<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM SB-2/A-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(Name of small business issuer in its charter)
Nevada
(State or jurisdiction of incorporation or organization)
9995
(Primary Standard Industrial Classification Code Number)
860973399
(I.R.S. Employer Identification No.)
2102 North Donner Avenue, Tucson, AZ 85749
(Address of principal executive offices)
2102 North Donner Avenue, Tucson, AZ 85749
(Address of principal place of business or intended principal place of business)
Daniel L. Hodges
2102 North Donner Avenue, Tucson, AZ 85749, (520) 760-7759
(Name, address and telephone number of agent for service)
--------------------------
copy to:
David J. Levenson, Esquire
Mays & Valentine, L.L.P.
8201 Greensboro Drive
Suite 800
McLean, Virginia 22102
Telephone: (703) 734-4328
Facsimile: (703) 734-4340
Approximate date of proposed sale to the public: From time to time after the
effective date of this registration statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, please check the following box. / /
CALCULATION OF REGISTRATION FEE
===============================================================================
Title of Each Class Amount Amount of
Securities to be Offering Price Per Registration
to be Registered Registered Unit Fee
--------------------- ------------ ------------------ -------------
Common Stock, $.001 par value 200,000 $ .001(1) $ .05
TOTAL .05
MINIMUM FEE $100.00
(1) Estimated solely for the purpose of calculating the registration fee.
The price of the shares has been determined by K & L on the basis of the par
value of the shares issued and outstanding.
------------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
-------------------------
K & L ELECTRONICS PHOTO AND SUPPLY CO.
CROSS REFERENCE SHEET
Form SB-2 Item Caption in Prospectus
______________ _____________________
PART I
Item 1. Front of Registration Statement and
Outside Front Cover of Prospectus.......... Front of Registration
Statement and
Outside Front Cover of
Prospectus
Item 2. Inside Front and Outside Back Cover
Pages of Prospectus........................ Inside Front and
Outside Back Cover
Pages of Prospectus
Item 3. Summary Information and Risk Factors........ Prospectus Summary;
Risk Factors
Item 4. Use of Proceeds............................. Use of Proceeds
Item 5. Determination of Offering Price............. Not Applicable
Item 6. Dilution.................................... Not Applicable
Item 7. Selling Shareholders........................ Selling Shareholders
Item 8. Plan of Distribution........................ Plan of Distribution
Item 9. Legal Proceedings........................... Business-Legal
Proceedings
Item 10. Directors, Executive Officers, Promoters and
Control Persons............................. Management
Item 11. Security Ownership of Certain Beneficial
Owners and Management....................... Management-Principal
Shareholders
Item 12. Description of Securities.................... Description of
Securities
Item 13. Interest of Named Experts and Counsel........ Not Applicable
Item 14. Disclosure of Commission Position on
Indemnification............................. Indemnification of
Officers and Directors
Item 15. Organization Within Last Five Years.......... Certain Transactions
Item 16. Description of Business...................... Business
Item 17. Management's Discussion and Analysis or
Plan of Operation........................... Management's Discussion
and Analysis of
Financial Conditions
and Plan of Operations
Item 18. Description of Property...................... Business-Properties
Item 19. Certain Relationships and Related Transactions Certain Transactions
Item 20. Market for Common Equity and Related
Stockholder Matters......................... Market Information
Item 21. Executive Compensation....................... Management-Executive
Compensation
Item 22. Financial Statements......................... Financial Statements
Item 23. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure...... Not Applicable
PART II
Item 24. Indemnification of Directors and Officers.... Indemnification of
Directors and Officers
Item 25. Other Expenses of Issuance and Distribution.. Other Expenses of
Issuance and
Distribution
Item 26. Recent Sales of Unregistered Securities...... Recent Sales of
Unregistered Securities
Item 27. Exhibits..................................... Exhibits
Item 28. Undertakings................................. Undertakings
<PAGE>
PROSPECTUS
K & L Electronics Photo And Supply Co.
200,000 Shares of Common Stock
This prospectus covers the resale by twenty-eight selling shareholders, from
time to time, of up to 200,000 shares of common stock of K & L Electronics
Photo and Supply Co. in the over-thecounter market, at prevailing market
prices, at negotiated prices or otherwise.
K & L will not be receiving any proceeds from the sale of shares by the
selling shareholders but will bear all of the expenses of the registration
of the shares.
K & L's common stock is not currently listed or quoted on any quotation
medium.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of the prospectus. Any representation to
the contrary is a criminal offense.
------------------------
The date of this prospectus is September 20, 2000
Prospectus summary
K & L Electronics Photo and Supply Co.
--------------------------------------
K & L is a development stage company which was organized on December
31, 1997. It was formed specifically to be a "blank check" or "shell"
corporation. The terms "blank check" or "shell" corporation are used
to describe a company that either has no specific business plan or
purpose or indicates that its business plan or purpose is to engage in
a merger or acquisition with an unidentified company. K & L has one
officer and director, Daniel L. Hodges, who also owns 80% of K & L's
issued and outstanding shares. Mr. Hodges owns over 100 blank check
companies which are seeking merger or acquisition candidates.
