U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB AMENDMENT NO. 2
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 V, Inc.
(Name of Small Business Issuer in its charter)
Florida 65-0913588
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
319 Clematis Street, Suite 812, West Palm Beach, Florida 33401
(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 V, 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.
Limited Basis to Evaluate the Company's Prospects; Recently Organized
Company; No Operating History.
There is only a limited basis upon which to evaluate the Company's
prospects for achieving its intended business objectives. The Company was
incorporated on April 15, 1999. It is a development stage company which has
no operating history, no revenues, and no present source of future
revenues. To date, the Company's entire activity has consisted of
organizational activities and preparation for its proposed plan of
business. See "Description of Business - Shell Corporation".
<PAGE 4>
Management's Discussion and Analysis or Plan of Operation; Development
Stage Company with Limited Resources, No Operations or Revenues Anticipated
Prior to the Effectuation of a Business Combination; Potential for the
Company's Cash Reserves to Be Depleted Prior to the Effectuation of a
Business Combination.
The Company is a development stage entity which has neither
engaged in any operations nor generated any revenues to date. The Company
will not achieve any revenues until, at the earliest, the consummation of
a Business Combination, if at all. As of the date hereof, the Company has
not attempted to seek a Business Combination and there can be no assurances
that any Target Business, whether 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 profitable basis. The
Company has limited resources and 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. To the extent that a Business Combination does not occur
with an identified Target Business, the Company will be unable to recoup
the financial resources expended on searching for and analyzing such Target
Business. 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 for and analysis of a Target Business,
there can be no assurances that until a Business Combination is
consummated, the Company's cash requirements will be sufficient. See
"Management's Discussion and Analysis or Plan of Operation" and
"Description of Business - Shell Corporation - Selection of a Target
Business and Structuring of a Business Combination".
No Assurance of Availability of Additional Financing if the Company's Cash
Reserves are Depleted Prior to the Effectuation of a Business Combination;
Limited Ability to Evaluate Capital Requirements of a Target Business.
The Company cannot ascertain with any degree of certainty the
capital requirements for any particular Business Combination. 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 -
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
<PAGE 5>
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".
Unspecified Target Business and Industry; Inability to Evaluate the Merits
or Risks of any Target Business or Industry.
Since the Company has not yet selected a Target Business or any
particular industry in which to concentrate its Business Combination
efforts, no current basis presently exists for the Company to evaluate the
possible merits or risks of a particular Target Business or industry in
which the Company may ultimately operate. Therefore, there can be no
assurances that the Company will properly ascertain or assess all
significant risk factors in connection with a Business Combination.
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.
Intense Competition From Other Blank Check Companies; No Assurance the
Company Can Successfully Compete with Competitors or Effect a Business
Combination with an Attractive Target Business.
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 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".
Probable Lack of Business Diversification; Dependance Upon a Single
Business
It is likely that the Company will have the ability to effect only
a single Business Combination since it will not 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.
Accordingly, the prospects for the Company's success will be entirely
dependent upon the future performance of a single business or 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
<PAGE 6>
viable. See "Description of Business - Shell Corporation - Probable Lack
of Business Diversification".
Limited Ability to Ascertain the Competitive Environment of a Target
Business or Industry.
If the Company effects a Business Combination, the Company may
become subject to intense competition from competitors of the Target
Business who will likely possess greater financial, marketing, technical
and other resources than the Target Business. 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 Target Business".
Probable Change in Control and Management; Reliance Upon Unidentifiable
Management of Target Business; Limited Ability to Evaluate a Target
Business' Management.
It is likely that the successful completion of a Business
Combination will result in a change in control of the Company, and any
change in control of the Company will most likely also result in the
resignation or removal of the Company's present officers and directors. The
Company does not intend to retain an independent company to perform an
analysis or any type of background investigation on the members of a
potential Target Business's management. 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. There can be no assurances that the Company's assessment of a
prospective Target Business' management will prove to be correct in
connection with a Business Combination, especially in light of the possible
inexperience of the Company's current management 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's operational activities. See
"Description of Business - Shell Corporation - 'Selection of a Target
Business and Structuring of a Business Combination' and 'Limited Ability
to Evaluate Target Business' Management".
