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Amendment No. 2 to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
LA INVESTMENT ASSOCIATES, INC.
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(Name of Small Business Issuer in its charter)
NEVADA 88-0406903
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(State) (I.R.S. Employer Identification No.)
2949 East Desert Inn Road, Suite 1, Las Vegas, NV 89121
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (702) 914-6092
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Securities to be registered under Section 12(b) of the Act.
Not applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value per share
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This registration statement contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended, and is subject to the
safe harbors created by those sections. These forward-looking statements are
subject to significant risks and uncertainties, including information included
under Items 1 and 2 of this registration statement, which may cause actual
results to differ materially from those discussed in such forward-looking
statements. The forward-looking statements within this registration statement
are identified by words such as "believes", "anticipates", "expects", "intends",
"may", "will" and other similar expressions regarding the Company's intent,
belief and current expectations. However, these words are not the exclusive
means of identifying such statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or
circumstances and statements made in the future tense are forward-looking
statements. Readers are cautioned that actual results may differ materially from
those projected in the forward looking statements as a result of various
factors, many of which are beyond the control of the Company. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances occurring subsequent to the filing of this registration statement
with the SEC. Readers should note that the safe harbor described in the
Litigation Reform Act does not apply to initial public offerings nor does it
apply to statements made by a registrant that has issued penny stock during the
three year period preceding the date on which the statements are made. The
Company's stock can be considered penny stock and as a result the safe harbor
does not apply to this registration statement. Finally, readers are urged to
carefully review and consider the various disclosures made by the Company in
this registration statement.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS:
BUSINESS DEVELOPMENT SINCE INCEPTION:
LA Investment Associates, Inc. (the "Company") was incorporated in Nevada on
June 19, 1990, under the name of American Long Distance Services, Inc. The
Company's founders were Linda Friedman and Barry Friedman, none of whom have
been associated in any capacity with the Company since February 1991. Thereafter
the officers of the Company were Paul W. Andre, M. Paula Rowe, and Sandra J.
Andre, none of whom have been associated with the Company since May 1999. The
Company changed its name to LA Associates, Inc. in August 1990, and then to LA
Investment Associates, Inc. on October 19, 1998. On September 30, 1999, the
Company had not yet commenced any formal business operations, and all activity
to date relates to the Company's formation and proposed fund raising.
The Company will attempt to locate and negotiate with a business entity for the
merger, or some other business combination, of that target into the Company. In
certain instances, a target company may wish to become a subsidiary of the
Company or may wish to contribute assets to the Company rather than merge. No
assurances can be given that the Company will be successful in locating or
negotiating with any target company.
The Company was formed to provide a method for a foreign or domestic private
company to become a reporting ("public") company whose securities are qualified
for trading in the United States secondary market.
There are certain perceived benefits to being a reporting company with a class
of publicly-traded securities qualified for trading in the United States
secondary market. These are commonly thought to include the following:
* the ability acquire assets or businesses using funds raised in a public
offering, by registering securities with the SEC, or by issuing restricted
securities;
* increased visibility;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital markets.
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A business entity, if any, which may be interested in a business combination
with the Company may include the following:
* a company for whom a primary purpose of becoming public is the use of its
securities for the acquisition of assets or businesses;
* a company which is unable to find an underwriter of its securities or is
unable to find an underwriter of securities on terms acceptable to it;
* a company which wishes to become public with less dilution of its common
stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment capital on
more favorable terms after it has become public;
* a foreign company which may wish an initial entry into the United States
securities market;
* a special situation company, such as a company seeking a public market to
satisfy redemption requirements under a qualified Employee Stock Option Plan;
* a company seeking one or more of the other perceived benefits of becoming a
public company.
A business combination with a target company may involve the transfer to the
target company of the majority of the issued and outstanding common stock of the
Company, and the substitution by the target business of its own management and
board of directors No assurances can be given that the Company will be able to
enter into a business combination, as to the terms of a business combination, or
as to the nature of the target company.
The proposed business activities described herein classify the Company as a
"blank check" company. See "GLOSSARY". The Securities and Exchange Commission
and many states have enacted statutes, rules and regulations limiting the sale
of securities of blank check companies.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934, as amended.
The Company's business is subject to numerous risk factors, including the
following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had no
operating history nor any revenues or earnings from operations. The Company has
no significant assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of a business combination. This may result in the Company
incurring a net operating loss which will increase continuously until the
Company can consummate a business combination with a target company.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the target company. While
management intends to seek business combinations with entities having
established operating histories, there can be no assurance that the Company will
be successful in locating candidates meeting such criteria. In the event the
Company completes a business combination the success of the Company's
operations, most likely, will be dependent upon management of the target company
and numerous other factors beyond the Company's control.
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SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS. The
Company is and will continue to be an insignificant participant in the business
of seeking mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be merger or
acquisition target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION-NO STANDARDS FOR
BUSINESS COMBINATION. The Company has no arrangement, agreement or understanding
with respect to engaging in a merger with or acquisition of a business entity.
The Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it will
require a target business opportunity to have achieved, or without which the
Company would not consider a business combination with such business entity.
Accordingly, the Company may enter into a business combination with a business
entity having no significant operating history, losses, limited or no potential
for earnings, limited assets, negative net worth or other negative
characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
business combination, management anticipates devoting up to 30 hours per month
to the business of the Company. The Company's sole officer and director has not
entered into a written employment agreement with the Company and he is not
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on its sole officer and director. Notwithstanding the
combined limited experience and limited time commitment of management, loss of
the services of this individual would adversely affect development of the
Company's business and its likelihood of continuing operations. See
"MANAGEMENT."
CONFLICTS OF INTEREST-GENERAL. The Company's sole officer and director
participates in other ventures which may compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may also arise
in the future. Management has adopted a policy that requires full disclosure of
any potentially conflicting relationships..
See "ITEM 6. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
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REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") requires
companies subject thereto to provide certain information about significant
acquisitions including certified financial statements for the company acquired
covering one or two years, depending on the relative size of the acquisition.
The time and additional costs that may be incurred by some target companies to
prepare such statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by the Company. Acquisition
prospects that do not have or are unable to obtain the required audited
statements may not be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if successful,
will in all likelihood result in the Company engaging in a business combination
with only one business opportunity. Consequently, the Company's activities will
be limited to those engaged in by the business which the Company merges with or
acquires. The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
REGULATION. Although the Company will be subject to regulation under the
Exchange Act, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company does not intend
to be engaged in the business of investing or trading in securities. However, if
as a result of acquisitions, the Company does hold passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. (See "Acquisition Restrictions")
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving the
issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Such a change in control was anticipated when in June of 1999 the
Company commenced negotiations with LLO-Gas, Inc. LLO-Gas, Inc. had agreements
with a major oil company to acquire branded service stations together with a 15
year supply contract to purchase petroleum products. The proposed Agreement and
Plan of Reorganization with LLO-Gas, Inc, the same agreement mentioned under
Note 3, in the June 30, 1990 financial statements, was terminated. The proposed
agreement was disclosed in the June 30, 1999 financial statements since, at the
time, it was considered a matter that could have significant effect on the
Company.
The financial statements for the period ending September 30, 1999 make note
of the fact that negotiations with LLO-Gas, Inc. were terminated. There was
no change in control of the Company as a result of the LLO-Gas, Inc.
negotiations.
