sole shareholder, officer and director of David M. Bovi, P.A., a private
practice law firm which concentrates its practice in representing public and
private entities with respect to corporate and securities law and merger
and acquisition transactions. He has held this position since April, 1996.
Additionally, Mr. Bovi is an officer and director of other shell companies
with the same business plan as the Company. See "Directors, Executive
Officers, Promoters and Control Persons - Other Blank Check Activities" and
"Description of Business - Shell Corporation - Conflicts of Interest". From
November 1995 to April 1996 he worked as a transactional corporate and
securities and mergers and acquisitions attorney at Communications/USA, a
privately held cellular paging services firm located in Palm Beach County,
Florida. During 1994 and 1995 he served as an associate attorney in the
corporate securities law department of the law firm of Robert C. Hackney and
Associates, Chartered, which served as of counsel to the law firm of Desantis
Gaskill & Hunston, Palm Beach County, Florida. Also, in 1994, he served as an
associate attorney in the corporate securities law department of the law firm of
Cohen Chernay et al., Palm Beach County, Florida. Mr. Bovi received his LL.M.
Degree (Masters Degree of Law) in Securities Regulation from Georgetown
University Law School in May, 1993, his Juris Doctor Degree from St. Thomas
University School of Law in May, 1992, and his Bachelor of Arts Degree in
Economics from the State University of New York at Buffalo in May, 1989. He
<PAGE> 30
has been a member in good standing of the Florida Bar since October, 1992.
Mr. Colucci has served as a director, president, secretary and
treasurer of the Company since its inception in April, 1999. Mr. Colucci is
also a director of Net Lnnx, Inc., a publicly traded corporation which, in
March, 1999, reorganized with PrintOnTheNet.Com, Inc. which provides printing
services on the Internet via e-commerce. He has held this position since
September, 1997. Prior to this reorganization, Net Lnnx, Inc. served as a
"shell" corporation. Mr. Colucci is also presently a consultant with a privately
held management firm known as Harbor Town Management Group, Inc., a Florida
corporation, which provides business consulting services. Additionally, Mr.
Colucci is an officer and director of other shell companies with the same
business plan as the Company. See "Directors, Executive Officers, Promoters
and Control Persons - Other Blank Check Activities" and "Description of
Business- Shell Corporation - Conflicts of Interest". From June 1996 to May
1997, Mr. Colucci served as Chief Operating Officer and SEC Compliance officer
for Physicians Laser Services, Inc., a publicly traded Delaware corporation
traded in the Over-the-counter trading market. From April 1991 to May 1996,
Mr. Colucci served as a senior partner of Decision Dynamics, Inc., a private
business and real estate consulting firm. Prior to this, Mr. Colucci has
served in senior management positions, including president and CEO of various
companies. These companies included Bandak Corporation, a privately held
jewelry and manufacturing company, Inmont Corporation, a publicly traded,
billion dollar a year, chemical and paint manufacturing division of United
Technologies, Inc., which is traded on the New York Stock Exchange, and
Butcher & Sherrerd, a privately held securities brokerage firm based in
Philadelphia, Pennsylvania. Mr Colucci received his Bachelor of Science Degree
in Economics from St. Joseph's University in Philadelphia in 1964 and has
successfully completed advanced courses of study at Stanford University's
Graduate School of Business for executives of emerging growth companies.
There are no agreements or understandings for any officer or director
to resign at the request of another person, and none of the officers and
directors of the Company are acting on behalf of or will act at the
discretion of any other person. The initial promoters of the Company are David
M. Bovi and William R. Colucci. The Company had no other promoters.
Presently, the only persons who perform material operations on behalf of
the Company are the Company's present officers and directors. Until such time
as a Business Combination occurs, the officers and directors of the Company do
not expect any significant hanges in the composition of the Company's officers
or board of directors. There are no arrangements, agreements or understandings
between non-management shareholders and management under which non-
management shareholders may directly or indirectly participate in or
influence the management of the Company's affairs.
OTHER BLANK CHECK ACTIVITIES
Each of the Company's officers, directors, and principal shareholders
hold similar officer, director and shareholder positions with a total of six
blank check companies (including the Company). The following table sets
forth, as of the date hereof, these companies' identities, amount
<PAGE> 31
and percentage of beneficial ownership of each of the Company's officers,
directors, and principal shareholders in such companies, and the percentage
of time they intend to devote to these companies' affairs:
<TABLE>
<CAPTION>
Percent of Time
Name, Filing Type Amount and Percentage Intended to Devote
SEC File Number of Beneficial Ownership To Company's Affair
- ----------------- ----------------------- --------------------
<S> <C> <C>
BF Acquisition Group I, Inc. 400,000 shrs. (50.95%)(1) 5%
Form 10-SB/12G 300,000 shrs. (38.21%)(2)
SEC File No. 0-26843
BF Acquisition Group II, Inc. 400,000 shrs. (50.95%)(1) 5%
Form 10-SB/12G 300,000 shrs. (38.21%)(2)
SEC File No. 0-26845
BF Acquisition Group III, Inc. 400,000 shrs. (50.95%)(1) 5%
Form 10-SB/12G 300,000 shrs. (38.21%)(2)
SEC File No. 0-26849
BF Acquisition Group IV, Inc. 400,000 shrs. (50.95%)(1) 5%
Form 10-SB/12G 300,000 shrs. (38.21%)(2)
SEC File No. 0-26851
BF Acquisition Group V, Inc. 400,000 shrs. (50.95%)(1) 5%
Form 10-SB/12G 300,000 shrs. (38.21%)(2)
SEC File No. 0-26853
Harbor Town Holding 9,115,625 shrs. (45.12%)(1) 5%
Group I, Inc. 1,810,541 shrs. (8.96%) (2)
Form 10-SB/12G
SEC File No. 0-23439
_______________________________
</TABLE>
(1) Represents shares owned by Mr. Bovi.
(2) Represents shares held by Mr. Colucci.
The Company and each of these other entities will be in competition
with each other for Target Businesses. See "Description of Business - Shell
Corporation - Conflicts of Interest". Presently, neither Mr. Bovi nor Mr.
Colucci are actively seeking Target Business' to effect a Business Combination
with any of the above-listed companies, since at this time, none of the
above-listed companies are prepared to effectuate a Business Combination.