K & L will be seeking merger or acquisition candidates with which it
can either merge or acquire. K & L has not selected any company for
acquisition or merger and does not intend to limit potential
acquisition candidates to any particular field or industry. At this
time, K & L's plans are still in the conceptual stage.
The offering.
K & L previously issued 200,000 shares of its common stock to 28
individuals. This prospectus covers any resale of these shares.
Common Stock Registered for Resale........................ 200,000 shares
Common Stock Outstanding prior to the Offering............1,000,000 shares
Common Stock Outstanding after the Offering...............1,000,000 shares
Selected financial data
The following selected consolidated financial data should be read in
conjunction with "Management's discussion and analysis of financial
condition and plan of operations" and the consolidated financial
statements, including the accompanying notes, included elsewhere in
this prospectus. The statement of operations data for the years ended
December 31, 1998 and 1999 and the balance sheet data at December 31,
1998 and 1999 are derived from K & L's consolidated financial
statements, which have been audited by K & L's independent auditors,
included elsewhere in this prospectus, and include all adjustments that
K & L considers necessary for a fair presentation of the financial
position and results of operations at that date and for such periods.
The statement of operations data for the six months ended June 30, 1999
and 2000 and the balance sheet data at June 30, 2000 are derived from K
& L's consolidated financial statements, included elsewhere in this
prospectus, which have been reviewed but not audited.
Balance sheet data: June 30, December 31,
------------- --------------------
2000 1999 1998
-------- ------- ---------
Assets.......... $ -- $ -- $ --
Liabilities - Accounts Payable..... $ -- $ -- $ 100
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 shares at
June 30, 2000 and December 31,
1999 and 1998.................. 1,000 1,000 1,000
Paid-In Capital.................. 2,800 250 --
Retained Deficit................. (1,100) (1,100) (1,100)
Deficit Accumulated During
the Development Stage.......... (2,700) (150) --
Total Stockholders' Equity....... -- -- (100)
Total Liabilities and
Stockholders' Equity........... $ -- $ -- $ --
Statement of operations data:
Cumulative Since
For the Six Months For Year Ended Inception of
Ended June 30 December 31, Development Stage
-------------------- ----------------- ------------------
2000 1999 1999 1998
-------- ----- ------ ------
Revenues: $ -- $ -- $ -- $ -- $ --
Expenses: 2,550 -- 150 1,100 2,700
Net Loss $(2,550) -- (150) $(1,100) $(2,700)
Basic & Diluted
loss per share $ -- $ -- $ -- $ --
Risk factors
K & L's business is subject to numerous risk factors. You should carefully
consider the following risk factors before investing in the shares.
K & L has only one director and one officer and does not have multiple layers of
management which investors typically find in larger public companies.
K & L's president and sole officer is Daniel L. Hodges. Because management
consists of only Mr. Hodges, K & L does not benefit from multiple judgments that
a greater number of directors or officers would provide. K & L must rely
completely on the judgment of its sole officer and director when selecting a
target company. His decision to enter into a business combination will likely be
made without detailed feasibility studies, independent analysis, market surveys
or similar information which, if K & L had more funds available to it, would be
desirable. Mr. Hodges anticipates devoting only a few hours per month to the
business of K & L. Mr. Hodges has not entered into a written employment
agreement with K & L and he is not expected to do so. K & L has not obtained key
man life insurance on Mr. Hodges. The loss of the services of Mr. Hodges would
adversely affect development of K & L's business and its likelihood of
continuing operations.
K & L has no operating history, no revenue, minimal assets and operates at a
loss.
K & L has no operating history or any revenues or earnings from operations. K &
L has no significant assets or financial resources. K & L has operated at a loss
to date and will, in all likelihood, continue to have operating expenses without
corresponding revenues, at least until the consummation of a business
combination. As of June 30, 2000, K & L had incurred expenses of approximately
$2,700. Mr. Hodges has paid these expenses and he has no expectation or
agreement with K & L for reimbursement. There is no assurance that K & L will
ever be profitable.
Mr. Hodges may have conflicts of interest with K & L because of his involvement
in other blank check companies.
The terms of any future business combination involving K & L may include Mr.
Hodges' remaining a director or officer of K & L following the business
combination. In the alternative, the terms of a business combination may provide
for a payment by cash or securities to Mr. Hodges for the purchase or retirement
of all or part of his common stock of K & L by a target company or for his
services. Mr. Hodges would directly benefit from employment or payment and these
benefits may influence his choice of a target company. In addition, the articles
of incorporation of K & L provide that K & L indemnify its officers and/or
directors for liabilities, which can include liabilities arising under the
securities laws. Therefore, K & L's assets could be used or attached to satisfy
any liabilities subject to indemnification.
In addition, Mr. Hodges has participated or is currently participating in other
blank check companies which may compete directly with K & L.
As of the date of this prospectus, Mr. Hodges has been or currently is involved
with over 100 shell companies, approximately all or almost all of which are or
will be seeking business opportunities for mergers or acquisitions.
Consequently, there are potential inherent conflicts of interest in Mr. Hodges'
acting as officer and director of K & L. Conflicts could also arise if K & L
were to enter into any business combination with a company in which Mr. Hodges
is involved. This type of business transaction is not an arm's-length
transaction because of Mr. Hodges' potential involvement with both parties.