No Assurance of Favorable Tax Treatment in Connection with a Business
Combination.
There can be no assurance that the Internal Revenue Service (the "IRS")
or appropriate state tax authorities will ultimately assent to the Company's
tax treatment of a consummated Business Combination. If IRS or state tax
authorities recharacterize 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".
<PAGE 7>
Dependence upon Management; Potential Material Adverse Effect on the
Company in the Event of Loss of Management's Services.
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. See
"Directors and Executive Officers, Promoters and Control Persons".
No Opportunity for Shareholder Evaluation or Approval of Business
Combinations; Potential Loss of Dissenter's Rights.
Non-affiliate shareholders of the Company will, in all likelihood,
neither receive nor otherwise have the opportunity to evaluate any
financial or other information in connection with selecting a potential
Business Combination. 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".
Potential Inability to Retain Outside Advisors; No Opportunity for
Shareholders to Select Outside Advisors; No Continuous Fiduciary Duty to
the Company by Outside Advisors.
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. These
persons may consist of accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. There can be no assurances
that the Company's limited resources will enable it to retain such
necessary additional personnel. Also, the selection of any such advisors
will be made by the Company's officers without any input from shareholders;
and such outside advisors will likely not owe a continuing fiduciary duty
or other obligation to the Company. See "Description of Business - Shell
Corporation - Selection of a Target Business and Structuring of a Business
Combination".
Voting Control of Management; Management's Ability to Control the Company's
Affairs and Operations; No Disinterested Members of the Board of Directors.
Management of the Company owns approximately 89.17% of the issued
and outstanding shares
<PAGE 8>
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. Further, 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 committees until some time after the
consummation of a Business Combination. See "Security Ownership of Certain
Beneficial Owners and Management" and "Description of Securities".
Management Not Required to Commit Their Full Time to the Affairs of the
Company; Management's Potential Conflicts of Interest in Presenting
Business Opportunities to the Company as a Result of Multiple Affiliations.
It is anticipated that the Company's officers and directors will
devote approximately 5% of their time to the affairs of the Company. Since
none of the Company's key personnel are required to commit their full time
to the affairs of the Company, such personnel may have conflicts of
interest in allocating management time among various business activities.
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. Additionally, 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. 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'".
Potential Securities Sales by Affiliate Shareholders.
It is possible for the Company's principal shareholders to 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'".
<PAGE 9>
Indemnification of Officers and Directors; Loss of Certian Anti-takeover
Protections Due to 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'".
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".
Likelihood the Company's Securities will be Subject to the SEC's Penny
Stock Regulations; Potential Difficulties in Reselling Securities.
The Company's securities, if and when available for trading, will
likely 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
<PAGE 10>
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 resell their shares of
Common Stock. 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".
Authorization of Additional Securities; Likelihood That a Substantial
Amount of Additional Securities Will Be Issued in Connection with a
Business Combination; Potential Adverse Effect on the Market Price of Such
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. See "Description
of Business - Shell Corporation - Selection of a Target Business and
Structuring of a Business Combination" and "Description of Securities".
Shares Eligible for Future Sale; Potential Adverse Effect on Any Future
Market Price of Securities from Sales of Restricted Stock; Potential
Adverse Effect on the Company's Ability to Raise Capital Through the Sale
of its Securities.
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
<PAGE 11>
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".
Payment of 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".
"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 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
<PAGE 12>
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 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) is
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 a 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.
<PAGE 13>
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.
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
<PAGE 14>
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 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;
<PAGE 15>
- 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 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 a
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
<PAGE 16>
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.
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. 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 business 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
<PAGE 17>
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 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
<PAGE 18>
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 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
<PAGE 19>
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 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
<PAGE 20>
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.
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
<PAGE 21>
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 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
<PAGE 22>
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
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 to sell 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.
<PAGE 23>
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
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, including venture capital partnerships and corporations,
blind pool companies, large industrial and financial institutions, small
business investment companies and wealthy individuals, are well-established
and have extensive
<PAGE 24>
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 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
<PAGE 25>
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.