Harbor Town Holding Group I, Inc. is presently not current with its SEC
periodic filing obligations; and the SEC has yet to notify any of the
B.F. Acquisition Group companies listed above that the SEC has no further
comments on such
<PAGE> 32
companies' registration statements. Until such time as this occurs, which
cannot be predicted with any degree of certainty, neither Mr. Bovi nor Mr.
Colucci will evaluate any Target Business to effect a Business Combination
with on behalf of these companies. Presently, no determination has been made as
to these companies' priority with respect to the order which these companies
will attempt to effectuate a Business Combination once they are prepared to so.
However, as described above, the Company and each of these other entities
will be in competition with each other for Target Businesses. See "Description
of Business - Shell Corporation - Conflicts of Interest".
Mr. Colucci has an affiliation with a former shell company as
described below:
Mr. Colucci serves as a director of PrintOnTheNet.Com, Inc.,
(f/k/a Net Lnnx, Inc.), a former publicly traded, reporting shell corporation
which now operates as a printing company. PrintOnTheNet.Com, Inc. provides
printing services on the Internet via e-commerce.
Net Lnnx was established in 1968 as a blank check company and in 1996
commenced operations in the cellular paging and Internet access industries.
Since these ventures proved to have only limited success, Net Lnnx disposed of
these business interest in January of 1997 and once again became a shell
corporation. In September, 1997, Mr. Colucci was recruited as an officer and
director of Net Lnnx to assist in the implementation Net Lnnx's acquisition
strategy. In March, 1999 Net Lnnx reorganized with, and in July subsequently
merged with, PrintOnTheNet.Com, Inc. PrintOnTheNet.Com, Inc. presently trades
on the over-the-counter bulletin board under the symbol POTN.
Other than as described herein, neither Mr. Colucci nor Mr. Bovi is an
affiliate of any other blank check company.
EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION.
Long Term
Compensation ------------
- -------------
Annual Compensation
---------------------
Awards Payouts
-------- --------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h)
Other All
Name & Annual Restricted Securities Other
Position Year Salary($) Bonus($) Compen- Stock Underlying LTIP Compen-
sation Award(s) Options/ Payout sation
($) ($) SARs(#) ($) ($)
_________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Since -0- -0- -0- 284.20(1) -0- -0- -0-
Bovi. Inception
Director, 1999
Chief
Executive
Officer
</TABLE>
<PAGE> 33
________________________________
(1) Represents 145,000 shares of Common Stock at $0.00196 per share.
Neither Mr. Bovi nor Mr. Colucci are bound by an employment agreement
with the Company. As a result, either of them may terminate their
relationship with the Company at any time for any reason.
Compensation of Directors
At inception, Mr. Colucci received 45,000 shares of Common Stock
valued at $88.20, or $0.00196 per share, which were issued for pre-incorporation
services rendered and for agreeing to serve as an officer and director of the
Company. See "Certain Relationships and Related Transactions". Other than as
described in this registration statement, no officer or director has received
any other remuneration. Until the Company effectuates a Business
Combination, it is not anticipated that any officer or director will receive
additional compensation from the Company other than reimbursement for out-of-
pocket expenses incurred on behalf of the Company. See "Certain Relationships
and Related Transactions". The Company has no stock option, retirement,
pension, or profit-sharing programs for the benefit of directors, officers or
other employees, but the board of directors may recommend adoption of one or
more such programs in the future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 15, 1999, the Company adopted and agreed to be bound by the
terms of a Pre-incorporation Consultation and Subscription Agreement dated April
10, 1999, between David M. Bovi and William R. Colucci pursuant to which such
persons agreed to provide cash, certain pre-incorporation services and to take
the steps necessary to organize the Company in return for the issuance to
them of Company securities. Accordingly, on April 15, 1999, the Company
issued such persons a total of 700,000 shares of Common Stock at $0.00196 per
share.
The cash consideration provided by such persons pursuant to the terms of the Pre
- -incorporation Consultation and Subscription Agreement totaled $1,000, or
$0.00196 per share, and the services provided by such persons pursuant to
the terms of the Pre-incorporation Consultation and Subscription Agreement,
were valued at $372.40 or $0.00196 per share.
Certificates evidencing the Common Stock issued by the Company to
these persons have all been stamped with a restrictive legend, and are subject
to stop transfer orders by the Company. For additional information concerning
restrictions that are imposed upon the securities held by current
stockholders, and the responsibilities of such stockholders to comply with
federal securities laws in the disposition of such Common Stock, See "Market for
Common Equity and Related Stockholder Matters".
No officer, director, promoter, or affiliate of the Company has or
proposes to have any direct or indirect material interest in any asset
proposed to be acquired by the Company through security holdings, contracts,
options, or otherwise.
<PAGE> 34
The Company has adopted a policy whereby any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a Target Business is to be paid in stock rather
than in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether, or in what amount, such
a stock issuance might be made.
It is not currently anticipated that any other salary, consulting fee,
or finder's fee shall be paid to any of the Company's directors or executive
officers, or to any other affiliate of the Company except as described in this
registration statement. See "Executive Compensation".
Pursuant to Sections. 607.0901(5) and 607.0902(5) of the Florida
Business Corporation Act, the Company has inserted certain provisions in its
articles of incorporation which has the effect of removing the Company from
the purview of the control-share acquisition and affiliated transaction statutes
promulgated under Sections 607.0901 and 607.0902 of the Florida Business
Corporation Act and hence, the protections afforded by such statutes.
Section. 607.0901 of the Florida Business Corporation Act imposes
limitations on the exercise of corporate control, directly or indirectly, by
a beneficial owner of more than 10% of a corporation's outstanding voting
stock (an "interested shareholder"). The corporation's "disinterested
directors" as defined therein, or a supermajority of the corporation's
shareholders (other than the interested shareholder and related parties) are
required to approve certain business combinations and corporate transactions
with the interested shareholder or any entity or individual controlled by
the interested shareholder ("affiliated transaction"), unless certain
statutory exemptions apply, or the corporation has opted out of the affiliated
transactions statute. The stated purpose of the affiliated transactions
statute is to assure that Florida shareholders who do not tender their
shares in a hostile takeover offer receive a fair price for those shares in a
second-step, freeze-out transaction. By removing the Company from the purview
of Florida's affiliated transaction statute, the consideration received by
selling shareholders in a "second-step" transaction could be less than the
consideration received by the selling shareholders in the initial
transaction. See "Description of Business -Shell Corporation -Conflicts of
Interest".