While there is no K & L policy prohibiting such a transaction, K & L currently
does not intend to engage in a business combination of this type.
Many states, including Nevada where K & L is incorporated, have enacted laws to
address breaches of fiduciary duties of management when conflicts of interest
become problematic. Shareholders' pursuit of remedies under state laws can be
prohibitively expensive and time consuming. Thus, as a potential investor, any
investment in K & L could be unprofitable.
K & L's proposed operations are speculative and may not result in any profit to
any investors.
The success of K & L's proposed plan of operation will depend to a great extent
on the operations, financial condition and management of the not-yet-identified
target company. While Mr. Hodges will seek a business combination with an entity
having established an operating history, we cannot guarantee that K & L will be
successful in locating candidates meeting this criteria. In the event K & L does
complete a business combination, the success of K & L's operations will be
dependent upon the management of the target company and numerous other factors
beyond K & L's control. There is no assurance that K & L can identify a target
company and consummate a business combination.
K & L's stock is probably penny stock and the purchase of penny stocks can be
unpredictable and unprofitable for investors.
In the event that a public trading market develops for K & L's shares following
a business combination, the shares will probably be classified as "penny stock"
depending upon their market price and the manner in which they are traded. The
Securities Exchange Act of 1934 defines a "penny stock" as any equity security
that has a market price of less than $5.00 per share and is not admitted for
quotation and does not trade on the Nasdaq Stock Market or on a national
securities exchange. There are cumbersome rules for transactions involving a
penny stock. Prices for penny stocks are often not available and investors are
often unable to sell such stock. Thus you may lose your entire investment in a
penny stock and consequently should be cautious of any purchase of penny stocks.
K & L will enter a market where there is a scarcity of, and significant
competition for, business opportunities and combinations.
K & L is and will continue to be a very small participant in the business of
seeking mergers with and acquisitions of business entities.
Because of general economic conditions, rapid technological advances being made
in some industries and shortages of available capital, Mr. Hodges believes that
there are numerous firms seeking the benefits of a publicly traded corporation
like K & L. The perceived benefits of a publicly traded corporation include:
* facilitating or improving the terms on which additional equity
financing may be sought;
* providing liquidity for the principals of a business;
* creating a means for providing incentive stock options or similar
benefits to key employees;
* providing liquidity for all shareholders; and,
* other factors.
Potentially available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
A large number of established and well-financed companies, including venture
capital firms, are active in mergers and acquisitions of companies which may be
merger or acquisition target candidates for K & L. Nearly all of these other
participants have greater financial resources, technical expertise and
managerial capabilities than K & L. Consequently, K & L will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, K & L will also compete with
numerous other small public companies in seeking merger or acquisition
candidates.
Currently, we do not have an agreement for a business combination with K & L
and we do not have any minimum requirements for a business combination. As
an investor, you should know that we are at the very early stages of this
process.
K & L has no current arrangement, agreement or understanding with respect to
engaging in a business combination with any specific entity. We cannot assure
that K & L will be successful in identifying and evaluating any suitable
business opportunities or in concluding a business combination. We have not
selected any particular industry or specific business within an industry as a
potential target company. K & L has not established any criteria, including a
specific length of operating history or a specified level of earnings, assets,
and/or net worth, which it will require a target company to have achieved, or
without which K & L would not consider a business combination with such business
entity. Accordingly, K & L may enter into a business combination with a business
entity having no significant operating history, losses, limited or no potential
for immediate earnings, limited assets, negative net worth or other negative
characteristics. We cannot assure you that K & L will be able to negotiate a
business combination on terms favorable to K & L.
We may be delayed or precluded from an acquisition because of the reporting
requirements to which K & L will be subject.
Under the requirements of the Securities Exchange Act of 1934, K & L will be
required to provide information about significant acquisitions. This will
include audited financial statements of the acquired company which must be
furnished within 75 days following the effective date of a business combination.
The target company will have the obligation and the cost of obtaining audited
financial statements. The additional time and expense for some potential target
companies to prepare audited financial statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition.
In addition, even if a target company agrees to obtain audited financial
statements within the required time frame, these audited financials may not be
available to K & L before agreeing to be a business combination. In cases where
audited financials are unavailable, K & L will have to rely upon unaudited
information that has not been verified by outside auditors in making its
decision to engage in a transaction with the business entity. This risk
increases the prospect that a business combination with this business entity
might prove to be an unfavorable one for K & L, and an unprofitable one for
investors.
We lack the market research and marketing organization which might attract a
potential business combination.
K & L has not conducted, and others have not made available to K & L, market
research indicating that demand exists for the transactions we contemplate. Even
in the event demand exists for a transaction of the type contemplated by K & L,
there is no assurance K & L will be successful in completing any such business
combination.
We likely will have a change in control and management following a business
combination. If this happens, Mr. Hodges will not be involved in the management
of your investment.
A business combination involving the issuance of K & L's common stock will, in
all likelihood, result in shareholders of a target company obtaining a
controlling interest in K & L. As a condition of the business combination
agreement, Mr. Hodges may agree to sell or transfer all or a portion of his
common stock to provide the target company with majority control of K & L. The
resulting change in control of K & L will occur without your vote and will
likely result in removal of Mr. Hodges as the present sole officer and director
of K & L and a corresponding reduction in or elimination of his participation in
the future affairs of K & L. This might or might not affect the value of your
investment.
