================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10SB-12G/A1
General Form For Registration of Securities
of Small Business Issuers
Pursuant to Sections 12(b) and (g) of
the Securities Exchange Act of 1934
MNS EAGLE EQUITY GROUP IV, INC.
(Exact name of Small Business Issuer as specified in its charter)
Nevada 84-1517720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12373 E. Cornell Avenue, Aurora, Colorado 80014
-----------------------------------------------
(Address of Principal Executive Offices and Zip Code)
303-337-3384
-------------------------------------------------------------
(Small Business Issuer's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 Par Value
-----------------------------
(Title of Class)
================================================================================
<PAGE>
TABLE OF CONTENTS
PART I
Item 1. DESCRIPTION of BUSINESS ...................................... 4
Background ................................................. 4
Forward-Looking Statements ................................. 4
Exchange Act Registration .................................. 5
Proposed Business .......................................... 5
Pre-Combination Activities .............................. 5
Combination Suitability Standards ....................... 6
Form of Acquisition ..................................... 8
Post-Combination Activities ............................. 9
Potential Benefits to Insiders ............................. 10
Use of Consultants and Finders ............................. 10
State Securities Law Considerations ........................ 10
No Investment Company Regulation ........................... 11
Competition ................................................ 11
Employees .................................................. 11
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION .... 11
Results of Operations ...................................... 11
Liquidity and Capital Resources ............................ 12
Year 2000 Issues ........................................... 12
Item 3. DESCRIPTION of PROPERTY ...................................... 13
Item 4. SECURITY OWNERSHIP of CERTAIN
BENEFICIAL OWNERS and MANAGEMENT ............................ 13
Beneficial Ownership ....................................... 13
Changes in Control ......................................... 13
Item 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS and CONTROL PERSONS ............................... 14
Biographical Information ................................... 14
Prior Experience with Blank Check Companies................. 14
Potential Conflicts of Interest ............................ 15
Indemnification of Directors and Officers .................. 16
Exclusion of Director Liability ............................ 16
Item 6. EXECUTIVE COMPENSATION ....................................... 16
Cash and Other Compensation ................................ 16
Compensation Pursuant to Plans ............................. 16
Employee Stock Compensation Plan ........................... 17
Compensatory Stock Option Plan ............................. 17
Employment Contracts ....................................... 17
2
<PAGE>
Item 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS ............... 17
Item 8. DESCRIPTION of SECURITIES .................................... 18
Common Stock ............................................... 18
Preferred Stock ............................................ 18
Annual Reports ............................................. 18
Transfer Agent ............................................. 19
PART II
Item 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON
EQUITY and OTHER SHAREHOLDER MATTERS ........................ 19
Price Range of the Common Stock ............................ 19
Dividends .................................................. 19
Public Market for the Common Shares ........................ 19
Rule 144 Resales ........................................... 19
Item 2. LEGAL PROCEEDINGS ............................................ 20
Item 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS
on ACCOUNTING and FINANCIAL DISCLOSURE ...................... 20
Item 4. RECENT SALES of UNREGISTERED SECURITIES ...................... 20
Item 5. INDEMNIFICATION of DIRECTORS and OFFICERS .................... 21
PART F/S
FINANCIAL STATEMENTS ......................................... 21
PART III
Item 1. LIST of EXHIBITS ............................................. 22
SIGNATURES ................................................... 23
3
<PAGE>
PART I
ITEM 1. DESCRIPTION of BUSINESS.
BACKGROUND
MNS Eagle Equity Group IV, Inc., a Nevada corporation ("MNS" or "Company"),
was incorporated on February 28, 1997. MNS issued 725,000 shares of common stock
to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs
and deferred offering costs. MNS is in the development stage with no significant
assets or liabilities and has been essentially inactive, except for
organizational activities and the private placement offering described below.
The Company's parent offered for sale, at the price of US$1.00 per unit, a
total of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold.
On October 31, 1997, the Company's former parent closed the private
placement offering. A total of 7,500 units were sold for $7,500. The proceeds
were allocated by the Company's parent as follows: $5,000 to the parent and $500
to each of the wholly owned subsidiaries.
MNS owns no real estate and has no full time employees, and it will have no
operations of its own unless and until it engages in one or more of the
activities described below under this ITEM 1. MNS is a "blank check" company
which intends to enter into a business combination with one or more as yet
unidentified privately held businesses.
FORWARD-LOOKING STATEMENTS
This Registration Statement contains certain forward-looking statements and
information relating to MNS that are based on the beliefs of its management as
well as assumptions made by and information currently available to its
management. When used in this report, the words "anticipate", "believe",
"estimate", "expect", "intend", "plan" and similar expressions, as they relate
to MNS or its management, are intended to identify forward-looking statements.
These statements reflect management's current view of MNS concerning future
events and are subject to certain risks, uncertainties and assumptions,
including among many others: a general economic downturn; a downturn in the
securities markets; a general lack of interest for any reason in going public by
means of transactions involving public blank check companies; federal or state
laws or regulations having an adverse effect on blank check companies,
Securities and Exchange Commission regulations which affect trading in the
securities of "penny stocks," and other risks and uncertainties.
Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, estimated or expected. Readers
should realize that MNS is in the development stage, with only very limited
assets, and that for MNS to succeed requires that it either originate a
successful business (for which it lacks the funds) or acquire a successful
business. MNS's realization of its business aims as stated herein will depend in
the near future principally on the successful completion of its acquisition of a
business, as discussed below.
4
<PAGE>
EXCHANGE ACT REGISTRATION
MNS has voluntarily filed this registration statement on Form 10-SB with
the Securities and Exchange Commission ("SEC" or "Commission") in order to
register MNS's common stock under Section 12(g) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"). Upon effectiveness of this registration
statement, MNS will be required to file quarterly, annual and other reports and
other information with the SEC as required by the Exchange Act. Management
believes it is in the shareholders' best interests for MNS to register under the
Exchange Act, in order that MNS's common stock can be quoted on the OTC Bulletin
Board. Additionally, management believes that potential combination candidates
will find MNS more attractive as a public blank check company if it is subject
to Exchange Act reporting requirements and files annual and quarterly financial
statements with the SEC. If MNS's duty to file reports under the Exchange Act is
suspended, MNS intends to nonetheless continue filing reports on a voluntary
basis.
PROPOSED BUSINESS
MNS intends to enter into a business combination with one or more as yet
unidentified privately held businesses. Management believes that MNS will be
attractive to privately held companies interested in becoming publicly traded by
means of a business combination with MNS, without offering their own securities
to the public. MNS intends to pursue negotiations with qualified candidates
after effectiveness of this Registration Statement. MNS will not be restricted
in its search for business combination candidates to any particular geographical
area, industry or industry segment, and may enter into a combination with a
private business engaged in any line of business. Management's discretion is, as
a practical matter, unlimited in the selection of a combination candidate. MNS
has not entered into any agreement, arrangement or understanding of any kind
with any person regarding a business combination. MNS does not intend to enter
into any business combination involving any business or venture with which its
sole officer or director is affiliated.
Depending upon the nature of the transaction, the current officers and
directors of MNS probably will resign their directorship and officer positions
with MNS in connection with MNS's consummation of a business combination. See
"Form of Acquisition" below. MNS's current management will not have any control
over the conduct of MNS's business following MNS's completion of a business
combination.
It is anticipated that business opportunities will come to MNS's attention
from various sources, including its management, 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. MNS has no plans, understandings,
agreements, or commitments with any individual or entity to act as a finder of
or as a business consultant in regard to any business opportunities for MNS.
There are no plans to use advertisements, notices or any general solicitation in
the search for combination candidates.