Section. 607.0902 of the Florida Business Corporation Act denies
corporate control to an acquirer of control shares by extinguishing the
voting rights of shares of an "issuing public corporation", as defined
therein, acquired in a "control share acquisition", as defined therein.
Voting rights may be reinstated to the extent provided in a shareholders'
resolution approved by (1) each class or series entitled to vote separately
on the proposal by a majority of all votes entitled to be cast by such
class or series and (2) each class or series entitled to votes separately on
the proposal by a majority of all votes entitled to be cast by such class or
series, excluding all "interested shares" (ie., generally speaking, those
shares that may be voted by or at the direction of a person who made a control
- -share acquisition or an officer or employee/director of the subject "issuing
public corporation"). The acquisition of shares is not directly affected,
only the voting rights attendant to control shares. Other shares of the same
corporation that are owned or acquired by the same person are not affected.
The stated purpose of the control share acquisitions statute is to protect
Florida
<PAGE> 35
shareholders by affording them an opportunity to decide whether a change in
corporate control is desirable. By removing the Company from the purview of
Florida's control-share acquisition statute, shares of an "issuing public
corporation" acquired pursuant to a control acquisition are not deemed to be
"control-share acquisitions", which, in the Company's case, effectively denies
non-management/affiliate shareholders an opportunity to approve or consent
to an acquirer's purchase of such management or affiliate's stock pursuant
to a Business Combination. See "Description of Business -Shell Corporation
- - Conflicts of Interest".
The executive and business office of the Company consists of office
space located at 319 Clematis Street, Suite 812, West Palm Beach, Florida
33401. Pursuant to a written lease, the Company sub-leases this office space
on a month-to-month basis at below fair market value rates from David M.
Bovi, P.A., a corporation controlled by David M. Bovi, a shareholder and
director of the Company and the Company's chief executive officer. The Company
believes this office space is adequate to serve its needs until such time as
a Business Combination occurs. The Company expects to be able to utilize
these offices, pursuant to the terms described above, until such time as a
Business Combination occurs. See "Description of Property".
DESCRIPTION OF SECURITIES.
GENERAL
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.001 par value and 5,000,000 shares of Preferred Stock. As of the date of
this registration statement 785,000 shares of Common Stock are outstanding,
held of record by approximately eight shareholders. No shares of Preferred
Stock are outstanding. No other type of securities are authorized by the
Company at this time.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. By virtue of their ownership of more
than 50% of the outstanding Common Stock, the Company's officers and
directors can elect all of the directors of the Company. Florida law permits
the holders of the minimum number of shares necessary to take action at a
meeting of shareholders (normally a majority of the outstanding shares) to
take action by written consent without a meeting, provided notice is given
within ten days to all other shareholders. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the board of directors
out of funds legally available therefor. In the event of liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the Common Stock. Holders of
shares of Common
<PAGE> 36
Stock, as such, have no conversion, preemptive, redemption provisions or
other subscription rights. All of the outstanding shares of Common Stock are
fully paid and non-assessable.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date
and does not presently intend to pay cash dividends prior to the
<PAGE> 37
consummation of a Business Combination. The payment of cash dividends in the
future, if any, will be contingent upon the Company's revenues and earnings,
if any, capital requirements and general financial condition subsequent to
consummation of a Business Combination. The payment of any dividends
subsequent to a Business Combination will be within the discretion of the
Company's then board of directors. It is the present intention of the board
of directors to retain all earnings, if any, for use in the Company's
business operations and, accordingly, the board of directors does not
anticipate paying any cash dividends in the foreseeable future.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the Company to issue
5,000,000 shares of Preferred Stock. The board of directors of the Company
is authorized to provide for the issuance of such Preferred Stock in classes
or series and, by filing the appropriate articles of amendment with the
Secretary of State of Florida, is authorized to establish the number of
shares to be included in each class or series and the preferences, limitations
and relative rights of each class or series, which may consist of a
conversion feature whereby such Preferred Stock may be convertible into Common
Stock. This type of preferred stock is commonly referred to as "blank check
preferred stock". As of the date of this registration statement, no shares of
Preferred Stock have been issued by the Company and no preferences,
limitations and relative rights have been assigned. The Company does not
anticipate issuing any shares of Preferred Stock until such time that a
Business Combination is effectuated.
SECURITIES EXCHANGE ACT OF 1934
By virtue of filing this registration statement, the Company is
making an application with the Commission to register its Common Stock under
the provisions of Section 12(g) of the Exchange Act. Such registration will
require the Company to comply with periodic reporting, proxy solicitations
and certain other requirements of the Exchange Act. If the Company seeks
shareholder approval of a Business Combination at such time as the Company's
securities are registered pursuant to Section 12(g) of the Exchange Act, the
Company's proxy solicitation materials required to be transmitted to
shareholders may be subject to prior review by the Securities and Exchange
Commission. Under the federal securities laws, public companies must furnish
certain information about significant acquisitions, which information may
require audited financial statements of an acquired company with respect to
one or more fiscal years, depending upon the relative size of the acquisition.
Consequently, if a prospective Target Business did not have available and was
unable to reasonably obtain the requisite audited financial statements, the
Company could, in the event of consummation of a Business Combination with
such company, be precluded from (i) any public financing of its own securities
for a period of as long as three years, as such financial statements would be
required to undertake registration of such securities for sale to the public;
and (ii) registration of its securities under the Exchange Act. As a result
these requirements, and in order to remain in compliance with the Company's
policy, Target Businesses will be required to possess the requisite audited
financial statements prior to the consummation of a Business Combination. See
"Description of Business - General" and "Market For Common Equity and
Related Stockholder Matters - Market Information".
In the event the Company's obligation to file periodic reports under
the Exchange Act is suspended, the Company presently intends to continue to
file such periodic reports on a voluntary basis.
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
The Company's bylaws provide, among other things, that (i) officers
and directors of the Company will be indemnified to the fullest extent
permitted under Florida law. See "Indemnification of Directors and Officers".
TRANSFER AGENT
The Company presently serves as its own transfer agent.
PART II
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
No public trading market presently exists for the Company's Common
Stock, and there are no present plans, proposals, arrangements or
understandings with any person with regard to the development of any trading
market in any of the Company's securities. No shares of Common Stock have
been registered for resale under the blue sky laws of any state. The holders of
shares of Common Stock and persons who may desire to purchase shares of
Common Stock in any trading market that might develop in the future, should
be aware that there may be significant state blue-sky law restrictions upon
the ability of shareholders to sell their shares and of purchasers to purchase
the shares of Common Stock. Some jurisdictions may not allow the trading or
resale of blind-pool or "blank-check" securities under any circumstances.