Any future business combination may require the Company's sole officer
and director to sell or transfer all or a portion of the Company's common stock
held by him, and to resign as a member of the Board of Directors and an officer
of the Company. The resulting change in control of the Company could result in
removal of the present sole officer and director of the Company and a
corresponding reduction in or elimination of his participation in the future
affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION. The
Company's primary plan of operation is based upon a business combination with a
business entity which, in all likelihood, will result in the Company issuing
securities to shareholders of such business entity. The issuance of previously
authorized and unissued common stock of the Company would result in reduction in
the percentage of shares owned by the present shareholders of the Company and
would most likely result in a change in control or management of the Company.
ASPECTS OF BLANK CHECK COMPANIES. The Company may enter into a business
combination with a business entity that desires to establish a public trading
market for its shares if the Company has shares that are trading publicly. A
target company may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such an
offering, loss of voting control to public shareholders or the inability to
obtain an underwriter or to obtain an underwriter on terms satisfactory to the
Company. There is no assurance that a trading market will ever develop in the
Company's securities.
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TAXATION. Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination the Company may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions. The
Company intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the target company;
however, there can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to the transaction.
YEAR 2000. The Year 2000 problem is the result of computer programs being
written using two digits (rather than four) to define the applicable year. Any
programs that have date-sensitive software or equipment that has time-sensitive
embedded components may recognize a date using "00" as the year 1900 rather than
the Year 2000. This could result in a major system failure or miscalculations.
The Company has no computers and will not face any Year 2000 related problems.
The Company will not enter into an acquisition transaction with any business
that has an unresolved Year 2000 problem.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company will request that any potential
business opportunity provide audited financial statements. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company rather than incur the expenses associated
with preparing audited financial statements. Such audited financial statements
may not be available. In such case, the Company intends to obtain certain
assurances as to the target company's assets, liabilities, revenues and expenses
prior to consummating a business combination, with further assurances that an
audited financial statement would be provided after closing of such a
transaction. Closing documents relative thereto may include representations that
the audited financial statements will not materially differ from the
representations included in such closing documents.
The Company's ability to commence operations is contingent upon its ability to
identify a prospective target business and raise the capital it will require
through the issuance of equity securities, debt securities, bank borrowings or a
combination thereof.
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ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in exchange for
the Company's securities. The Company anticipates seeking out a target business
through solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting firms,
investment bankers, financial advisors and similar persons, the use of one or
more World Wide Web sites and similar methods. No estimate can be made as to the
number of persons who will be contacted or solicited.
The Company has no full time employees. The Company's sole officer and director
has agreed to allocate a portion of his time to the activities of the Company,
without compensation. He anticipates that the business plan of the Company can
be implemented by his devoting approximately 30 hours per month to the business
affairs of the Company. Consequently, conflicts of interest may arise with
respect to the limited time commitment by him. The Company's sole officer and
director expects in the future to become involved with other companies which
have a business purpose similar to that of the Company. A conflict may arise in
the event that another company, or a company to be formed, with which management
is affiliated seeks a target business. See "ITEM 6. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS." The Certificate of Incorporation of
the Company provides that the Company may indemnify officers and/or directors of
the Company for liabilities, which can include liabilities arising under the
securities laws. Therefore, assets of the Company could be used or attached to
satisfy any liabilities subject to such indemnification.
In June of 1999 the Company commenced negotiations with LLO-Gas, Inc. LLO-Gas,
Inc. had agreements with a major oil company to acquire branded service stations
together with a 15 year supply contract to purchase petroleum products. LLO-Gas,
Inc. expected to acquire additional existing service stations and anticipated
developing several branded truck stop facilities. LLO-Gas, Inc. had entered into
agreements for funding acquisitions and construction from a major lender.
The proposed Agreement and Plan of Reorganization with LLO-Gas, Inc, the same
agreement mentioned under Note 3, in the June 30, 1990 financial statements, was
terminated. The proposed agreement was disclosed in the June 30, 1999 financial
statements since, at the time, it was considered a matter that could have
significant effect on the Company.
The parties agreed to terminate negotiations because the pink sheet status of
the Company made it difficult to obtain commitments for additional financing as
required under the proposed agreement. The parties terminated their agreement
amicably. The company to be merged, LLO-Gas, Inc., subsequently merged with
another company, one that was fully reporting. LA Investment Associates, Inc.
thereafter put out a press release on October 15, 1999 announcing negotiations
had terminated, the reason for same and further stated the Company's intention
to file for reporting status. The Company's financial review ending September
30, 1999 contains a note that explains the outcome of the LLO-Gas, Inc.
negotiations.
The Company found it difficult to negotiate with acquisition candidates since
most required merging with a fully reporting public company. This in fact was
the difficulty with the potential LLO-Gas, Inc. acquisition, the only one the
Company considered to date. Recent requirements that a company be fully
reporting to be quoted on the OTC Bulletin Board further reinforced the need
for LA Investment Associates, Inc. to become fully reporting. Accordingly the
Company decided to apply for reporting status prior to attempting other
acquisitions.
The Company expects to engage in negotiations with business combination
candidates when it becomes fully reporting. It expects to consummate a
transaction with a viable candidate in the next twelve months after going
effective. The Company continues to keep aware of potential acquisition targets
through a network of contacts, by attending information sessions about companies
and by researching opportunities.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity presented to it by persons or
firms who or which desire to seek the perceived advantages of a corporation
which has a class of securities registered under the Exchange Act. The Company
will not restrict its search to any specific business, industry, or geographical
location and the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is not meant to be
restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. The Company's sole officer and
director anticipates that it will be able to participate in only one business
venture because the Company has nominal assets and limited financial resources.
See PART F/S, "FINANCIAL STATEMENTS." This lack of diversification should be
considered a substantial risk to the shareholders of the Company because it will
not permit the Company to offset potential losses from one venture against gains
from another.
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The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, and providing liquidity for
shareholders and other factors. Business opportunities may be available in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities difficult and complex.
The Company has, and will continue to have, no capital with which to provide the
owners of business opportunities. However, management believes the Company will
be able to offer owners of acquisition candidates the opportunity to acquire
ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The officer and
director of the Company has not conducted market research and is not aware of
statistical data to support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the sole officer and director of the Company, who is not a
professional business analyst. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trades; name identification; and other
relevant factors. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Exchange
Act requires that any merger or acquisition candidate comply with certain
reporting requirements, which include providing audited financial statements to
be included in the reports to be filed under the Exchange Act. The Company will
not acquire or merge with any company for which audited financial statements
cannot be obtained at or within a reasonable period of time after closing of the
proposed transaction.
The sole officer and director of the Company, which in all likelihood will not
be experienced in matters relating to the business of a target company, will
rely upon his own efforts in accomplishing the business purposes of the Company.
It is anticipated that outside consultants or advisors may be utilized by the
Company to assist in the search for qualified target companies. If the Company
does retain such an outside consultant or advisor, any cash fee earned by such
party will need to be paid by the prospective merger/acquisition candidate, as
the Company has limited cash assets with which to pay such obligation. The
Company may pay all or some of such consultant's or advisor's fee with
previously authorized but unissued shares.
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The Company will not restrict its search for any specific type of firms, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in any stage of its business life. It is impossible to
predict at this time the status of any business in which the Company may become
engaged, in that such business may need to seek additional capital, may desire
to have its shares publicly traded, or may seek other perceived advantages which
the Company may offer.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present Management and shareholders of the Company will
no longer be in control of the Company. In addition, the Company's sole officer
and director may, as part of the terms of the acquisition transaction resign and
be replaced by one or more new directors without a vote of the Company's
shareholders or may sell his stock in the Company.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon an exemption from registration under applicable federal
and state securities laws. In some circumstances, however, as a negotiated
element of its transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it may be undertaken by the surviving entity after the Company has
entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. The issuance of substantial additional securities and their potential
sale into any trading market which may develop in the Company's securities may
have a depressive effect on the market value of the Company's securities in the
future if such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a "tax-free" reorganization under Sections
351 or 368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which target
company shareholders would acquire in exchange for all of their shareholdings in
the target company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's shareholders at such time.