A business combination will possibly involve the issuance of more common stock
which would dilute the value of your shares in K & L.
A business combination ordinarily will involve the issuance of a significant
number of additional shares of K & L's common stock. Depending upon the value of
the assets acquired in the business combination, the per share value of K & L's
common stock may increase or decrease, perhaps significantly.
Shareholders might be required to sell their shares at a lower price upon a
business combination.
As part of any transaction, the acquired company may require that Mr. Hodges or
other shareholders of K & L sell all or a portion of their shares to the
acquired company, or to the principals of the acquired company. The sales price
of these shares may be lower than the anticipated market price of K & L's common
stock at that time. K & L shareholders will not be provided the opportunity to
approve or consent to such sale.
Mr. Hodges may actively negotiate for the purchase of his common stock as a
condition to or in connection with a proposed merger or acquisition transaction.
Any terms of a sale of Mr. Hodges' shares may not be afforded to other
shareholders of K & L. The opportunity to sell all or a portion of his shares in
connection with an acquisition may influence Mr. Hodges' decision to enter into
a specific transaction. However, Mr. Hodges believes that since the anticipated
sales price will potentially be less than market value, the potential of a stock
sale will be a material factor in any decision to enter a specific transaction.
This description of potential sales of Mr. Hodges' stock is not based upon any
corporate bylaw, shareholder or board resolution, or contract or agreement. No
other payments of cash or property are expected to be received by Mr. Hodges in
connection with any acquisition.
There are state regulations which might affect the transferability of K & L's
shares.
K & L has not registered its shares for resale under the securities or "blue
sky" laws of any state and has no plans to register or qualify its shares in any
state. Current shareholders, and persons who desire to purchase the shares in
any trading market that may develop in the future, should be aware that there
may be significant state restrictions upon the ability of new investors to
purchase the securities.
SEC and "blue sky" laws, regulations, orders, or interpretations place
limitations on offerings or sales of securities by blank check companies, or in
"blind-pool" offerings, or if such securities represent "cheap stock" previously
issued to promoters or others. These limitations typically provide, in the form
of one or more of the following limitations, that such securities are:
* not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified purchasers;
* not eligible for the transactional exemption from registration for
nonissuer transactions by a registered broker dealer;
* not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
* not eligible for the "solicitations of interest" exception to
securities registration requirements available in many states;
* required to be placed in escrow and the proceeds received held in
escrow subject to various limitations; or
* not permitted to be registered or exempted from registration, and thus
not permitted to be sold in the state under any circumstances.
Virtually all 50 states have adopted one or more of these limitations, or other
limitations or restrictions affecting the sale or resale of stock of blank check
companies, or securities sold in "blind pool" offerings or "cheap stock" issued
to promoters or others. Specific limitations on offerings by blank check
companies have been adopted in:
Alaska Nevada Tennessee
Arkansas New Mexico Texas
California Ohio Utah
Delaware Oklahoma Vermont
Florida Oregon Washington
Georgia Pennsylvania
Idaho Rhode Island
Indiana South Carolina
Nebraska South Dakota
K & L's selling efforts, and any secondary trading market which may develop, may
only be conducted in those jurisdictions where an applicable exemption is
available or where the shares have been registered. K & L has no current plan to
register its shares in any state and does not anticipate doing so until after
the consummation of a merger or acquisition, after which it will no longer be
classified as a blank check company. K & L has not taken, and does not
contemplate taking, any steps to ensure compliance with state securities laws.
A business combination may result in unfavorable tax treatment for K & L which
will increase its business cost and decrease any return to investors.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination K & L may undertake. K & L hopes to
structure the transaction to result in tax-free reorganization treatment to both
companies, in accordance with various federal and state tax provisions and
minimize the federal and state tax consequences to both K & L and the target
company. However, there can be no assurance that such business combination will
meet the statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization will probably result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction and their shareholders.
Forward-looking information
Some of the statements contained in the prospectus summary and throughout this
prospectus regarding matters that are not historical facts, such as statements
regarding K & L's growth strategy, are forward-looking statements as such term
is defined in the Securities Act of 1933. Since these forward-looking statements
include risks and uncertainties, actual results may differ materially from those
expressed or implied by such statements. Factors that could cause actual results
to differ materially include, but are not limited to, those in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Plan of
Operations" and "Business," as well as those discussed throughout in this
prospectus.
Use of proceeds
The principal purpose of this registration statement is to create a more liquid
public market for K & L's common stock. Upon the effectiveness of this
registration statement, twenty percent of K & L's outstanding shares of common
stock will be registered for resale under the Securities Act. While K & L will
bear the expenses of the registration of the shares, K & L will not realize any
proceeds from any actual resales of the shares that might occur in the future.
All proceeds from any resale will be received by the selling shareholders.
Market information
K & L's common stock is not listed or quoted at the present time, and there is
no present public market for K & L's common stock. There can be no assurance
that a public market for K & L's common stock will ever develop.
Dividend policy.