PRE-COMBINATION ACTIVITIES. MNS is a "blank check" company, defined as an
inactive company with nominal assets and liabilities. With these
characteristics, management believes that MNS will be attractive to privately
held companies interested in becoming publicly traded by means of a business
combination with MNS, without offering their own securities to the public. MNS
intends to pursue negotiations with qualified candidates after effectiveness of
this Registration Statement and become publicly quoted.
The term "business combination" (or "combination") means the result of (i)
a statutory merger of a combination candidate into or its consolidation with MNS
or a wholly owned subsidiary of MNS formed for the purpose of the merger or
consolidation, (ii) the exchange of securities of MNS for the assets or
outstanding equity securities of a privately held business, or (iii) the sale of
securities by MNS for cash or other value to a business entity or individual,
and similar transactions. A combination may be structured in one of the
foregoing ways or in any other form which will result in the combined entity
being a publicly held corporation. It is unlikely that any proposed combination
will be submitted for the approval of MNS's shareholders prior to consummation.
5
<PAGE>
Pending negotiation and consummation of a combination, MNS anticipates that it
will have no business activities or sources of revenues and will incur no
significant expenses or liabilities other than expenses related to this
Registration Statement, related to ongoing filings required by the Exchange Act,
or related to the negotiation and consummation of a combination.
The Company anticipates that the business opportunities presented to it
will (1) be recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (2) be experiencing
financial or operating difficulties; (3) be in need of funds to develop a new
product or service or to expand into a new market; (4) be relying upon an
untested product or marketing concept; or (5) have a combination of the
foregoing characteristics. Given the above factors, it should be expected that
any acquisition candidate may have a history of losses or low profitability.
MNS will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business, including service, finance, mining, manufacturing, real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other. Management's discretion is, as a practical matter,
unlimited in the selection of a combination candidate. Management of MNS will
seek combination candidates in the United States and other countries, as
available time permits, through existing associations and by word of mouth.
MNS has not entered into any agreement or understanding of any kind with
any person regarding a business combination. There is no assurance that MNS will
be successful in locating a suitable combination candidate or in concluding a
business combination on terms acceptable to MNS. MNS's Board of Directors has
not established a time limitation by which it must consummate a suitable
combination; however, if MNS is unable to consummate a suitable combination
within a reasonable period, such period to be determined at the discretion of
MNS's Board of Directors, the Board of Directors will probably recommend its
liquidation and dissolution. It is anticipated that MNS will not be able to
diversify, but will essentially be limited to one such venture because of MNS's
lack of capital. This lack of diversification will not permit MNS to offset
potential losses from one acquisition against profits from another, and should
be considered an adverse factor affecting any decision to purchase MNS's
securities.
MNS's management has the authority and discretion to effect transactions
having a potentially adverse impact upon MNS's shareholders and to complete a
combination without submitting any proposal to the stockholders for their prior
approval. MNS's shareholders should not anticipate that they will have any
meaningful opportunity to consider or vote upon any candidate selected by MNS
management for acquisition. However, it is anticipated that MNS's shareholders
will, prior to completion of any combination, be given information about the
candidate company's business, financial condition, management and other
information required by ITEMs 6(a), (d), (e), 7 and 8 of Schedule 14A of
Regulation 14A under the Exchange Act.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies will
be undertaken by or under the supervision of MNS's President, who is not a
professional business analyst. See "MANAGEMENT" below.
To a large extent, a decision to participate in a specific combination may
be made upon management's analysis of the quality of the candidate company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the candidate will derive from becoming a publicly held entity, and numerous
other factors which are difficult, if not impossible, to objectively quantify or
analyze. In many instances, it is anticipated that the historical operations of
a specific candidate 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
6
<PAGE>
management, or make other changes. MNS will be dependent upon the owners and
management of a candidate to identify any such problems which may exist and to
implement, or be primarily responsible for the implementation of, required
changes. Because MNS may participate in a business combination with a newly
organized candidate or with a candidate which is entering a new phase of growth,
it should be emphasized that MNS will incur further risks, because management in
many instances will not have proved its abilities or effectiveness, the eventual
market for the candidate's products or services will likely not be established,
and the candidate may not be profitable when acquired.
Otherwise, MNS anticipates that it may consider, among other things, the
following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. MNS's perception of how any particular candidate will be received by
the investment community and by MNS's stockholders;
3. Whether, following the business combination, the financial condition
of the candidate would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of
MNS to qualify for listing on an exchange or on NASDAQ, so as to
permit the trading of such securities to be exempt from the
requirements of the federal "penny stock" rules adopted by the SEC.
4. Capital requirements and anticipated availability of required funds,
to be provided by MNS or from operations, through the sale of
additional securities, through joint ventures or similar arrangements,
or from other sources;
5. The extent to which the candidate can be advanced;
6. 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;
7. Strength and diversity of existing management, or management prospects
that are scheduled for recruitment;
8. The cost of participation by MNS as compared to the perceived tangible
and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required
items.
No one of the factors described above will be controlling in the selection
of a candidate. Potentially available candidates 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. It should be recognized that, because of MNS's
limited capital available for investigation and management's limited experience
in business analysis, MNS may not discover or adequately evaluate adverse facts
about the opportunity to be acquired. MNS cannot predict when it may participate
in a business combination. It expects, however, that the analysis of specific
proposals and the selection of a candidate may take several months or more.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with MNS 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
7
<PAGE>
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 MNS to be an attractive alternative.
Prior to consummation of any combination (other than a mere sale by MNS
insiders of a controlling interest in MNS's common stock) MNS intends to require
that the combination candidate provide MNS the financial statements required by
ITEM 310 of Regulation S-B, including at the least an audited balance sheet as
of the most recent fiscal year end and statements of operations, changes in
stockholders' equity and cash flows for the two most recent fiscal years,
audited by certified public accountants acceptable to MNS's management, and the
necessary unaudited interim financial statements. Such financial statements must
be adequate to satisfy MNS's reporting obligations under Section 15(d) or 13 of
the Exchange Act. If the required audited financial statements are not available
at the time of closing, MNS management must reasonably believe that the audit
can be obtained in less than 60 days. This requirement to provide audited
financial statements may significantly narrow the pool of potential combination
candidates available, since most private companies are not already audited. Some
private companies will either not be able to obtain an audit or will find the
audit process too expensive. In addition, some private companies on closer
examination may find the entire process of being a reporting company after a
combination with MNS too burdensome and expensive in light of the perceived
potential benefits from a combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which MNS
may participate in a business opportunity. Specific business opportunities will
be reviewed as well as the respective needs and desires of MNS and the promoters
of the opportunity and, upon the basis of that review and the relative
negotiating strength of MNS 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. MNS 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 MNS with other corporations or forms of business
organization, and although it is likely, there is no assurance that MNS would be
the surviving entity. In addition, the present management and stockholders of
MNS most likely will not have control of a majority of the voting shares of MNS
following a reorganization transaction. As part of such a transaction, MNS's
existing directors may resign and new directors may be appointed without any
vote or opportunity for approval by MNS's shareholders.
It is likely that MNS will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of MNS.
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 (i.e. 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, MNS'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 MNS 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 MNS by the current officers, directors and principal shareholders.
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, MNS may
agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
8
<PAGE>
issuance of substantial additional securities and their potential sale into any
trading market that might develop in MNS's securities may have a depressive
effect upon such market.