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The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties, will specify certain events of
default, will detail the terms of closing and the conditions which must be
satisfied by the parties prior to and after such closing, will outline the
manner of bearing costs, including costs associated with the Company's attorneys
and accountants, and will include other terms.
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at a closing of the proposed transaction or
represent that it will provide audited financial statements within a reasonable
period of time after closing of the proposed transaction. The Company will be
subject to all of the reporting requirements included in the Exchange Act.
Included in these requirements is the duty of the Company to file audited
financial statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as well as a
requirement to file audited financial statements in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction can voided at the discretion of the present management of the
Company.
The Company's sole officer and director has agreed that he may advance to the
Company additional funds which the Company may need for operating capital and
for costs in connection with searching for or completing an acquisition or
merger. Initially he committed to doing so for a period of one year and may
consider extending this if necessary. The current cash requirements of the
Company are minimal, less than $25,000 per year, an amount within the sole
officer and director's commitment toward expenses. Such funds shall be provided
on an as needed basis.
There is no minimum or maximum amount such shareholder, or any other
shareholder, may advance to the Company. The Company may also call on other
shareholders or use it's stock to cover expenses if necessary, as it already has
to cover some legal expenses. Should funds to cover expenses become unavailable
there is a risk the Company would no longer be able to function or could lose it
status as a public company.
The Company does not intend to borrow funds for the purpose of repaying advances
made by shareholders or to make any payments to the Company's promoters,
management or their affiliates.
ACQUISITION RESTRICTIONS
The Company may acquire a company or business by purchasing, trading or selling
the securities of such company or business. However, the Company does not intend
to engage primarily in such activities. Specifically, the Company intends to
conduct its activities so as to avoid being classified as an "investment
company" under the Investment Company Act of 1940, and therefore avoid
application of the costly and restrictive registration and other provisions of
the Investment Company Act of 1940 and the regulations promulgated thereunder.
Section 3(a) of the Penny Stock Reform Act expects from the definition of an
"investment company" an entity which does not engage primarily in the business
of investing, reinvesting or trading in securities, or which does not engage in
the business of investing, owning, holding or trading "investment securities"
(defined as "all securities other than government securities or securities of
majority-owned subsidiaries") the value of which exceed 40% of the value of its
total assets (excluding government securities, cash or cash items). The Company
intends to implement its business plan in a manner which will result in the
availability of this exception from the definition of "investment company."
Consequently, the Company's acquisition of a company or business through the
purchase and sale of investment securities will be limited. Although the Company
intends to act to avoid classification as an investment company, the provisions
of the Investment Company Act of 1940 are extremely complex and it is possible
that it may be classified as an inadvertent investment company. The Company
intends to vigorously resist classification as an investment company, and to
take advantage of any exemptions or exceptions from applications of the
Investment Company Act of 1940, which allows an entity a one time option during
any three-year period to claim an exemption as a "transient" investment company.
The necessity of asserting any such resistance, or making any claim of
exemption, could be time consuming and costly, or even prohibitive, given the
Company's limited resources.
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The Company's plan of business may involve changes in its capital structure,
management, control and business, especially if it consummates a reorganization
as discussed above. Each of these areas is regulated by the Investment Company
Act of 1940, which regulation has the purpose of protecting purchasers of
investment company securities. Since the Company does not intend to register as
an investment company, the investors in the Company's securities will not be
afforded these protections.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company and
there are many other registered blank check companies which will compete for
acquisition candidates. In view of the Company's extremely limited financial
resources and limited management availability, the Company will continue to be
at a significant competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire any
properties. The Company currently uses the offices of its sole officer and
director at no cost to the Company. The sole officer and director has agreed to
continue this arrangement until the Company completes an acquisition or merger.
ITEM 4. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS: GENERAL
The Company has not transacted business from formation through December 31, 1998
and had a net loss of $1,050 for that period. For the six months ended June 30,
1999 it had a net loss of $3,200 and for the nine months ended September 30,
1999 it had a net loss of $10,807. The Company had nominal assets as of
September 30, 1999. The Company's ability to acquire a business is dependent on
its raising financing through the sale of equity and/or debt securities.
Page 11
<PAGE>
ITEM 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
The number of shares of the Company's common stock owned by the Company's
directors and officers and by each person who owns legally and beneficially more
than five percent of the Company's issued and outstanding common stock at
October 25, 1999, the address of each such person and the percentage of the
common stock represented by such shares is set forth in the following table.
Unless otherwise indicated all ownership is both legal and beneficial.
<TABLE>
<CAPTION>
NAME ADDRESS # OF SHARES PERCENTAGE
- ------------------- -------------------------------- -------------------- ---------------------
<S> <C> <C> <C>
Randall Prouty 2949 East Desert Inn Road, Suite 1 3,000,000 58.71%
Las Vegas, NV 89121
Jonathan Lichtman 2949 East Desert Inn Road, Suite 1 525,000 10.27%
Las Vegas, NV 89121
Stephen Danner 2949 East Desert Inn Road, Suite 1
Las Vegas, NV 89121 350,000 6.85%
All Executive Officers and Directors as a Group (1 person) 58.71%
</TABLE>
ITEM 6. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The names, ages and terms of office of directors and executive officers of the
Company are set forth in the following table:
NAME AGE POSITIONS DIRECTOR SINCE
- ----------- -------- ----------------- -----------------------
Randall Prouty 47 President May 1999
Secretary
Each director is elected by holders of a majority of the Common Stock to serve
for a term of one year and until his successor is elected and qualified, which
is generally at the annual meeting of stockholders. Officer(s) serve at the will
of the board, subject to possible future employment agreements which would
establish term, salary, benefits and other conditions of employment.
Randall Prouty - Biography
- --------------------------
In 1997 Mr. Prouty co-founded Advanced Communication Technologies, Inc., (OTC:BB
ADVC), a telecommunications company involved in developing next generation
wireless equipment for teleco level use, and where he still a shareholder and
serves as a Director. Mr. Prouty is also the President and sole owner of Bristol
Realty Corporation since 1984, a firm active in the commercial real estate
finance and brokerage market. And finally, he is the sole owner of Bristol
Capital, Inc., a firm active in consulting and business development work for
companies seeking access to capital markets, and through which he is incubating
other e-business ventures.
Page 12
<PAGE>
Mr. Prouty was exposed the public markets in the early 1990's while assembling
commercial real estate assets used to back REMICs (mortgage backed securities)
offered by Donaldson, Lufkin and Jenrette and others. Prior to that time his
career included positions as a real estate construction lender, workout
specialist and investment advisor. Mr. Prouty is a licensed real estate and
mortgage broker in the State of Florida and is considered an expert in real
estate finance.
Mr. Prouty has a technical background that includes being a qualified
webmaster, (Webmaster defined: A person that administers a web system
or is an internet application developer.) and hostmaster (Hostmaster
defined: A person that administers multiple domains and IP addresses
over a network.) and has experience developing e-businesses on the web
while the CEO of an interactive media company now known as Advanced
Communication Technologies, Inc. (OTC: ADVC) and as an independent entrepreneur.
He participated in projects that produced interactive CD's for Compaq and Tech
Data, websites for Computer Sciences Corp., Volvo, Hewlett Packard and others.
He is a skilled internet application programmer including databases enhanced for
the web. He is currently developing a system for to distribute financial
products on the web.
