U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities
Exchange Act of 1934
PATHWAY CORP.
(Name of Small Business Issuer in its charter)
DELAWARE 52-2177760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 North Market Street, Suite 606,
Wilmington, Delaware 19801
(Address of Principal Office) Zip Code
Issuer's telephone number: (718) 997-7838
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered - N/A
Name of each exchange on which each class is to be
registered - N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
PART I
Item 1. DESCRIPTION OF BUSINESS
General
The Company was incorporated under the laws of the State of
Delaware on January 16, 1998, and is in the early developmental and
promotional stages. To date the Company's only activities have been
organizational ones, directed at developing its business plan and
raising its initial capital. The Company has not commenced any
commercial operations. The Company has no full-time employees and owns
no real estate.
The Company has elected to file this Form 10-SB registration
statement on a voluntary basis in order to become a reporting company
under the Securities Exchange Act of 1934. The Company is a "blind
pool" or "blank check" company, whose business plan is to seek,
investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value. The acquisition of a business opportunity may be
made by purchase, merger, exchange of stock, or otherwise, and may
encompass assets or a business entity, such as a corporation, joint
venture, or partnership. The Company has very limited capital, and it
is unlikely that the Company will be able to take advantage of more than
one such business opportunity. The Company intends to seek
opportunities demonstrating the potential of long-term growth as opposed
to short-term earnings.
At the present time the Company has not identified any
business opportunity that it plans to pursue, nor has the Company
reached any agreement or definitive understanding with any person
concerning an acquisition. One of the Company's directors has
previously been involved in several transactions involving mergers
between an established company and a blind pool or blank check entity.,
and he has numerous contacts within the field of corporate finance (See
Item 5 "Directors, Executive Officers, Promoters and Control Persons -
Other Blind Pool Activities"). As a result, he may have had
preliminary contacts with representatives of numerous companies
concerning the general possibility of a merger or acquisition with a
blind pool or blank check company. However, none of these preliminary
contacts or discussions involved the possibility of a merger or
acquisition transaction with the Company.
Prior to the effective date of this registration statement, it
is anticipated that the Company's officers and directors named herein
will contact broker/dealers and other persons with whom they are
acquainted who are involved in corporate finance matters to advise them
of the Company's existence and to determine if any companies or
businesses they represent have a general interest in considering a
merger or acquisition with a blind pool or blank check entity. No
direct discussions regarding the possibility of a merger with the
Company are expected to occur until after the effective date of this
registration statement. However, no assurance can be given that the
Company will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available
for acquisitions, or that any acquisition that occurs will be on terms
that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-
sized enterprises which have a desire to become public corporations and
which are able to satisfy, or anticipate in the reasonably near future
being able to satisfy, the minimum asset requirements in order to
qualify shares for trading on NASDAQ or on an exchange such as the
American Stock Exchange. (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business
opportunities presented to it will (i) either be in the process of
formation or, be recently organized with limited operating history, or a
history of losses attributable to under-capitalization or other factors;
(ii) be experiencing financial or operating difficulties; (iii) be in
need of funds to develop a new product or service or to expand into a
new market; (iv) be relying upon an untested product or marketing
concept; or (v) have a combination of the characteristics mentioned in
(i) through (iv). The Company intends to concentrate its acquisition
efforts on properties or businesses that it believes to be undervalued
or that it believes may realize a substantial benefit from being
publicly owned. Given the above factors, investors should expect that
any acquisition candidate may have little or no operating history, or a
history of losses or low profitability.
The Company does not propose to restrict its search for
investment opportunities to any particular geographical area or
industry, and may, therefore, engage in essentially any business, to the
extent of its limited resources. This includes industries such as
service, finance, natural resources, manufacturing, high technology,
product development, medical, communications and others. The Company's
discretion in the selection of business opportunities is unrestricted,
subject to the availability of such opportunities, economic conditions,
and other factors.
As a consequence of this registration of its securities, any
entity which has an interest in being acquired by, or merging into the
Company, is expected to be an entity that desires to become a public
company and establish a public trading market for its securities. In
connection with such a merger or acquisition, it is highly likely that
an amount of stock constituting control of the Company would either be
issued by the Company or be purchased from the current principal
shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to be a private transaction rather than a public
distribution of securities, but is also likely to result in substantial
gains to the current shareholders relative to their purchase price for
such stock. In the Company's judgment, none of its officers and
directors would thereby become an "underwriter" within the meaning of
the Section 2(11) of the Securities Act of 1933, as amended as long as
the transaction is a private transaction rather than a public
distribution of securities. The sale of a controlling interest by
certain principal shareholders of the Company could occur at a time when
the other shareholders of the Company remain subject to restrictions on
the transfer of their shares.
Depending upon the nature of the transaction, the current
officers and directors of the Company may resign their management
positions with the Company in connection with a change in control of the
Company or its acquisition of a business opportunity (See "Form of
Acquisition," below, and "Risk Factors,M - Lack of Continuity in
Management"). In the event of such a resignation, the Company's current
management would not have any control over the conduct of the Company's
business following the change in control or the Company's combination
with a business opportunity.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its officers and
directors, its other stockholders, professional advisors such as
attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may
present unsolicited proposals. The Company has no plans,
understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger
or acquisition transaction with any business with which its officers or
directors are currently affiliated. Should the Company determine in the
future, contrary to the foregoing expectations, that a transaction with
an affiliate would be in the best interests of the Company and its
stockholders, the Company would enter into such a transaction if:
(1) The material facts as to the relationship or interest of
the affiliate and as to the contract or transaction are disclosed or are
known to the Board of Directors, and the Board in good faith authorizes,
approves or ratifies the contract or transaction by the affirmative vote
of a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; or
(2) The material facts as to the relationship or interest of
the affiliate and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically authorized, approved or ratified in good
faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Company as
of the time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific
business opportunity may be made upon management's analysis of the
quality of the other company's management and personnel, the anticipated
acceptability of new products or marketing concepts, the merit of
technological changes, the perceived benefit the business opportunity
will derive from becoming a publicly held entity, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is
anticipated that the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches
substantially, expand significantly, change product emphasis, change or
substantially augment management, or make other changes. The Company
will be dependent upon the owners of a business opportunity to identify
any such problems which may exist and to implement, or be primarily
responsible for the implementation of, required changes. Because the
Company may participate in a business opportunity with a newly organized
firm or with a firm which is entering a new phase of growth, the Company
will incur further risks, because management in many instances will not
have proven its abilities or effectiveness, the eventual market for the
products or services of the business opportunity will likely not be
established, and the business opportunity may not be profitable when
acquired.
It is anticipated that the Company will not be able to
diversify, but will essentially be limited to one such venture because
of the Company's limited financing. This lack of diversification will
not permit the Company to offset potential losses from one business
opportunity against profits from another, and should be considered an
adverse factor affecting any decision to purchase the Company's
securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the Company's
management to complete acquisitions without submitting any proposal to
the stockholders for their consideration. Holders of the Company's
securities should not anticipate that the Company necessarily will
furnish such holders, prior to any merger or acquisition, with financial
statements, or any other documentation, concerning a target company or
its business. In some instances, however, the proposed participation in
a business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the
stockholders' advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by
or under the supervision of the Company's officers and directors, none
of whom are professional business analysts (See "Management"). Although
there are no current plans to do so, Company management might hire an
outside consultant to assist in the investigation and selection of
business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or
advisors to assist in the investigation and selection of business
opportunities, no policies have been adopted regarding use of such
consultants or advisors, the criteria to be used in selecting such
consultants or advisors, the services to be provided, the term of
service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely
that any such fee the Company agrees to pay would be paid in stock and
not in cash. Otherwise, the Company anticipates that it will consider,
among other things, the following factors:
(1) Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
(2) The extent to which the business opportunity can be advanced;
(3) Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
(4) The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other required
items.
(5) Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations, through the
sale of additional securities, through joint ventures or similar
arrangements, or from other sources.
(6) Whether, following the business combination, the
financial condition of the business opportunity would be, or would have
a significant prospect in the foreseeable future of becoming sufficient
to enable the securities of the Company to qualify for listing on an
exchange or on a national automated securities quotation system, such as
NASDAQ, so as to permit the trading of such securities to be exempt from
the requirements of Rule 15c2-6 adopted by the Securities and Exchange
Commission (See "Risk Factors, C. - Regulation of Penny Stocks").
(7) The Company's perception of how any particular business
opportunity will be received by the investment community and by the
Company's stockholders;
(8) Competitive position as compared to other companies of
similar size and experience within the industry segment as well as
within the industry as a whole;
(9) The cost of participation by the Company as
compared to the perceived tangible and intangible values and potential;
and
In regard to the possibility that the shares of the Company
would qualify for listing on NASDAQ, the current standards for initial
listing include, among other requirements, that the Company (i) have net
tangible assets of at least $4,000,000, or a market capitalization of
$50,000,000, or net income of not less than $750,000 in its latest
fiscal year or in two of the last three fiscal years; (ii) have a public
float (i.e. shares that are not held by any officer, director or 10%
shareholder) of at least 1,000,000 shares; (iii) have a minimum bid
price of at least $4.00; (iv) have at least 300 round lot shareholders
(i.e. shareholders who own not less than 100 shares); and (v) have an
operating history of at least one year or a market capitalization of at
least $50,000,000. Many, and perhaps most, of the business
opportunities that might be potential candidates for a combination with
the Company would not satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in
the selection of a business opportunity, and management will attempt to
analyze all factors appropriate to each opportunity and make a
determination based upon reasonable investigative measures and available
data. 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. Potential
investors must recognize that, because of the Company's limited capital
available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a
business opportunity. It expects, however, that the analysis of
specific proposals and the selection of a business opportunity may take
several months or more.
Prior to making a decision to participate in a business
opportunity, the Company will generally request that it be provided with
written materials regarding the business opportunity containing such
items as a description of products, services and company history;
management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions
between such company and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risks and
competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable
assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 60 days
following completion of a merger transaction; and other information
deemed relevant.
