SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to
the Securities Exchange Act of 1934
For the fiscal year ended 12-31-99
Commission file number 0-27773
ZEE, INC.
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(Exact name of registrant as specified in its charter)
Wyoming 83-0319519
(State of incorporation) (I.R.S. Employer
Identification No.)
214 S. Center, Casper, Wyoming 82601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 307-472-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
Name of each exchange on which registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Common $.001 Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes ( ) No (X)
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. (X)
State issuer's revenues for its most recent fiscal year. $0
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Transitional Small Business Disclosure Format:
( ) Yes (X) No
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1998: $0
Number of outstanding shares of the registrant's no par value common stock, as
of December 31, 1999: 660,000
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PART 1
Item 1. Business
The Company was incorporated under the laws of the State of Wyoming
September 2, 1997. Since its inception, the Company was engaged
primarily in organizational activities, including the raising of
initial financing and initiating activities related to the filing of a
form 10-SB Registration statement under Section 12(g) of the Securities
Exchange Act of 1934. The Company's executive offices are located at
214 S. Center, Casper, Wyoming 82601.
No significant business activity was conducted by the Company during
the fiscal year. As a result, no income was realized by the Company in
its last fiscal year.
The Company was inactive and presently does not participate in any
industry segment. The Company had no material revenues, or operating
profits or identifiable assets attributable to its industry segment.
The Company is actively seeking acquisition candidates.
The Company's Articles of Incorporation, as amended, entitle it to
transact any lawful business or businesses for which corporations may
be incorporated pursuant to the Wyoming Corporation Code. The Company
can be defined as a "shell" company, whose sole purpose at this time is
to locate and consummate a merger or acquisition with a private entity.
Any business combination or transaction will likely result in a
significant issuance of shares and substantial dilution to present
stockholders of the Company.
The proposed business activities described herein classify the Company
as a "blank check" company. Many states have enacted statutes, rules
and regulations limiting the sale of securities of "blank check"
companies in their respective jurisdictions. In order to comply with
these various limitations, management does not intend to undertake any
efforts to sell any additional securities of the Company, either debt
or equity, or cause a market to develop in the Company's securities
until such time as the Company has successfully implemented its
business plan described herein.
General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities
presented to it by persons or firms who or which desire to seek the
perceived advantages of a corporation which is registered under the
Securities Exchange Act of 1934 (the
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"Exchange Act"). The Company will not restrict its search to any
specific business, industry or geographical location and the Company
may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is
not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business
opportunities. Management anticipates that it may be able to
participate in only one potential business venture because the Company
has nominal assets and limited financial resources. See "Financial
Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against
gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public
marketplace in order to raise additional capital in order to expand
into new products or markets, to develop a new product or service or
for other corporate purposes. The Company may acquire assets and
establish wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to
general economic conditions, rapid technological advances being made in
some industries and shortages of available capital, management believes
that there are numerous firms seeking the perceived benefits of a
publicly registered corporation. Such perceived benefits may include
facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock
options or similar benefits to key employees, providing liquidity
(subject to restrictions of applicable statutes) for all shareholders
and other factors. Potentially, available business opportunities may
occur in many different industries and at various stages of
development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely
difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash
or other assets. However, management believes that the Company will be
able to offer owners of acquisition candidates the opportunity to
acquire a controlling ownership interest in a publicly registered
company without incurring the cost and time required to conduct an
initial public offering. The owners of the business opportunities will,
however, incur significant legal and accounting costs in connection
with the acquisition of a business opportunity
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including the costs of preparing forms 8-K, 10Q, or agreements and
related reports and documents. The Exchange Act specifically requires
that any merger or acquisition candidate comply with all applicable
reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to
complying with the Exchange Act. Nevertheless, the officers and
directors of the Company have not conducted market research and are not
aware of statistical data which would support the perceived benefits of
a merger or acquisition transaction for the owners of a business
opportunity. The analysis of new business opportunities will be
undertaken by, or under the supervision of, management. The officers
and directors of the Company have not conducted market research and are
not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company,
none of whom is a professional business analyst. Management intends to
concentrate on identifying preliminary prospective business
opportunities which may be brought to its attention through present
associations of the Company's officers and directors, or by the
Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available
technical, financial and managerial resources; working capital and
other financial requirements; history of operations, if any; prospects
for the future; nature of present and expected competition; the quality
and experience of management services which may be available and the
depth of that management; the potential for further research,
development or exploration; specific risk factors not now foreseeable
but which then may be anticipated to impact the proposed activities of
the Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition or acceptance of products,
services or trades; name identification; and other relevant factors.