Accordingly, shareholders should consider the secondary market for the
Company's securities to be a limited one.
It is likely that the Company will not develop any trading market in
the Company's Common Stock until such time as a Business Combination is
effectuated and the requisite audited financial statements required pursuant
to Form 8-K (or its equivalent) are filed with the SEC. No
<PAGE> 38
assurances are made, however, that a trading market for the Company's Common
Stock will ever develop.
No shares of Common Stock of the Company are presently subject to
outstanding options or warrants to purchase, or securities convertible into,
common equity of the Company. However, the Company's Articles of
Incorporation authorize the Company to issue 5,000,000 shares of preferred
stock ("Preferred Stock"). The board of directors of the Company is authorized
to provide for the issuance of such Preferred Stock in classes or series and,
by filing the appropriate articles of amendment withthe Secretary of State of
Florida, is authorized to establish the number of shares to be included in
each class or series and the preferences, limitations and relative rights of
each class or series, which may consist of a conversion feature whereby such
Preferred Stock may be convertible into Common Stock. This type of preferred
stock is commonly referred to as "blank check preferred stock". As of the
date of this registration statement, no shares of Preferred Stock have been
issued by the Company and no preferences, limitations and relative rights have
been assigned. The Company does not anticipate issuing any shares of
Preferred Stock until such time that a Business Combination is effectuated. See
"Description of Securities - Preferred Stock".
Approximately eight shareholders hold the Company's Common Stock. The
Company presently has 785,000 shares of Common Stock outstanding, and all such
shares are deemed to be "restricted securities," as that term is defined under
Rule 144 promulgated under the Securities Act, in that such shares were issued
in private transactions not involving a public offering. So long as all of
the conditions of Rule 144 are met; in (i) April, 2000, 700,000 shares; (ii)
May, 2000, 35,000 shares; and (iii) June/July, 2000, 50,000 shares of Common
Stock will be eligible for sale under Rule 144, as currently in effect. No
assurances are made; however, that Rule 144 will be available at any time for
any shareholder's shares. See "Description of Securities". The Company has
not provided to any shareholder registration rights to register under the
Securities Act any shareholder's shares for sale.
In general, under Rule 144, as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate
of the Company (or persons whose shares are aggregated), who has
beneficially owned restricted shares of Common Stock for at least one year
is entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares
of the same class or, if the Common Stock is traded on a national securities
exchange or the Nasdaq system, the average weekly trading volume during the
four calendar weeks preceding the sale. A person who has not been an affiliate
of the Company for at least the three months immediately preceding the sale
and who has beneficially owned restricted shares of Common Stock for at least
two years is entitled to sell such shares under Rule 144 without regard to
any of the limitations described above. No assurances are made; however, that
Rule 144 will be available at any time for any shareholder's shares.
The Company has no present plans, proposals, arrangements,
understandings or intention of selling any amount of shares of Common Stock
in the
<PAGE> 39
public market subsequent to a Business Combination. Nevertheless, in the
event that substantial amounts of Common Stock are sold in the public
market subsequent to a Business Combination, such sales may adversely affect
the price for the sale of the Company's equity securities in any trading
market which may develop. No prediction can be made as to the effect, if
any, that market sales of restricted shares of Common Stock or the
availability of such shares for sale will have on the market prices
prevailing from time to time.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date
and does not presently intend to pay cash dividends prior to the
consummation of a Business Combination. The payment of cash dividends in the
future, if any, will be contingent upon the Company's revenues and earnings,
if any, capital requirements and general financial condition subsequent to
the consummation of a Business Combination. The payment of any dividends
subsequent to a Business Combination will be within the discretion of the
Company's then board of directors. It is the present intention of the board
of directors to retain all earnings, if any, for use in the Company's
business operations and, accordingly, the board of directors does not anticipate
paying any cash dividends in the foreseeable future.
LEGAL PROCEEDINGS.
As of the date hereof, the Company is not a party to any material legal
proceedings, nor is it aware of any threatened litigation of a material nature.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
RECENT SALES OF UNREGISTERED SECURITIES.
As of the date of this registration statement, the Company has issued
an aggregate of 785,000 shares of Common Stock as follows:
On April 15, 1999, the Company adopted and agreed to be bound by the
terms of a Pre-incorporation Consultation and Subscription Agreement dated
April 10, 1999, between David M. Bovi and William R. Colucci pursuant to
which such persons agreed to provide cash, certain pre-incorporation services,
serve as an officer and director and to take the steps necessary to organize
the Company in return for the issuance to them of Company securities.
Accordingly, on April 15, 1999, the Company issued such persons a total of
700,000 shares of Common Stock at $0.00196 per share. Pursuant to the terms
of the Pre-incorporation Consultation and Subscription Agreement, the cash
consideration provided by such persons for 510,000 shares of Common Stock
totaled $1,000, or $0.00196 per share, and the services provided by such
persons for 190,000 shares of Common Stock were valued at $372.40,
or $0.00196 per share. The Company relied on Section 4(2) of the Securities
Act since the transaction did not involve any public offering.
<PAGE> 40
On May 1, 1999, the Company issued 35,000 shares to one (1)
non-accredited person in exchange for $68.60 in administrative services to
the Company, or $0.00196 per share. This person was the only offeree in
connection with this transaction. The Company relied on Section 4(2) of the
Securities Act since the transaction did not involve any public offering.
During June and July, 1999, the Company issued 50,000 shares to five
non-accredited investors in exchange for $2,500 in cash, or $0.05 per share.
These persons were the only offerees in connection with this transaction.
The Company relied on Section 4(2) and Rule 505 of Regulation D of the
Securities Act since the transaction did not involve any public offering.