As part of the Company's investigation, the Company's officers
and directors may meet personally with management and key personnel, may
visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited financial resources and
management expertise.
It is possible that the range of business opportunities that
might be available for consideration by the Company could be limited by
the impact of Securities and Exchange Commission regulations regarding
purchase and sale of "penny stocks." The regulations would affect, and
possibly impair, any market that might develop in the Company's
securities until such time as they qualify for listing on NASDAQ or on
an exchange which would make them exempt from applicability of the
"penny stock" regulations. See "Risk Factors - Regulation of Penny
Stocks."
Company management believes that various types of potential
merger or acquisition candidates might find a business combination with
the Company to be attractive. These include acquisition candidates
desiring to create a public market for their shares in order to enhance
liquidity for current shareholders, acquisition candidates which have
long- term plans for raising capital through the public sale of
securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of
development of a public market for their securities will be of
assistance in that process. Acquisition candidates which have a need
for an immediate cash infusion are not likely to find a potential
business combination with the Company to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company
may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and
desires of the Company and the promoters of the opportunity and, upon
the basis of that review and the relative negotiating strength of the
Company and such promoters, the legal structure or method deemed by
management to be suitable will be selected. Such structure may include,
but is not limited to leases, purchase and sale agreements, licenses,
joint ventures and other contractual arrangements. The Company may act
directly or indirectly through an interest in a partnership, corporation
or other form of organization. Implementing such structure may require
the merger, consolidation or reorganization of the Company with other
corporations or forms of business organization. In addition, the present
management and stockholders of the Company most likely will not have
control of a majority of the voting shares of the Company following a
merger or reorganization transaction. As part of such a transaction,
the Company's existing directors may resign and new directors may be
appointed without any vote by stockholders.
It is likely that the Company will acquire its participation
in a business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such transaction
cannot be predicted, it should be noted that in certain circumstances
the criteria for determining whether or not an acquisition is a so-
called "tax free" reorganization under the Internal Revenue Code of
1986, depends upon the issuance to the stockholders of the acquired
company of a controlling interest (e.g. 80% or more) of the common stock
of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather
than other "tax free" provisions provided under the Internal Revenue
Code, the Company's current stockholders would retain in the aggregate
20% or less of the total issued and outstanding shares. This could
result in substantial additional dilution in the equity of those who
were stockholders of the Company prior to such reorganization. Any such
issuance of additional shares might also be done simultaneously with a
sale or transfer of shares representing a controlling interest in the
Company by the current officers, directors and principal shareholders.
(See Item 1., "Description of Business - General").
It is anticipated that any new securities issued in any
reorganization would be issued in reliance upon exemptions, if any are
available, from registration under applicable federal and state
securities laws. In some circumstances, however, as a negotiated
element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, or under
certain conditions at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only
after the negotiation and execution of a written agreement. Although
the terms of such agreement cannot be predicted, generally such an
agreement would require specific representations and warranties by all
of the parties thereto, specify certain events of default, detail the
terms of closing and the conditions which must be satisfied by each of
the parties thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed, set forth remedies upon default,
and include miscellaneous other terms.
As a general matter, the Company anticipates that it will
enter into a letter of intent with the management, principals or owners
of a prospective business opportunity prior to signing a binding
agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate
the transaction. Execution of a letter of intent will by no means
indicate that consummation of an acquisition is probable. Neither the
Company nor any of the other parties to the letter of intent will be
bound to consummate the acquisition unless and until a definitive
agreement concerning the acquisition as described in the preceding
paragraph is executed. Even after a definitive agreement is executed,
it is possible that the acquisition would not be consummated should any
party elect to exercise any right provided in the agreement to terminate
it on specified grounds.
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 is made not to
participate in a specific business opportunity, the costs that may be
incurred in the related investigation would not be recoverable.
Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate
future time may make it impossible to procure goods and services.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by
purchasing, trading or selling the securities of such business. The
Company does not, however, intend to engage primarily in such
activities. Specifically, the Company intends to conduct its activities
so as to avoid being classified as an "investment company" under the
Investment Company Act of 1940 (the "Investment Act"), and therefore to
avoid application of the costly and restrictive registration and other
provisions of the Investment Act, and the regulations promulgated
thereunder.
The Company's plan of business may involve changes in its
capital structure, management, control and business, especially if it
consummates a reorganization as discussed above. Each of these areas is
regulated by the Investment Act, in order to protect purchasers of
investment company securities. Since the Company will not register as
an investment company, stockholders will not be afforded these
protections.
Any securities which the Company might acquire in exchange for
its Common Stock will be "restricted securities" within the meaning of
the Securities Act of 1933, as amended (the "Act"). If the Company
elects to resell such securities, such sale cannot proceed unless a
registration statement has been declared effective by the Securities and
Exchange Commission or an exemption from registration is available.
Section 4(1) of the Act, which exempts sales of securities not involving
a public distribution by persons other than the issuer, would in all
likelihood be available to permit a private sale. Although the plan of
operation does not contemplate resale of securities acquired, if such a
sale were to be necessary, the Company would be required to comply with
the provisions of the Act to effect such resale.
An acquisition made by the Company may be in an industry which
is regulated or licensed by federal, state or local authorities.
Compliance with such regulations can be expected to be a
time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in
its efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than the Company and will therefore be in a
better position than the Company to obtain access to attractive business
opportunities. The Company also will experience competition from other
public blind pool companies, many of which may have more funds available
than does the Company.
Administrative Offices
The Company currently maintains a mailing address at 98-01
67th Avenue, Rego Park, NY 11374, which is the office address of its
President. The Company's telephone number is 718-997-7838. The
Company pays no rent or other fees for the use of this mailing address.
Other than this mailing address and its principal office located at 1220
North Market Street, Suite 606, Wilmington, Delaware 19801, the Company
does not currently maintain any other office facilities, and does not
anticipate the need for additional office facilities at any time in the
foreseeable future. However, the need for additional office facilities
may be necessary once the Company acquires a business.
Employees
The Company is in the development stage and currently has no
employees. Management of the Company expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a need
to engage any full-time employees so long as it is seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether
or not to acquire or participate in specific business opportunities.
Risk Factors
A. Conflicts of Interest. Certain conflicts of interest may
exist
between the Company and its officers and directors. They have other
business interests to which they currently devote attention, and are
expected to continue to do so. As a result, conflicts of interest may
arise that can be resolved only through their exercise of judgment in a
manner which is consistent with their fiduciary duties to the Company. (
See Item 5 for management.)
The Company's officers and directors may form additional
blind pool or blank check companies in the future. Any additional blind
pool or blank check companies formed in the future may be in direct
competition with the Company for available business opportunities (See
Item 5 - "Directors, Executive Officers, Promoters and Control
Persons").
It is anticipated that the Company's principal shareholder may
actively negotiate or otherwise consent to the purchase of a portion of
their common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. In this process, the Company's
principal shareholders may consider their own personal pecuniary benefit
rather than the best interests of other Company shareholders, and the
other Company shareholders are not expected to be afforded the
opportunity to approve or consent to any particular stock buy-out
transaction.
B. Possible Need for Additional Financing. The Company
has very limited funds, and such funds may not be adequate to take
advantage of any available business opportunities. Even if the
Company's funds prove to be sufficient to acquire an interest in, or
complete a transaction with, a business opportunity, the Company may not
have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital.
The Company has not investigated the availability, source, or terms that
might govern the acquisition of additional capital and will not do so
until it determines a need for additional financing. If additional
capital is needed, there is no assurance that funds will be available
from any source or, if available, that they can be obtained on terms
acceptable to the Company. If not available, the Company's operations
will be limited to those that can be financed with its modest capital.
C. Regulation of Penny Stocks. The Company's securities,
when available for trading, will be subject to a Securities and Exchange
Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the
rule, the phrase "accredited investors" means, in general terms,
institutions with assets in excess of $5,000,000, or individuals having
a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and receive
the purchaser's written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers
in this offering to sell their securities in any market that might
develop therefor.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-
7 under the Securities Exchange Act of 1934, as amended. Because the
securities of the Company may constitute "penny stocks" within the
meaning of the rules, the rules would apply to the Company and to its
securities. The rules may further affect the ability of the Company's
shareholders to sell their shares in any public market which might
develop.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks
has suffered in recent years from patterns of fraud and abuse. Such
patterns include (i) control of the market for the security by one or a
few broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differentials and markups by selling broker-dealers;
and (v) the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with
consequent investor losses. The Company's management is aware of the
abuses that have occurred historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical
limitations to prevent the described patterns from being established
with respect to the Company's securities.
D. No Operating History. The Company was formed in January
of 1998
for the purpose of registering its common stock under the 1934 Act and
acquiring a business opportunity. The Company has no operating history,
revenues from operations, or assets other than cash from private sales
of stock. The Company faces all of the risks of a new business and the
special risks inherent in the investigation, acquisition, or involvement
in a new business opportunity. The Company must be regarded as a new or
"start-up" venture with all of the unforeseen costs, expenses, problems,
and difficulties to which such ventures are subject.
E. No Assurance of Success or Profitability. There is no
assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of the Company's outstanding shares
will be increased thereby.
F. Possible Business - Not Identified and Highly Risky. The
Company has not identified and has no commitments to enter into or
acquire a specific business opportunity. As a result, it is only able
to make general disclosures concerning the risks and hazards of
acquiring a business opportunity, rather than providing disclosure with
respect to specific risks and hazards relating to a particular business
opportunity. As a general matter, prospective investors can expect any
potential business opportunity to be quite risky. See Item 1,
"Description of Business."
G. Type of Business Acquired. The type of business to be
acquired may be one that desires to avoid effecting its own public
offering and the accompanying expense, delays, uncertainties, and
federal and state requirements which purport to protect investors.
