UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1999
--------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM to
------------------------------
COMMISSION FILE NUMBER 000-27959
-------------------------------------
LAREDO INVESTMENT CORP.
(Exact name of small business issuer as specified in its charter)
NEVADA 77-0517964
- ------------------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
UNIT 431-230-1210 SUMMIT DRIVE, KAMLOOPS, BC, V2C 6M1
-----------------------------------------------------
(Address of principal executive offices)
(250) 377-3918
--------------
Issuer's telephone number
(Former name, former address and former fiscal year, if changed since last
report.)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: 1,000,000 AS OF SEPTEMBER 30, 1999
---------------------------------------
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LAREDO INVESTMENT CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1999 1998
------------- -------------
Assets ....................................... $ -- $ --
============= =============
Liabilities - Accounts Payable ............... $ -- $ 200
------------- -------------
Stockholders' Equity
Common Stock, Par value $.001
Authorized 100,000,000 shares at
August 31, 1999 .......................... 1,000 1,000
Paid-In Capital ............................ 485 --
Retained Deficit ........................... (1,200) (1,200)
Deficit Accumulated During the
Development Stage ........................ (285) --
------------- -------------
Total Stockholders' Equity .............. -- (200)
------------- -------------
Total Liabilities and
Stockholders' Equity .................... $ -- $ --
============= =============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
LAREDO INVESTMENT CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Revenue: ................. $ -- $ -- $ -- $ --
Expenses: ................ 285 -- 285 100
---------- ---------- ---------- ----------
Net Loss ............ $ (285) $ -- $ (285) $ (100)
========== ========== ========== ==========
Basic & Diluted
Loss Per Share ......... $ -- $ -- $ -- $ --
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
LAREDO INVESTMENT CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
-----------------------
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ............................................. $ (285) (100)
Increase (Decrease) in Accounts Payable .............. (200) 100
---------- ----------
Net cash used by investing activities .............. (485) --
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used by investing activities ................ -- --
---------- ----------
Cash Flows From Financing Activities:
Capital contributed by shareholder .................. 485 --
---------- ----------
Net Cash Provided by Financing Activities ........... 485 --
---------- ----------
Net Increase (Decrease) in Cash and
Cash Equivalents ................................... -- --
Cash and Cash Equivalents at
Beginning of the Year .............................. -- --
---------- ----------
Cash and Cash Equivalents at
End of the Year .................................... $ -- $ --
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ........................................... $ -- $ --
Franchise and income Taxes ......................... $ 250 $ --
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
LAREDO INVESTMENT CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
1. INTERIM REPORTING
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles and with Form 10-QSB requirements.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the nine month period
ended September 30, 1999, are not necessarily indicative of the results that may
be expected for the year ended December 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION - GENERAL
The Company was organized for the purpose of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, acquire an
interest in one or more business opportunities presented to it by persons or
firms who or which desire to seek perceived advantages of a publicly held
corporation. At this time, the Company has no plan, proposal, agreement,
understanding or arrangement to acquire or merge with any specific business or
company, and the Company has not identified any specific business or company for
investigation and evaluation. No member of Management or promoter of the Company
has had any material discussions with any other company with respect to any
acquisition of that company. Of the 1,000,000 outstanding shares of the
Company's Common Stock, 200,000 shares are currently freely tradable under the
Rule 144 exemption promulgated under the Securities Act of 1933. 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. The discussion of the proposed business under this caption and
throughout is purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter into potential
business opportunities.
The Company intends to obtain funds in one or more private placements
to finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent on
the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. None of the officers
5
<PAGE>
and directors of the Company has had any experience in the proposed business of
the Company. There can be no assurance that the Company has had any experience
in the proposed business of the Company. There can be no assurance that the
Company will be able to raise any funds in private placement. In any private
placement, management may purchase shares on the same terms as offered in the
private placement.
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity with a firm that only
recently commenced operations, or a developing company in need of additional
funds for expansion into new products or markets, or an established company
seeking a public vehicle. In some instances, a business opportunity may involve
the acquisition or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock. The Company may purchase assets and establish wholly owned
subsidiaries in various business or purchase existing businesses as
subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Because of 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 benefits of a publicly traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statues) for all shareholders,
and other factors. Potentially available business opportunities may occur 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 extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management had adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may require that
Management or other stockholders of the Company sell all or a portion of their
shares to the acquired company, or to the principals of the acquired company. It
is anticipated that the sales price of such shares will be lower
6
<PAGE>
than the current market price or anticipated market price of the Company's
Common Stock at such a time. The Company's funds are not expected to be used for
purposes of any stock purchase from insiders. The Company shareholders will not
be provided the opportunity to approve or consent to such sale. The opportunity
to sell all or a portion of their shares in connection with an acquisition may
influence management's decision to enter into a specific transaction. However,
management believes that since the anticipated sales price will potentially be
less than market value, that the potential of a stock sale will be a material
factor in their decision to enter a specific transaction.
The above description of potential sales of management stock is not
based upon any corporate bylaw, shareholder or board resolution, or contract or
agreement. No other payments of cash or property are expected to be received by
Management in connection with any acquisition. The Company has not formulated
any policy regarding the use of consultants or outside advisors, but does not
anticipate that it will use the services of such persons.