K & L has never declared or paid cash dividends on its capital stock. K & L
currently intends to retain earnings, if any, to finance the growth and
development of its business and does not anticipate paying any cash dividends in
the foreseeable future.
Holders.
As of the date of this prospectus, there are 29 shareholders of record.
Selling shareholders
The following table sets forth certain information as of the date of this
prospectus, with respect to the selling shareholders for whom K & L is
registering shares for resale to the public. The shares listed in the table were
issued to individuals as gifts by Mr. Hodges in reliance on there being no
"sale" as defined in Section 2(3) of the Securities Act. No consideration was
received in exchange for the share issuances. The shares were gifted to
individuals whom Mr. Hodges knew either through familial relationships or
business associations. Mr. Hodges also selected individuals who could provide
some potential for introducing K & L to potential merger or acquisition
candidates or business opportunities as well as individuals who were willing to
provide K & L with clerical services for no renumeration. There are no known
relationships between any of the shareholders, or between Mr. Hodges as the sole
officer and director and any shareholders, except that Matthew Hodges is the
adult nephew of Mr. Hodges, Jennifer Warden is the wife of Mr. Hodges, and Brian
Delfs and James Delfs are brothers. On October 20, 1999, the outstanding shares
of K & L's common stock were forward split 1,000 to 1, resulting in a total of
1,000,000 shares outstanding.
Method of Shares Maximum No.