Because of the Company's limited capital, it is more likely than not
that any acquisition by the Company will involve other parties whose
primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
H. Impracticability of Exhaustive Investigation. The
Company's limited funds and the lack of full-time management will likely
make it impracticable to conduct a complete and exhaustive investigation
and analysis of a business opportunity before the Company commits its
capital or other resources thereto. Management decisions, therefore,
will likely be made without detailed feasibility studies, independent
analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be
particularly dependent in making decisions upon information provided by
the promoter, owner, sponsor, or others associated with the business
opportunity seeking the Company's participation. A significant portion
of the Company's available funds may be expended for investigative
expenses and other expenses related to preliminary aspects of completing
an acquisition transaction, whether or not any business opportunity
investigated is eventually acquired.
I. Lack of Diversification. Because of the limited financial
resources that the Company has, it is unlikely that the Company will be
able to diversify its acquisitions or operations. The Company's
probable inability to diversify its activities into more than one area
will subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with
the Company's operations.
J. Possible Reliance upon Unaudited Financial Statements.
The Company generally will require audited financial statements from any
business that it proposes to acquire. No assurance can be given,
however, that audited financial statements will be available to the
Company. In cases where audited financial statements are unavailable,
the Company will have to rely upon unaudited information that has not
been verified by outside auditors. The lack of the type of independent
verification which audited financial statements would provide, increases
the risk that the Company, in evaluating an acquisition with such a
target company, will not have the benefit of full and accurate
information about the financial condition and operating history of the
target company. This risk increases the prospect that the acquisition
of such a company might prove to be an unfavorable one for the Company
or the holders of the Company's securities.
Moreover, the Company will be subject to the reporting
provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thus will be required to furnish certain
information, including audited financial statements, for any existing
business it may acquire. Consequently, acquisition prospects that do
not have, or are unable to provide reasonable assurances that they will
be able to obtain, the required audited statements would not be
considered by the Company to be appropriate for acquisition so long as
the reporting requirements of the Exchange Act are applicable. Should
the Company, during the time it remains subject to the reporting
provisions of the Exchange Act, complete an acquisition of an entity for
which audited financial statements prove to be unobtainable, the Company
would be exposed to enforcement actions by the Securities and Exchange
Commission (the "Commission") and to corresponding administrative
sanctions, including permanent injunctions against the Company and its
management. The legal and other costs of defending a Commission
enforcement action are likely to have material, adverse consequences for
the Company and its business. The imposition of administrative
sanctions would subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would
prevent the securities of the Company from becoming eligible for listing
on NASDAQ, the automated quotation system sponsored by the National
Association of Securities Dealers, Inc., or on any existing stock
exchange. Moreover, the lack of such financial statements is likely to
discourage broker-dealers from becoming or continuing to serve as market
makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer
securities under a registration statement pursuant to the Securities Act
of 1933, and the ability of the Company to raise capital would be
significantly limited until such financial statements were to become
available.
K. Other Regulation. An acquisition made by the Company
may be of a business that is subject to regulation or licensing by
federal, state, or local authorities. Compliance with such regulations
and licensing can be expected to be a time-consuming, expensive process
and may limit other investment opportunities of the Company.
L. Dependence upon Management; Limited Participation of
Management. The Company will be heavily dependent upon the skills,
talents, and abilities of its officers and directors to implement its
business plan, and may, from time to time, find that the inability of
such persons to devote their full time attention to the business of the
Company results in a delay in progress toward implementing its business
plan. Furthermore, the Company will be entirely dependent upon the
experience of its officers and directors in seeking, investigating, and
acquiring a business and in making decisions regarding the Company's
operations (See Item 5. for management.). Because investors will not be
able to evaluate the merits of possible business acquisitions by the
Company, they should critically assess the information concerning the
Company's officers and directors.
M. Lack of Continuity in Management. The Company does
not have an employment agreement with any of its officers or directors,
and as a result, there is no assurance that they will continue to manage
the Company in the future. In connection with acquisition of a business
opportunity, it is likely the current officers and directors of the
Company may resign. A decision to resign will be based upon the
identity of the business opportunity and the nature of the transaction,
and is likely to occur without the vote or consent of the stockholders
of the Company.
N. Indemnification of Officers and Directors. The
Company's By-Laws provide for the indemnification of its directors,
officers, employees, and agents, under certain circumstances, against
attorney's fees and other expenses incurred by them in any litigation to
which they become a party arising from their association with or
activities on behalf of the Company. The Company will also bear the
expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company
therefor if it is ultimately determined that any such person shall not
have been entitled to indemnification. This indemnification policy
could result in substantial expenditures by the Company which it will be
unable to recoup.
O. Director's Liability Limited. The Company's Articles of
Incorporation, filed as Exhibit 2.1, exclude personal liability of its
directors to the Company and its stockholders for monetary damages for
breach of fiduciary duty except in certain specified circumstances.
Accordingly, the Company will have a much more limited right of action
against its directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or
applicable state securities laws.
P. Dependence upon Outside Advisors. To supplement the
business experience of its officers and directors, the Company may be
required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such
advisors will be made by the Company's officers without any input from
stockholders. Furthermore, it is anticipated that such persons may be
engaged on an "as needed" basis without a continuing fiduciary or other
obligation to the Company. In the event the officers of the Company
consider it necessary to hire outside advisors, they may elect to hire
persons who are affiliates, if those affiliates are able to provide the
required services.
Q. Leveraged Transactions. There is a possibility that any
acquisition of a business opportunity by the Company may be leveraged,
i.e., the Company may finance the acquisition of the business
opportunity by borrowing against the assets of the business opportunity
to be acquired, or against the projected future revenues or profits of
the business opportunity. This could increase the Company's exposure to
larger losses. A business opportunity acquired through a leveraged
transaction is profitable only if it generates enough revenues to cover
the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss
of a portion or all of the assets acquired. There is no assurance that
any business opportunity acquired through a leveraged transaction will
generate sufficient revenues to cover the related debt and expenses.
R. Competition. The search for potentially profitable
business opportunities is intensely competitive. The Company expects to
be at a disadvantage when competing with many firms that have
substantially greater financial and management resources and
capabilities than the Company. These competitive conditions will exist
in any industry in which the Company may become interested.
S. No Foreseeable Dividends. The Company has not paid
dividends on its Common Stock and does not anticipate paying such
dividends in the foreseeable future.
T. Loss of Control by Present Management and Stockholders.
The Company may consider an acquisition in which the Company would issue
as consideration for the business opportunity to be acquired an amount
of the Company's authorized but unissued Common Stock that would, upon
issuance, represent the great majority of the voting power and equity of
the Company. The result of such an acquisition would be that the
acquired company's stockholders and management would control the
Company, and the Company's management could be replaced by persons
unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders. In
addition, in conjunction with such a transaction, the Company's current
officers, directors and principal shareholders could sell their
controlling block of stock at a premium price to the acquired company's
stockholders.
U. No Public Market Exists. There is no public market for
the Company's common stock, and no assurance can be given that a market
will develop or that a shareholder ever will be able to liquidate his
investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Factors such as those
discussed in this "Risk Factors" section may have a significant impact
upon the market price of the securities offered hereby. Owing to the
low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a
broker willing to effect a transaction in these securities, the
combination of brokerage commissions, state transfer taxes, if any, and
any other selling costs may exceed the selling price. Further, many
lending institutions will not permit the use of such securities as
collateral for any loans.
V. Rule 144 Sales. All of the outstanding shares of Common
Stock held by present stockholders are "restricted securities" within
the meaning of Rule 144 under the Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144
or other applicable exemptions from registration under the Act and as
required under applicable state securities laws. Rule 144 provides in
essence that a person who has held restricted securities for a
prescribed period may, under certain conditions, sell every three
months, in brokerage transactions, a number of shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or
the average weekly trading volume during the four calendar weeks prior
to the sale. There is no limit on the amount of restricted securities
that may be sold by a non-affiliate after the restricted securities have
been held by the owner for a period of at least two years. A sale under
Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registrations of shares of Common Stock of
present stockholders, may have a depressive effect upon the price of the
Common Stock in any market that may develop. Of the total 10,635,000
shares of common stock held by present stockholders of the Company,
10,200,000 shares will become available for resale under Rule 144 ninety
(90) days after the Company registers its common stock under Section
12(g) of the Securities and Exchange Commission, and the remaining
435,000 shares will become available for resale starting in November,
2000.
W. Blue Sky Considerations. Because the
securities registered hereunder have not been registered for resale
under the blue sky laws of any state, the holders of such shares and
persons who desire to purchase them in any trading market that might
develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of investors to sell
the securities and of purchasers to purchase the securities. Some
jurisdictions may not allow the trading or resale of "blind-pool" or
"blank-check" securities under any circumstances. Accordingly,
investors should consider the secondary market for the Company's
securities to be a limited one.
Item 2. Management's Discussion and Analysis or Plan of Operations.
Liquidity and Capital Resources
The Company remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources or stockholder's equity other than the receipt of proceeds in
the amount of $ 2,903.00 from its inside capitalization funds.
Consequently, the Company's balance sheet for the period of January 16,
1998 (inception) through November 3, 1999 reflects a current asset
value of $2,653.00 and a total asset value of $ 2,653.00 which is all
in the form of cash.
The Company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its liquidity and
capital resources will be diminished prior to the consummation of a
business combination or whether its capital will be further depleted by
the operating losses (if any) of the business entity which the Company
may eventually acquire.
Results of Operations
During the period from January 16, 1998 (inception) through
November 3, 1999, the Company has engaged in no significant operations
other than organizational activities, acquisition of capital and
preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. No revenues were received by the
Company during this period.
For the current fiscal year, the Company anticipates incurring
a loss as a result of organizational expenses, expenses associated with
registration under the Securities Exchange Act of 1934, and expenses
associated with locating and evaluating acquisition candidates. The
Company anticipates that until a business combination is completed with
an acquisition candidate, it will not generate revenues other than
limited interest income. The Company may also continue to operate at a
loss after completing a business combination, depending upon the
performance of the acquired business.