No underwriters were utilized and no commissions or fees were paid
with respect to any of the above transactions. No other shares of Common
Stock have been issued by the Company in any other transaction.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws contain the broadest form of indemnification for
its officers and directors and former officers and directors permitted under
Florida law. The Company's bylaws generally provide that: The Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by, or
in the right of the Company) by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorney's fees), judgments, fines, amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, including any appeal thereof, if he acted in good
faith in a manner he reasonably believed to be in, or not opposed to the best
interests of the Company, and with respect to any criminal action or proceeding,
had no reasonable cause to believe that his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contenders or its equivalent shall not
create, of itself, a presumption that the person did not act in good faith or in
a manner which he reasonably believed to be in, or not opposed to, the best
interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in any defense of any claim,
issue or matter therein, he shall be indemnified against expenses, including
attorneys fees, actually and reasonably incurred by him in connection therewith.
Any indemnification shall be made only if a determination is made that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth above. Such determination shall be made either (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties
<PAGE> 41
to such action, suit or proceeding, or (2) by the shareholders who were not
parties to such action, suit or proceeding. If neither of the above
determinations can occur because the board of directors consists of a sole
director or the Company is owned by a sole shareholder, then the sole
director or sole shareholder shall be allowed to make such determination.
Expenses incurred in defending any action, suit or proceeding may be
paid in advance of the final disposition of such action, suit or proceeding
as authorized in the manner provided above upon receipt of any undertaking
by or on behalf of the director, officer, employee or agent to repay such
amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the Company.
The indemnification provided shall be in addition to the
indemnification rights provided pursuant to Chapter 607 of the Florida
Statutes, and shall not be deemed exclusive of any other rights to which any
person seeking indemnification may he entitled under any bylaw, agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who
has ceased to be a director, officer, employee or agent of the Company and
shall inure to the benefit of the heirs, executors and administrators of such
a person.
FINANCIAL STATEMENTS
<PAGE> F-1
BF ACQUISITION GROUP IV, INC.
( A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
-------------------------------
Page
REPORT OF INDEPENDENT AUDITORS F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 through
F-8
<PAGE> F-2
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
BF Acquisition Group IV, Inc.
We have audited the accompanying balance sheet of BF Acquisition Group IV,
Inc. (the "Company"), a development stage company, as of April 30, 1999, and
the related statements of operations, changes in stockholders' equity, and
cash flows for the period April 15, 1999 (date of incorporation) through
April 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BF Acquisition Group IV,
Inc. as of April 30, 1999, and the results of its operations and its cash
flows for the period April 15, 1999 (date of incorporation) through April 30,
1999 in conformity with generally accepted accounting principles.
By: /s/Ahearn, Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
May 20, 1999
<PAGE> F-3
BF ACQUISITION GROUP IV, INC.
(A development stage company)
BALANCE SHEET
APRIL 30, 1999
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSET - Cash and cash equivalents $1,000
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 5,000,000 shares
authorized; none issued or outstanding $ -
Common stock, $.001 par value; 50,000,000 shares
authorized; 700,000 shares issued and outstanding 700
Additional paid-in capital 672
Deficit accumulated during the development stage (372)
-----------
Total $1,000
-----------
-----------
</TABLE>
<PAGE> F-4
BF Acquisition Group IV, Inc.
(A development stage company)
STATEMENT OF OPERATIONS
FOR PERIOD APRIL 15, 1999 (date of incorporation) THROUGH APRIL
30, 1999
<TABLE>
<CAPTION>
<S> <C>
REVENUE $ --
GENERAL AND ADMINISTRATIVE EXPENSES 372
LOSS BEFORE INCOME TAX PROVISION (372)
PROVISION FOR INCOME TAXES --
NET LOSS $(372)
-----------
-----------
PER SHARE AMOUNTS:
Net loss per common share outstanding $(0.0005)
-----------
-----------
COMMON SHARES OUTSTANDING AT APRIL 30, 1999 700,000
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE> F-5
BF Acquisition Group IV, Inc.
(A development stage company)
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
FOR PERIOD APRIL 15, 1999 (date of incorporation)
THROUGH APRIL 30, 1999
<TABLE>
<CAPTION>
Common Additional Accumulated
Stock, at Paid-in during the
par value Capital Development
Stage Total
----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
STOCKHOLDERS'
EQUITY
April 15, 1999 $ --- $ --- $ --- $ ---
Sale of 510,000 shares of
common stock 510 490 --- 1,000
Common stock issued for
services 190 182 --- 372
Net loss for the initial
period ended
April 30, 1999 --- --- (372) (372)
STOCKHOLDERS'
EQUITY, April 30, 1999 $ 700 $ 672 $(372) $1,000
--------- ------- ---------- ------
--------- ------- ---------- ------
</TABLE>
See notes to financial statements.
<PAGE> F-6
BF Acquisition Group IV, Inc.
(A development stage company)
STATEMENT OF CASH FLOWS
FOR PERIOD APRIL 15, 1999 (date of incorporation) THROUGH
APRIL 30, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (372)
Common stock issued for services 372
------------
NET CASH USED IN OPERATING ACTIVITIES --
------------
CASH FLOWS FROM FINANCING ACTIVITY:
Sale of common stock 1,000
------------
NET INCREASE IN CASH EQUIVALENTS 1,000
CASH AND CASH EQUIVALENTS, beginning of period --
-----------
CASH AND CASH EQUIVALENTS, end of period $ 1,000
-----------
-----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ --
----------
----------
Cash paid for income taxes $ --
----------
----------
</TABLE>
See notes to financial statements.
<PAGE> F-7
BF Acquisition Group IV, Inc.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR PERIOD APRIL 15, 1999 (date of incorporation) THROUGH
APRIL 30, 1999
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
BF Acquisition Group IV, Inc., (the "Company"), a development stage
company, was organized in Florida on April 15, 1999 as a "shell" company
which plans to look for suitable business partners or acquisition candidates
to merge with or acquire. Operations since incorporation have consisted
primarily of obtaining the initial capital contribution by the founding
shareholders and coordination of activities regarding the SEC registration of
the Company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
The Company accounts for income taxes in accordance with the Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes",
which requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
A valuation allowance is recognized to reduce the net deferred tax asset to
an amount that is more likely than not to be realized. The tax provision
shown on the accompanying statement of operations is zero since the deferred
tax asset generated from the net operating loss is offset in its entirety by
a valuation allowance.
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid debt
instruments with an original maturity of three months or less at the date of
purchase.
Earnings Per Common Share
The Company follows the provisions of SFAS No. 128, "Earnings Per
Share", which requires companies with complex capital structures or common
stock equivalents to present both basic and diluted earnings per share
("EPS") on the face of the income statement. Basic EPS is calculated as
income available to common stockholders divided by the weighted average number
of common shares outstanding during the period.