MNS 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, MNS anticipates that it, and/or its officers and
principal shareholders 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 MNS 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 theretofore 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 MNS to pay until an indeterminate future time may make it
impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following
consummation of a combination, control of MNS will change as a result of the
issuance of additional Common Stock to the shareholders of the business acquired
in the combination. Once ownership control has changed, it is likely that the
new controlling shareholders will call a meeting for the purpose of replacing
the incumbent directors of MNS with candidates of their own, and that the new
directors will then replace the incumbent officers with their own nominees. Rule
14f-1 under the Exchange Act requires that, if in connection with a business
combination or sale of control of MNS there should arise any arrangement or
understanding for a change in a majority of MNS's directors and the change in
the board of directors is not approved in advance by MNS's shareholders at a
shareholder meeting, then none of the new directors may take office until at
least ten (10) days after an information statement has been filed with the
Securities and Exchange Commission and sent to MNS's shareholders. The
information statement furnished must as a practical matter include the
information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule 14A of
Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that MNS
will file a current report on Form 8-K with the Commission which discloses among
other things the date and manner of the combination, material terms of the
definitive agreement, the assets and consideration involved, the identity of the
person or persons from whom the assets or other property was acquired, changes
in management and biographies of the new directors and executive officers,
identity of principal shareholders following the combination, and contains the
required financial statements. The Form 8-K report also will be required to
include all information as to the business acquired called for by ITEM 101 of
Regulation S-B.
9
<PAGE>
POTENTIAL BENEFITS to INSIDERS
In connection with a business combination, it is possible that shares of
common stock constituting control of MNS may be purchased from the current
principal shareholders ("insiders") of MNS by the acquiring entity or its
affiliates. If stock is purchased from the insiders, the transaction is very
likely to result in substantial gains to them relative to the price they
originally paid for the stock. In MNS's judgment, none of its officers and
directors would as a result of such a sale become an " underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933, as amended. No bylaw
or charter provision MNS prevents insiders from negotiating or consummating such
a sale of their shares. The sale of a controlling interest by MNS insiders could
occur at a time when the other shareholders of the Company remain subject to
restrictions on the transfer of their shares, and it is unlikely that MNS
shareholders generally will be given the opportunity to participate in any such
sale of shares. Moreover, MNS shareholders probably will not be afforded any
opportunity to review or approve any such buyout of shares held by an officer,
director or other affiliate, should such a buyout occur.
MNS may require that a company being acquired repay all advances made to
MNS by MNS shareholders and management, at or prior to closing of a combination.
Otherwise, there are no conditions that any combination or combination candidate
must meet, such as buying stock from MNS insiders or paying compensation to any
MNS officer, director or shareholder or their respective affiliates.
USE OF CONSULTANTS and FINDERS
Although there are no current plans to do so, MNS management might hire and
pay an outside consultant to assist in the investigation and selection of
candidates, and might pay a finder's fee to a person who introduces a candidate
with which MNS completes a combination. Since MNS management has no current
plans to use any outside consultants or finders to assist in the investigation
and selection of candidates, no policies have been adopted regarding use of
consultants or finders, the criteria to be used in selecting such consultants or
finders, the services to be provided, the term of service, or the structure or
amount of fees that may be paid to them. However, because of the limited
resources of MNS, it is likely that any such fee MNS agrees to pay would be paid
in stock and not in cash. MNS has had no discussions, and has entered into no
arrangements or understandings, with any consultant or finder. MNS's officers
and directors have not in the past used any particular consultant or finder on a
regular basis and have no plan to either use any consultant or recommend that
any particular consultant be engaged by MNS on any basis.
It is possible that compensation in the form of common stock, options,
warrants or other securities of MNS, cash or any combination thereof, may be
paid to outside consultants or finders. No securities of MNS will be paid to
officers, directors or promoters of MNS nor any of their respective affiliates.
Any payments of cash to a consultant or finder would be made by the business
acquired or persons affiliated or associated with it, and not by MNS. It is
possible that the payment of such compensation may become a factor in any
negotiations for MNS's acquisition of a business opportunity. Any such
negotiations and compensation may present conflicts of interest between the
interests of persons seeking compensation and those of MNS's shareholders, and
there is no assurance that any such conflicts will be resolved in favor of MNS's
shareholders.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
that involve the sale of a "covered security." The term "covered security" is
defined in Section 18 to include among other things transactions by "any person
not an issuer, underwriter or dealer," (in other words, secondary transactions
in securities already outstanding) that are exempted from registration by
Section 4(1) of the Securities Act of 1933, provided the issuer of the security
is a "reporting company," meaning that it files reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
10
<PAGE>
Section 18 as amended preserves the authority of the states to require
certain limited notice filings by issuers and to collect fees as to certain
categories of covered securities, specifically including Section 4(1) secondary
transactions in the securities of reporting companies. Section 18 expressly
provides, however, that a state may not "directly or indirectly prohibit, limit,
or impose conditions based on the merits of such offering or issuer, upon the
offer or sale of any (covered) security. This provision prohibits states from
requiring registration or qualification of securities of an Exchange Act
reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that
prohibit secondary trading in the securities of "blank check" companies like
MNS. Section 18, however, of the Act preempts state law as to covered securities
of reporting companies. Thus, while the states may require certain limited
notice filings and payment of filing fees by MNS as a precondition to secondary
trading of its shares in those states, they cannot, so long as MNS is a
reporting issuer, prohibit, limit or condition trading in MNS's securities based
on the fact that MNS is or ever was a blank check company. MNS will comply with
such state limited notice filings as may be necessary in regard to secondary
trading. At this time, MNS's stock is not actively traded in any market, and an
active market in its common stock is not expected to arise, if ever, until after
completion of a business combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, MNS will not engage in the business of
investing or reinvesting in, or owning, holding or trading in securities, or
otherwise engaging in activities which would cause it to be classified as an
"investment company" under the 1940 Act. To avoid becoming an investment
company, not more than 40% of the value of MNS's assets (excluding government
securities and cash and cash equivalents) may consist of "investment
securities," which is defined to include all securities other than U.S.
government securities and securities of majority-owned subsidiaries. Because MNS
will not own less than a majority of any assets or business acquired, it will
not be regulated as an investment company. MNS will not pursue any combination
unless it will result in MNS owning at least a majority interest in the business
acquired.
COMPETITION
MNS will be in direct competition with many entities in its efforts to
locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
entities will possess greater financial resources and will be able to assume
greater risks than those which MNS, with its limited capital, could consider.
Many of these competing entities will also possess significantly greater
experience and contacts than MNS's Management. Moreover, MNS also will be
competing with numerous other blank check companies for such opportunities.
EMPLOYEES
The only employees of MNS currently are its officers. It is not expected
that MNS will have additional employees except as a result of completing a
combination.
ITEM 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION.
MNS's plan of operation over the next twelve months is set forth above
under ITEM 1 (Description of Business). This plan of operation has been adopted
in order to attempt to create value for MNS's shareholders.
RESULTS of OPERATIONS
MNS has never had operations or revenues and is still in the development
stage. MNS anticipates no operations unless and until it completes a business
combination as described above.
11
<PAGE>
LIQUIDITY and CAPITAL RESOURCES
As of the date of this Registration Statement, MNS has no cash and minimal
debts. MNS has no commitments for any capital expenditure and foresees none.
However, MNS will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur fees and expenses in the event it
makes or attempts to make an acquisition. As a practical matter, MNS expects no
significant operating costs other than professional fees payable to attorneys
and accountants. To the extent accounting services are performed by President
Stephen M. Siedow, an accountant, he has agreed not to charge MNS for those
services, although any other accountants utilized are expected to charge MNS
their customary rates.
MNS does not anticipate that funding will be necessary in order to complete
a proposed combination, except possibly for fees and costs of MNS's professional
advisers. Accordingly, there are no plans to raise capital to finance any
business combination, nor does management believe that any combination candidate
will expect cash from MNS. MNS hopes to require the candidate companies to
deposit with MNS an advance which MNS can use to defray professional fees and
costs and travel, lodging and other due diligence costs of MNS's management.
Otherwise, management would have to advance such costs out of their own pockets,
and there is no assurance they will advance such costs.