Need for Additional Financing
The Company believes that its existing capital will be
sufficient to meet the Company's cash needs, including the costs of
compliance with the continuing reporting requirements of the Securities
Exchange Act of 1934, as amended, for a period of approximately one
year. Accordingly, in the event the Company is able to complete a
business combination during this period, it anticipates that its
existing capital will be sufficient to allow it to accomplish the goal
of completing a business combination. There is no assurance, however,
that the available funds will ultimately prove to be adequate to allow
it to complete a business combination, and once a business combination
is completed, the Company's needs for additional financing are likely to
increase substantially.
No commitments to provide additional funds have been made by
management or other stockholders, and the Company has no plans,
proposals, arrangements or understandings with respect to the sale or
issuance of additional securities prior to the location of a merger or
acquisition candidate. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover
its expenses. In the event the Company does elect to raise additional
capital prior to location of a merger or acquisition candidate, it
expects to do so through the private placement of restricted securities
rather than through a public offering. The Company does not currently
contemplate making a Regulation S offering.
Regardless of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might
seek to compensate providers of services by issuing stock in lieu of
cash. For information as to the Company's policy in regard to payment
for consulting services, see Item 7. "Certain Relationships and Related
Transactions."
Item 3. Description of Property.
The Company currently maintains a mailing address at 98-01
67th Avenue, Rego Park, NY 11374, which is the address of its President.
The Company pays no rent for the use of this mailing address. The
Company's telephone number is 718-997-7838. The Company does not believe
that it will need to maintain an office at any time in the foreseeable
future in order to carry out its plan of operations described herein.
However, the need for additional office facilities may be necessary once
the Company acquires a business.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this
Registration Statement, the number of shares of Common Stock owned of
record and beneficially by officers, directors and persons who hold 5%
or more of the outstanding Common Stock of the Company. Also included
are the shares held by all executive officers and directors as a group.
Name and Address of Number of Shares % of Class
Beneficial Owner Beneficially Owned
Robert Scher 200,000 1.9
900 West 190th Street
New York, NY 10040
Carol Kaplan 10,000,000 94.0
98-01 67th Avenue
Rego Park, NY 11374
All directors and executive
officers (2) 95.9
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are
as follows:
Name Age Positions Held and Tenure
Robert Scher 57 Chairman of the Board of
Directors since August 1, 1999
Carol Kaplan 56 President, Secretary, Treasurer
& Director since January 16, 1998
The directors named above will serve until the first annual
meeting of the Company's stockholders. Thereafter, directors will be
elected for one-year terms at the annual stockholders' meeting.
Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding
between any of the directors or officers of the Company and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer, and there is no arrangement, plan or
understanding as to whether non-management shareholders will exercise
their voting rights to continue to elect the current directors to the
Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders and management under
which non-management shareholders may directly or indirectly participate
in or influence the management of the Company's affairs.
The directors and officers will devote their time to the
Company's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or more
than forty hours per month, but more than likely will fall within the
range of five to ten hours per month. There are no agreements or
understandings for any officer or director to resign at the request of
another person, and none of the officers or directors are acting on
behalf of, or will act at the direction of, any other person.
Biographical Information
Robert Scher has been Chairman of the Board of Directors
of the Company since August 1, 1999. Additionally, he has been
Chairman of the Board and President of U.S.A Growth Inc, a
publicly traded company, from July 1995 until July, 1999.
He has also been the President of Growth Net Inc. since May
10, 1999. Mr. Scher has a B.A. in accounting from the City
University of New York, Baruch College . He has been an
accountant with the Health and Hospital Corporation since
1971 - 1999. He is currently a self-employed tax consultant
and a private investor. He is the brother of Carol Kaplan.
Carol Kaplan has been a Director as well as President and
Secretary/Treasurer of the Company since its inception.
She is currently a self-employed consultant in computers and financial
analysis. Ms. Kaplan received a BA in mathematics and
computer science and a MS degree in education. Ms
Kaplan is also a recipient of a National Science Foundation
grant in computer science. She is the sister of Robert
Scher.
Indemnification of Officers and Directors
As permitted by the General Corporation Law of the State of
Delaware, the Company's By-Laws provide that the Company will indemnify
its directors and officers against expenses and liabilities they incur
to defend, settle, or satisfy any civil or criminal action brought
against them on account of their being or having been Company directors
or officers unless, in any such action, they are adjudged to have acted
with gross negligence or willful misconduct. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and
is, therefore, unenforceable.
Exclusion of Liability
Pursuant to the General Corporation Law of the State of
Delaware, the Company's Articles of Incorporation exclude personal
liability for its directors for monetary damages based upon any
violation of their fiduciary duties as directors, except as to liability
for any breach of the duty of loyalty to the corporation or its
stockholders; acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; liability for
unlawful payments of dividends or unlawful stock purchase or redemption
by the corporation; or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit
any right which a director may have to be indemnified and does not
affect any director's liability under federal or applicable state
securities laws.
Other Blind Pool Activities
The Company's Chairman of the Board of Directors has been
formerly affiliated with World Television, Inc., Hunter Industrial
Facilities, Inc., and U.S.A. Growth Inc., which were blind pool or
blank check companies. He no longer has any involvement with these
entities.
Conflicts of Interest
None of the officers of the Company will devote more than a
portion of his time to the affairs of the Company. There will be
occasions when the time requirements of the Company's business conflict
with the demands of the officers' other business and investment
activities. Such conflicts may require that the Company attempt to
employ additional personnel. There is no assurance that the services of
such persons will be available or that they can be obtained upon terms
favorable to the Company.
The Company's officers and directors may form additional blind
pool or blank check companies in the future. Although these other
companies may, in effect, be in direct competition with the Company for
acquisition of available business opportunities, the potential that such
competition will create a conflict of interest for the officers and
directors of the Company is minimized by the fact that. it is the stated
policy of the persons who are officers and directors of the Company and
of other blind pool or blank check companies, to present the opportunity
to the available blind pool or blank check company that has had its
securities registered pursuant to Section 12(g) of the 1934 Act for the
longest period of time. In the event that none of the pools is more
mature than the others, the officers and directors will arbitrarily
assign the particular business opportunity to one of the pool companies.
Potential investors should expect that, because of the policy that will
be employed by the Company's officers and directors as set forth above,
whereby more "mature" pool companies will have business opportunities
presented to them first, the Company and its shareholders may have to
wait a significant amount of time before an appropriate business
opportunity for the Company is identified.
The officers, directors and principal shareholders of the
Company may actively negotiate for the purchase of a portion of their
common stock as a condition to, or in connection with, a proposed merger
or acquisition transaction. Carol Kaplan acquired 10,000,000 shares of
the common stock of the Company, at a price of $.000025 per share (as
adjusted for a 40:1 stock split on November 2, 1999), as consideration
for consulting services performed on behalf of the Company which
services were valued at $250.00. Robert Scher acquired 200,000 shares
of the common stock of the Company, at a price of $.001 per share (as
adjusted for a 40:1 stock split on November 2,1999), for a total cash
price of $200.00. It is anticipated that a substantial premium may be
paid by the purchaser in conjunction with any sale of shares by the
Company's officers, directors and principal shareholders made as a
condition to, or in connection with, a proposed merger or acquisition
transaction. The fact that a substantial premium may be paid to members
of Company management to acquire their shares creates a conflict of
interest for them and may compromise their state law fiduciary duties to
the Company's other shareholders. In making any such sale, members of
Company management may consider their own personal pecuniary benefit
rather than the best interests of the Company and the Company's other
shareholders, and the other shareholders are not expected to be afforded
the opportunity to approve or consent to any particular buy-out
transaction involving shares held by members of Company management.
Item 6. Executive Compensation.
The Company does not currently pay any salary or fees to its
officers or directors but the Board of Directors may elect to do so in
the future.
The Company has no stock option, retirement, pension, or
profit-sharing programs for the benefit of directors, officers or other
employees, but the Board of Directors may recommend adoption of one or
more such programs in the future.
The Company may employ a spouse of an officer or director, or
an employee of a company owned by an officer or director, to perform
administrative or secretarial services required by the Company. Such
individuals would be paid standard, "going rate" hourly compensation for
services rendered.
.
Item 7. Certain Relationships and Related Transactions.
The Company has adopted a policy under which any consulting or
finder's fee that may be paid to a third party for consulting services
to assist management in evaluating a prospective business opportunity
would be paid in stock rather than in cash. Any such issuance of stock
would be made on an ad hoc basis. Accordingly, the Company is unable to
predict whether, or in what amount, such a stock issuance might be made.
It is not currently anticipated that any salary, consulting
fee or finder's fee shall be paid to any of the Company's officers or
directors, or to any other affiliate of the Company except as described
under "Executive Compensation" above.
The Company's principal office is that of its Registered Agent
in Delaware, located at 1220 North Market , Suite 606, Wilmington,
Delaware 19801. The Company , also, maintains a mailing address at the
residence of its President, for which it pays no rent, and for which it
does not anticipate paying rent in the future. It is likely that the
Company will not establish additional office facilities until it has
completed a business acquisition transaction, but it is not possible to
predict what arrangements will actually be made with respect to future
office facilities.
Although management has no current plans to cause the Company
to do so, it is possible that the Company may enter into an agreement
with an acquisition candidate requiring the sale of all or a portion of
the Common Stock by the Company's current stockholders to the
acquisition candidate or principals thereof, or to other individuals or
business entities, or requiring some other form of payment to the
Company's current stockholders, or requiring the future employment of
specified officers and payment of salaries to them. It is more likely
than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price
substantially higher than that originally paid by such stockholders.
Any payment to current stockholders in the context of an acquisition
involving the Company would be determined entirely by the largely
unforeseeable terms of a future agreement with an unidentified business
entity.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation, as amended,
authorize the issuance of 100,000,000 shares of Common Stock. Each
record holder of Common Stock is entitled to one vote for each share
held on all matters properly submitted to the stockholders for their
vote. Cumulative voting for the election of directors is not permitted
by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to
such dividends as may be declared from time to time by the Board of
Directors out of legally available funds; and, in the event of
liquidation, dissolution or winding up of the affairs of the Company,
holders are entitled to receive, ratably, the net assets of the Company
available to stockholders after distribution is made to the preferred
stockholders, if any, who are given preferred rights upon liquidation.