Diluted EPS is calculated using the "if converted" method for convertible
securities and the treasury stock method for options and warrants as
previously prescribed by Accounting Principles Board Opinion No. 15,
"Earnings Per Share".
Statement of Comprehensive Income
A statement of comprehensive income has not been included, per SFAS
130, "Reporting Comprehensive Income", as the Company has no items of other
comprehensive income.
<PAGE> F-8
BF ACQUISITION GROUP IV, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 15, 1999 (date of incorporation) THROUGH
APRIL 30, 1999
NOTE 3 - LOSS PER COMMON SHARE
Net loss per common share outstanding, as shown on the statement of
operations, is based on the number of common shares outstanding at the
balance sheet date. Weighted average shares outstanding was not computed
since it would not be meaningful in the circumstances, as all shares issued
during the period from incorporation through April 30, 1999 were for initial
capital and were issued to just two individuals. Therefore, the total shares
outstanding at the end of the period was deemed to be the most relevant
number of shares to use for purposes of this disclosure.
For future periods, the Company will utilize the treasury stock method
for computing earnings per share, and will compute a weighted average number
of shares outstanding if additional shares of stock are issued to new
shareholders.
NOTE 4 - CAPITAL STOCK
Common Stock
The holders of the common stock are entitled to one vote per share and
have non-cumulative voting rights. The holders are also entitled to receive
dividends when, as, and if declared by the Board of Directors. Additionally,
the holders of the common stock do not have any preemptive right to subscribe
for, or purchase, any shares of any class of stock.
Preferred Stock
The Board of Directors of the Company is authorized to provide for the
issuance of the preferred stock in classes or series and, by filing the
appropriate articles of amendment with the Secretary of State of Florida, is
authorized to establish the number of shares to be included in each class or
series and the preferences, limitations and relative rights of each class or
series, which may include a conversion feature into common stock.
This type of preferred stock is commonly referred to as "blank check
preferred stock". As of May 20, 1999, no shares of preferred stock have
been issued and no preferences, limitations and relative rights have been
assigned.
NOTE 5 - RELATED PARTY TRANSACTIONS
Transactions with Shareholders
On April 15, 1999, the company issued 190,000 shares valued at $372 as
consideration for services rendered by the two shareholders of the Company for
the formation of the Company. Of the 190,000 shares, 90,000 have been issued
under Rule 701 adopted by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
Office Facilities
Office space is provided by a shareholder of the Company at no charge.
<PAGE>
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
INDEX
PART I Financial Information
ITEM I Balance Sheets
July 31, 19999 (unaudited) and April 30, 1999..................2
Statements of Operations -
Three months ended July 31, 1999
and from inception on April 15, 1999 through
July 31, 1999 (unaudited).......................................3
Statement of Stockholders' Equity
From April 15, 1999 through July 31, 1999.......................4
Statement of Cash Flows -
Three months ended July 31, 1999
and from inception on April 15, 1999 through
July 31, 1999 (unaudited)......................................5
Notes to Financial Statements..................................6
Item 2 Management's Plan of Operations................................9
PART II Other Information
Item 1 Legal Proceedings.............................................11
Item 2 Changes in Securities.........................................11
Item 3 Defaults upon Senior Securities...............................11
Item 4 Submission of Matters to a vote of
Security Holders..............................................11
Item 5 Other Information..............................................11
Item 6 Exhibits and Reports on Form 8-K...............................11
Signature page...........................................................11
<PAGE> G-2
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
July 31, April 30,
1999 1999
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,892 $ 1,000
----------- ----------
Total assets $ 1,892 $ 1,000
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized;
none issued or outstanding
Common stock $0.001 par value;
50,000,000 shares authorized,
785,000 and 700,000 shares issued
and outstanding at July 31, 1999
and April 30, 1999, respectively 785 700
Additional paid-in capital 3,156 672
Deficit accumulated during
the development stage (2,049) (372)
Total stockholders' equity 1,892 1,000
Total liabilities and
stockholders' equity $ 1,892 $ 1,000
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> G-3
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Period from
inception
Three months (April15,1999)
ended through
July 31, 1999 July 31, 1999
------------- ---------------------
(unaudited) (unaudited)
<S> <C> <C>
Revenues $ -- $ --
General and administrative
expenses 1,677 2,049
Loss before income tax
provision $ (1,677) $ (2,049)
Provision for income taxes - -
------------ ---------------
Net loss $ (1,677) $ (2,049)
------------ --------------
------------ --------------
Basic and dilutive loss
per common share:
Basic and diluted loss
per common share $ (0.0022) $ (0.0027)
--------------- --------------
-------------- --------------
Weighted average number of
common shares outstanding 759,565 750,741
------------ ---------------
------------ ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> G-4
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional during the Total
--------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
April 15,1999 - $ - $ - $ - -
Sale of
510,000 shares
of common stock 510,000 510 490 1,000
Common stock
issued for
services 190,000 190 182 372
Net Loss - - - (372) (372)
---------- --------- ----------- ------------ ------------
Balance,
April 30,1999 700,000 $ 700 $ 672 $(372) 1,000
------- --------- ----------- --------- ------------
--------- --------- ----------- --------- ------------
Sale of 50,000
shares of
common stock 50,000 50 2,450 2,500
Common stock
issued for
services 35,000 35 34 69
Net loss - - - (1,677) (1,677)
---------- -------- --------- ---------- -----------
Balance,
July 31, 1999 785,000 $ 785 $3,156 $(2,049) $ 1,892
------------ -------- ---------- --------- -----------
------------ -------- ---------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> G-5
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
inception
Three months (April 15,1999)
ended through
July 31 July 31
1999 1999
-------------- -----------------
<S> <C> <C>
(unaudited) (unaudited)
Cash flows from
operating activities:
Net loss $ (1,677) $ (2,049)
Common Stock Issued for services 69 441
------------- -----------------
Net cash used in operating activities (1,608) (1,608)
Cash flows from
financing activities
Sale of common stock 2,500 3,500
------------- -----------------
Net cash provided by
financing activities 2,500 3,500
------------- ---------------
Net increase in cash and
cash equivalents 892 1,892
Cash and cash equivalents at
beginning of period 1,000 -
------------ ----------------
Cash and cash equivalents at
end of period $ 1,892 $1,892
------------ ----------------
------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> G-6
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
BF Acquisition Group IV, Inc., (the "Company"), a development stage
company, was organized in Florida on April 15, 1999 as a "shell" company
which plans to look for suitable business partners or acquisition candidates
to merge with or acquire. Operations since incorporation have consisted
primarily of obtaining the initial capital contribution by the founding
shareholders and coordination of activities regarding the SEC registration of
the Company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The information for the three and six months ended October 31, 1999 has
not been audited by independent certified public accountants, but includes all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the period.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the requirements of the Securities
and Exchange Commission, although the Company believes that the disclosures
included in these interim financial statements are adequate to make the
information not misleading.