Other routine expenses, such as making required filings with the Securities
and Exchange Commission, inevitably will be incurred. In order to pay these, MNS
will be forced to borrow money or prevail upon existing shareholders to
contribute additional funds, whether as a loan or investment, to MNS. It is by
no means certain that existing shareholders will want or be financially able to
do so. There are no plans to sell additional securities of MNS to raise capital.
MNS's failure to timely file reports required under the Securities Exchange Act
of 1934, as amended, could subject it to fines and penalties and make it less
desirable to a potential combination candidate. None of these sources of funds
is assured and, if no funds can be raised, MNS may be effectively unable to
pursue its business plan.
MNS shareholders and management members who advance money to MNS to cover
operating expenses will expect to reimbursed by the company acquired, prior to
or at the time of completing the combination. MNS has no intention of borrowing
money to pay any officer, director or shareholder of MNS or their affiliates.
YEAR 2000 ISSUES
Many computers and computer programs in use around the world for purposes
of economy contain only two fields for expression of dates and were programmed
to assume that all dates entered are for years in the twentieth century
beginning with "19" (e.g., 99 means 1999). It is believed that many computers
and software programs will crash on commencement of the year 2000, because they
will not recognize dates beginning with "20" instead of "19" and that widespread
computer crashes will have significant economic effects on governments,
companies and individuals. This is known as the "Y2K" problem or the "milennium
bug." The extent, severity and duration of the Y2K problem are unknown and
impossible to forecast. Moreover, experts disagree on the extent, severity and
duration of the Y2K problem, and on the economic losses and other damage that
may occur as a result of it.
MNS has no operations or revenues, does no business with customers, vendors
or suppliers, and has no material relationships with other companies. MNS
therefore does not anticipate that it will suffer any losses as a result of Y2K
issues. However, if general economic problems resulting from Y2K issues are
severe and prolonged, demand for blank check companies could be reduced or
eliminated for an unknown (and unknowable) period of time. Because MNS regularly
backs up its records and documents maintained on computer, any computer failure
should not directly cause MNS more than a modest inconvenience at worst.
12
<PAGE>
ITEM 3. DESCRIPTION of PROPERTY.
MNS neither owns nor leases any real estate or other properties. MNS's
offices are located at 12373 E. Cornell Avenue, Aurora, Colorado 80014, and are
provided at no charge by its President. This arrangement is entirely adequate
for MNS's current needs. MNS does not have any plans to acquire any properties
or lease offices, and management does not anticipate that MNS will take office
space unless and until it has completed a business combination, in which case
MNS's offices almost certainly will be the same as those of the business
opportunity acquired.
ITEM 4. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT.
BENEFICIAL OWNERSHIP
The following table sets forth, as of the date of this Registration
Statement, the stock ownership of each executive officer and director of MNS, of
all executive officers and directors of MNS as a group, and of each person known
by MNS to be a beneficial owner of 5% or more of its Common Stock. Except as
otherwise noted, each person listed below is the sole beneficial owner of the
shares and has sole investment and voting power as such shares. No person listed
below has any option, warrant or other right to acquire additional securities of
MNS, except as may be otherwise noted.
Name and Address Amount & Nature
of Beneficial of Beneficial Percent
Owner Ownership of Class
- ----------------------------- ---------------- --------
*Stephen M. Siedow 304,605 (1,3) 44.6%
12373 E. Cornell Avenue
Aurora, Colorado 80014
John D. Brasher Jr. 301,605 (2,3) 44.2%
90 Madison Street, Suite 707
Denver, Colorado 80206
MNS Eagle Equity Group, Inc. 34,916 (3) 5.1%
12373 E. Cornell Avenue
Aurora, Colorado 80014
*All directors & officers 304,605 44.6%
as a group (1 person)
(1) Mr. Siedow disclaims beneficial ownership of 12,500 shares of common
stock owned by his wife, Linda M. Siedow, of 10,000 shares of common
stock held by his wife as custodian for his minor children, and of
5,000 shares of common stock held by his daughter.
(2) Mr. Brasher disclaims beneficial ownership of 10,000 shares of common
stock owned by his wife, Lisa K. Brasher, and of 5,000 shares of
common stock held by his wife as trustee for a trust established for
his minor children. Includes 20,000 shares of common stock held by
Yakima Corp., a corporation controlled by Mr. Brasher and his wife.
(3) Includes 34,916 shares of common stock held by MNS Eagle Equity Group,
Inc. (former parent), a corporation controlled by Mr. Brasher and Mr.
Siedow.
Despite not having received any compensation and not having otherwise
engaged in any transactions involving the acquisition or disposition of assets
with MNS, the current officers and directors of MNS may be deemed to be
"promoters" and "founders" of MNS.
CHANGES in CONTROL
A change of control of MNS probably will occur upon consummation of a
business combination, which is anticipated to involve significant change in
ownership of MNS and in the membership of the board of directors. The extent of
any such change of control in ownership or board composition cannot be predicted
at this time.
13
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS and CONTROL PERSONS.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Executive officers (none of whom have an employment or similar contract)
continue in office at the pleasure of the Board of Directors. The following
table sets forth the name, age, position held and tenure of each director and
executive officer:
Name Age Position Held and Tenure
---- --- ------------------------
Stephen M. Siedow 49 President, CEO, Director, Chairman of the Board,
since inception
There are no family relationships among the officers and directors. There
is no arrangement or understanding between MNS (or any of its directors or
officers) and any other person pursuant to which such person was or is to be
selected as a director or officer, or under which any officer or director will
resign at the request of another person, and no officer or director is acting or
will act on behalf of or at the direction of any other person. The directors and
officers are expected to devote their time to MNS's affairs on an "as needed"
basis, but are not required to make any specific portion of their time available
to MNS. It is anticipated that officers and directors will, on the average,
devote no more than 15 hours per week to MNS's affairs.
BIOGRAPHICAL INFORMATION
STEPHEN M. SIEDOW. Mr. Siedow is president and sole shareholder of Stephen
M. Siedow, P.C., a professional accounting firm providing auditing, management
consulting, tax services and write-up services to corporations, partnerships and
individuals since 1982. Mr. Siedow specializes in public and SEC accounting and
has experience in industries including mining (gold and coal), oil and gas,
construction, and mergers/acquisitions/liquidations. Prior to that, he was with
the audit department of Ernst & Young, Certified Public Accountants in Denver,
Colorado, for eight years. Mr. Siedow is a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
Accountants.
Mr. Siedow also is a director, executive officer, promoter or control
person of the following companies with business plans substantially identical to
those of MNS:
o Chairman, CEO, President and significant shareholder of EQUICAP, INC.,
a formerly active California corporation no longer in the development
stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of GALLAGHER
RESEARCH (NEV.) CORPORATION, a formerly active Colorado corporation no
longer in the development stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of MNS EAGLE
EQUITY GROUP, INC., MNS EAGLE EQUITY GROUP I, INC., MNS EAGLE EQUITY
GROUP II, INC., and MNS EAGLE EQUITY GROUP III, INC., all Nevada
corporations in the development stage.
PRIOR EXPERIENCE with BLANK CHECK COMPANIES
Mr. Siedow has never been an executive officer or director of a blank check
or "blind pool" company which conducted a public offering. Mr. Siedow has,
however, been an executive officer and director of several reporting blank check
companies (those required to file reports with the SEC), and his experience is
detailed below.
14
<PAGE>
1. WHITNEY AMERICAN CORPORATION ("WHAM") - Organized 1987 in Delaware.
Effective on March 10, 1998, WHAM acquired Kemron Environmental Services, Inc. a
New York company, in a stock-for-stock exchange. In the exchange, WHAM issued to
the shareholders of Kemron Environmental Services, Inc. a total of 3,500,000
common shares. WHAM's common stock is quoted on the OTC Bulletin Board under the
symbol WHAM and trades sporadically. Mr. Siedow was not an officer or director
of WHAM following consummation of the merger. Neither Mr. Siedow nor any other
officer, director or shareholder of WHAM, nor their respective affiliates, sold
any stock in connection with the acquisition of Kemron Environmental Services,
Inc.