Officers and directors of the Company will meet personally with
management and key personnel of the business opportunity as part of
their investigation. To the extent possible, the Company intends to
utilize written reports and personal investigation to evaluate the
above factors. The Company will not acquire or merge with any company
for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own
efforts and, to a much lesser extent, the efforts of the Company's
shareholders, in accomplishing the
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business purposes of the Company. It is not anticipated that any
outside consultants or advisors, other than the Company's legal counsel
and accountants, will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does retain
such an outside consultant or advisor, any cash fee earned by such
party will need to be paid by the prospective merger/acquisition
candidate, as the Company has no cash assets with which to pay such
obligation. There have been no contracts or agreements with any outside
consultants and none are anticipated in the future.
The Company will not restrict its search to any specific kind of firms,
but may acquire a venture which is in its preliminary or development
stage, which is already in operation or which is in essentially any
stage of its corporate life. It is impossible to predict at this time
the status of any business in which the Company may become engaged, in
that such business may need to seek additional capital, may desire to
have its shares publicly traded or may seek other perceived advantages
which the Company may offer.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the
Company has no capital with which to pay these anticipated expenses,
present management of the Company will pay these charges with their
personal funds, as interest free loans to the Company. However, the
only opportunity which management has to have these loans repaid will
be from a prospective merger or acquisition candidate. Management has
agreed among themselves that the repayment of any loans made on behalf
of the Company will not impede, or be made conditional in any manner,
on consummation of a proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization,
joint venture or licensing agreement with another corporation or
entity. It may also acquire stock or assets of an existing business. On
the consummation of a transaction, it is probable that the present
management and shareholders of the Company will no longer be in control
of the Company. In addition, the Company's directors may, as part of
the terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
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It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under
applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of its transaction, the Company may
agree to register all or a part of such securities immediately after
the transaction is consummated or at specified times thereafter. If
such registration occurs, of which there can be no assurance, it will
be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until such time as this occurs,
the Company will not attempt to register any additional securities. The
issuance of substantial additional securities and their potential sale
into any trading market which may develop in the Company's securities
may have a depressive effect on the value of the Company's securities
in the future, if such a market develops, of which there is no
assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a
taxable event and thereby structure the acquisition in a so-called
"tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the
surviving entity, which would result in significant dilution in the
equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may
visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check 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. The manner in which the Company participates
in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the
management of the opportunity and the relative negotiation strength of
the Company and such other management.
With respect to any merger or acquisition, negotiations with target
company management are expected to focus on the percentage of the
Company which target company shareholders would acquire in exchange for
all of their shareholdings in the target company. Depending upon, among
other things, the target company's assets and liabilities, the
Company's
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shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then-shareholders. If required to so do
under relevant law, management of the Company will seek shareholder
approval of a proposed merger or acquisition via a Proxy Statement.
However, such approval would be assured where management supports such
a business transaction because management presently controls sufficient
shares of the Company to effectuate a positive vote on the proposed
transaction. Further, a prospective transaction may be structured so
that shareholder approval is not required, and such a transaction may
be effectuated by the Board of Directors without shareholder approval.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although
the terms of such agreements cannot be predicted, generally such
agreements will require some specific representations and warranties by
all of the parties thereto, will specify certain events of default,
will detail the terms of closing and the conditions which must be
satisfied by each of the parties prior to and after such closing, will
outline the manner of bearing costs, including costs associated with
the Company's attorneys and accountants, will set forth remedies on
default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements
within a reasonable period of time after closing of the proposed
transaction. The Company is subject to all of the reporting
requirements included in the Exchange Act. Included in these
requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with
the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-KSB (or 10-K, as applicable).
If such audited financial statements are not available at closing, or
within time parameters necessary to insure the Company's compliance
with the requirements of the Exchange Act, or if the audited financial
statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing
documents will provide that the proposed transaction will be voidable,
at the discretion of the present management of the Company. If such
transaction is voided, the agreement will
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also contain a provision providing for the acquisition entity to
reimburse the Company for all costs associated with the proposed
transaction.
Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are
many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's combined extremely
limited financial resources and limited management availability, the
Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
Employees
The Company has no full time employees. The Company's president,
treasurer and secretary have agreed to allocate a portion of their time
to the activities of the Company, without compensation. These officers
anticipate that the business plan of the Company can be implemented by
their devoting approximately 20 hours per month to the business affairs
of the Company and, consequently, conflicts of interest may arise with
respect to the limited time commitment by such officers. See Item 9,
"Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act."
Investment Company Act of 1940
The Company may participate in a business or opportunity by purchasing,
trading or selling the securities of such business. However, the
Company does not intend to engage primarily in such activities.
Specifically, the Company intends to conduct its activities so as to
avoid being classified as an "investment company" under the Investment
Company Act of 1940 (the "Investment Act"), and therefore avoid
application of the costly and restrictive registration and other
provisions of the Investment Act and the regulations promulgated
thereunder.
Section 3(a) of the Investment Act provides the definition of an
"investment company" which includes an entity that engages or holds
itself out as being engaged primarily in the business of investing,
reinvesting or trading in securities, or that engages or proposes to
engage in the business of investing, reinvesting, owning, holding or
trading "investment securities" (defined as all securities other than
government securities, securities of majority-owned subsidiaries and
certain other securities) the value of which exceeds 40% of
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the value of its total assets (excluding government securities, cash or
cash items). The Company intends to implement its business plan in a
manner that will result in the availability of this exception from the
definition of "investment company." Consequently, the Company's
participation in a business or opportunity through the purchase and
sale of investment securities will be limited. In order to avoid
classification as an investment company, the Company will search for,
analyze and acquire or participate in a business opportunity by use of
a method that does not involve the acquisition, ownership or holding of
investment securities.
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, which regulation has the purported
purpose of protecting purchasers of investment company securities.
Since the Company will not register as an investment company, its
shareholders will not be afforded these purported protections.
The Company intends to vigorously resist classification as an
investment company and to take advantage of any exemptions or
exceptions from application of the Investment Act, which allows an
entity a one-time option during any three-year period to claim an
exemption as a "transient" investment company. The necessity of
asserting any such resistance, or making any claim of exemption, could
be time-consuming and costly, or even prohibitive, given the Company's
limited resources.
Certain Risks
The Company's business is subject to numerous risk factors, including
the following:
No Operating History or Revenue and Minimal Assets. The Company has had
no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company
will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating
loss which will increase continuously until the Company can consummate
a business combination with a profitable business opportunity. There is
no assurance that the Company can identify such a business opportunity
and consummate such a business combination.
Speculative Nature of Company's Proposed Operations. The success of the
Company's proposed plan of operation will
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depend to a great extent on the operations, financial condition and
management of the identified business opportunity. While management
intends to seek business combination(s) with entities having
established operating histories, there can be no assurance that the
Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of
which there can be no assurance, the success of the Company's
operations may be dependent upon management of the successor firm or
venture partner firm and numerous other factors beyond the Company's
control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures
with and acquisitions of small private and public entities. A large
number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies
which may be desirable target candidates for the Company. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing
a business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small
public companies.
No Agreement for Business Combination or Other Transaction; No
Standards for Business Combination. The Company has no arrangement,
agreement or understanding with respect to engaging in a merger with,
joint venture with or acquisition of, a private or public entity. There
can be no assurance that the Company will be successful in identifying
and evaluating suitable business opportunities or in concluding a
business combination. Management has not identified any particular
industry or specific business within an industry for evaluation by the
Company. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company. The
Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which
it will require a target business opportunity to have achieved, and
without which the Company would not consider a business combination in
any form with such business opportunity. Accordingly, the Company may
enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for
earnings, limited assets, negative net worth or other negative
characteristics.
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Continued Management Control; Limited Time Availability. While seeking
a business combination, management anticipates devoting up to 20 hours
per month to the business of the Company. None of the Company's
officers has entered into a written employment agreement with the
Company and none is expected to do so in the foreseeable future. The
Company has not obtained key man life insurance on any of its officers
or directors. Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these
individuals would adversely affect development of the Company's
business and its likelihood of continuing operations. See Item 9,
"Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act."