It is suggested that these consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Form 10-SB (see File Number 000-26849) on
file with the Securities and Exchange Commission.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Income Taxes
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", which
requires the recognition of deferred tax liabilities and assets at currently
enacted tax rates for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
A valuation allowance is recognized to reduce the net deferred tax asset
to an amount that is more likely than not to be realized. The tax provision
shown on the accompanying statement of operations is zero since the deferred tax
asset generated from the net operating loss is offset in its entirety by a
valuation allowance.
<PAGE> G-6
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid debt
instruments with an original maturity date of three months or less at the date
of purchase.
Earnings Per Common Share
The Company follows the provisions of SFAS No. 128, "Earnings Per
Share", which requires companies with complex capital structures or common
stock equivalents to present both basic and diluted earnings per share ("EPS")
on the face of the income statement. Basic EPS is calculated as income
available to common stockholders divided by the weighted average number of
common shares outstanding during the period. Diluted EPS is calculated using
the "if converted" method for convertible securities and the treasury stock
method for options and warrants as previously prescribed by Accounting
Principles Board Opinion No. 15, "Earnings Per Share".
Statement of Comprehensive Income
A statement of comprehensive income has not been included, per SFAS 130,
"Reporting Comprehensive Income", as the Company has no items of other
comprehensive income.
3. LOSS PER COMMON SHARE:
Net loss per common share outstanding, as shown on the statement of
operations, is determined by the weighted average number of shares of common
stock outstanding during the period. Diluted loss per common share
calculations are determined by dividing loss available to common shareholders
by the weighted average number of shares of common stock and dilutive common
stock equivalents outstanding during the period.
4. CAPITAL STOCK:
Common Stock
The holders of the common stock are entitled to one vote per share and
have non-cumulative voting rights. The holders are also entitled to receive
dividends when, as, and if declared by the Board of Directors. Additionally,
the holders of the common stock do not have any preemptive right to subscribe
for, or purchase, any shares of any class of stock.
Preferred Stock
The Board of Directors of the Company is authorized to provide for the
issuance of the preferred stock in classes or series and, by filing the
appropriate articles of amendment with the Secretary of State of Florida, is
authorized to establish the number of shares to be included in each class or
series and the preferences, limitations and relative rights of each class or
series, which may include a conversion feature into common stock. This type
of preferred stock is commonly referred to as "blank check preferred stock".
As of December 13, 1999, no shares of preferred stock have been issued and no
preferences,limitations and relative rights have been assigned.
<PAGE> G-6
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
5. RELATED PARTY TRANSACTIONS:
OFFICE FACILITIES
OFFICE SPACE WAS PROVIDED TO THE COMPANY BY A SHAREHOLDER OF
THE COMPANY AT $150 PER MONTH FROM JUNE THROUGH OCTOBER 1999. EFFECTIVE
NOVEMBER 1999, THE RENT WILL BE $100 PER MONTH FOR OFFICE SPACE.
<PAGE> H-1
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
INDEX
PART I Financial Information
Item I Balance Sheets -
October 31, 1999 (unaudited) and April 30, 1999..............2
Statements of Operations -
Three months and six months ended October 31, 1999
and from inception on April 15, 1999 through
October 31, 1999 (unaudited)....................................3
Statement of Stockholders' Equity
From April 15, 1999 through October 31, 1999....................4
Statement of Cash Flows -
Three months and six months ended October 31, 1999
and from inception on April 15, 1999 through
October 31, 1999 (unaudited).....................................5
Notes to Financial Statements....................................6
Item 2 Mangaement's Plan of Operations.................................9
PART II Other Information
Item 1 Legal Proceedings...............................................11
Item 2 Changes in Securities...........................................11
Item 3 Defaults upon Senior Securities.................................11
Item 4 Submission of Matters to a vote of
Security Holders................................................11
Item 5 Other Information...............................................11
Item 6 Exhibits and Reports on Form 8-K.................................11
Signature page.............................................................11
<PAGE> H-2
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
October 31, April 30,
1999 1999
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,547 $ 1,000
----------- ----------
Total assets $ 1,547 $ 1,000
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized;
none issued or outstanding - -
Common stock $0.001 par value;
50,000,000 shares authorized,
785,000 and 700,000 shares issued
and outstanding at October 31, 1999
and April 30, 1999, respectively 785 700
Additional paid-in capital 3,156 672
Deficit accumulated during
the development stage (2,394) (372)
Total stockholders' equity 1,547 1,000
Total liabilities and
stockholders' equity $ 1,547 $ 1,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> H-3
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Period from
inception
Three months Six months (April 15, 1999)
ended ended through
October 31, October 31, October 31,
1999 1999 1999
------------- ------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Revenues $ - $ - $ -
General and
administrative expenses 345 2,022 2,394
----------- ------------- ----------
Loss before income
tax provision (345) (2,022) (2,394)
Provision for income
taxes - - -
----------- ------------- ----------
Net loss $ (345) $(2,022) $ (2,394)
----------- ------------- ----------
------------ ------------- ----------
Basic and dilutive
loss per common share:
Basic and diluted
loss per common share $(0.0004) $(0.0026) $ (0.0031)
------------ ------------- ----------
------------ ------------- ----------
Weighted average number
of common shares
outstanding 785,000 772,283 766,500
------------ ------------- ----------
------------ ------------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> H-4
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional during the Total
--------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------ --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance,
April 15,1999 - $ - $ - $ - -
Sale of
510,000 shares
of common stock 510,000 510 490 1,000
Common stock
issued for services 190,000 190 182 372
Net Loss - - - (372) (372)
------ ------ --------- ----------- ----------
Balance,
April 30,1999 700,000 $ 700 $ 672 $ (372) 1,000
------- ------ --------- ----------- ---------
------- ------ --------- ----------- ---------
Sale of 50,000
shares of
common stock 50,000 50 2,450 - 2,500
Common stock
issued for
services 35,000 35 34 69
Net loss - - - (2,022) (2,022)
------- ------- -------- ------------ ----------
Balance,
October 31,
1999 785,000 $ 785 $3,156 $(2,394) $ 1,547
------- ------ -------- ---------- ------------
------- ----- -------- ---------- ------------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> H-5
BF ACQUISITION GROUP IV, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
inception
Three months Six months (April 15,1999)
ended ended through
October 31, October 31, October 31,
1999 1999 1999
-------------- -------------- -------------
<S> <C> <C> <C>
(unaudited) (unaudited) (unaudited)
Cash flows from
operating activities:
Net loss $ (345) $ (2,022) $ (2,394)
Common Stock
Issued for
services - 69 441
------------- -------------- -------------
Net cash used in
operating activities (345) (1,953) (1,953)
Cash flows from
financing activities:
Sale of common stock - 2,500 3,500
------------- --------------- -------------
Net cash provided by
financing activities - 2,500 3,500
------------- -------------- -------------
Net (decrease) increase
in cash and cash
equivalents (345) 547 1,547
Cash and cash
equivalents at
beginning of period 1,892 1,000 -
------------ --------------- -------------
Cash and cash
equivalents at
end of period $ 1,547 $ 1,547 $ 1,547
----------- ---------------- --------------
----------- ---------------- --------------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> H-6
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
BF Acquisition Group IV, Inc., (the "Company"), a development
stage company, was organized in Florida on April 15, 1999 as a
"shell" company which plans to look for suitable business
partners or acquisition candidates to merge with or acquire.