BLANK CHECK COMPANIES
Mr. Prouty has not been, nor is he currently an officer, director, or control
person of a blank check company other than the Company.
CONFLICTS OF INTEREST
The Company's sole officer and director may organize other companies of a
similar nature and with a similar purpose as the Company. Consequently, there
are potential inherent conflicts of interest in acting as an officer and
director of the Company. Insofar as the officer and director is engaged in other
business activities, Management anticipates that it will devote only a minor
amount of time to the Company's affairs. The Company does not have a right of
first refusal pertaining to opportunities that come to Management's attention
insofar as such opportunities may relate to the Company's proposed business
operations. A conflict may arise in the event that another blank check company
with which Management is affiliated is formed and actively seeks a target
business.
Mr. Prouty intends to devote as much time to the activities of the Company as
required. However, should a conflict arise, there is no assurance that Mr.
Prouty would not attend to other matters prior to those of the Company.
The terms of a business combination may provide for payment by cash or otherwise
to the current shareholders of the Company for the purchase of their common
stock of the Company by a target business. The current shareholders would
directly benefit from such payment. Such benefits may influence Management's
choice of a target business.
The Company's sole officer and director owns 58.71% of the outstanding shares of
common stock of the Company. The Company does not expect to issue other
securities or rights to securities of the Company to the sole officer and
director or promoters, or their affiliates or associates, prior to the
completion of a business combination. At the time of a business combination some
of the common stock owned by the sole officer and director may be purchased by
the target business. The amount of common stock sold or continued to be owned by
the sole officer and director cannot be determined at this time.
Page 13
<PAGE>
Management may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target business to the Company where that
referral results in a business combination. The amount of any finder's will be
subject to negotiation, and cannot be estimated at this time.
Management has adopted certain policies involving possible conflicts of
interest, including prohibiting any of the following transactions involving
management or promoters or their affiliates or associates:
(i) Any lending by the Company to such persons; or
(ii) The issuance of any additional securities to such persons prior to a
business combination.
These policies have been adopted by the Board of Directors of the Company, and
any changes in these provisions would require the approval of the Board of
Directors. Management does not intend to propose any such action and does not
anticipate that any such action will occur.
There are no binding guidelines or procedures for resolving potential conflicts
of interest. Failure by management to resolve conflicts of interest in favor of
the Company could result in liability of management to the Company.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Exchange Act,
management believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company does not intend to be
engaged in the business of investing or trading in securities. However, if as a
result of acquisitions, the Company does hold passive investment interests in a
number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940.
Page 14
<PAGE>
ITEM 7. EXECUTIVE COMPENSATION.
The Company's sole officer and director does not receive any compensation for
his services rendered to the Company, nor has he received such compensation in
the past. As of the date of this registration statement, the Company has no
funds available to pay the sole officer and director. Further, the sole officer
and director is not accruing any compensation pursuant to any agreement with the
Company.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
ITEM 8. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On October 21, 1999, the Company issued a total of 3,000,000 shares of Common
Stock to the following persons for a total of $50,000 ($.02 per share)
NAME NUMBER OF SHARES CONSIDERATION
- ------------------------ ---------------- -------------
Randall Prouty (1) 3,000,000 $50,000
(1) Randall Prouty may be deemed a "parent" and "promoter" of the Company as
those terms are defined under the Securities Act. There are no other "parents"
or "promoters" of the Company.
The proposed business activities described herein classify the Company as a
"blank check" company. See "GLOSSARY". The Securities and Exchange Commission
and many states have enacted statutes, rules and regulations limiting the sale
of securities of blank check companies. Management does not intend to undertake
any efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein.
ITEM 9. DESCRIPTION OF SECURITIES.
The following statements summarized the material provision of the certificate of
incorporation and bylaws. The authorized capital stock of the Company consists
of 25,000,000 shares of Common Stock, par value $.001 per share. Reference is
made to the more detailed provisions of, and such statements are qualified in
their entirety by reference to, the Certificate of Incorporation and the
By-laws, copies of which are filed as exhibits to this registration statement.
Page 15
<PAGE>
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock are entitled to share ratably
in dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefor. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities.
Holders of common stock have no preemptive rights to purchase the Company's
common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.
The issuance of shares of Preferred Stock, or the issuance of rights to purchase
such shares, could be used to discourage an unsolicited acquisition proposal,
further, such issuance of a series of Preferred Stock might impede a business
combination by including class voting rights that would enable the holder to
block such a transaction, or facilitate a business combination by including
voting rights that would provide a required percentage vote of the stockholders.
In addition, under certain circumstances, the issuance of Preferred Stock could
adversely affect the voting power of the holders of the Common Stock and all the
right of the common stockholders. Although the Board of Directors is required to
make any determination to issue such stock based on its judgment as to the best
interests of the stockholders of the Company, the Board of Directors could act
in a manner that would discourage an acquisition attempt or other transaction
that some, or a majority, of the stockholders might believe to be in their best
interests or in which stockholders might receive a premium for their stock over
the then market price of such stock. The Board of Directors does not at present
intend to seek stockholder approval prior to any issuance of currently
authorized stock, unless otherwise required by law or stock exchange rules. The
Board of Directors has also elected to opt out of the Delaware Anti-Takeover
Statutes. This would make it easier for parties presently not associated with
the Company to obtain control of the Company without approval of the
shareholders. The Company has no present plans to issue any Preferred Stock.
DIVIDENDS
The Company does not expect to pay dividends. Dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of the Company's Board of Directors. The Company presently
intends to retain all earnings, if any, for use in its business operations and
accordingly, the Board of Directors does not anticipate declaring any dividends
in the foreseeable future.
Page 16
<PAGE>
GLOSSARY
"Blank Check" Company: As defined in Section 7(b)(3) of the
Securities Act: A "blank check" is a development stage
company that has no specific business plan or purpose
or has indicated that its business plan is to engage in
a merger or acquisition with an unidentified company or
companies and is issuing "penny stock" securities as
defined in Rule 3a51-1 of the Exchange Act.
Securities Exchange Act: The Securities Exchange Act of 1934, as amended.
"Penny Stock" Security As defined in Rule 3a51-1 of the Exchange Act, a "penny
stock" security is any equity security other than a
security (i) that is a reported security (ii) that is
issued by an investment company (iii) that is a put or
call issued by the Option Clearing Corporation; (iv)
that has a price of $5.00 or more (except for purposes
of Rule 419 of the Securities Act); (v) that is
registered on a national securities exchange; (vi) that
is authorized for quotation on the Nasdaq Stock Market,
unless other provisions of Rule 3a51-1 are not
satisfied; or (vii) that is issued by an issuer with
(a) net tangible assets in excess of $2,000,000, if in
continuous operation for more than three years or
$5,000,000 if in operation for less than three years or
(b) average revenue of at least $6,000,000 for the last
three years.
Securities Act: The Securities Act of 1933, as amended.
Small Business Issuer: As defined in Rule 12b-2 of the Exchange Act, a "Small
Business Issuer" is an entity (i) which has revenues of
less than $25,000,000 (ii) whose public float (the
outstanding securities not held by affiliates) has a
value of less than $25,000,000 (iii) which is a United
States or Canadian issuer (iv) which is not an
Investment Company and (v) if a majority-owned
subsidiary, whose parent corporation is also a small
business issuer.
Page 17
<PAGE>
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is quoted under the stock symbol "LAIV" on the OTC
Pink Sheets. The following table sets forth the approximate high and low bid and
asked quotations for the Company's Common Stock for the four quarters ended
September 30, 1999. These quotations are inter-dealer quotations without retail
markup, markdown or commissions and may not represent actual transactions.