Conflicts of Interest - General. Certain of the officers and directors
of the Company are directors and/or principal shareholders of other
blank check companies and, therefore, could face conflicts of interest
with respect to potential acquisitions. In addition, officers and
directors of the Company may in the future participate in business
ventures which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may
also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. The Company's Board of Directors has
adopted a policy that the Company will not seek a merger with, or
acquisition of, any entity in which management serve as officers or
directors, or in which they or their family members own or hold a
controlling ownership interest. Although the Board of Directors could
elect to change this policy, the Board of Directors has no present
intention to do so. In addition, if the Company and other blank check
companies with which the Company's officers and directors are
affiliated both desire to take advantage of a potential business
opportunity, then the Board of Directors has agreed that said
opportunity should be available to each such company in the order in
which such companies registered or became current in the filing of
annual reports under the Exchange Act subsequent to January 1, 1997.
See Item 9, "Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act - Conflicts
of Interest."
Reporting Requirements May Delay or Preclude Acquisition. Sections 13
and 15(d) of the Exchange Act require companies subject thereto to
provide certain information about significant acquisitions, including
certified financial statements for the company acquired, covering one,
two or three years, depending on the relative size of the acquisition.
The time and additional costs that may be incurred by some target
entities to prepare such statements
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may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects
that do not have or are unable to obtain the required audited
statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable.
Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, results of
market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company does
not have, and does not plan to establish, a marketing organization.
Even in the event demand is identified for a merger or acquisition
contemplated by the Company, there is no assurance the Company will be
successful in completing any such business combination.
Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with a business opportunity. Consequently, the
Company's activities may be limited to those engaged in by the business
opportunity or opportunities which the Company merges with or acquires.
The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks
associated with the Company's operations.
Regulation. Although the Company will be subject to regulation under
the Exchange Act, management believes the Company will not be subject
to regulation under the Investment Company Act of 1940, insofar as the
Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation under
the Investment Company Act of 1940. In such event, the Company would be
required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange
Commission as to the status of the Company under the Investment Company
Act of 1940 and, consequently, any violation of such Act would subject
the Company to material adverse consequences.
Probable Change in Control and Management. A business combination
involving the issuance of the Company's Common Stock will, in all
likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may
require management of the Company to sell or transfer all or a portion
of the
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Company's Common Stock held by them, or resign as members of the Board
of Directors of the Company. The resulting change in control of the
Company could result in removal of one or more present officers and
directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of the
Company.
Reduction of Percentage Share Ownership Following Business Combination.
The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would
result in the Company issuing securities to shareholders of any such
private company. The issuance of previously authorized and unissued
shares of Common Stock of the Company would result in a reduction in
the percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of
the Company.
Disadvantages of Blank Check Offering. The Company may enter into a
business combination with an entity that desires to establish a public
trading market for its shares. A business opportunity may attempt to
avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with the Company.
Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such
an offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state
laws enacted for the protection of investors.
Taxation. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may
undertake. Currently, such transactions may be structured so as to
result in tax-free treatment to both companies, pursuant to various
federal and state tax provisions. The Company intends to structure any
business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity; however, there
can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on
both parties to the transaction.
Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential
business opportunity must provide audited financial statements for
review, for the protection of all parties to the business combination.
One or more attractive
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business opportunities may choose to forego the possibility of a
business combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
Item 3. Legal Proceedings
The Company does not have any formal offices at year end. Records are
maintained and mail received at 214 S. Center, Casper, Wyoming 82601.
The company owns no real property.
The Company is a party to no pending legal proceedings, nor is its
property subject to such proceedings, at year end 1999.
Item 4. Submission of Matters to a Vote of Security
Holders
No matters were submitted during the fiscal year covered by this report
to a vote of security holders of the Company, through the solicitation
of proxies or otherwise.
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
As of the date of this report, management knows of no trading or
quotation of the Company's common stock. The range of high and low bid
quotations for each fiscal quarter since the last report, as reported
by the National Quotation Bureau Incorporated, was as follows:
1998 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1997 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
1996 High Low
First quarter * *
Second quarter * *
Third quarter * *
Fourth quarter * *
* No quotations reported
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent
actual transactions.
As of December 31, 1999, there were 38 record holders of the Company's
common Stock.
The Company has not declared or paid any cash dividends on its common
stock and does not anticipate paying dividends for the foreseeable
future.