Operations since incorporation have consisted primarily of
obtaining the initial capital contribution by the founding
shareholders and coordination of activities regarding the SEC
registration of the Company.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The information for the three and six months ended October 31,
1999 has not been audited by independent certified public
accountants, but includes all adjustments which are, in the
opinion of management, necessary to a fair statement of the
results for the period.
Certain information and footnote disclosure normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to
the requirements of the Securities and Exchange Commission,
although the Company believes that the disclosures included in
these interim financial statements are adequate to make the
information not misleading.
It is suggested that these consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual
Report on Form 10-SB (see File Number 000-26851) on file with
the Securities and Exchange Commission.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Income Taxes
The Company accounts for income taxes in accordance with the
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which requires the recognition
of deferred tax liabilities and assets at currently enacted tax
rates for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
A valuation allowance is recognized to reduce the net deferred
tax asset to an amount that is more likely than not to be
realized. The tax provision shown on the accompanying
statement of operations is zero since the deferred tax asset
generated from the net operating loss is offset in its entirety
by a valuation allowance.
<PAGE> H-7
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid
debt instruments with an original maturity date of three months
or less at the date of purchase.
Earnings Per Common Share
The Company follows the provisions of SFAS No. 128, "Earnings
Per Share", which requires companies with complex capital
structures or common stock equivalents to present both basic
and diluted earnings per share ("EPS") on the face of the
income statement. Basic EPS is calculated as income available
to common stockholders divided by the weighted average number
of common shares outstanding during the period. Diluted EPS is
calculated using the "if converted" method for convertible
securities and the treasury stock method for options and
warrants as previously prescribed by Accounting Principles
Board Opinion No. 15, "Earnings Per Share".
Statement of Comprehensive Income
A statement of comprehensive income has not been included, per
SFAS 130, "Reporting Comprehensive Income", as the Company has
no items of other comprehensive income.
3. LOSS PER COMMON SHARE:
Net loss per common share outstanding, as shown on the
statement of operations, is determined by the weighted average
number of shares of common stock outstanding during the period.
Diluted loss per common share calculations are determined by
dividing loss available to common shareholders by the weighted
average number of shares of common stock and dilutive common
stock equivalents outstanding during the period.
4. CAPITAL STOCK:
Common Stock
The holders of the common stock are entitled to one vote per
share and have non-cumulative voting rights. The holders are
also entitled to receive dividends when, as, and if declared by
the Board of Directors. Additionally, the holders of the
common stock do not have any preemptive right to subscribe for,
or purchase, any shares of any class of stock.
Preferred Stock
The Board of Directors of the Company is authorized to provide
for the issuance of the preferred stock in classes or series
and, by filing the appropriate articles of amendment with the
Secretary of State of Florida, is authorized to establish the
number of shares to be included in each class or series and the
preferences, limitations and relative rights of each class or
series, which may include a conversion feature into common
stock. This type of preferred stock is commonly referred to as
"blank check preferred stock". As of December 13, 1999, no
shares of preferred stock have been issued and no preferences,
limitations and relative rights have been assigned.
<PAGE> H-7
BF ACQUISITION GROUP IV, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
5. RELATED PARTY TRANSACTIONS:
OFFICE FACILITIES
OFFICE SPACE WAS PROVIDED TO THE COMPANY BY A SHAREHOLDER OF
THE COMPANY AT $150 PER MONTH FROM JUNE THROUGH OCTOBER 1999.
EFFECTIVE NOVEMBER 1999, THE RENT WILL BE $100 PER MONTH FOR
OFFICE SPACE.
<PAGE> 42
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for BF Acquisition Group IV, Inc.
1. Balance Sheet (audited and unaudited)
2. Statement of Operations (audited and unaudited)
3. Statement of Changes in Stockholders' Equity (audited and
unaudited)
4. Statement of Cash Flows (audited and unaudited)
5. Notes to Financial Statements (audited and unaudited)
(b) Pursuant to Item 601 of Regulation S-B, the Company
includes the following exhibits:
Exhibit No. Description of Exhibit Sequential Page No.
- --------- ---------------------- --------------------
(3) Charter and Bylaws.
3.1 Articles of Incorporation. **
3.2 Bylaws. **
(4) Instruments defining the rights of security holders.
4.1 Articles of Incorporation. **
4.2 Bylaws. **
(10) Material Contracts.
10.1 Pre-incorporation Agreement. **
10.2 Office Sub-Lease Agreement. **
(27) Financial Data Schedule.
<PAGE> 43
27.1 Financial Data Schedule.
** Incorporated by reference to Registrant's Form 10-SB filed July 27, 1999.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
BF ACQUISITION GROUP IV, INC.
Date: December 20, 1999 By:/s/ David M. Bovi
David M. Bovi,
Chief Executive Officer