Quarter ended: High Bid Low Bid High Ask Low Ask
- ------------------ -------- -------- -------- -------
January 1, 1999
THRU Unpriced Unpriced Unpriced Unpriced
March 31, 1999
April 1, 1999
THRU Unpriced Unpriced Unpriced Unpriced
June 30 ,1999
July 1, 1999
THRU Unpriced Unpriced Unpriced Unpriced
September 22, 1999
September 23, 1999
THRU 2.00 1.01 3.50 3.25
September 30, 1999
The closing high bid and low asked quotations for the Company's common stock on
September 30, 1999 were $2.00 and $3.25 respectively.
NUMBER OF STOCKHOLDERS. As of November 1, 1999, the Company had sixty-three (63)
stockholders of record and an estimated 100 beneficial shareholders.
(a) The Securities and Exchange Commission has adopted Rule 15g-9 which
established the definition of a "penny stock." For purposes relevant to the
Company, a penny stock is any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. By this standard the common shares in the Company
should be considered penny stock and as such it may be more difficult for
investors to resell their common stock. For any transaction involving a penny
stock, unless exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks and (ii) the broker or dealer
receive from the investor a written agreement to the transaction, setting forth
the identity and quantity of the penny stock to be purchased. In order to
approve a person's account for transactions in penny stocks, the broker or
dealer must (i) obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable determination that the
transactions in penny stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
Page 18
<PAGE>
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers the NASDAQ Stock Market, has established certain criteria for
initial and continued eligibility for listing on the NASDAQ Stock Market. In
order to qualify for listing on the NASDAQ SmallCap Market, a company must have
at least (i) net tangible assets of $4,000,000 or market capitalization of
$50,000,000 or net income for two of the last three years of $750,000; (ii)
public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an
operating history of one year or, if less than one year, $50,000,000 in market
capitalization. For continued listing on the NASDAQ SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
There can be no assurances that, upon a successful merger or acquisition, the
Company will qualify its securities for listing on the NASDAQ SmallCap Market or
a national or regional exchange, or be able to maintain the maintenance criteria
necessary to insure continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such qualification
may result in the discontinuance of the inclusion of the Company's securities.
In such events, trading, if any, in the Company's securities may then continue
in the over-the-counter market. In such case, a shareholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, the Company's securities.
(b) Holders. There are approximately sixty-three (63) holders of the Company's
Common Shares on November 1, 1999 with a total outstanding of 5,110,000 Common
Shares of $.001 per value stock.
Two Million One (2,100,00) shares were acquired on or before August 10, 1991 by
thirty-five (35) shareholders according to the Company record. The original sale
and issuance of the securities were authorized by resolution of the Board on
August 17, 1991 in reliance upon the exemption from registration requirements of
Section 5 of the Act, as provided in Section (4) (2) of the Act. On or about
August 10, 1991, in reliance on the same exemption, the Company sold and issued
for cash or in cancellation of indebtedness additional shares included in the
2,100,000 common shares.
The Company issued a total of 3,000,000 of its Common Shares to Randall Prouty
for cash at $.02 per share for a total price of $50,000 and another 10,000
common shares to Jack Halperin Esq. for legal services.
(c) Dividends. Dividends on the common stock can be paid lawfully only out of
current and retained earnings and surplus of the Company, when, as and if
declared by the board of directors. The Company has not declared or paid any
dividends on the common stock since inception and there is no assurance
dividends will be paid in the foreseeable future. The payment of dividends in
the future rests within the discretion of its board of directors and will
depend, among other things, upon the Company's earnings, its capital
requirements and its financial condition, as well as other factors which the
board of directors deems relevant.
Page 19
<PAGE>
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are no
disagreements with the findings of its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which were not
registered as follows:
DATE NAME NUMBER CONSIDERATION
May 20, 1999 Randall Prouty (1) 3,000,000 $50,000
Oct 10, 1999 Jack Halperin, Esq. (2) 10,000 $20,000
(1) Mr. Prouty is the sole officer and director of the Company and the
beneficial owner of these common shares which were purchased for cash.
(2) Mr. Halperin is the SEC Counsel for the Company. On October 4, 1999 it was
resolved to issue Mr. Halperin 10,000 common shares valued at $2.00 per share as
payment for toward an existing invoice and toward future legal services.
(3) The proposed Agreement and Plan of Reorganization with LLO-Gas, Inc, the
same agreement mentioned under Note 3, in the June 30, 1990 financial
statements, was terminated. The proposed agreement was disclosed in the June 30,
1999 financial statements since, at the time, it was considered a matter that
could have significant effect on the Company. The shares anticipated to be
issued in connection with that agreement have not and will not now be issued.
With respect to the sales made, the Company relied on Section 4(2) of the
Securities Act of 1933, as amended and Rule 506 promulgated thereunder. Each of
the investors in the Company's securities had access to all information
available on the Company. Each investor purchased the securities for his own
account and risk and has not acted as a nominee for others, and has purchased
the securities for investment and not with a view to the distribution of the
securities. Based on the work experience, business sophistication and investment
history of the investors, they were able to evaluate the investment made in the
Company's securities.
Page 20
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.037 of the Nevada Corporation Law provides that a Nevada corporation
has the power, under specified circumstances, to indemnify its directors,
officers, employees and agents, against expenses incurred in any action, suit or
proceeding. The Certificate of Incorporation and the by-laws of the Company
provide for indemnification of directors and officers to the fullest extent
permitted by the Nevada Corporation Law.
ITEM 6. FINANCIAL STATEMENTS AND EXHIBITS:
Financial statements filed as part of this registration statement.
1. Balance sheet at December 31, 1998.
2. Statements of operations for the year ended June 31, 1998 and for the
period from June 19, 1990 (inception) to December 31, 1999.
3. Statement of changes in stockholder equity for the period from June 19,
1990 (inception) through December 31, 1998.
4. Statement of cash flows for the year ended December 31, 1998 and the period
from June 19, 1990 (inception) through December 31, 1998.
5. Notes to financial statements as of December 31, 1998.
6. Balance Sheet as of June 30, 1999.
8. Statement of Operations for the six months ended June 30, 1999 and for the
period from June 19, 1990 (inception) to June 30, 1999.
9. Statement of changes in Stockholders' equity for the period from June 19,
1990 (inception) to June 30, 1999.
10. Statements of cash flows for the six months ended June 30, 1999 and for the
period from June 19, 1990 (inception) to June 30, 1999.
11. Notes to financial statements as of June 30, 1999.
12. Balance sheet at September 30, 1999
13. Statements of operations for the nine and three months ended September 30,
1999 and for the period from June 19, 1990 (inception) to September 30,
1999
14. Statement of changes in stockholders' deficiency for the period from June
19, 1990 (inception) to September 30, 1999
15. Statements of cash flows for the nine and three months ended September 30,
1999 and for the period from June 19, 1990 (inception) to September 30,
1999
16. Notes to financial statements as of September 30, 1999
EXHIBITS.
3.(i). Articles of Incorporation **
3.(ii). Bylaws, as amended **
4 Specimen of stock certificate **
27 Financial Data Schedule *
- ---------------
* Filed herewith
** Filed as an exhibit to the Registrant's Form 10SB12G filed with the
Securities and Exchange Commission on November 4, 1999 (Registration No.
000-27949) and incorporated herein by reference.
Page 21
<PAGE>
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 representative.
LA INVESTMENT ASSOCIATES, INC.
By: /s/ Randall Prouty Date: January 6, 1999
---------------------------- ------------------
Randall Prouty
President, Secretary
Director
Page 22
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
------------------------------
(FORMERLY L.A. ASSOCIATES, INC.)