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Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition and Changes in Financial
Condition
No operations were conducted and no revenues were generated in the
fiscal year. The Company had no income in 1999. The Company at year end had only
$404 in cash capital and $750 in other assets. The Company at year end was
illiquid and needed cash infusions from shareholders to provide capital, or
loans from any sources. The Company had no debt at year end.
Results of Operations - Year Ended December 31, 1999
compared to Year Ended December 31, 1998
During the fiscal year ended December 31, 1999, the Company had no
revenues, and in 1998, the Company had no revenues. In 1999, the Company
incurred $161 in miscellaneous expenses. In 1998, the Company incurred $185 in
general and administrative expenses. The loss on operations of ($161) in 1999
was comparable to a ($185) loss on operations in 1998.
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-7.
Item 8. Changes in and Disagreements on Accounting
and Financial Disclosure
Michael B. Johnson & Company, CPA's of Denver, Colorado was
retained in 1998 as auditor for the Company and continued in 1999.
In connection with audits of two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused him to
make reference in connection with his report to the subject matter of the
disagreement(s).
The principal accountants' reports on the financial statements for any
of the past two years contained no adverse opinion or a disclaimer of opinion
nor was qualified as to uncertainty, audit scope, or accounting principles
except for the "going concern" qualification.
17
<PAGE>
PART III
Item 9. Directors and Executive Officers of the
Registrant and Compliance with Section 16(a)
The directors and executive officers of the Company as of December 31,
1999, are as follows:
Name Age Position
- ---------------------- --- -------------------------
Percy S. Chopping, Jr. 66 President and Director
Michael A. Crank 45 Secretary/Treasurer, and
Director
Ronald A. Shogren 57 Director
The term of office of each director and executive officer ends at, or
immediately after, the next annual meeting of shareholders of the Company.
Except as otherwise indicated, no organization by which any director or officer
has been previously employed is an affiliate, parent or subsidiary of the
Company.
Michael A. Crank, age 45, is Secretary Treasurer and a Director of the
Company since 1997. Mr. Crank has completed schools on Real Estate, Commercial
Investment Counciling and Appraisal Institute. Mr. Crank was a carpenter and
General Contractor from 1972 to 1982. Mr. Crank was a Licensed Real Estate
Broker in the State of Wyoming from 1982 to 1996. Mr. Crank is presently an
Associate Appraiser with James E. Wren Co., Inc., of Casper, Wyoming.
Percy S. Chopping, Jr., age 66, is President and a Director of the Company
since 1997. Mr. Chopping retired from the University of Wyoming in 1994 where he
headed the Photography and Video Production Department of the Wyoming Family
Practice Medical Center for 16 years. Mr. Chopping currently operates his
Professional Photography and Video business. Mr. Chopping is currently a
Director of Tempus, Inc. since April 1998.
Ronald A. Shogren, age 57, is a Director of the Company since 1997. Mr.
Shogren attended Eastern Montana College. Mr. Shogren is the past Exalted Ruler
of Casper's Elk Lodge 1353. Mr. Shogren has been a licensed General Contractor
from 1976 to present. Mr. Shogren also has 17 years experience as an Insurance
Claims Adjuster and presently owns and operates Cowboy State Claims Service.
18
<PAGE>
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
Certain of the officers and directors of the Company are directors and
principal shareholders in other blank check companies, and officers and
directors of the Company may in the future become shareholders, officers or
directors of other companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company. Accordingly,
direct conflicts of interest may arise in the future with respect to such
individuals acting on behalf of the Company or other entities. Conflicts of
interest may arise with respect to opportunities which come to the attention of
such individuals in the performance of their duties or otherwise. The Company
does not currently have a right of first refusal pertaining to opportunities
that come to management's attention insofar as such opportunities may relate to
the Company's proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company and the companies with which the officers and directors are
affiliated both desire to take advantage of an opportunity, then the Board of
Directors has agreed that said opportunity should be available to each such
company in the order in which such companies registered or became current in the
filing of annual reports under the Exchange Act subsequent to January 1, 1997.
All directors may still individually take advantage of opportunities if the
Company should decline to do so. Except as set forth above, the Company has not
adopted any other conflict of interest policy with respect to such transactions.