2. CASHBUILDER, INC. ("CBI") - Organized 1982 in Colorado. Mr. Siedow sold
shares of CBI amounting to control of CBI in a private transaction for an
aggregate of $50,000 in 1994. Otherwise, no officer, director or shareholder of
CBI, nor their respective affiliates, sold any stock in connection with any
acquisition made.
POTENTIAL CONFLICTS of INTEREST
The Company's Officers and Directors are affiliated with other companies
having a similar business plan to that of MNS ("Affiliated Companies") which may
compete directly or indirectly with MNS. MNS has not identified a specific
business area, industry or industry segment in which it will seek combination
candidates. MNS has made a determination that it will not concentrate its search
for combination candidates in any particular business, industry or industry
segment, since any such determination is potentially limiting and confers no
advantage to MNS or its shareholders. Certain specific conflicts of interest may
include those discussed below.
1. The interests of any Affiliated Companies from time to time may be
inconsistent in some respects with the interests of MNS. The nature of these
conflicts of interest may vary. There may be circumstances in which an
Affiliated Company may take advantage of an opportunity that might be suitable
for MNS. Although there can be no assurance that conflicts of interest will not
arise or that resolutions of any such conflicts will be made in a manner most
favorable to MNS and its shareholders, the officers and directors of MNS have a
fiduciary responsibility to MNS and its shareholders and, therefore, must adhere
to a standard of good faith and integrity in their dealings with and for MNS and
its shareholders.
2. The officers and directors of MNS serve as officers or directors of one
or more Affiliated Companies and may serve as officers and directors of other
Affiliated Companies in the future. MNS's officers and directors are required to
devote only so much of their time to MNS's affairs as they deem appropriate, in
their sole discretion. As a result, MNS's officers and directors may have
conflicts of interest in allocating their management time, services, and
functions among MNS and any current and future Affiliated Companies which they
may serve, as well as any other business ventures in which they are now or may
later become involved.
3. The Affiliated Companies may compete directly or indirectly with that of
MNS for the acquisition of available, desirable combination candidates. There
may be factors unique to MNS or an Affiliated Company which respectively makes
it more or less desirable to a potential combination candidate, such as age of
the company, name, capitalization, state of incorporation, contents of the
articles of incorporation, etc. However, any such direct conflicts are not
expected to be resolved through arm's- length negotiation, but rather in the
discretion of management. While any such resolution will be made with due regard
to the fiduciary duty owed to MNS and its shareholders, there can be no
assurance that all potential conflicts can be resolved in a manner most
favorable to MNS as if no conflicts existed. Members of MNS's management who
also are members of management of another Affiliated Company will also owe the
same fiduciary duty to the shareholders of the other Affiliated Company.
4. Certain conflicts of interest exist and will continue to exist between
MNS and its officers and directors due to the fact that each has other
employment or business interests to which he devotes his primary attention. Each
15
<PAGE>
officer and director is expected to continue to do so in order to make a living,
notwithstanding the fact that management time should be devoted to MNS's
affairs. MNS has not established policies or procedures for the resolution of
current or potential conflicts of interest between MNS and its management.
As a practical matter, such potential conflicts could be alleviated only if
the Affiliated Companies either are not seeking a combination candidate at the
same time as the Company, have already identified a combination candidate, are
seeking a combination candidate in a specifically identified business area, or
are seeking a combination candidate that would not otherwise meet MNS's
selection criteria. It is likely, however, that the combination criteria of MNS
and any Affiliated Companies will be substantially identical. Ultimately, MNS's
shareholders ultimately must rely on the fiduciary responsibility owed to them
by MNS's officers and directors.
There can be no assurance that members of management will resolve all
conflicts of interest in MNS's favor. The officers and directors are accountable
to MNS and its shareholders as fiduciaries, which means that they are legally
obligated to exercise good faith and integrity in handling MNS's affairs and in
their dealings with MNS. Failure by them to conduct MNS's business in its best
interests may result in liability to them. The area of fiduciary responsibility
is a rapidly developing area of law, and persons who have questions concerning
the duties of the officers and directors to MNS should consult their counsel.
INDEMNIFICATION of DIRECTORS and OFFICERS
See discussion under Part II, ITEM 5 below.
EXCLUSION of DIRECTOR LIABILITY
Pursuant to the General Corporation Law of Nevada, MNS's Certificate of
Incorporation excludes personal liability on the part of its directors to MNS
for monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or for improper
payment of dividends. 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.
ITEM 6. EXECUTIVE COMPENSATION.
CASH and OTHER COMPENSATION
Since inception of MNS and through the date of this Registration Statement,
no director or executive officer has received cash or cash equivalent
compensation from MNS. MNS has no other agreement or understanding, express or
implied, with any director or executive officer concerning employment or cash or
other compensation for services. MNS will undoubtedly pay compensation to
officers and other employees should it succeed in acquiring a business and funds
exist for compensation.
COMPENSATION PURSUANT to PLANS
Since inception of MNS and through the date of this Registration Statement,
no director or executive officer has received compensation from MNS pursuant to
any compensatory or benefit plan. There is no plan or understanding, express or
implied, to pay any compensation to any director or executive officer pursuant
to any compensatory or benefit plan of MNS, although MNS anticipates that it
will compensate its officers and directors for services to MNS with stock or
options to purchase stock, in lieu of cash.
MNS currently has in place an employee stock compensation plan and
compensatory stock option plan. MNS has no long-term incentive plans, as that
term is defined in the rules and regulations of the Securities and Exchange
16
<PAGE>
Commission. There are no other compensatory or benefit plans, such as retirement
or pension plans, in effect or anticipated to be adopted, although other plans
may be adopted by new management following completion of a business combination.
EMPLOYEE STOCK COMPENSATION PLAN
MNS has adopted the 1997 Employee Stock Compensation Plan for employees,
officers, directors of MNS and advisors to MNS (the "ESC Plan"). MNS has
reserved a maximum of 1,000,000 Common Shares to be issued upon the grant of
awards under the ESC Plan. Employees will recognize taxable income upon the
grant of Common Stock equal to the fair market value of the Common Stock on the
date of the grant and MNS will recognize a compensating deduction for
compensation expense at such time. The ESC Plan will be administered by the
Board of Directors or a committee of directors. No shares have been awarded or
currently are anticipated to be awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN
MNS has adopted the 1997 Compensatory Stock Option Plan for officers,
employees, directors and advisors (the "CSO Plan"). MNS has reserved a maximum
of 1,500,000 Common Shares to be issued upon the exercise of options granted
under the CSO Plan. The CSO Plan will not qualify as an "incentive stock option"
plan under Section 422 of the Internal Revenue Code of 1986, as amended. Options
will be granted under the CSO Plan at exercise prices to be determined by the
Board of Directors or other CSO Plan administrator. With respect to options
granted pursuant to the CSO Plan, optionees will not recognize taxable income
upon the grant of options granted at or in excess of fair market value. However,
optionees will realize income at the time of exercising an option to the extent
the market price of the common stock at that time exceeds the option exercise
price, and MNS must recognize a compensation expense in an amount equal to any
taxable income realized by an optionee as a result of exercising the option. The
CSO Plan will be administered by the Board of Directors or a committee of
directors. No options have been granted or currently are anticipated to granted
under the CSO Plan.