Original Beneficially of Shares
Date of Issuance Owned Prior to be Sold
Name of Original (i.e.purchase, to Pursant to
Security Holder Issue gift, etc.) Offering this Prospectus
---------------- ---------- --------------- ----------- ---------------
Frank Anjakos 1/4/98 Gift 2,000 2,000
1971 N. Lindenwood Drive
Tucson, AZ 85712
Cindy Baker 1/4/98 Gift 2,000 2,000
P. O. Box 40484
Tucson, AZ 85717
Steve Bays 1/4/99 Gift 2,000 2,000
5637 E. Spring Street
Tucson, AZ 85712
Brain Delfs 1/4/98 Gift 2,000 2,000
10130 E. Winding Trail
Tucson, AZ 85749
James Delfs 1/4/98 Gift 2,000 2,000
3730 N. Tucson Blvd.
Tucson, AZ 85716
Sam Erbst 1/4/98 Gift 2,000 2,000
770 N. Dodge #33
Tucson, AZ 85749
Gus Fotinos 1/4/98 Gift 2,000 2,000
6547 N. Turnberry Drive
Tucson, AZ 85718
Allyson Fox 1/4/98 Gift 2,000 2,000
61 Kennedy Parkway
Toronto, Canada
Audra Guthery 1/4/98 Gift 2,000 2,000
4810 E. Seneca
Tucson, AZ 85712
David H. Hack 1/4/98 Gift 50,000 50,000
232 W. Smoot Drive
Tucson, AZ 85705
Matthew S. Hodges 1/4/98 Gift 2,000 2,000
1529 N. Desmond
Tucson, AZ 85712
Kim Lasater 1/4/98 Gift 2,000 2,000
5531 E. Spring Street
Tucson, AZ 85712
Jeff Milton 1/4/98 Gift 2,000 2,000
2519 E. Helen Street
Tucson, AZ 85716
Suzanne Morvay 1/4/98 Gift 2,000 2,000
4042 N. Pontatoc Road
Tucson, AZ 85718
Mike Neighbors 1/4/98 Gift 2,000 2,000
128 N. Southern Swale Avenue
Tucson, AZ 85748
Thomas Nieman 1/4/98 Gift 2,000 2,000
7825 E. Sabino Hollow Court
Tucson, AZ 85749
Ron Olson 1/4/98 Gift 2,000 2,000
9969 E. Paseo San Ardo
Tucson, AZ 85747
Mark Polifka 1/4/98 Gift 2,000 2,000
1132 Mohawk
Topanga, CA 90290
Sophie Radecki 1/4/98 Gift 2,000 2,000
207 Hallam Street
Toronto, Canada M6H1X6
Jonathan Roberts 1/4/98 Gift 50,000 50,000
2102 N. Donner Avenue
Tucson, AZ 85749
Lowell E. Robinson 1/4/98 Gift 2,000 2,000
P. O. Box 23
Arivaca, AZ 85601
Monica Romero 1/4/98 Gift 2,000 2,000
2528 W. Criswell Court
Tucson, AZ 85745
Melissa Saucedo 1/4/98 Gift 2,000 2,000
7019 W. Avondale
Tucson, AZ 85743
Kevin Sherlock 1/4/98 Gift 50,000 50,000
630 N. Craycroft
Tucson, AZ 85710
Howard Smith 1/4/98 Gift 2,000 2,000
4050 N. Hiddencove Place
Tucson, AZ 85749
John Sylvester 1/4/98 Gift 2,000 2,000
10222 E. Sylvester Road
Hereford, AZ 85615
Raymond Willey 1/4/98 Gift 2,000 2,000
1192 Joseph Ct.
Ripton, CA 95366
Jennifer L. Worden 1/4/98 Gift 2,000 2,000
9055 E. Catlina Highway
No. 5206
Tucson, AZ 85749
State by State Tabulation of Selling Shareholders
Arizona 192,000
California 4,000
Canada 4,000
All of the shares offered by this prospectus may be offered for resale, from
time to time, by the selling shareholders in one or more private or negotiated
transactions, in open market transactions in the over-the- counter market, or
otherwise, or by a combination of these methods, at fixed prices that may be
changed, at market prices prevailing at the time of the sale, at prices related
to such market prices, at negotiated prices, or otherwise. The selling
shareholders may effect these transactions by selling their shares directly to
one or more purchasers or to or through broker-dealers or agents. The
compensation to a particular broker-dealer or agent may be more or less than
customary commissions depending upon the arrangement negotiated by a selling
shareholder with a brokerdealer. Each of the selling shareholders may be deemed
an "underwriter" within the meaning of the Securities Act in connection with
each sale of shares. The selling shareholders will pay all commissions, transfer
taxes and other expenses associated with their sales.
Management's discussion and analysis of financial
condition and plan of operations
We ask that you read the following discussion in conjunction with K & L's
consolidated financial statements, including the accompanying notes, which
appear elsewhere in this prospectus.
Plan of operations - general.
K & L was organized for the purpose of creating a corporate vehicle to seek out
and acquire an interest in one or more business opportunities presented to it by
persons or firms desiring to seek perceived advantages of a publicly held
corporation. At this time, K & L has no plan, proposal, agreement, understanding
or arrangement to acquire or merge with any specific business or company, and K
& L has not identified any specific business or company for investigation and
evaluation. Mr. Hodges, K & L's sole officer and director will be undertaking
the search for a business combination and he has not had any material
discussions with any company with respect to K & L's acquisition of that
company.
K & L will not restrict its search to any specific business, industry or
geographical location, and K & L may participate in a business venture of
virtually any kind or nature. Our discussion of the proposed business of K & L
is purposefully general and is meant to demonstrate K & L's virtually unlimited
discretion to search for and enter into potential business opportunities.
Sources of opportunities.
K & L does not intend to actively seek out investors. Rather, K & L seeks to
merge with or acquire assets or shares of an entity, which is already actively
engaged in a business that generates revenues, in exchange for K & L's common
stock.
In addition, K & L anticipates that business opportunities will be referred to K
& L by various sources including Mr. Hodges, professional advisers, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. K & L will seek a potential
business opportunity from all known sources, but will rely principally on
personal contacts of Mr. Hodges as well as indirect associations between him and
other business and professional people. We cannot predict the number of
individuals or companies who may approach Mr. Hodges about K & L.
K & L will not enter into a business combination with a company in which Mr.
Hodges or his affiliates or associates has a current ownership interest.
However, there is no policy, corporate bylaw or shareholder resolution
prohibiting K & L from merging or acquiring a business, asset or company in
which any potential promoter, affiliate or associate of K & L or Mr. Hodges has
any direct or indirect ownership.
K & L does not currently plan to engage professional firms specializing in
business acquisitions or reorganizations; however K & L has not formulated any
policy regarding the use of consultants or outside advisors. In addition, K & L
has not, and does not intend to, advertise in search of business opportunities.
However, K & L may, in the future, advertise and promote K & L in financial
newspapers, magazines and on the Internet.
K & L has, and will continue to have, insufficient capital with which to provide
the owners of potential target companies with any significant cash or other
assets. However, Mr. Hodges believes K & L will offer owners of business
opportunities the opportunity to acquire a controlling ownership interest in a
public company at substantially less cost than is required to conduct an initial
public offering. The owners of the business opportunities will, however, incur
significant post-merger or acquisition registration costs in the event they wish
to register a portion of their shares for subsequent sale. The target company
will also incur significant legal and accounting costs in connection with the
business combination including the costs of preparing post-effective amendments,
Forms 8-K, agreements and related reports and documents. However, Mr. Hodges has
not conducted market research and is not aware of statistical data which would
support the perceived benefits of a merger or acquisition transaction for the
owners of a business opportunity.
Evaluation of opportunities.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, Mr. Hodges. Mr. Hodges will be the key person in the search,
review and negotiation with potential acquisition or merger candidates. While
Mr. Hodges likely has no quantifiable experience in the businesses of any
particular target companies that may be reviewed, he has experience in managing
development stage companies similar to K & L. However, Mr. Hodges is currently
employed in other positions and will devote very minimal time to the business
affairs of K & L until such time as an acquisition has been determined to be
highly favorable. After that time, however, Mr. Hodges expects to spend full
time in investigating and closing any acquisition. In addition, in the face of
competing demands for his time, Mr. Hodges may grant priority to his other
positions rather than to K & L. Mr. Hodges will consider the following matters
in analyzing prospective business opportunities:
* the available technical, financial and managerial resources; working
capital and other financial requirements of the target;
* the target's history of operations, if any;
* the target's prospects for the future;
* the present and expected competition in the target's industry;
* the quality and experience of management services which may be
available and the depth of that management within the target;
* the potential for further research, development or exploration in the
target's industry;
* specific risk factors which may be anticipated to impact the proposed
activities of K & L;
* the potential for growth or expansion and profit;
* the perceived public recognition or acceptance of products, services or
trades of the target and the industry and brand or name identification;
and
* all other relevant factors.