The Company's Board of Directors has adopted a policy that the Company
will not seek a merger with, or acquisition of, any entity in which any officer
or director serves as an officer or director or in which they or their family
members own or hold a controlling ownership interest. Although the Board of
Directors could elect to change this policy, the Board of Directors has no
present intention to do so.
19
<PAGE>
There can be no assurance that management will resolve all conflicts of
interest in favor of the Company.
Item 10. Executive Compensation
The Company accrued no compensation to the executive officers as a
group for services rendered to the Company in all capacities during the 1999
fiscal year. No one executive officer received, or has accrued for his benefit,
in excess of $60,000 for the year. No cash bonuses were or are to be paid to
such persons.
The Company does not have any employee incentive stock option plans.
There are no plans pursuant to which cash or non-cash compensation was
paid or distributed during the last fiscal year, or is proposed to be paid or
distributed in the future, to the executive officers of the Company. No other
compensation not described above was paid or distributed during the last fiscal
year to the executive officers of the Company. There are no compensatory plans
or arrangements, with respect to any executive office of the Company, which
result or will result from the resignation, retirement or any other termination
of such individual's employment with the Company or from a change in control of
the Company or a change in the individual's responsibilities following a change
in control.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
<S> <C> <C> <C> <C> <C> <C>
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
Percy S. 1998 0 0 0 0 0
Chopping,
Jr.,
President
1999 0 0 0 0 0
Michael A. 1998 0 0 0 0 0
Crank,
Secretary
1999 0 0 0 0 0
</TABLE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
20
<PAGE>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
<TABLE>
<CAPTION>
Cash Compensation Security Grants
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs(#)
<S> <C> <C> <C> <C> <C>
A. Director, 0 0 0 0* 0
Percy S.
Chopping, Jr.
B. Director, 0 0 0 0* 0
Michael A.
Crank
C. Director, 0 0 0 0* 0
Ronald Shogren
</TABLE>
* See "Compensation Table of Executives"
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth information, as of December 31, 1999,
with respect to the beneficial ownership of the Company's no par value common
stock by each person known by the Company to be the beneficial owner of more
than five percent of the outstanding common stock.
<TABLE>
<CAPTION>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Percy S. Chopping, Jr. 100,000 15.1%
214 S. Center
Casper, WY 82601
Common Michael A. Crank 100,000 15.1%
214 S. Center
Casper, WY 82601
Common Ronald A. Shogren 0 0%
214 S. Center
Casper, WY 82601
Common M. Ann Anderson 100,000 15.1%
130 N. Ash
Casper, WY 82601
</TABLE>
21
<PAGE>
Security Ownership of Certain Beneficial Owners and
Management (Continued)
The following table sets forth information, as of December 31, 1999,
with respect to the beneficial ownership of the Company's no par value common
stock by the directors and officers of the Company, both individually and as a
group.
<TABLE>
<CAPTION>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Percy S. Chopping, Jr. 100,000 15.1%
214 S. Center
Casper, WY 82601
Common Michael A. Crank 100,000 15.1%
214 S. Center
Casper, WY 82601
Common Ronald A. Shogren 0 0%
214 S. Center
Casper, WY 82601
Common M. Ann Anderson 100,000 15.1%
130 N. Ash
Casper, WY 82601
Officers and Directors as a group 300,000 45.3%
</TABLE>
Item 12. Certain Relationships and Related Transactions
None for 1999.
PART IV
Item 13. Exhibits and Reports on Form 8-K
The following documents are filed as part of this report:
1. Reports on Form 8-K: None
2. Exhibits: None
22
<PAGE>
INDEX
Form 10-K
Regulation Consecutive
S-K Number Exhibit Page Number
3.1 Articles of Incorporation *Incorporated by reference
to Registration Statement
#0-2773 10SB/12(g)
3.2 Bylaws *Incorporated by reference
to Registration Statement
#0-2773 10SB/12(g)
27.1 Financial Data Schedule EX-27.1
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ZEE, INC.
(Registrant)
Date: March 29, 2000
/s/ Percy S. Chopping, Jr.