Holders of outstanding shares of Common Stock have no preemptive,
conversion or redemptive rights. All of the issued and outstanding
shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and non-
assessable. To the extent that additional shares of the Company's
Common Stock are issued, the relative interests of then existing
stockholders may be diluted.
Transfer Agent
As of the date hereof, the Company is serving as its own
Transfer Agent.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual
report for each fiscal year ending December 31 containing financial
statements audited by its independent certified public accountants. In
the event the Company enters into a business combination with another
company, it is the present intention of management to continue
furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim
reports to its stockholders when it deems appropriate. The Company
intends to comply with the periodic reporting requirements of the
Securities Exchange Act of 1934.
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
No public trading market exists for the Company's securities
and all of its outstanding securities are restricted securities as
defined in Rule 144. There were twenty (20) holders of record of the
Company's common stock on November 3, 1999. No dividends have been paid
to date and the Company's Board of Directors does not anticipate paying
dividends in the foreseeable future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings,
and no such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner
of record or beneficial owner of more than 5.0% of the securities of the
Company, or any associate of any such director, officer or security
holder is a party adverse to the Company or has a material interest
adverse to the Company in reference to pending litigation.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since January 16, 1998 (the date of the Company's formation),
the Company has sold 10,635,000 shares of its Common Stock to 20 persons
including Carol Kaplan, its President (10,000,000 shares on January 17,
1999), and Robert Scher, its Chairman (200,000 shares on August 1,
1999). Each of the sales was made either for cash and/or for services.
Sales for which the consideration was services were made in reliance
upon the exemption from registration provided by Rule 701 adopted
pursuant to Section 3(b) of the Securities Act of 1933. Sales for which
the consideration was cash were made in reliance upon the exemption from
registration offered by Section 4(2) of the Securities Act of 1933.
Based upon the Consultation and Subscription Agreement executed by the
persons who acquired shares for services, and the Subscription Agreement
and Investment Representations executed by persons who acquired shares
for cash, and based upon the pre-existing relationship between the cash
subscribers and the Company's officers and directors, the Company had
reasonable grounds to believe immediately prior to making an offer to
the private investors, and did in fact believe, when such subscriptions
were accepted, that such purchasers (1) were purchasing for investment
and not with a view to distribution, and (2) had such knowledge and
experience in financial and business matters that they were capable of
evaluating the merits and risks of their investment and were able to
bear those risks. The purchasers had access to pertinent information
enabling them to ask informed questions. The shares were issued without
the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer
records. All such sales were effected without the aid of underwriters,
and no sales commissions were paid.
Item 5. Indemnification of Directors and Officers
The By-Laws of the Company, filed as Exhibit 2.2, provide that
the Company will indemnify its officers and directors for costs and
expenses incurred in connection with the defense of actions, suits, or
proceedings where the officer or director acted in good faith and in a
manner he reasonably believed to be in the Company's best interest and
is a party by reason of his status as an officer or director, absent a
finding of negligence or misconduct in the performance of duty.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements as and for the period November 3,
1999. See following pages.
PATHWAY CORP.
(A Development Stage Company)
Report of Independent Certified Public Accountant
Balance Sheet
Statement of Loss and Accumulated Deficit
Statement of Cash Flows
Statement of Stockholders' Equity
Notes to Audited Financial Statements
ROGER S. GRAFF
CERTIFIED PUBLIC ACCOUNTANT
27 CONCORD ROAD
PORT WASHINGTON, NY 11050
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The Board of Directors and Stockholders of
Pathway Corp.
I have audited the accompanying balance sheet of Pathway Corp. (a
development stage company) as of November 3, 1999, and the related
statements of loss and accumulated deficit, stockholders' equity, and
cash flows for the initial period ended November 3, 1999. These
financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements
based on our audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pathway
Corp. as of November 3, 1999, and the results of its operations and cash
flows for the period then ended, in conformity with generally accepted
accounting principles.
Roger S. Graff, CPA (NY)
Port Washington, NY
November 8, 1999
Pathway Corp.
(A Development Stage Company)
BALANCE SHEET
November 3, 1999
(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,653
Total current assets 2,653
TOTAL ASSETS $ 2,653
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 300
Total current liabilities $ 300
TOTAL LIABILITIES $ 300
STOCKHOLDERS EQUITY
Common stock,$.00001 par value,
100,000,000 shares authorized,
10,635,000 shares issued and
outstanding at November 3, 1999 106
Additional paid-in capital 2,797
Deficit accumulated
during the development stage (550)
Total stockholders' equity $ 2,353
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,653
The accompanying notes are an integral part of this statement
PATHWAY CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
Cumulative
January 16, 1998
(Date of Inception) Year Jan. 1, 1999
to Ended to
November 3, 1999 Dec. 31, 1998 Nov. 3, 1999
REVENUE $ -0- $ -0- $ -0-
EXPENSES:
consulting expenses 550 $ 250 300
INCOME (LOSS) (550) (250) (300)
INCOME TAXES:
Federal 0
State 0
0
NET INCOME (LOSS) (550) (250) (300)
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK NIL NIL NIL
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD Note (2) 10,000,000 10,060,000
The accompanying notes are an integral part of this statement
PATHWAY CORP.
(A Development Stage Company)
Statements of Cash Flows
the Period From Inception (January 16, 1998) to November 3, 1999
Cumulative
January 16, 1998
(Date of Inception) Year Jan. 1, 1999
to Ended to
November 3, 1999 Dec.31, 1998 Nov. 3, 1999
Cash Flows From Operating Activities:
Net (loss) $ (550) $ (250) $ (300)
Adjustments to reconcile
net (loss) to net cash
provided by (used in)
operating activities:
Issuance of common stock
for services 250 250 -
Accounts payable 300 300
---------- ---------- ----------
Net cash provided by
(used in) operations - - -
---------- ---------- ----------
Cash flows from investing
activities:
Net cash provided by (used in)
investing activities - - -
----------- ---------- ----------
Cash flows from financing
activities:
Issuance of common stock 2653 - 2653
----------- ---------- ---------
Net cash provided by (used in)
financing activities 2653 - 2653
---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents 2653 - 2653
---------- ---------- ----------
Beginning cash and
cash equivalents - - -
---------- ---------- ----------
Ending cash and
cash equivalents $ 2653 $ - $ 2653
========== ========== ==========
Supplemental disclosure of cash flow information:
Cash paid for: Income taxes $ - $ - $ -
Interest $ - $ - $ -
Supplemental schedule of non-cash investing and financing activities:
Common shares issued for
organization costs $ - $ - $ -
The accompanying notes are an integral part of this statement.
Pathway Corp.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From (Inception) January 16, 1998, through
November 3, 1999
Deficit Accumulated
During the
Common Stock Development Stage Total
---------------- ------------------- -----
Shares Amount
------ ------
Shares issued for
services at $.001
per share during
January, 1998 250,000 $ 250 $ 250
Net (loss) for
the period - - (250) (250)
--------- -------- --------- ---------
Balance Dec 31,1998 250,000 250 (250) -
Shares issued for
services during
August, 1999 5,000 200 200
40:1 stock split:
common stock,
p.v $.001 (255,000) -
common stock,
p.v $.00001 10,200,000 -
shares issued
during Nov. 199 190,000 3 3
shares issued
during November, 1999
at $.01 per share to
investors 245,000 2,450 2,450
Net (loss) for the
period 1/1/99-11/3/99 - - (300) (300)
--------- -------- --------- ---------
Balance Nov 3, 1999 10,635,000 $ 2,903 $ (550) $ 2,353
========= ======== ========= =========
The accompanying notes are an integral part of this statements.
Pathway Corp.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 3, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development stage company
Pathway Corp. (a development stage company) (the "Company") was
incorporated under the laws of the State of Delaware on January 16,
1998. The current registered office of the Company is 1220 North Market
Street, Suite 606, Wilmington, Delaware 19801. The current principal
office of the corporation is 1220 North Market Street, Suite 606,
Wilmington, Delaware 19801.
The Company is a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has not
engaged in any business other than organizational efforts. It has no
full- time employees and owns no real property. The Company intends to
operate as a capital market access corporation by registering with the
U.S. Securities and Exchange Commission under the Securities Exchange
Act of 1934. After this, the Company intends to seek to acquire one or
more existing businesses which have existing management, through merger
or acquisition. Management of the Company will have virtually unlimited
discretion in determining the business activities in which the Company
might engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal year
The fiscal year end of Company is the calendar year ending December 31.
Loss per share
Loss per share was computed using the weighted average number of shares
outstanding during the period.
Statement of cash flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of
three month or less to be cash equivalents.
Use of estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principals requires the Company's
management to make estimates and assumptions that effect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received
in exchange.
2. STOCKHOLDERS' EQUITY
Pursuant to a consulting services and subscription agreement dated
January 17, 1998, Carol Kaplan was issued 250,000 shares of the
common stock at par value .001 of the Company for a value of $250.00
in services. On November 2, 1999 there was a 40:1 stock split and the
250,000 shares were exchanged for 10,000,000 shares at par value of
.00001 of the common stock of the Company.
As of November 3, 1999, Robert Scher was issued 200,000 shares of the
common stock of the Company. These shares were issued for the total
cash price of $200.00.
3. RELATED PARTY TRANSACTIONS
The Company's two directors and officers are also shareholders. Robert
Scher controls 200,000 shares of the common stock of the Company
(approximately 1.9% of the outstanding shares). Carol Kaplan is a
principal shareholder and controls 10,000,000 shares of the common stock
of the Company (approximately 94% of outstanding shares). Robert
Scher's shares were issued for the cash price of $200. Carol Kaplan's
shares were issued for services which have been valued at $250. A
mailing address is being provided to the Company by Carol Kaplan at no
charge.
4. INCOME TAXES
The Company has Federal net operating loss carry forwards of
approximately $550 expiring in the year 2013 through 2015. The tax
benefit of these net operating losses, which totals approximately $ 83
has been offset by a full allowance for realization. This carry
forward may be limited upon the consummation of a business combination
under IRC Section 381.