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1998
-----------------------
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
---------------------------------
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEET AS OF DECEMBER 31, 1998
PAGE 3 - STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1998 AND FOR THE PERIOD FROM
JUNE 19, 1990 (INCEPTION) TO DECEMBER 31,
1998
PAGE 4 - STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE PERIOD FROM JUNE 19, 1990,
(INCEPTION) TO DECEMBER 31, 1998
PAGE 5 - STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED
DECEMBER 31, 1998 AND FOR THE PERIOD FROM
JUNE 19, 1990 (INCEPTION) TO DECEMBER 31,
1998
PAGES 6 - 8 - NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of:
LA Investment Associates, Inc.
We have audited the accompanying balance sheet of LA Investment Associates, Inc.
(Formerly L.A. Associates, Inc. ) (a development stage company) as of December
31, 1998 and the related statements of operations, changes in stockholders'
equity and cash flows for the year ended December 31, 1998 and for the period
from June 19, 1990 (inception) to December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted 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 LA Investment Associates, Inc.
(Formerly L.A. Associates, Inc.)(a development stage company) as of December 31,
1998, and the results of its operations and its cash flows for the year ended
December 31, 1998 and for the period from June 19, 1990 (inception) to December
31, 1998 in conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
July 26, 1999
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1998
-----------------------
ASSETS
------
Cash $ -
----------
TOTAL ASSETS $ -
- ------------ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
----------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value, 25,000,000
shares authorized, 2,100,000 issued and
outstanding 2,100
Additional paid in capital (1,050)
Accumulated deficit during development stage (1,050)
----------
Total Stockholders' Equity -
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -
- ------------------------------------------ ==========
See accompanying notes to financial statements.
2
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO DECEMBER 31, 1998
--------------------------------
CUMULATIVE FROM
JUNE 19, 1990 (INCEPTION) FOR THE YEAR ENDED
TO DECEMBER 31, 1998 DECEMBER 31, 1998
Income $ - $ -
Expenses
General and
administrative 1,050 -
----------- ----------
NET LOSS $ (1,050) $ -
- -------- =========== ==========
See accompanying notes to financial statements.
3
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO DECEMBER 31, 1998
Deficit
Additional Accumulated
Common Paid-In During Devel-
Stock Capital opment Stage Total
----------- ----------- ----------- -----------
August 1990, issuance
of common stock $ 100 $ - $ - $ 100
----------- ----------- ----------- -----------
Balance, December 31,
1990 100 - - 100
August 1991, issuance of
common stock 950 - - 950
Net loss 1991 - (1,050) (1,050)
----------- ----------- ----------- -----------
Balance December 31,
1991 1,050 - (1,050) -
January 1, 1992 -
December 31, 1997 - - - -
----------- ----------- ----------- -----------
Balance, December
31, 1997 1,050 - (1,050) -
October 1998, par value
changed from no par
to $.001 (1,049) 1,049 - -
October 1998, forward
stock split 2,000:1 2,099 (2,099) - -
Net loss for the
year ended December
31, 1998 - - - -
----------- ----------- ----------- -----------
BALANCE AT DECEMBER
31, 1998 $ 2,100 $ (1,050) $ (1,050) $ -
- --------- =========== =========== =========== ===========
See accompanying notes to financial statements.
4
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO DECEMBER 31, 1998
CUMULATIVE FROM FOR THE
JUNE 19, 1990 (INCEPTION) YEAR ENDED
TO DECEMBER 31, 1998 DECEMBER 31,1998
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (1,050) $ -
Adjustments to
reconcile net loss
to net cash used
by operating activities: - -
---------- ---------
Net cash used in
operating activities (1,050) -
---------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES - -
---------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of common stock 1,050 -
---------- ---------
Net cash provided by
financing activities 1,050 -
---------- ---------
INCREASE IN CASH AND
CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - -
---------- ---------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ - $ -
------------- ========== =========
See accompanying notes to financial statements.
5
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
A. Organization and Business Operations
----------------------------------------
LA Investment Associates, Inc. (Formerly L.A. Associates, Inc.) (a
development stage company) ("the Company") was incorporated in Nevada
on June 19, 1990 to serve as a vehicle to effect a merger, exchange of
capital stock, asset acquisition or other business combination with a
domestic or foreign private business. At December 31, 1998, the Company
had not yet commenced any formal business operations, and all activity
to date relates to the Company's formation and proposed fund raising.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the capital
it will require through the issuance of equity securities, debt
securities, bank borrowings or a combination thereof.
B. Use of Estimates
--------------------
The preparation of the 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.
C. Cash and Cash Equivalents
-----------------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
6
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
- --------------------------------------------------------------
D. Income Taxes
----------------
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. There were no current or deferred income
tax expense or benefits due to the Company not having any material
operations from inception to December 31, 1998.
NOTE 2 - STOCKHOLDERS' EQUITY
- ------------------------------
A. Common Stock
----------------
The Company is authorized to issue 25,000,000 shares of common stock at
$.001 par value. The Company has issued 2,100,000 shares through
December 31, 1998.
NOTE 3 - SUBSEQUENT EVENTS
- --------------------------
(A) Agreement and Plan of Reorganization
-----------------------------------------
The Company is in the process of negotiating an Agreement and Plan of
Reorganization with LLO-Gas, Inc., a Delaware corporation, that will
result in the Company acquiring 100% of LLO-Gas, Inc.'s issued and
outstanding stock in consideration for common stock in the Company.
LLO-Gas, Inc. will become a wholly owned subsidiary of the Company.
7
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
NOTE 3 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(A) Agreement and Plan of Reorganization - (CONT'D)
----------------------------------------------------
LLO-Gas, Inc. has agreements with a major oil company to acquire
branded service stations. These are existing combination gas and
convenience stores which have a 15 year supply contract to purchase
petroleum products from the same oil company selling the service
stations. The Company expects to acquire additional existing service
stations and also anticipates developing several branded truck stop
facilities which will be supplied by the same oil company.
LLO-Gas, Inc. has entered into agreements that management believes will
provide for funding for the first phase acquisition.
In connection with the Plan of Reorganization, certain shareholders of
the Company have agreed to subscribe to no more than 33,300 shares of
the Company's common stock at $3.00 per share. The funds are to be used
by LLO-Gas, Inc. to complete the acquisition of the service stations.
The closing of the subscription agreement is to occur on or before
August 10, 1999 for not less than 11,666 shares. The subscription
agreement is not collateralized by any security interest. Provided
there is no failure to perform as to the 11,666 shares, the balance of
the subscription obligation is due and payable at such date as the
seller of the service stations, LLO-Gas, Inc. and a lending institution
may determine, upon not less than ten days notice to the subscribing
shareholders.
(B) Change in Control
----------------------
In June and July of 1999, by virtue of an acquisition of substantially
all of the outstanding stock by a new group, a change in control of the
Company occurred.
8
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
------------------------------
(FORMERLY L.A. ASSOCIATES, INC.)
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
--------------------
AS OF JUNE 30, 1999
-------------------
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
---------------------------------
PAGE 1 - ACCOUNTANTS' REVIEW REPORT
PAGE 2 - BALANCE SHEET AS OF JUNE 30, 1999
PAGE 3 - STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1999 AND FOR THE PERIOD FROM
JUNE 19, 1990(INCEPTION) TO JUNE 30, 1999
PAGE 4 - STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO JUNE 30, 1999
PAGE 5 - STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED JUNE 30, 1999 AND FOR THE PERIOD FROM
JUNE 19, 1990 (INCEPTION) TO JUNE 30, 1999
PAGES 6 - 8 - NOTES TO FINANCIAL STATEMENTS AS OF JUNE 30, 1999
<PAGE>
ACCOUNTANTS' REVIEW REPORT
--------------------------
To the Board of Directors of:
LA Investment Associates, Inc.