-----------------------------------------
Percy S. Chopping, Jr. President/Director
/s/ Michael A. Crank
-----------------------------------------
Michael A. Crank, Secretary, Director
/s/ Ronald Shogren
-----------------------------------------
Ronald Shogren, Director
24
<PAGE>
ZEE, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
For the Period September 2, 1997 (Inception) to December 31, 1999
<PAGE>
<TABLE>
<CAPTION>
ZEE, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
With Comparative Totals for December 31, 1998
Dec. 31, Dec. 31,
ASSETS 1999 1998
------------- ------------
<S> <C> <C>
Current Assets:
Cash $ 404 $ 565
------------- ------------
Total Current Assets 404 565
Other Assets:
Investment in Western Technology 750 750
------------- ------------
Total Other Assets 750 750
Total Assets $ 1,154 $ 1,315
============= ============
LIABILITIES & STOCKHOLDERS' EQUITY
Stockholders's Equity (Note 2)
50,000,000 shares authorized at $.001 par value
660,000 shares issued and outstanding in 1998 & 1999 660 660
No stocks were issued or outstanding in 1997
Additional Paid-in Capital 840 840
Deficit accumulated during the development stage (346) (185)
------------- ------------
Total Liabilities & Stockholders' Equity $ 1,154 $ 1,315
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
ZEE, INC.
(A Development Stage Company)
Statement of Operations
For the Period Sep. 2, 1997 (Inception) to December 31, 1999
With Comparative Totals for December 31, 1998
Sep. 2, 1997
Dec. 31, Dec. 31, Inception to
1999 1998 Dec. 31, 1999
------------ ------------ ----------------
<S> <C> <C> <C>
Revenue: $ - $ - $ -
Costs and Expenses:
Office Expenses 111 185 296
Filing Fees 50 - 50
------------ ------------ ----------------
Net Loss $ 161 $ 185 $ 346
============ ============ ================
Per Share Information:
Weighted average number
of common shares outstanding 660,000 605,000 660,000
------------ ------------ ----------------
Net Loss per common share * * *
============ ============ ================
* Less than $.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ZEE, INC.
Stockholders' Equity
December 31, 1999
COMMON STOCKS Additional Retained Total
Paid-In Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Issuance of Stock for Cash 2/9/98 660,000 $ 660 $ 840 $ - $ 1,500
Net Deficit 12/31/98 - - - (185) (185)
Balance 12/31/98 660,000 660 840 (185) 1,315
Net Deficit 12/31/99 - - - (161) (161)
Balance 12/31/99 660,000 $ 660 $ 840 $ (346) $ 1,154
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ZEE, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period From September 2, 1997 (Inception) to December 31, 1999
With Comparative Totals for December 31, 1998
Sep. 2,1997
Dec. 31, Dec. 31, Inception to
Cash Flows from Operating Activities: 1999 1998 Dec. 31, 1999
------------- ------------ -----------------
<S> <C> <C> <C>
Net Loss $ (161) $ (185) $ (346)
(Increase) in Investment - (750) (750)
------------- ------------ -----------------
Net Cash Provided by Operating Activities (161) (935) (1,096)
Cash Flows from Financing Activities:
Proceeds from stock issuance - 1,500 1,500
------------- ------------ -----------------
Net Cash Provided by Financing Activities - 1,500 1,500
Net Increase in Cash & Cash Equivalent (161) 565 404
Beginning Cash & Cash Equivalent 565 - -
------------- ------------ -----------------
-----------------
Ending Cash & Cash Equivalent $ 404 $ 565 $ 404
============= ============ =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest - - -
Income Taxes - - -
</TABLE>
<PAGE>
ZEE, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 1 - Organization and Summary of Significant Accounting Policies:
Organization:
The Company was incorporated on September 2, 1997, in the state of Wyoming.
The Company is in the development stages and was organized for the purpose of
raising capital. The Company's fiscal year end is December 31.
Basis of Presentation:
The Company is primarily engaged in capital raising. The authorized capital
stock of the corporation is 50,000,000 shares of common stock $.001 par value.
Cash and Cash Equivalents:
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.
Revenue Recognition:
Revenue is recognized when earned and expenses are recognized when they occur.
Use of Estimates:
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Net Loss Per Share
Net loss per share is base don the weighted average number of common shares and
common shares equivalents outstanding during the period.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 404
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 407
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1154
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 660
<OTHER-SE> 494
<TOTAL-LIABILITY-AND-EQUITY> 1154
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (161)
<INCOME-TAX> 0
<INCOME-CONTINUING> (161)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (161)
<EPS-BASIC> (.0)
<EPS-DILUTED> (.0)
</TABLE>