EMPLOYMENT CONTRACTS
No person has entered into any employment or similar contract with MNS. It
is not anticipated that MNS will enter into any employment or similar contract
unless in conjunction with or following completion of a business combination.
ITEM 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS.
On November 18, 1997, a stockholder of the Company surrendered 50,000
shares of the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company.
At September 30, 1999 MNS was indebted to MNS Eagle Equity Group, Inc.
(former parent) in the amount of $359 for costs and expenses advanced on its
behalf. MNS is not indebted to any other officer, director, promoter or control
person. MNS has no understanding with its officers, directors or shareholders,
pursuant to which such persons are required to contribute capital to MNS, loan
money or otherwise provide funds to MNS, although management expects that one or
more of such persons may make funds available to MNS in the event of need to
cover operating expenses.
There were no transactions, or series of transactions, for the year ended
December 31, 1998 nor are there any currently proposed transactions, or series
of transactions, to which MNS is a party, in which the amount exceeds $60,000,
and in which to the knowledge of MNS any director, executive officer, nominee,
five percent or greater shareholder, or any member of the immediate family of
any of the foregoing persons, have or will have any direct or indirect material
interest.
17
<PAGE>
ITEM 8. DESCRIPTION of SECURITIES.
The authorized capital stock of MNS consists of 50,000,000 shares of Common
Stock, $.001 par value, and 10,000,000 shares of Preferred Stock, $.001 par
value.
COMMON STOCK
At September 30, 1999, there were 682,500 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each share
held. MNS's Certificate of Incorporation provides that the affirmative vote of a
majority of the votes cast at a shareholder's meeting is sufficient to effect
any corporate action upon which shareholders may or must vote. Common Shares do
not carry cumulative voting rights, thus holders of more than 50% of the Common
Stock have the power to elect all directors if they wish and, as a practical
matter, to control MNS. Holders of Common Stock are not entitled to preemptive
rights, and the Common Stock is not subject to redemption.
MNS's bylaws provide for a board of one director, all of whom are elected
for one-year terms at the annual meeting of shareholders. The affirmative vote
of a simple majority of the outstanding Common Stock is necessary to remove a
director. A special meeting of shareholders may be called by the Chairman of the
Board, the President, a majority of the Board of Directors, or shareholders
owning in the aggregate 10% or more of the Common Stock. Holders of Common Stock
are entitled to receive, pro rata dividends if, when and as declared by the
Board of Directors out of funds legally available therefor.
Upon liquidation, dissolution or winding up of MNS, holders of Common Stock
are entitled to share ratably in MNS's assets legally available for distribution
to its shareholders after payment of liquidation preference and outstanding
redemption rights (if any) on any Preferred Stock outstanding and are not
subject to further calls or assessments.
PREFERRED STOCK
Although no shares of Preferred Stock are being registered in this
Registration Statement or have previously been registered under the Exchange
Act, this discussion is included to enhance the reader's understanding of MNS.
No Preferred Shares are issued or outstanding, and MNS has no plans to issue any
Preferred Shares. The Board of Directors has the authority to issue Preferred
Stock in one or more series and to fix the voting powers, conversion rights,
other special rights and qualifications, limitations and restrictions of each
series, without any further vote or action by the shareholders. It is not
possible to state the actual effect of the authorization of any Preferred Stock
upon the rights of holders of the Common Stock, until the Board of Directors
determines the specific rights of the holders of the Preferred Stock. However,
the Preferred Stock may have adverse effects upon the holders of the Common
Stock, including (i) restrictions on dividends on the Common Stock if dividends
on the Preferred Stock have not been paid, (ii) dilution of the voting power of
the Common Stock to the extent that the Preferred Stock has voting rights, (iii)
dilution of the equity interest of the Common Stock to the extent that the
Preferred Stock is converted into Common Stock, or (iv) the Common Stock not
being entitled to share in MNS's assets upon liquidation until satisfaction of
any liquidation preference granted the holders of the Preferred Stock. MNS does
not currently anticipate that it will issue Preferred Stock in connection with
any business combination, but issuance for this purpose is a possibility. MNS
has not authorized such number of Preferred Shares for anti-takeover or similar
purposes.
ANNUAL REPORTS
MNS will furnish its shareholders with annual reports containing financial
statements of MNS as examined and reported upon by independent certified public
accountants. MNS will distribute other reports as determined by the Board of
Directors.
18
<PAGE>
TRANSFER AGENT
MNS has not appointed a transfer agent or registrar for its Common Shares
and, in order to minimize expenses, does not expect to do so unless and until it
appears that its Common Shares will commence to trade.
PART II
ITEM 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON EQUITY and
OTHER SHAREHOLDER MATTERS.
PRICE RANGE of the COMMON STOCK
Not applicable.
DIVIDENDS
MNS has not declared or paid any dividends on its Common Stock to date.
Management anticipates that any future earnings will be retained as working
capital and used for business purposes. Accordingly, it is unlikely that MNS
will declare or pay any such dividends in the foreseeable future.
PUBLIC MARKET for the COMMON SHARES
There currently is no public market for MNS'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. Unless and until
MNS's common shares are quoted on the NASDAQ system or listed on a national
securities exchange, it is likely that the common shares will be defined as
"penny stocks" under the Exchange Act and SEC rules thereunder. The Exchange Act
and penny stock rules generally impose additional sales practice and disclosure
requirements upon broker-dealers who sell penny stocks to persons other than
certain "accredited investors" (generally, institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 jointly with spouse) or in transactions
not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must
make a suitability determination for each purchaser and receive the purchaser's
written agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the SEC. So long as MNS's common shares are
considered "penny stocks", many brokers will be reluctant or will refuse to
effect transactions in MNS's shares, and many lending institutions will not
permit the use of penny stocks as collateral for any loans.
RULE 144 RESALES
MNS has 682,500 common shares issued and outstanding, of which
approximately 44,500 shares are unrestricted and may be freely traded in the
securities markets and of which an additional 24,206 shares will pursuant to
Rule 144(k) under the Act, become unrestricted and fully tradeable by the end of
November 1999. There are in addition approximately 613,794 common shares which
have been issued and outstanding, and beneficially owned and fully paid, for
more than two years which could be resold pursuant to Rule 144 under the
Securities Act of 1933, as amended. Rule 144 provides that a person who acquired
securities in a private placement transaction and has beneficially owned those
securities, fully paid, for a period of at least one year may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed one percent (1%) of the issuer's outstanding common
stock. For issuers whose shares are listed on a stock exchange or NASDAQ, a
shareholder may alternatively sell a number of shares that does not exceed the
average weekly trading volume during the four calendar weeks prior to his or her
sale.
19
<PAGE>
However, if a person has beneficially owned securities for a period of two
years and has not been an affiliate (control person) of the issuer for the
preceding three-month period, the person may under authority of Rule 144(k)
request that all restrictive legends affecting the securities be removed, and
there is no limit on the number of shares that the non-affiliate may then sell.
The sale of a substantial number of shares of MNS under Rule 144 or under any
other exemption from the Act could have a depressive effect upon the price of
MNS's common shares in any market that may develop. Under current SEC rules, no
MNS common shares may be resold under Rule 144 during the ninety (90)-day period
following effectiveness of this Registration Statement.
ITEM 2. LEGAL PROCEEDINGS.
There are no legal proceedings which are pending or have been threatened
against MNS or any officer, director or control person of which management is
aware.
ITEM 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS on ACCOUNTING and
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 4. RECENT SALES of UNREGISTERED SECURITIES.
The following sets forth certain information with respect to all common
stock of MNS sold during the three-year period or since inception prior to the
filing of this Registration Statement.
(1) On February 28, 1997, the Company issued 725,000 shares of common stock
to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs
and deferred offering costs. These common shares were valued at $.01 per share.