We have reviewed the accompanying balance sheet of LA Investment Associates,
Inc. (formerly L.A. Associates, Inc.) (a development stage company) as of June
30, 1999 and the related statements of operations, changes in stockholders'
equity and cash flows for the six months then ended and for the period from June
19, 1990 (inception) to June 30, 1999, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these financial
statements is the representation of the management of LA Investment Associates,
Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
July 26, 1999
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 30, 1999
-------------------
ASSETS
------
Cash $ 3,429
-----------
TOTAL ASSETS $ 3,429
- ------------ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable $ 2,259
------------
Total Liabilities 2,259
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value, 25,000,000
shares authorized, 2,100,000 issued and
outstanding 2,100
Additional paid in capital 3,320
Accumulated deficit during development stage (4,250)
-----------
Total Stockholders' Equity 1,170
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,429
- ------------------------------------------ ===========
See accompanying notes to financial statements.
2
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
AND FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO JUNE 30, 1999
----------------------------
CUMULATIVE FROM
JUNE 19, 1990 (INCEPTION) FOR THE SIX MONTHS
TO JUNE 30, 1999 ENDED JUNE 30, 1999
Income $ - $ -
-------------- --------------
Expenses:
General and
administrative 1,202 152
Professional fees 2,155 2,155
Telephone 964 964
-------------- --------------
Total expenses 4,321 3,271
-------------- --------------
Other Income
Dividend Income 71 71
-------------- --------------
Net Loss $ (4,250) $ (3,200)
- -------- ============== ==============
See accompanying notes to financial statements.
3
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO JUNE 30, 1999
----------------------------
Deficit
Additional Accumulated
Common Paid-In During Devel-
Stock Capital opment Stage Total
----------- ----------- ----------- -----------
August 1990, issuance
of common stock $ 100 $ - $ - $ 100
----------- ----------- ----------- -----------
Balance, December 31,
1990 100 - - 100
August 1991, issuance of
common stock 950 - - 950
Net loss 1991 - (1,050) (1,050)
----------- ----------- ----------- -----------
Balance December 31,
1991 1,050 - (1,050) -
January 1, 1992 -
December 31, 1997 - - - -
----------- ----------- ----------- -----------
Balance, December
31, 1997 1,050 - (1,050) -
October 1998, par value
changed from no par
to $.001 (1,049) 1,049 - -
October 1998, forward
stock split 2,000:1 2,099 (2,099) - -
Net loss for the
year ended December
31, 1998 - - - -
----------- ----------- ----------- -----------
Balance at December
31, 1998 2,100 (1,050) (1,050) -
Increase in paid in
capital - 4,370 - 4,370
Net loss for the six
months ended June 30,
1999 - - (3,200) (3,200)
----------- ----------- ----------- -----------
BALANCE AT
JUNE 30, 1999 $ 2,100 $ 3,320 $ (4,250) $ 1,170
- -------------- =========== =========== =========== ===========
See accompanying notes to financial statements.
4
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
AND FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO JUNE 30, 1999
----------------------------
CUMULATIVE FROM FOR THE
JUNE 19, 1990 (INCEPTION) SIX MONTHS ENDED
TO JUNE 30, 1999 JUNE 30, 1999
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (4,250) $ (3,200)
Adjustments to
reconcile net loss
to net cash used
by operating activities:
Increase in accounts payable 2,259 2,259
Net cash used in
operating activities (1,991) ( 941)
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES - -
---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in paid in capital 4,370 4,370
Proceeds from issuance
of common stock 1,050 -
---------- ----------
Net cash provided by
financing activities 5,420 4,370
---------- ----------
INCREASE IN CASH AND
CASH EQUIVALENTS 3,429 3,429
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - -
---------- ----------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 3,429 $ 3,429
------------- ========== ==========
See accompanying notes to financial statements.
5
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
-------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
A. Organization and Business Operations
----------------------------------------
LA Investment Associates, Inc. (Formerly L.A. Associates, Inc.) (a
development stage company) ("the Company") was incorporated in Nevada
on June 19, 1990 to serve as a vehicle to effect a merger, exchange of
capital stock, asset acquisition or other business combination with a
domestic or foreign private business. At June 30, 1999, the Company had
not yet commenced any formal business operations, and all activity to
date relates to the Company's formation and proposed fund raising.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the capital
it will require through the issuance of equity securities, debt
securities, bank borrowings or a combination thereof.
In June and July of 1999, by virtue of an acquisition of substantially
all of the outstanding stock by a new group, a change in control of the
Company occurred.
B. Use of Estimates
--------------------
The preparation of the 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.
C. Cash and Cash Equivalents
-----------------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
D. Income Taxes
----------------
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
6
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
-------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
- --------------------------------------------------------------
D. Income Taxes - (CONT'D)
---------------------------
which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. There were no current or
deferred income tax expense or benefits due to the Company not having
any material operations from inception to June 30, 1999.
NOTE 2 - STOCKHOLDERS' EQUITY
- ------------------------------
A. Common Stock
----------------
The Company is authorized to issue 25,000,000 shares of common stock at
$.001 par value. The Company has issued 2,100,000 shares through June
30, 1999.
NOTE 3 - SUBSEQUENT EVENTS
- --------------------------
(A) Agreement and Plan of Reorganization
-----------------------------------------
The Company is in the process of negotiating an Agreement and Plan of
Reorganization with LLO-Gas, Inc., a Delaware corporation, that will
result in the Company acquiring 100% of LLO-Gas, Inc.'s issued and
outstanding stock in consideration for common stock in the Company.
LLO-Gas, Inc. will become a wholly owned subsidiary of the Company.
LLO-Gas, Inc. has agreements with a major oil company to acquire
branded service stations. These are existing combination gas and
convenience stores which have a 15-year supply contract to purchase
petroleum products from the same oil company selling the service
stations. The Company expects to acquire additional existing service
stations and also anticipates developing several branded truck stop
facilities which will be supplied by the same oil company.
LLO-Gas, Inc. has entered into agreements that management believes will
provide for funding for the first phase acquisition.
In connection with the Plan of Reorganization, certain shareholders of
the Company have agreed to subscribe to no more than 33,300 shares of
the Company's common stock at $3.00 per share. The funds are to be used
by LLO-Gas, Inc. to complete the acquisition of the service stations.
The closing of the subscription agreement is to occur on or before
August 10, 1999 for not less than 11,666 shares. The subscription
agreement is
7
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
-------------------
NOTE 3 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
A. Agreement and Plan of Reorganization - (CONT'D)
---------------------------------------------------
not collateralized by any security interest. Provided there is no
failure to perform as to the 11,666 shares, the balance of the
subscription obligation is due and payable at such date as the seller
of the service stations, LLO-Gas, Inc. and a lending institution may
determine, upon not less than ten days notice to the subscribing
shareholders.
8
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
------------------------------
(FORMERLY L.A. ASSOCIATES, INC.)
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
--------------------
AS OF SEPTEMBER 30, 1999
------------------------
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------------------------------
PAGE 1 - ACCOUNTANTS' REVIEW REPORT
PAGE 2 - BALANCE SHEET AS OF SEPTEMBER 30, 1999
PAGE 3 - STATEMENTS OF OPERATIONS FOR THE NINE AND THREE MONTHS
ENDED SEPTEMBER 30, 1999 AND FOR THE PERIOD FROM JUNE 19,
1990 (INCEPTION) TO SEPTEMBER 30, 1999
PAGE 4 - STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM JUNE 19, 1990 (INCEPTION)
TO SEPTEMBER 30, 1999
PAGE 5 - STATEMENTS OF CASH FLOWS FOR THE NINE AND
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO SEPTEMBER 30, 1999
PAGES 6 - 7 - NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1999
<PAGE>
ACCOUNTANTS' REVIEW REPORT
--------------------------
To the Board of Directors of:
LA Investment Associates, Inc.