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
<PAGE 26>
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 "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:
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership
David M. Bovi 400,000 50.95%
<PAGE 27>
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
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:
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership
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:
Name Age Position
_______ _______ ____________
David M. Bovi 32 Director, Chief
Executive Officer
William R. Colucci 60 Director, President,
Treasurer, Secretary
_________________________
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,
<PAGE 28>
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 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 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 September 1997 to December
1999, Mr. Colucci served as 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. Prior to
this reorganization, Net Lnnx, Inc. served as a "shell" corporation. 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
<PAGE 29>
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 changes 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 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:
Percent of Time
Name, Filing Type Amount and Percentage Intended to Devote
SEC File Number of Beneficial Ownership To Company's Affairs
- ----------------- ----------------------- ---------------------
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
<PAGE 30>
SEC File No. 0-23439
_______________________________
(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 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 had an affiliation with a former shell company as
described below:
From September 1997 to December 1999, Mr. Colucci served 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 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 of Net
Lnnx's acquisition strategy. In March 1999, Net Lnnx reorganized with, and
in July 1999 subsequently merged with, PrintOnTheNet.Com, Inc. In
December 1999, Mr. Colucci resigned from his director position at
PrintOnTheNet.Com,Inc. in order to devote more time to his consulting
activities at his management firm. 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.
<PAGE 31>
EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION.
Long Term
------------
Compensation
- -------------
Annual Compensation Awards Payouts
-------------------- ------- --------
(a) (b) (c) (d) (e) (f) (g) (h)
Other All
Name & Year Salary Bonus Annual Restricted Securities Other
Position Compen- Stock Underlying LTIP Compen-
sation Award(s) Options/ Payouts sation
($) ($) SARs(#) ($) ($)
______________________________________________________________________________
David Since -0- -0- -0- 284.20(1) -0- -0- -0-
Bovi. Inception
Director,1999
Chief
Executive
Officer
- -------------------------------------------
(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
<PAGE 32>
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.
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
<PAGE 33>
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 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".
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
<PAGE 34>
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 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
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
<PAGE 35>
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 of 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
<PAGE 36>
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
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 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. 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
<PAGE 37>
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 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.
<PAGE 38>
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.
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
<PAGE 39>
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 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 V, 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 V, Inc.
We have audited the accompanying balance sheet of BF Acquisition Group V,
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 V,
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 V, INC.
(A development stage company)
BALANCE SHEET
APRIL 30, 1999
ASSETS
------
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
-----------
-----------
<PAGE> F-4
BF Acquisition Group V, Inc.
(A development stage company)
STATEMENT OF OPERATIONS
FOR PERIOD APRIL 15, 1999 (date of incorporation) THROUGH APRIL
30, 1999
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
-----------
-----------
See notes to financial statements.
<PAGE> F-5
BF Acquisition Group V, Inc.
(A development stage company)
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
FOR PERIOD APRIL 15, 1999 (date of incorporation)
THROUGH APRIL 30, 1999
Common Additional Accumulated
Stock, at Paid-in during the
par value Capital Development
Stage Total
----------- ----------- ----------- --------
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
--------- ------- ---------- ------
--------- ------- ---------- ------
See notes to financial statements.
<PAGE> F-6
BF Acquisition Group V, Inc.
(A development stage company)
STATEMENT OF CASH FLOWS
FOR PERIOD APRIL 15, 1999 (date of incorporation) THROUGH
APRIL 30, 1999
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 $ --
----------
----------
See notes to financial statements.
<PAGE> F-7
BF Acquisition Group V, 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 V, 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 V, 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> G-1
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
INDEX
Balance Sheets
July 31, 1999 (unaudited) and April 30, 1999..................G-2
Statements of Operations -
Three months ended July 31, 1999
and from inception on April 15, 1999 through
July 31, 1999 (unaudited).....................................G-3
Statement of Stockholders' Equity
From April 15, 1999 through July 31, 1999.....................G-4
Statement of Cash Flows -
Three months ended July 31, 1999
and from inception on April 15, 1999 through
July 31, 1999 (unaudited)....................................G-5
Notes to Financial Statements................................G-6
<PAGE> G-2
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
BALANCE SHEET
July 31, April 30,
1999 1999
(unaudited)
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
------------ -----------
------------ -----------
The accompanying notes are an integral part of these financial statements.