PART III
Item 1. INDEX TO EXHIBITS
The Exhibits listed below are filed as
part of this Registration Statement.
Exhibit No. Document
3.1 Articles of Incorporation
3.2 By-Laws
3.3 Specimen Stock Certificate
10.1 Consultation And Subscription Agreement
for Carol Kaplan
10.2 Consultation and Subscription Agreement
for Robert Scher
27 Financial Data Schedule
Item 2. DESCRIPTION OF EXHIBITS
Exhibit No.
3.1 Articles of Incorporation
3.2 By-Laws
3.3 Specimen Stock Certificate
10.1 Consultation and Subscription Agreement
for Carol Kaplan
10.2 Consultation and Subscription Agreement
for Robert Scher
27 Financial Data Schedule
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.
PATHWAY CORP.
By: /s/ Carol Kaplan
President
Date: November 29, 1999
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Pathway Corp.
(Name of Small Business Issuer in its charter)
Delaware 52-2177760
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 North Market Street
Suite 606
Wilmington, Delaware 19801
(Address of Principal Office) Zip Code
Issuer's telephone number: (718) 997- 7838
EXHIBIT INDEX
Exhibit
No. Document
3.1 Articles of Incorporation
3.2 By-laws
3.3 Specimen Stock Certificate
10.1 Consultation and Subscription
Agreement for Carol Kaplan
10.2 Consultation and Subscription
Agreement for Robert Scher
27 Financial Data Schedule
Exhibit No. 3.1
CERTIFICATE OF INCORORATION
OF
PATHWAY CORP.
FIRST: The name of this corporation is Pathway Corp.
SECOND: Its registered office in the State of Delaware is to be
located at 1313 N. Market Street. Wilmington, DE 19801-1151,
County of New castle. The registered agent in charge thereof is
The Company Corporation. Address "same as above".
THIRD: The nature of the business and, the objects and purposes
proposed to be transacted, promoted and carried on, are to do any
or all the things herein mentioned as fully and to the same
extent as natural persons might or could do, and in any part of
the world, viz:
The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 20,000,000 shares of stock at .001
par value.
FIFTH: The name and mailing address of the incorporator is as
follows: Regina Cephas, 1313 N. Market St., Wilmington, DE 19801
SIXTH: the directors shall have power to make and to alter or
amend the By-laws; to fix the amount to be reserved as working
capital and to authorize and cause to be executed mortgages and
liens without limit as to the amount, upon the property and
franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the
holders of a majority of the capital stock issued and
outstanding, the Directors shall have the authority to dispose,
in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the
accounts and books of this corporation, or any of them shall be
open to the inspection of the stockholder: and no stockholder
shall have any right of inspecting any account, or book or
document of this Corporation, except as conferred by the law of
the By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold
their meetings and keep the books, documents and papers of the
Corporation outside of the State of Delaware, at such places as
may be from time to time designated by the By-Laws or by
resolution of the stockholders or directors, except as otherwise
required by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to
either the corporation or its stockholders for monetary damages
for a breach of fiduciary duties unless the breach involves: (1)
a director's duty of loyalty to the corporation or its
stockholders: (2)acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law;
(3)liability for unlawful payments of dividends or unlawful stock
purchase or redemption by the corporation; (4) a transaction from
which the director derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation
under the laws of the State of Delaware, do make, file and record
this Certificate and do certify that the facts herein are true:
and I have accordingly hereunto set may hand.
DATED: January 16, 1998 /S/ Regina Cephas
Certificate of Amendment
of
Certificate of Incorporation
Pathway Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Pathway
Corp., the following resolution was duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"FOURTH" so that, as amended, said Article shall be and read as
follows:
The total number of shares of stock which the corporation shall
have authority to issue is one hundred million (100,000,000).
All such shares are to be with a par value of $0.00001 and are to
be of one class.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the Stockholders of said
corporation was duly called and held, upon notice in accordance
with Section 242 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
FOURTH: That the capital of said corporation shall not be
reduced under or by reason of said amendment.
IN WITNESS THEREOF, said Pathway Corp., has caused this
certificate to be signed by the President, Carol Kaplan, this 2nd
day of November, 1999.
By: /s/ Carol Kaplan
President
Exhibit 3.2
BY-LAWS
ARTICLE I - OFFICES
Section 1. The registered office of the corporation shall
be at the office of the registered agent in Delaware:
1313 North Market St.
Wilmington, DE 19801-1151
The registered agent in charge thereof shall be The Company
Corporation.
Section 2. The corporation may also have offices at such
other places as the
Board of Directors may from time to time appoint or the business
of the corporation may
require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the
name of the corporation,
the year of its organization and the words "Corporate Seal,
Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the
registered office of the
corporation in this state or at such place, either within or
without this state, as may be
selected from time to time by the Board of Directors.
Section 2. Annual Meetings: The annual meeting of the
stockholders shall be
held on the 20 of January in each year if not a legal holiday,
and if a legal holiday, then on
the next secular day following at 10:00 AM o'clock .M., when they
shall elect a Board of
Directors and transact such other business as may properly be
brought before the meeting.
If the annual meeting for election of directors is not held on
the date designated therefor,
the directors shall cause the meeting to be held as soon
thereafter as convenient.
Section 3. Election of Directors: Elections of the
directors of the corporation be
by written ballot.
Section 4. Special Meetings: Special meetings of the
stockholders may be
called at any time by the President, or the Board of Directors,
or stockholders entitled to
cast at least one-fifth of the votes which all stockholders are
entitled to cast at the
particular meeting. At any time, upon written request of any
person or persons who have
duly called a special meeting, it shall be the duty of the
Secretary to fix the date of the
meeting, to be held not more than sixty days after receipt of the
request, and to give due
notice thereof. If the Secretary shall neglect or refuse to fix
the date of the meeting and
give notice thereof, the person or persons calling the meeting
may do so.
Business transacted at all special meetings shall be
confined to the objects stated
in the call and matters germane thereto, unless all stockholders
entitled to vote are present
and consent.
Written notice of a special meeting of stockholders stating
the time and place and
object thereof, shall be given to each stockholder entitled to
vote thereat at least 10 days
before such meeting, unless a greater period of notice is
required by statute in a particular
case.
Section 5. Quorum: A majority of the outstanding shares
of the corporation
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting
of stockholders. If less than a majority of the outstanding
shares entitled to vote is
represented at a meeting, a majority of the shares so represented
may adjourn the meeting
from time to time without further notice. At such adjourned
meeting at which a quorum
shall be present or represented, any business may be transacted
which might have been
transacted at the meeting as originally noticed. The
stockholders present at a duly
organized meeting may continue to transact business until
adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a
quorum.
Section 6. Proxies: Each stockholder entitled to vote at
a meeting of
stockholders or to express consent or dissent to corporate action
in writing without a
meeting may authorize another person or persons to act for him by
proxy, but no such
proxy shall be voted or acted upon after three years from its
date, unless the proxy
provides for a longer period.
A duly executed proxy shall be irrevocable if it states that
it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in
law to support an
irrevocable power. A proxy may be made irrevocable regardless of
whether the interest
with which it is coupled is an interest in the stock itself or an
interest in the corporation
generally. All proxies shall be filed with the Secretary of the
meeting before being voted
upon.
Section 7. Notice of Meetings: Whenever stockholders are
required or permitted to
take any action at a meeting, a written notice of the meeting
shall be given which shall
state the place, date and hour of the meeting, and, in the case
of a special meeting, the
purpose or purposes for which the meeting is called.
Unless otherwise provided by law, written notice of any
meeting shall be given
not less than ten nor more than sixty days before the date of the
meeting to each
stockholder entitled to vote at such meeting.
Section 8. Consent in Lieu of Meetings: Any action
required to be taken at any
annual or special meeting of stockholders or a corporation, or
any action which may be
taken at any annual or special meeting of such stockholders, may
be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the
action so taken, shall be signed by the holders of outstanding
stock having not less than
the minimum number of votes that would be necessary to authorize
or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted. Prompt
notice of the taking of the corporate action without a meeting by
less than unanimous
written consent shall be given to those stockholders who have not
consented in writing.
Section 9. List of Stockholders: The officer who has
charge of the stock ledger
of the corporation shall prepare and make, at least ten days
before every meeting of
stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged
in alphabetical order, and showing the address of each
stockholder and the number of
shares registered in the name of each stockholder. No share of
stock upon which any
installment is due and unpaid shall be voted at any meeting. The
list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary
business hours, for a period of at least ten days prior to the
meeting, either at a place
within the city where the meeting is to be held, which place
shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held.
The list shall also be produced and kept at the time and place of
the meeting during the
whole time thereof, and may be inspected by any stockholder who
is present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation
shall be managed by its
Board of Directors, 2 in number. The directors need not be
residents of this state or
stockholders in the corporation. They shall be elected by the
stockholders at the annual
meeting of stockholders of the corporation, and each director
shall be elected for the term
of one year, and until his successor shall be elected and shall
qualify or until his earlier
resignation or removal.
Section 2. Regular Meetings: Regular meetings of the
Board shall be held
without notice Quarterly at 9:30 AM .M. at the registered office
of the corporation, or at
such other time and place as shall be determined by the Board.
Section 3. Special Meetings: Special Meetings of the
Board may be called by
the President on 10 days notice to each director, either
personally or by mail or by
telegram; special meetings shall be called by the President or
Secretary in like manner
and on like notice on the written request of a majority of the
directors in office.
Section 4. Quorum: A majority of the total number of
directors shall constitute
a quorum for the transaction of business.
Section 5. Consent in Lieu of Meeting: Any action
required or permitted to be
taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken
without a meeting if all members of the Board of committee, as
the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of
the Board or committee. The Board of Directors may hold its
meetings, and have an
office or offices, outside of this state.