We have reviewed the accompanying balance sheet of LA Investment Associates,
Inc. (formerly L.A. Associates, Inc.) (a development stage company) as of
September 30, 1999 and the related statements of operations, changes in
stockholders' deficiency and cash flows for the nine and three months then ended
and for the period from June 19, 1990 (inception) to September 30, 1999, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of LA Investment Associates, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
December 22, 1999
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
--------------------------------
ASSETS
------
Cash $ 2,239
------------
TOTAL ASSETS $ 2,239
- ------------ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,179
Due to shareholder 2,000
------------
Total Current Liabilities 4,176
------------
STOCKHOLDERS' DEFICIENCY
Common Stock, $.001 par value, 25,000,000
shares authorized, 2,100,000 issued and
outstanding 2,100
Common Stock to be issued, 3,000,000 shares 3,000
Additional paid in capital 4,820
Accumulated deficit during development stage (11,857)
------------
Total Stockholders' Deficiency (1,937)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 2,239
- ---------------------------------------------- ============
See accompanying notes to financial statements.
2
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND FOR THE PERIOD FROM
JUNE 19, 1990 (INCEPTION) TO SEPTEMBER 30, 1999
-----------------------------------------------
CUMULATIVE FROM FOR THE FOR THE
JUNE 19, 1999 NINE MONTHS THREE MONTHS
(INCEPTION) TO ENDED SEPTEMBER ENDED SEPTEMBER
SEPTEMBER 30,1999 30, 1999 30, 1999
----------------- ----------------- -----------------
Income
Expenses: $ - $ - $ -
----------------- ----------------- -----------------
General and
administrative 3,235 2,185 2,033
Professional fees 7,127 7,127 4,972
Telephone 1,619 1,619 655
----------------- ----------------- -----------------
Total expenses 11,981 10,931 7,660
----------------- ----------------- -----------------
Other Income
Dividend Income 124 124 53
----------------- ----------------- -----------------
Net Loss $ (11,857) $ (10,807) $ (7,607)
================= ================= =================
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JUNE 19, 1990
(INCEPTION) TO SEPTEMBER 30, 1999
---------------------------------
<CAPTION>
Common Stock Deficit
and Additional Accumulated
Common Stock Paid-In During Devel-
to be issued Capital opment Stage Total
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
August 1990, issuance
of common stock $ 100 $ - $ - $ 100
------------ ------------ ------------- ------------
Balance, December 31,
1990 100 - - 100
August 1991, issuance of
common stock 950 - - 950
Net loss 1991 - - (1,050) (1,050)
------------ ------------ ------------- ------------
Balance December 31,
1991 1,050 - (1,050) -
January 1, 1992 -
December 31, 1997 - - - -
------------ ------------ ------------- ------------
Balance, December
31, 1997 1,050 - (1,050) -
October 1998, par value
changed from no par
to $.001 (1,049) 1,049 - -
October 1998, forward
stock split 2,000:1 2,099 (2,099) - -
Net loss for the
year ended December
31, 1998 - - - -
------------ ------------ ------------- ------------
Balance at December
31, 1998 2,100 (1,050) (1,050) -
Increase in paid in
capital - 5,870 - 5,870
Common stock to be
issued 3,000 - - 3,000
Net loss for the nine
months ended September
30, 1999 - - (10,807) (10,807)
------------ ------------ ------------- ------------
BALANCE AT
- ----------
SEPTEMBER 30, 1999 $ 5,100 $ 4,820 $ (11,857) $ (1,937)
------------------ ============ ============ ============= ============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE NINE AND THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND FOR THE PERIOD FROM
JUNE 19, 1990 (INCEPTION) TO SEPTEMBER 30, 1999
-----------------------------------------------
CUMULATIVE FROM FOR THE FOR THE
JUNE 19, 1999 NINE MONTHS THREE MONTHS
(INCEPTION) TO ENDED SEPTEMBER ENDED SEPTEMBER
SEPTEMBER 30,1999 30, 1999 30, 1999
----------------- ----------------- -----------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (11,857) $ (10,807) $ (7,607)
Adjustments to
reconcile net
loss to net cash
used by operating
activities:
Increase (Decrease)
in accounts payable 2,176 2,176 (83)
----------------- ----------------- -----------------
Net cash used in
operating activities (9,681) (8,631) (7,690)
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Due to shareholder 2,000 2,000 2,000
Increase in paid in
capital 5,870 5,870 1,500
Proceeds from issued
and to be issued
common stock 4,050 3,000 3,000
----------------- ----------------- -----------------
Net cash provided by
financing activities 11,920 10,870 6,500
----------------- ----------------- -----------------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 2,239 2,239 1,190
----------------- ----------------- -----------------
CASH AND CASH
EQUIVALENTS -
BEGINNING OF PERIOD - - 3,429
----------------- ----------------- -----------------
CASH AND CASH
EQUIVALENTS -
END OF PERIOD $ 2,239 $ 2,239 $ 2,239
------------- ================= ================= =================
See accompanying notes to financial statements.
5
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999
------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
A. Organization and Business Operations
---------------------------------------
LA Investment Associates, Inc. (Formerly L.A. Associates, Inc.) (a
development stage company) ("the Company") was incorporated in Nevada
on June 19, 1990 to serve as a vehicle to effect a merger, exchange of
capital stock, asset acquisition or other business combination with a
domestic or foreign private business. At September 30, 1999, the
Company had not yet commenced any formal business operations, and all
activity to date relates to the Company's formation and proposed fund
raising.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the capital
it will require through the issuance of equity securities, debt
securities, bank borrowings or a combination thereof.
B. Use of Estimates
-------------------
The preparation of the 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.
C. Cash and Cash Equivalents
----------------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
D. Income Taxes
---------------
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
6
<PAGE>
LA INVESTMENT ASSOCIATES, INC.
(FORMERLY L.A. ASSOCIATES, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
- --------------------------------------------------------------
D. Income Taxes - (CONT'D)
--------------------------
includes the enactment date. There were no current or deferred income
tax expense or benefits due to the Company not having any material
operations from inception to September 30, 1999.
NOTE 2 - STOCKHOLDERS' DEFICIENCY
- ---------------------------------
A. Common Stock
---------------
The Company is authorized to issue 25,000,000 shares of common stock at
$.001 par value. The Company has issued 2,100,000 shares through
September 30, 1999. As of the same date, 3,000,000 shares are
classified as common stock to be issued, the proceeds for which have
already been received by the Company.
NOTE 3 - SUBSEQUENT EVENT -
- ---------------------------
RESCISSION OF AGREEMENT AND PLAN OF REORGANIZATION
--------------------------------------------------
As of June 30, 1999, the Company was negotiating an Agreement and Plan
of Reorganization with LLO-Gas, Inc., a Delaware corporation, that
would have resulted in the Company acquiring 100% of LLO-Gas, Inc.'s
issued and outstanding stock in consideration for common stock in the
Company, therefore making LLO-Gas, Inc. a wholly owned subsidiary of
the Company (see Note 3 of the June 30, 1999 financial statements).
In October 1999, the Company and LLO-Gas, Inc. had amicably terminated
negotiations. The Company is continuing to seek business opportunities.
7
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