<PAGE> G-3
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Period from
inception
Three months (April15, 1999)
ended ended
July 31, 1999 July 31, 1999
------------- ---------------------
(unaudited) (unaudited)
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
------------ ---------------
------------ ---------------
The accompanying notes are an integral part of these financial statements.
<PAGE> G-4
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional during the Total
--------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------- --------- ----------- ----------- ------------
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
------------ -------- ---------- --------- -----------
------------ -------- ---------- --------- -----------
The accompanying notes are an integral part of these financial statements.
<PAGE> G-5
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period from
inception
Three months (April 15,1999)
ended through
July 31 July 31
1999 1999
-------------- -----------------
(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
------------ ----------------
------------- ----------------
The accompanying notes are an integral part of these financial statements.
<PAGE> G-6
BF ACQUISITION GROUP V, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
BF Acquisition Group V, 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 000-26853) 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 V, 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 V, 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 V, INC.
(A Development Stage Company)
INDEX
Balance Sheets -
October 31, 1999 (unaudited) and April 30, 1999.................H-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)....................................H-3
Statement of Stockholders' Equity
From April 15, 1999 through October 31, 1999................... H-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)....................................H-5
Notes to Financial Statements...................................H-6
<PAGE> H-2
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, April 30,
1999 1999
(unaudited)
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
----------- -----------
----------- -----------
The accompanying notes are an integral part of these financial statements.
<PAGE> H-3
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
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)
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
------------ ------------- ----------
------------ ------------- ----------
The accompanying notes are an integral part of these financial statements.
<PAGE> H-4
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional during the Total
--------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------ --------- ----------- ----------- ----------
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
------- ------ -------- ---------- ------------
------- ----- -------- ---------- ------------
The accompanying notes are an integral part of these financial statements.
<PAGE> H-5
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
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)
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
----------- ---------------- --------------
----------- ---------------- --------------
The accompanying notes are an integral part of these financial statements.
<PAGE> H-6
BF ACQUISITION GROUP V, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
BF Acquisition Group V, 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 000-26853) 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>
BF ACQUISITION GROUP V, 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>
BF ACQUISITION GROUP V, 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> I-1
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
INDEX
Balance Sheets
January 31, 2000 (unaudited) and April 30, 1999................I-2
Statements of Operations -
Three months ended January 31, 2000
and from inception on April 15, 1999 through
January 31, 2000 (unaudited)...................................I-3
Statement of Stockholders' Equity
From April 15, 1999 through January 31, 2000...................I-4
Statements of Cash Flows -
Three months and nine months ended January 31, 2000
and from inception on April 15, 1999 through
January 31, 2000 (unaudited)...................................I-5
Notes to Financial Statements..................................I-6
<PAGE> I-2
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
BALANCE SHEET
January, April 30,
2000 1999
___________ ___________
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,203 $ 1,000
----------- ----------
Total assets $ 1,203 $ 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 January 31, 2000
and April 30, 1999, respectively 785 700
Additional paid-in capital 3,156 672
Deficit accumulated during
the development stage (2,738) (372)
__________ ___________
Total stockholders' equity 1,203 1,000
__________ ___________
Total liabilities and
stockholders' equity $ 1,203 $ 1,000
------------ -----------
------------ -----------
The accompanying notes are an integral part of these financial statements.