Section 6. Conference Telephone: One or more directors
may participate in a
meeting of the Board, or a committee of the Board or of the
stockholders, by means of
conference telephone or similar communications equipment by means
of which all
persons participating in the meeting can hear each other;
participation in this manner shall
constitute presence in person at such meeting.
Section 7. Compensation: Directors as such, shall not
receive any stated salary
for their services, but by resolution of the Board, a fixed sum
and expenses of attendance
at each regular or special meeting of the Board PROVIDED, that
nothing herein
contained shall be construed to preclude any director from
serving the corporation in any
other capacity and receiving compensation therefor.
Section 8. Removal: Any director or the entire Board of
Directors may be
removed, with or without cause, by the holders of a majority of
the shares then entitled to
vote at an election of directors, except that when cumulative
voting is permitted, if less
than the entire Board is to be removed, no director may be
removed without cause if the
votes cast against his removal would be sufficient to elect him
if then cumulatively voted
at an election of the entire Board of Directors, or, if there be
classes of directors, at an
election of the class of directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall
be chosen by the
directors and shall be a President, Secretary and Treasurer. The
Board of Directors may
also choose a Chairman, one or more Vice Presidents and such
other officers as it shall
deem necessary. Any number of offices may be held by the same
person.
Section 2. Salaries: Salaries of all officers and agents
of the corporation shall be
fixed by the Board of Directors.
Section 3. Term of Office: The officers of the
corporation shall hold office for
one year and until their successors are chosen and have
qualified. Any officer or agent
elected or appointed by the Board may be removed by the Board of
Directors whenever in
its judgment the best interest of the corporation will be served
thereby.
Section 4. President: The President shall be the chief
executive officer of the
corporation; he shall preside at all meetings of the stockholders
and directors; he shall
have general and active management of the business of the
corporation, shall see that all
orders and resolutions of the Board are carried into effect,
subject, however, to the right
of the directors to delegate any specific powers, except such as
may be by statute
exclusively conferred on the President, to any other officer or
officers of the corporation.
He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of
the corporation. He shall be EX-OFFICIO a member of all
committees, and shall have
the general power and duties of supervision and management
usually vested in the office
of President of a corporation.
Section 5. Secretary: The Secretary shall attend all
sessions of the Board and all
meetings of the stockholders and act as clerk thereof, and record
all the votes of the
corporation and the minutes of all its transactions in a book to
be kept for that purpose,
and shall perform like duties for all committees of the Board of
Directors when required.
He shall give, or cause to be given, notice of all meetings of
the stockholders and of the
Board of Directors, and shall perform such other duties as may be
prescribed by the
Board of Directors or President, and under whose supervision he
shall be. He shall keep
in safe custody the corporate seal of the corporation, and when
authorized by the Board,
affix the same to any instrument requiring it.
Section 6. Treasurer: The Treasurer shall have custody
of the corporate funds
and securities and shall keep full and accurate accounts of
receipts and disbursements in
books belonging to the corporation, and shall keep the moneys of
the corporation in
separate account to the credit of the corporation. He shall
disburse the funds of the
corporation as may be ordered by the Board, taking proper
vouchers for such
disbursements, and shall render to the President and directors,
at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as Treasurer
and of the financial condition of the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the
corporation by death,
resignation, removal or otherwise, shall be filled by the Board
of Directors. Vacancies
and newly created directorships resulting from any increase in
the authorized number of
directors may be filled by a majority of the directors then in
office, although not less than
a quorum, or by a sole remaining director. If at any time, by
reason of death or
resignation or other cause, the corporation should have no
directors in office, then any
officer or any stockholder or an executor, administrator, trustee
or guardian of a
stockholder, or other fiduciary entrusted with like
responsibility for the person or estate of
stockholder, may call a special meeting of stockholders in
accordance with the provisions
of these By-Laws.
Section 2. Resignations Effective at Future Date: When
one or more directors
shall resign from the Board, effective at a future date, a
majority of the directors then in
office, including those who have so resigned, shall have power to
fill such vacancy or
vacancies, the vote thereon to take effect when such resignation
or resignations shall
become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by
attorney or other agent,
shall, upon written demand under oath stating the purpose
thereof, have the right during
the usual hours for business to inspect for any proper purpose
the corporation's stock
ledger, a list of its stockholders, and its other books and
records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such
person's interest as a stockholder. In every instance where an
attorney or other agent shall
be the person who seeks the right to inspection, the demand under
oath shall be
accompanied by a power of attorney or such other writing which
authorizes the attorney
or other agent to so act on behalf of the stockholder. The
demand under oath shall be
directed to the corporation at its registered office in this
state or at its principal place of
business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall
be numbered and
registered in the share ledger and transfer books of the
corporation as they are issued.
They shall bear the corporate seal and shall be signed by the
person authorized to sign
stock certificates.
Section 2. Transfers: Transfers of shares shall be made
on the books of the
corporation upon surrender of the certificates therefor, endorsed
by the person named in
the certificate or by attorney, lawfully constituted in writing.
No transfer shall be made
which is inconsistent with law.
Section 3. Lost Certificate: The corporation may issue a
new certificate of stock
in the place of any certificate theretofore signed by it, alleged
to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost,
stolen or destroyed
certificate, or his legal representative to give the corporation
a bond sufficient to
indeminify it against any claim that may be made against it on
account of the alleged loss,
theft or destruction of any such certificate or the issuance of
such new certificate.
Section 4. Record Date: In order that the corporation
may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any
adjournment thereof, or the express consent to corporate action
in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or allotment
of any rights, or entitled to exercise any rights in respect of
any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors
may fix, in advance, a record date, which shall not be more than
sixty nor less than ten
days before the date of such meeting, nor more than sixty days
prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice
of or to vote at a meeting of stockholders shall be at the close
of
business on the day next preceding the day on which notice is
given, or if notice is waived, at the close of business on the
day
next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary,
shall
be the day on which the first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to notice
of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 5. Dividends: The Board of Directors may declare
and pay dividends
upon the outstanding shares of the corporation from time to time
and to such extent as
they deem advisable, in the manner and upon the terms and
conditions provided by the
statute and the Certificate of Incorporation.
Section 6. Reserves: Before payment of any dividend
there may be set aside out
of the net profits of the corporation such sum or sums as the
directors, from time to time,
in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for
equalizing dividends, or for repairing or maintaining any
property of the corporation, or
for such other purpose as the directors shall think conducive to
the interests of the
corporation, and the directors may abolish any such reserve in
the manner in which it was
created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Checks: All checks or demands for money and
notes of the
corporation shall be signed by such officer or officers as the
Board of Directors may from
time to time designate.
Section 2. Fiscal Year: The fiscal year shall begin on
the first day of January.
Section 3. Notice: Whenever written notice is required
to be given to any
person, it may be given to such person, either personally or by
sending a copy thereof
through the mail, or by telegram, charges prepaid, to his address
appearing on the books
of the corporation, or supplied by him to the corporation for the
purpose of notice. If the
notice is sent by mail or by telegraph, it shall be deemed to
have been given to the person
entitled thereto when deposited in the United States mail or with
a telegraph office for
transmission to such person. Such notice shall specify the
place, day and hour of the
meeting and, in the case of a special meeting of stockholders,
the general nature of the
business to be transacted.
Section 4. Waiver of Notice: Whenever any written notice is
required by statute, or by
the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by
the person or persons entitled to such notice, whether before or
after the time stated
therein, shall be deemed equivalent to the giving of such notice.
Except in the case of a
special meeting of stockholders, neither the business to be
transacted at nor the purpose
of the meeting need be specified in the waiver of notice of such
meeting. Attendance of a
person either in person or by proxy, at any meeting shall
constitute a waiver of notice of
such meeting, except where a person attends a meeting for the
express purpose of
objecting to the transaction of any business because the meeting
was not lawfully called
or convened.
Section 5. Disallowed Compensation: Any payments made to
an officer or
employee of the corporation such as a salary, commission, bonus,
interest, rent, travel or
entertainment expense incurred by him, which shall be disallowed
in whole or in part as a
deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer
or employee to the corporation to the full extent of such
disallowance. It shall be the duty
of the directors, as a Board, to enforce payment of each such
amount disallowed. In lieu
of payment by the officer or employee, subject to the
determination of the directors,
proportionate amounts may be withheld from his future
compensation payments until the
amount owed to the corporation has been recovered.
Section 6. Resignations: Any director or other officer
may resign at anytime,
such resignation to be in writing, and to take effect from the
time of its receipt by the
corporation, unless some time be fixed in the resignation and
then from that date. The
acceptance of a resignation shall not be required to make it
effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and Board of Directors shall
present at each annual
meeting a full and complete statement of the business and affairs
of the corporation for
the preceding year. Such statement shall be prepared and
presented in whatever manner
the Board of Directors shall deem advisable and need not be
verified by a certified public
accountant.
ARTICLE XI - Indemnification of Officers and Directors
As permitted by the General Corporation Law of the
State of Delaware, the Company will indemnify its directors and
officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against
them on account of their being or having been Company directors
or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct.
ARTICLE XII - MERGERS AND ACQUISITIONS
Section 1. The Board of Directors has complete authority
to execute agreements relating to acquisitions by the Corporation
or merger with other corporations or business for cash or through
the issuance of additional stock of the Corporation. The Board of
Directors are hereby permitted to effect such transactions on
behalf of the Corporation without shareholder approval in any and
all jurisdictions where this is permitted.
ARTICLE XIII - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the
vote of
stockholders entitled to cast at least a majority of the votes
which all stockholders are
entitled to cast thereon, at any regular or special meeting of
the stockholders, duly
convened after notice to the stockholders of that purpose.
EXHIBIT 3.3 - SPECIMEN STOCK CERTIFICATE
CONTENTS:
State of Incorporation
Name of Company
Number of authorized shares of common stock
Name of Individual Shareholder
Number of shares owned by individual shareholder
Fully paid and non-assessable shares
Date of issuance of certificate
Signature of President
Restrictive transfer legend
Exhibit 10.1 - CONSULTATION AND SUBSCRIPTION AGREEMENT REGARDING
PATHWAY CORP.