These securities were issued without registration under the Securities Act of
1933, as amended, and exemption for such sale(s) from registration under such
Act is claimed under Section 4(2) thereof on the basis that such sale was a
transaction not involving any public offering. MNS Eagle Equity Group, Inc.
executed a customary form of investment letter concerning such purchase.
Appropriate precautions against transfer were taken, including the placement of
an investment legend on the certificate(s) evidencing such shares and placement
of a stop transfer notation in the stock records concerning such shares.
(2) Private Placement. The Company's parent offered for sale, at the price
of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of
common stock in six different corporations for a total of six (6) shares of
stock, including one share of common stock, $.001 par value per share, of MNS
Eagle Equity Group, Inc., the former parent, and one share of common stock,
$.001 par value per share, of each of the following corporations organized in
the State of Nevada and which were at that time wholly owned subsidiaries of the
Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc.,
MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle
Equity Group V, Inc. No minimum number of Units had to be sold. On October 31,
1997, the Company's former parent closed the private placement offering. A total
of 7,500 units were sold for $7,500. The proceeds were allocated by the
Company's parent as follows: $5,000 to the parent and $500 to each of the wholly
owned subsidiaries. The offering was not registered under the Securities Act of
1933, as amended ("Act"), and was offered to qualified investors in reliance
upon the exemption from such registration requirements provided by Section 4(2)
of the Act and/or Rule 505 of Regulation D under the Act and applicable state
laws. Accordingly, the Units and component shares were deemed "restricted
securities" and are subject to significant restrictions on transfer. Appropriate
precautions against transfer were taken, including the placement of an
investment legend on the certificate(s) evidencing such shares and placement of
a stop transfer notation in the stock records concerning such shares.
20
<PAGE>
ITEM 5. INDEMNIFICATION of DIRECTORS and OFFICERS.
As permitted by Nevada law, MNS's Certificate of Incorporation provides
that MNS will indemnify its officers and directors against attorneys' fees and
other expenses and liabilities they incur to defend, settle or satisfy any civil
or criminal action brought against them arising out of their association with or
activities on behalf of MNS unless, in any such action, they are adjudged to
have acted with gross negligence or to have engaged in willful misconduct. MNS
may also bear the expenses of such litigation for any such persons upon their
promise to repay such sums if it is ultimately determined that they are not
entitled to indemnification. Such expenditures could be substantial and may not
be recouped, even if MNS is so entitled. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling MNS pursuant to the foregoing
provisions, MNS 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. Furthermore, it should be noted
that a successful indemnification of any officer or director could deplete the
assets of MNS.
PART F/S
(1) AUDITED FINANCIAL STATEMENTS.
Independent Auditor's Report .................................. F-1
Balance Sheets as of December 31, 1998 and 1997................ F-2
Statements of Operations for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception) to
December 31, 1998............................................. F-3
Statement of Stockholders' Equity for the period
February 28, 1997(inception) to December 31, 1998............. F-4
Statements of Cash Flows for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception) to
December 31, 1998............................................. F-5
Notes to Financial Statements ................................. F-6
(2) MANAGEMENT PREPARED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets as of September 30, 1999 and
December 31, 1998 (audited)................................... F-1
Statements of Operations for the nine month
ended September 30, 1999 and 1998 and for the period
February 28, 1997 (inception) to September 30, 1999........... F-2
Statement of Stockholders' Equity (Deficit) for
the period February 28, 1997
(inception) to September 30, 1999............................. F-3
Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 and for the
period February 28, 1997 (inception) to September 30, 1999.... F-4
Notes to Financial Statement .................................. F-5
21
<PAGE>
Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545 2280 South Xanadu Way
Suite 370
Aurora, Colorado 80014
Independent Auditor's Report
Board of Directors and Stockholders
MNS Eagle Equity Group IV, Inc.
I have audited the accompanying balance sheets of MNS Eagle Equity Group IV,
Inc. as of December 31, 1998 and 1997 and the related statements of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
1998, period from inception February 28, 1997 to December 31, 1997 and for the
period from inception February 28, 1997 to December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audits 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 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 MNS Eagle Equity Group IV, Inc. as
of December 31, 1998 and 1997 and the results of its operations and their cash
flows for the year ended December 31, 1998, period from inception February 28,
1997 to December 31, 1997 and for the period from inception February 28, 1997 to
December 31, 1998 in conformity with generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
August 4, 1999
F-1
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Balance Sheets)
ASSETS
December 31,
1998 1997
----- -----
Current assets:
Cash $ 176 $ 510
----- -----
Other assets:
Organization costs, net 282 371
----- -----
$ 458 $ 881
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ -- $ --
----- -----
Stockholders' equity:
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (592) (169)
----- -----
Total stockholders' equity 458 881
----- -----
$ 458 $ 881
===== =====
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Operations
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- -------------- --------------
<S> <C> <C> <C>
Costs and expenses:
Amortization $ 89 $ 74 $ 163
General and administrative, related party 334 95 429
--------- --------- ---------
Net loss $ (423) $ (169) $ (592)
========= ========= =========
Loss per common share $ (.0006) $ (.0002)
========= =========
Weighted average common shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period February 28, 1997 (Inception) to December 31, 1998
Deficit
Common Stock Additional Accumulated
------------------------ Paid-in from
Shares Amount Capital Inception
------- -------- ---------- -----------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 $ 682 $ 368 $ (592)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Cash Flows
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
------------ -------------- --------------
Cash flows from operating activities:
Net loss $(423) $(169) $(592)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 89 74 163
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts
due to an officer/stockholder -- -- --
----- ----- -----
Net cash used in operating activities (334) (95) (429)
----- ----- -----
Cash flows from investing activities:
Organization costs -- (100) (100)
----- ----- -----
Net cash used in investing activities -- (100) (100)
----- ----- -----
Cash flows from financing activities:
Proceeds from sale of common stock -- 803 803
Deferred offering costs -- (98) (98)
----- ----- -----
Net cash provided by financing activities -- 705 705
----- ----- -----
Net increase (decrease) in cash (334) 510 176
Cash at beginning of year 510 -- --
----- ----- -----
Cash at end of year $ 176 $ 510 $ 176
===== ===== =====
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ 345 $ 345
===== ===== =====
Common stock issued for deferred offering costs $ -- $ 77 $ 77
===== ===== =====
Common stock issued for services $ -- $ -- $ --
===== ===== =====
The accompanying notes are an integral part of the financial statements.
F-5
</TABLE>
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
- -----------------------
The financial statements presented are those of MNS Eagle Equity Group IV, Inc.,
a development stage company (the "Company"). The Company was organized under the
laws of the State of Nevada on February 28, 1997. The Company's activities, to
date, have been organizational in nature, and have been directed towards the
raising of capital and to discussions of potential business combinations. Should
the Company eventually engage in a business combination, future consolidated
operations of the Company would depend on the operations of the company with
which it combines.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Deferred Offering Costs
- -----------------------
Costs incurred directly related to the private placement offering are
capitalized. Such costs will be offset against the proceeds received from the
private placement.
Organization Costs
- ------------------
Organization costs are amortized over five years.
Fair Value of Financial Instruments
- -----------------------------------
The fair value of the Company's payable due to officers/stockholders is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Income Taxes
- ------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
F-6
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
- ---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Note 2 - Stockholders' Equity
Common Stock Transactions
- -------------------------
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS
Eagle Equity Group, Inc. (its former parent) for cash, organization costs and
deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata
basis to its officers, directors and stockholders to purchase 687,500 shares of
the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total
of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold. The offering was not registered
F-7
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
under the Securities Act of 1933, as amended ("Act"), and was offered to
qualified investors in reliance upon the exemption from such registration
requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D
under the Act and applicable state laws. Accordingly, the Units and component
shares were deemed "restricted securities" and are subject to significant
restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock
options held by them. Options on 616,378 of the 687,500 optioned shares of the
Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement
offering. A total of 7,500 units were sold for $7,500. The proceeds were
allocated by the Company's parent as follows: $5,000 to the parent and $500 to
each of the wholly owned subsidiaries. Offering costs of $175 were incurred by
each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of
the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company. Options on 47,416 of
the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock
options held by them. Options on 23,706 of the 687,500 optioned shares of the
Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
- ---------------
No shares of preferred stock have been issued or are outstanding. Dividends,
voting rights and other terms, rights and preferences of the preferred shares
have not been designated but may be designated by the Board of Directors from
time to time.