Mr. Hodges and/or his legal and financial advisers intend to meet personally
with management and key personnel of the firm sponsoring the business
opportunity as part of their investigation. To the extent possible, K & L
intends to utilize written reports and personal investigation to evaluate the
above factors. K & L will not acquire or merge with any company for which
audited financial statements cannot be obtained.
Mr. Hodges is currently involved in over 100 blank check companies, many of
which have registered their shares with the SEC under the Securities and
Exchange Act of 1934. Mr. Hodges is in various stages of searching for merger or
acquisition opportunities for all of these companies, and thus, there are
potential inherent conflicts of interest in Mr. Hodges' acting as officer and
director of K & L and these other companies.
K & L does not currently have a right of first refusal pertaining to
opportunities that come to Mr. Hodges' attention insofar as such opportunities
may relate to K & L's proposed business operations. Mr. Hodges will consider
merger and/or acquisition opportunities and intends to make them available to K
& L and the companies that he is affiliated with on an equal basis and in his
sole discretion. K & L has not adopted any conflict of interest policy with
respect to these types of transactions. If a situation arises in which more than
one company with which Mr. Hodges is involved desires to merge with or acquire a
specific target company and the principals of the proposed target company have
no preference as to which company will merge or acquire the target company, the
company that first filed a registration statement with the Securities and
Exchange Commission will be entitled to proceed with the proposed transaction.
Acquisition of opportunities.
K & L does not intend to make any loans to any prospective merger or acquisition
candidates or unaffiliated third parties. However, as is customary in the
industry, K & L may pay a finder's fee for persons locating and introducing an
acquisition prospect. K & L does not currently have any agreements or
understandings with any particular finder. However, in the event K & L
consummates a transaction with an entity introduced by a finder, we may
compensate the finder for the referral in the form of a finder's fee, either in
the form of restricted common stock issued by K & L as part of the terms of the
proposed transaction, or in the form of cash consideration.
If the finder's fee is paid in the form of common stock, K & L's board of
directors will approve this issuance. If the finder's fee is in the form of
cash, the payment will have to be tendered by the acquisition or merger
candidate because K & L has insufficient cash available to make any fee payment.
If any such fee is paid, it will be approved by the board of directors and will
be in accordance with the industry standards. Finder's fees are customarily
between 1% and 5% of the size of the transaction, based upon a sliding scale of
the dollar amount involved. These fees are typically in the range of 5% on a
$1,000,000 transaction ratably down to 1% in a $4,000,000 transaction.
In implementing a structure for a particular business acquisition, K & L may
become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with the target corporation. Except as may be
required by state or federal securities law applicable to the particular form of
transfer, K & L does not intend to provide K & L's shareholders with any
complete disclosure documents, including a proxy statement and/or audited
financial statements, concerning an acquisition or merger candidate and its
business prior to the consummation of any acquisition or merger transaction.
K & L will probably not have sufficient funds to undertake any significant
development, marketing and manufacturing of any products which it may acquire. K
& L does not intend to raise any funds, via private placement or otherwise,
prior to the effectiveness of a merger or acquisition. Upon the merger or
acquisition, K & L intends to obtain funds in one or more private placements to
finance the operation of the acquired business. Persons purchasing securities in
these placements and other shareholders may not have the opportunity to
participate in the decision relating to any acquisition.
K & L's proposed business is sometimes referred to as a blank check because any
investors will entrust their investment to K & L's management before they have a
chance to analyze any ultimate use to which their money may be put. Accordingly,
K & L would probably be required to give up a substantial portion of its
interest in any acquired product. We cannot assure you that K & L will be able
either to obtain additional financing or interest third parties in providing
funding for the further development, marketing and manufacturing of any products
acquired.
We believe that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial time, attention and costs for
accountants, attorneys and others. If K & L and/or the target business decide
not to participate in a specific business opportunity, the costs incurred in the
related investigation would not be recoverable.
Liquidity and capital resources.
K & L has never previously undertaken an offering of its common stock. Mr.
Hodges has contributed all current expenses of K & L. K & L has no assets, no
liquidity and no capital resources.
Business
K & L.
Since its formation on December 31, 1997, K & L has not engaged in any
operations other than organizational matters. It was formed specifically to be a
blank check or "clean public shell" corporation, for the purpose of either
merging with or acquiring an operating company with operating history and
assets. K & L is a clean public shell because it has not commenced operational
activities, and has no debt or liabilities. K & L has not been involved in any
litigation nor has it had any prior regulatory problems or business failures.
Mr. Hodges was not the original incorporator of K & L. Mr. Hodges retained the
services of Laughlin & Associates to incorporate or provide already incorporated
Nevada and Wyoming companies. Subsequent to incorporation, Mr. Hodges was
appointed as sole officer and director of K & L and the original incorporator
resigned as director.
Properties.
K & L has a working agreement with one of its shareholders for use of office
space, telephones and secretarial services supplied free of charge to K & L. K &
L has no property.
Competition.
K & L is an insignificant participant which competes among firms which engage in
business combinations with, or financing of, development stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than K & L in this field. In view
of K & L's limited financial resources and management availability, K & L
continues to be at a significant competitive disadvantage.
Regulation and taxation.
K & L intends to structure a merger or acquisition in such a manner as to
minimize federal and state tax consequences to K & L and to any target company.