<PAGE> I-3
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Period from
inception
Three months Nine months (April 15, 1999)
ended ended through
January 31, January 31, January 31,
2000 2000 2000
------------- ------------- -------------------
(unaudited) (unaudited) (unaudited)
Revenues $ -- $ -- $ --
General and
administrative
expenses 344 2,366 2,738
------------- -------------- ----------------
Loss before
income tax
provision (344) (2,366) (2,738)
Provision for
income taxes -- -- --
------------- --------------- ---------------
Net loss $ (344) $ (2,366) $ (2,738)
------------ -------------- ---------------
------------ -------------- ---------------
Basic and
dilutive loss
per common share:
Basic and
diluted loss
per common share $ (0.0004) $ (0.0031) $ (0.0036)
------------ --------------- --------------
------------ --------------- --------------
Weighted average
number of common
shares outstanding 785,000 772,283 766,500
------------ -------------- ---------------
------------ -------------- ---------------
The accompanying notes are an integral part of these financial statements.
<PAGE> I-4
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional during the Total
--------------- Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------- --------- ----------- ----------- ------------
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 - - - (2,366) (2,366)
---------- -------- --------- ---------- -----------
Balance,
January 31, 2000 785,000 $ 785 $ 3,156 $(2,738) $ 1,203
---------- -------- ---------- --------- -----------
--------- -------- ---------- --------- -----------
The accompanying notes are an integral part of these financial statements.
<PAGE> I-5
BF ACQUISITION GROUP V, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period from
inception
Three months Nine months (April 15,1999)
ended ended through
January 31, January 31, January 31,
2000 2000 2000
-------------- --------------- -----------------
(unaudited) (unaudited) (unaudited)
Cash flows from
operating activities:
Net loss $ (344) $ (2,366) ($2,738)
Common Stock Issued
for services -- 69 441
------------- --------------- ----------------
Net cash used in
operating activities (344) (2,297) (2,297)
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 (344) 203 1,203
Cash and cash equivalents
at beginning of period 1,547 1,000 --
------------ -------------- -----------------
Cash and cash equivalents
at end of period $1,203 $1,203 $1,203
----------- -------------- ----------------
----------- --------------- ----------------
The accompanying notes are an integral part of these financial statements.
<PAGE> I-6
BF ACQUISITION GROUP V, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION:
BF Acquisition Group V, 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 nine months ended January 31, 2000
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 000-26853) 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> I-6
BF ACQUISITION GROUP V, 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 February 16, 2000, no shares of preferred
stock have been issued and no preferences, limitations and relative rights
have been assigned.
<PAGE> I-6
BF ACQUISITION GROUP V, 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, and $100 per month from
November 1999 through January 2000.
<PAGE 40>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for BF Acquisition Group V, 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 41>
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 V, INC.
Date: February 22, 2000 By: /s/ David M. Bovi
--------------------
David M. Bovi,
Chief Executive Officer
<PAGE>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEETS AND INCOME STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
[PERIOD-TYPE] 3-MOS 9-MOS
[FISCAL-YEAR-END] JAN-31-2000 JAN-31-2000
[PERIOD-START] NOV-01-1999 MAY-01-1999
[PERIOD-END] JAN-31-2000 JAN-31-2000
[EXCHANGE-RATE]
[CASH] 1,203 1,203
[SECURITIES]
[RECEIVABLES]
[ALLOWANCES]
[INVENTORY]
[CURRENT-ASSETS] 1,203 1,203
[PP&E]
[DEPRECIATION]
[TOTAL-ASSETS] 1,203 1,203
[CURRENT-LIABILITIES]
[BONDS]
[PREFERRED-MANDATORY]
[PREFERRED] 5,000,000 5,000,000
[COMMON] 50,000,000 50,000,000
[OTHER-SE]
[TOTAL-LIABILITY-AND-EQUITY] 1,203 1,203
[SALES]
[TOTAL-REVENUES]
[CGS]
[TOTAL-COSTS]
[OTHER-EXPENSES] 344 2,366
[LOSS-PROVISION]
[INTEREST-EXPENSE]
[INCOME-PRETAX] (344) (2,366)
[INCOME-TAX]
[INCOME-CONTINUING] (344) (2,366)
[DISCONTINUED]
[EXTRAORDINARY]
[CHANGES]
[NET-INCOME] (344) (2,366)
[EPS-BASIC] (0.0004) (0.0031)
[EPS-DILUTED] (0.0004) (0.0031)