The Company has, and will continue to have, insufficient capital with
which to provide the owners of business opportunities with any significant cash
or other assets. However, management believes the Company will offer owners of
business opportunities the opportunity to acquire a controlling ownership
interest in a public company at substantially less cost than is required to
conduct an initial public offering. The owners of the business opportunities
will, however, incur significant post-merger or acquisition registration costs
in the event they wish to register a portion of their shares for subsequent
sale. The Company will also incur significant legal and accounting costs in
connection with the acquisition of a business opportunity including the costs of
preparing post- effective amendments, Forms 8-K, agreements and related reports
and documents. However, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which would
support the perceived benefits of a merger or acquisition transaction for the
owners of a business opportunity.
The Company does not intend to make any loans to any prospective merger
or acquisition candidates or unaffiliated third parties.
SOURCES OF OPPORTUNITIES
The Company anticipates that business opportunities for possible
acquisition will be referred by various sources, including its officers and
directors, professional advisers, securities broker- dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals. The Company will seek a potential business opportunity
from all known sources, but will rely principally on personal contacts of its
officers and directors as well as indirect associations between them and other
business and professional people. It is not presently anticipated that the
Company will engage professional firms specializing in business acquisitions or
reorganizations.
The officers and directors of the Company are currently employed in
other positions and will devote only a portion of their time (not more than a
couple hours per week) to the business affairs
7
<PAGE>
of the Company, until such time as an acquisition has been determined to be
highly favorable, at which time they expect to spend full time in investigating
and closing any acquisition. In addition, in the face of competing demands for
their time, the officers and directors may grant priority to their full-time
positions rather than to the Company.
EVALUATION OF OPPORTUNITIES
The analysis of new business opportunities will be undertaken by or
under the supervision of the officers and directors of the Company. Management
intends to concentrate on identifying prospective business opportunities that
may be brought to its attention through present associations with management.
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
operation, if any; prospects for the future; present and expected competition;
the quality and experience of management services which may be available and the
depth of that management; 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. Officers and directors of each Company will meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent possible, the Company
intends to utilize written reports and personal investigation to evaluate the
above factors. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and the
Company's shareholders must, therefore, depend on the ability of management to
identify and evaluate such risk. In the case of some of the opportunities
available to the Company, it may be anticipated that the promoters thereof have
been unable to develop a going concern or that such business is in its
development stage in that it has not generated significant revenues from its
principal business activities prior to the Company's participation. There is a
risk, even after the Company's participation in the activity and the related
expenditure of the Company's funds, that the combined enterprises will still be
unable to become a going concern or advance beyond the development stage. Many
of the opportunities may involve new and untested products, processes, or market
strategies that may not succeed. The Company and, therefore, its shareholders
will assume such risks.
The Company will not restrict its search for any specific kind of
business, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is currently impossible to predict the status of any business
in which the Company may become engaged, in that such business may need
additional
8
<PAGE>
capital, may merely 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, franchise or licensing agreement with another corporation or entity. It
may also purchase stock or assets of an existing business. On the consummation
of a transaction, it is possible that the present management and shareholders of
the Company will not be in control of the Company. In addition, a majority or
all of the Company's officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
Federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market in the
Company's Common Stock may have a depressive effect on such market. 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 so called "tax free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the "Code").
In order to obtain tax-free treatment under the Code, it may be necessary for
the owners of the acquired business to own 80% or more of the voting stock of
the surviving entity. In such event, the shareholders of the Company, including
past and current investors, would retain less than 20% of the issued and
outstanding shares of the surviving entity, which could result in significant
dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check reference of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which each
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity, and the relative negotiating strength of the
Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the Company
which target company shareholders would acquire in exchange for 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 lesser percentage ownership interest in the Company following
any merger or
9
<PAGE>
acquisition. The percentage ownership may be subject to significant reduction in
the event that 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
then shareholders, including past and current investors.
The Company will not have sufficient funds (unless it is able to raise
funds in a private placement) to undertake any significant development,
marketing and manufacturing of any products which may be acquired. Accordingly,
following the acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing or obtain
funding from third parties, in exchange for which the Company would probably be
required to give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able either to obtain
additional financing or interest third parties in providing funding for the
further development, marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision were made not to participate in a specific business
opportunity the costs therefore incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate that
transaction may result in the loss of the Company of the related costs incurred.
Management believes that the Company may be able to benefit from the
use of "leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. During periods when interest rates
are relatively high, the benefits of leveraging are not as great as during
periods of lower interest rates because the investment in the business
opportunity held on a leveraged basis will only be profitable if it generates
sufficient revenues to cover the related debt and other costs of the financing.
Lenders from which the Company may obtain funds for purposes of a leveraged
buy-out may impose restrictions on the future borrowing, distribution, and
operating policies of the Company. It is not possible at this time to predict
the restrictions, if any, which lenders may impose or the impact thereof on the
Company.
10
<PAGE>
COMPETITION
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be at a significant competitive disadvantage vis-a-vis the
Company's competitors.
REGULATION AND TAXATION
The Investment Company Act of 1940 defines an "investment company" as
an issuer that is or holds itself out as being engaged primarily in the business
of investing, reinvesting or trading of securities. While the Company does not
intend to engage in such activities, the Company could become subject to
regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood that the Company could be classified as an "investment company."
The Company intends to structure a merger or acquisition in such a
manner as to minimize Federal and state tax consequences to the Company and to
any target company.
EMPLOYEES
The Company's only employees at the present time is its sole officer
and director, who will devote as much time as the Board of Directors determine
is necessary to carry out the affairs of the Company.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the quarter months
ended September 30, 1999.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LAREDO INVESTMENT CORP.
(Registrant)
DATE: MARCH 10, 2000 BY: /S/
------------------------- ------------------------------------------
Lois E. Couston, President
(Principal financial and Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF LAREDO INVESTMENT CORP. AS OF SEPTEMBER 30, 1999 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (1)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