THIS CONSULTATION AND
SUBSCRIPTION AGREEMENT ("Agreement") is made and entered into
this 17th day of January , 1998, by and between Carol Kaplan (
"Consultant" )and the Pathway Corp. ( the "Company").
WHEREAS, the Company requires services of the
Consultant, and the Consultant desires to subscribe for the
acquisition of stock to be issued by the Company, and the parties
have mutually agreed that the consideration for the issuance of
such shares shall be for incorporation services and assistance to
the Company relating to its formation, determination of an
appropriate capital structure, and in developing its business
plan.
NOW, THEREFORE, in consideration of the foregoing, and
in consideration of the mutual covenants and promises hereinafter
set forth, it is agreed as follows:
1. Initial Services. By execution of this Agreement, the
Consultant
agrees to provide such services as may be necessary or
appropriate to formally establish the corporate entity, and to
determining the feasibility of, and completing, the Company's
business plan, including, but not limited to, determining the
Company's capital needs, establishing an appropriate capital
structure, investigating the likelihood of finding a suitable
merger or acquisition target and arrange for filing a
registration statement for the securities of the Company with the
U.S. Securities and exchange Commission; reviewing applicable
legal and regulatory restrictions imposed by the Securities and
Exchange Commission, the National Association of Securities
Dealers, and other governmental or regulatory organizations.
2. Agreement to Serve as Officer and Director. By execution of
this Agreement, the Consultant hereby agree to serve as an
officer and director of the Company, and in that capacity, to
assume responsibility for implementation of the Company's
business plan.
3. Consideration. As consideration for the services
described herein, upon formation of the Company, the undersigned
shall cause the Company to issue and deliver to the Consultant
250,000 common shares, par value $.001,("shares") and the
Consultant hereby agrees to accept as full consideration for the
services rendered with a stated value of $250.00.
6. Exemption from Registration. The parties hereto intend
and agree
that this Agreement shall serve as a written compensatory
contract which, satisfies the requirements of Rule 701 adopted by
the Securities and Exchange Commission under the Securities Act
of 1933, as amended. Accordingly, it is the intent of the
parties that the exemption from registration provided by Rule 701
shall be applicable to the issuance of the shares.
7. Representations and Acknowledgements. The parties
hereto make the following representations and acknowledgements:
(a) The Shares shall not, upon issuance, have been
registered under the Securities Act of 1933, as amended (the
"Act"), or under any State Blue Sky or securities laws and only
the Company can register such securities under the Act or under
applicable State Blue Sky or securities laws.
(b) Upon issuance, the Shares shall constitute "restricted
securities" as that term is defined in Rule 144 under the Act.
(c) Following issuance, the Shares may not be sold or
transferred for value without registration under the Securities
Act of 1933, as amended, or under applicable State blue sky or
securities laws, or in the absence of an opinion of counsel
acceptable to the Company that such registration is not required
under such Act or Acts, and it is not anticipated that the
Company will, at any time, seek to register the Shares under the
Act or under any applicable state blue sky or securities laws.
(d) Following the issuance of the Shares, the Company may,
from time to time, make stop transfer notations in the Company's
records to assure compliance with the Act and any applicable
State blue sky or securities laws.
(e) In accordance with the foregoing restrictions, the
parties hereby agree that a legend substantially to the effect of
the following may be placed upon all certificates representing
the shares. "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
OTHER SECURITIES LAWS. SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (i)
THEY SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES ACT, OR (ii) THE COMPANY SHALL HAVE BEEN
FURNISHED WITH AN OPINION OF COUNSEL, SATISFACTORY
TO COUNSEL FOR THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER ANY OF SUCH ACTS."
(f) The Consultant is acquiring the Shares upon issuance
solely for its own account and not on behalf of any other person.
(g) The Consultant is acquiring the Shares upon issuance
for investment purposes and not with the present intent of
reselling or otherwise distributing the Shares.
(h) By execution of this Agreement, the Consultant agrees
to execute and deliver to the Company, any document, or do any
other act or thing, which the Company may reasonably request in
connection with the acquisition of the Shares.
8. Assignment. Neither the Consultant, or its heirs,
executors, representatives or assigns shall sell, assign, create
a security interest in, pledge, or otherwise transfer or encumber
the Shares to be issued hereunder, without the express prior
written consent of the Company.
9. Delaware Law.. This Agreement shall be governed by,
and construed in accordance with the laws of the State of
Delaware.
10. Binding Effect. This Agreement shall inure to the
benefit of, and be binding upon the parties, and their respective
heirs, executors, representatives and permitted assigns.
11. Entire Agreement. This Agreement supersedes all
agreements previously made between the parties relating to its
subject matter. There are no other understandings or agreements
between the parties.
IN WITNESS WHEREOF, this Consultation and Subscription
Agreement has been executed as of the day and year first above
written.
By: /s/ Carol Kaplan by: /s/ Carol Kaplan
consultant President
_____________________________________________________
Exhibit 10.2 - CONSULTATION AND SUBSCRIPTION AGREEMENT REGARDING
PATHWAY CORP.
THIS CONSULTATION AND
SUBSCRIPTION AGREEMENT ("Agreement") is made and entered into
this 1st day of August, 1999, by and between Robert Scher (
"Consultant" ) and the Pathway Corp. ( the "Company").
WHEREAS, the Company requires services of the Consultant, and
the Consultant desires to subscribe for the acquisition of stock
to be issued by the Company, and the parties have mutually agreed
that the consideration for the issuance of such shares shall be
for assistance to the Company relating to its formation,
determination of an appropriate capital structure, and in
developing its business plan.
NOW, THEREFORE, in consideration of the foregoing, and
in consideration of the mutual covenants and promises hereinafter
set forth, it is agreed as follows:
1. Initial Services. By execution of this Agreement, the
Consultant
agrees to provide such services as may be necessary or
appropriate to determining the feasibility of, and completing,
the Company's business plan, including, but not limited to,
determining the Company's capital needs, establishing an
appropriate capital structure, investigating the likelihood of
finding a suitable merger or acquisition target and arrange for
filing a registration statement for the securities of the Company
with the U.S. Securities and exchange Commission; reviewing
applicable legal and regulatory restrictions imposed by the
Securities and Exchange Commission, the National Association of
Securities Dealers, and other governmental or regulatory
organizations.
2. Agreement to Serve as Officer and Director. By execution of
this Agreement, the Consultant hereby agree to serve as an
officer and director of the Company, and in that capacity, to
assume responsibility for implementation of the Company's
business plan.
3. Consideration. As consideration for the services
described herein, upon formation of the Company, the undersigned
shall cause the Company to issue and deliver to the Consultant
5,000 common shares, par value $.001,("shares") and the
Consultant hereby agrees to accept as full consideration for the
services rendered, and his cash payment of $200.00.
6. Exemption from Registration. The parties hereto intend
and agree
that this Agreement shall serve as a written compensatory
contract which, satisfies the requirements of Rule 701 adopted by
the Securities and Exchange Commission under the Securities Act
of 1933, as amended. Accordingly, it is the intent of the
parties that the exemption from registration provided by Rule 701
shall be applicable to the issuance of the shares.
7. Representations and Acknowledgements. The parties
hereto make the following representations and acknowledgements:
(a) The Shares shall not, upon issuance, have been
registered under the Securities Act of 1933, as amended (the
"Act"), or under any State Blue Sky or securities laws and only
the Company can register such securities under the Act or under
applicable State Blue Sky or securities laws.
(b) Upon issuance, the Shares shall constitute "restricted
securities" as that term is defined in Rule 144 under the Act.
(c) Following issuance, the Shares may not be sold or
transferred for value without registration under the Securities
Act of 1933, as amended, or under applicable State blue sky or
securities laws, or in the absence of an opinion of counsel
acceptable to the Company that such registration is not required
under such Act or Acts, and it is not anticipated that the
Company will, at any time, seek to register the Shares under the
Act or under any applicable state blue sky or securities laws.
(d) Following the issuance of the Shares, the Company may,
from time to time, make stop transfer notations in the Company's
records to assure compliance with the Act and any applicable
State blue sky or securities laws.
(e) In accordance with the foregoing restrictions, the
parties hereby agree that a legend substantially to the effect of
the following may be placed upon all certificates representing
the shares. "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
OTHER SECURITIES LAWS. SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (i)
THEY SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES ACT, OR (ii) THE COMPANY SHALL HAVE BEEN
FURNISHED WITH AN OPINION OF COUNSEL, SATISFACTORY
TO COUNSEL FOR THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER ANY OF SUCH ACTS."
(f) The Consultant is acquiring the Shares upon issuance
solely for its own account and not on behalf of any other person.
(g) The Consultant is acquiring the Shares upon issuance
for investment purposes and not with the present intent of
reselling or otherwise distributing the Shares.
(h) By execution of this Agreement, the Consultant agrees
to execute and deliver to the Company, any document, or do any
other act or thing, which the Company may reasonably request in
connection with the acquisition of the Shares.
8. Assignment. Neither the Consultant, or its heirs,
executors, representatives or assigns shall sell, assign, create
a security interest in, pledge, or otherwise transfer or encumber
the Shares to be issued hereunder, without the express prior
written consent of the Company.
9. Delaware Law.. This Agreement shall be governed by,
and construed in accordance with the laws of the State of
Delaware.
10. Binding Effect. This Agreement shall inure to the
benefit of, and be binding upon the parties, and their respective
heirs, executors, representatives and permitted assigns.
11. Entire Agreement. This Agreement supersedes all
agreements previously made between the parties relating to its
subject matter. There are no other understandings or agreements
between the parties.
IN WITNESS WHEREOF, this Consultation and Subscription
Agreement has been executed as of the day and year first above
written.
By: /s/ Robert Scher by: /s/ Carol Kaplan
consultant President
_____________________________________________________
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> NOV-3-1999
<CASH> 2,653
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,653
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,653
<CURRENT-LIABILITIES> 300
<BONDS> 0
0
0
<COMMON> 10,635,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,653
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-TAX> 0
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