1997 Stock Option Plan
- ----------------------
The Company has adopted a stock option plan (the "CSO Plan") which allows for
the issuance of options to purchase up to 1,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The CSO Plan is
not intended to qualify as an "incentive stock option plan" under Section 422 of
the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
F-8
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1997 Employee Stock Compensation Plan
- -------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,500,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (63) $ (25)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 63 25
---------- ----------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 88 25
Valuation allowance (88) (25)
---------- ----------
$ -- $ --
========== ==========
</TABLE>
At December 31, 1998, the Company has net operating loss carryforwards of $592
which may be available to offset future taxable income through 2018.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no
charge.
F-9
<PAGE>
<TABLE>
<CAPTION>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Balance Sheets (Unaudited)
ASSETS
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Current assets:
Cash $ -- $ 176
------- -------
Other assets:
Organization costs, net 215 282
------- -------
$ 215 $ 458
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ -- $ --
Due to an officer/stockholder 359 --
------- -------
359 --
------- -------
Stockholders' equity (deficit):
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (1,194) (592)
------- -------
Total stockholders' equity (deficit) (144) 458
------- -------
$ 215 $ 458
======= =======
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Operations (Unaudited)
Nine Nine Feb 28, 1997
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- -------------
Costs and expenses:
Amortization $ 67 $ 67 $ 230
General and administrative, related party 535 334 964
--------- --------- ---------
Net loss $ (602) $ (401) $ (1,194)
========= ========= =========
Loss per common share $ (.001) $ (.001)
========= =========
Weighted average shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)
For the Period February 28, 1997 (Inception) to September 30, 1999
Deficit
Common Stock Additional Accumulated
---------------------- Paid-in from
Shares Amount Capital Inception
------ ------ ---------- ------------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 682 368 (592)
Net loss for the period (602)
-------- -------- -------- --------
Balances, September 30, 1999 682,500 $ 682 $ 368 $ (1,194)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
Nine Nine Feb 28, 1997,
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- -------------
Cash flows from operating activities:
Net loss $ (602) $ (401) $(1,194)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 67 67 230
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts due
to an officer/stockholder 359 -- 359
------- ------- -------
Net cash used in operating activities (176) (334) (605)
------- ------- -------
Cash flows from investing activities:
Organization costs -- -- (100)
------- ------- -------
Net cash used in investing activities -- -- (100)
------- ------- -------
Cash flows from financing activities:
Proceeds from sale of common stock -- -- 803
Deferred offering costs -- -- (98)
------- ------- -------
Net cash provided by financing activities -- -- 705
------- ------- -------
Net increase (decrease) in cash (176) (334) --
Cash at beginning of year 176 510 --
------- ------- -------
Cash at end of period $ -- $ 176 $ --
======= ======= =======
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ -- $ 345
======= ======= =======
Common stock issued for deferred offering costs $ -- $ -- $ 77
======= ======= =======
Common stock issued for services $ -- $ -- $ --
======= ======= =======
The accompanying notes are an integral part of the financial statements.
F-4
</TABLE>
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Note 1 - Summary of Significant Accounting Policies
Description of Business
- -----------------------
The financial statements presented are those of MNS Eagle Equity Group IV, Inc.,
a development stage company (the "Company"). The Company was organized under the
laws of the State of Nevada on February 28, 1997. The Company's activities, to
date, have been organizational in nature, and have been directed towards the
raising of capital and to discussions of potential business combinations. Should
the Company eventually engage in a business combination, future consolidated
operations of the Company would depend on the operations of the company with
which it combines.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Deferred Offering Costs
- -----------------------
Costs incurred directly related to the private placement offering are
capitalized. Such costs will be offset against the proceeds received from the
private placement.
Organization Costs
- ------------------
Organization costs are amortized over five years.
Fair Value of Financial Instruments
- -----------------------------------
The fair value of the Company's payables due to officers/stockholders is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
F-5
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Income Taxes
- ------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
- ---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Unaudited Financial Statements
- ------------------------------
The unaudited financial statements of the Company have been prepared on the
accrual basis and includes all of the information and footnotes required by
generally accepted accounting principles. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
Note 2 - Stockholders' Equity (Deficit)
Common Stock Transactions
- -------------------------
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS
Eagle Equity Group, Inc. (its former parent) for cash, organization costs and
deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata
basis to its officers, directors and stockholders to purchase 687,500 shares of
the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total
of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold. The offering was not registered
F-6
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
under the Securities Act of 1933, as amended ("Act"), and was offered to
qualified investors in reliance upon the exemption from such registration
requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D
under the Act and applicable state laws. Accordingly, the Units and component
shares were deemed "restricted securities" and are subject to significant
restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock
options held by them. Options on 616,378 of the 687,500 optioned shares of the
Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement
offering. A total of 7,500 units were sold for $7,500. The proceeds were
allocated by the Company's parent as follows: $5,000 to the parent and $500 to
each of the wholly owned subsidiaries. Offering costs of $175 were incurred by
each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of
the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company. Options on 47,416 of
the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock
options held by them. Options on 23,706 of the 687,500 optioned shares of the
Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
- ---------------
No shares of preferred stock have been issued or are outstanding. Dividends,
voting rights and other terms, rights and preferences of the preferred shares
have not been designated but may be designated by the Board of Directors from
time to time.
F-7
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
1997 Stock Option Plan
- ----------------------
The Company has adopted a stock option plan (the "CSO Plan") which allows for
the issuance of options to purchase up to 1,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The CSO Plan is
not intended to qualify as an "incentive stock option plan" under Section 422 of
the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1997 Employee Stock Compensation Plan
- -------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,500,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (90) $ (60)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 90 60
---------- ----------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 178 85
Valuation allowance (178) (85)
---------- ----------
$ -- $ --
========== ==========
</TABLE>
At September 30, 1999, the Company has net operating loss carryforwards of
$1,194 which may be available to offset future taxable income through 2019.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no
charge.
F-8
<PAGE>
PART III
ITEM 1. LIST OF EXHIBITS.
The following exhibits are either filed with this registration statement or
have previously been filed with the Securities and Exchange Commission and are
incorporated by reference to another report, registration statement or form. As
to any shareholder of record requesting a paper copy of this registration
statement, MNS will furnish any exhibit indicated in the list below as filed
with this report upon payment to MNS of its expenses in furnishing the
information.
3.1 Certificate of Incorporation of MNS as filed with the
Nevada Secretary of State on February 28, 1997............. 2
3.4 Bylaws of MNS .............................................. 2
4.1 Specimen common stock certificate .......................... 2
10.1 1997 Compensatory Stock Option Plan of MNS ................. 2
10.2 1997 Employee Stock Compensation Plan of MNS ............... 2
1 - Filed herewith as an exhibit.
2 - Previously filed as an exhibit to the Registration Statement on
Form 10SB-12G (Registration No. 0-27783) filed on October 22,
1999.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Company has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATED: November 22, 1999
MNS Eagle Equity Group IV, Inc.
By /s/ Stephen M. Siedow
--------------------------------------------
Stephen M. Siedow, President and CEO
23