Patents.
K & L does not own any patents or Internet domain names.
Employees.
K & L has no full-time or part-time employees. Mr. Hodges anticipates devoting
only a few hours per month to the activities of K & L for which he will not
receive compensation.
Legal proceedings.
K & L is not subject to any pending litigation, legal proceedings or claims.
Management
Executive officers, key employees and directors.
The members of the board of directors of K & L serve until the next annual
meeting of shareholders, or until their successors have been elected. The
officers serve at the pleasure of the board of directors.
Currently, there is only one executive officer, key employee and director of K &
L:
Name Age Position
------ ----- ----------
Daniel L. Hodges 34 President/Secretary/Director
Mr. Hodges has been the sole director, president, chief financial officer and
secretary of K & L since shortly after its formation. Since 1995, Mr. Hodges has
been president and director of Solomon Consulting Corp., which specializes in
corporate and securities consulting. He has owned and operated APRI, Inc., an
industrial manufacturing company, since 1998. APRI, Inc. (which stands for
Architectural PRoducts Incorporated) was in the business of manufacturing
concrete precast products such as pillars, balastrade assemblies, wainscot,
benches, etc. APRI ceased operations in 1999 and is in the process of selling
the casting and molding assets for the sum of $150,000 to a third party,
Cornerstone Precast, LLC. Mr. Hodges has no affiliation with Cornerstone
Precast, LLC. APRI, Inc. had gross revenues of $383,000 in 1998 and estimated
gross revenues of $140,000 in 1999. APRI, Inc. leased premises in Tucson,
Arizona of 8,000 square feet of industrial warehouse space for its operations.
This lease terminated in 1999. APRI never had more than eight employees at any
one time.
Mr. Hodges is currently on the board of directors of two charitable
organizations as well as a number of blank check companies, as we indicate on
the chart below. He received a B.S. from Thomas A. Edison State College in
Trenton, New Jersey. He also is a graduate of the U.S. Air Force Undergraduate
Pilot Training program and currently holds the rank of Captain as an officer in
the Air National Guard.
The following chart summarizes certain information concerning the blank check
companies with which Mr. Hodges is or has been a director and which have filed
or intend to file a registration statement with the SEC. The term "n/a"
indicates that the company referenced has not entered into an agreement for a
business combination or merger.
Inc. Form10-SB
Company Name State File Date SEC File No.
------------- --------- ---------- --------------
A Better Way Financial Corporation Wyoming 01/24/2000 0-29061
Amazing Investments, Inc. Wyoming 12/23/1999 0-28533
American Frontiers Marketing Company Wyoming 01/26/2000 0-29131
Arcadia Investments, Inc. Wyoming 12/17/1999 0-28535
Blackjack Financial, Inc. Wyoming 12/17/1999 0-28531
Boulder Creek Financial, Inc. Wyoming 12/23/1999 0-28623
Business to Business, Inc. Wyoming 12/17/1999 0-28533
Caprock Canyon Investments,Inc. Wyoming 12/27/1999 0-28647
Cedar Grove Marketing, Inc. Wyoming 12/22/2000 0-28615
Cherokee Investments, Inc. Wyoming 01/05/2000 0-28777
Coyote Canyon Corporation Wyoming 01/26/2000 0-29133
Easy Living Investments, Inc. Wyoming 01/26/2000 0-29135
Equality Investments, Inc. Wyoming 01/26/2000 0-29137
Essential Solutions, Inc. Wyoming 01/26/2000 0-29139
Fantastic Financial Corporaation Wyoming 01/24/2000 0-29063
Feather Valley Financial, Inc. Wyoming 12/27/1999 0-28649
Freedom Financial Corporation Wyoming 12/27/1999 0-28651
Granite Cliffs Incorporated Wyoming 12/27/1999 0-28653
Harvest Valley Ventures, Inc. Wyoming 12/22/1999 0-28617
Magical Marketing, Inc. Wyoming 12/22/1999 0-28611
Monumental Marketing, Inc. Wyoming 01/05/2000 0-28769
Neighborhood Investments, Ltd. Wyoming 12/27/1999 0-28655
Preferred Investments, Inc. Wyoming 01/26/2000 0-29141
Private Access, Inc. Wyoming 01/26/2000 0-29143
Red Butte Financial, Inc. Wyoming 01/26/2000 0-29151
Spring Valley Management Corporation Wyoming 01/26/2000 0-29145
Stone Field Management Company Wyoming 01/26/2000 0-29147
Stonewall Financial, Ltd. Wyoming 12/22/1999 0-28613
Sweetwater Investing, Inc. Wyoming 01/04/2000 0-28751
Unimann, Inc. Wyoming 12/23/1999 0-28625
Valuable Ventures, Inc. Wyoming 12/27/1999 0-28673
Walnut Valley Ventures, Inc. Wyoming 01/26/2000 0-29153
Western Financial Corporation Wyoming 01/26/2000 0-29149
White Horse Resources, Inc. Wyoming 01/24/2000 0-29065
White Oak Corporation Wyoming 12/27/1999 0-28671
Achievement Investments Nevada 02/16/2000 0-29535
American Machine, Inc. Nevada 02/11/2000 0-29465
Buccaneer Marketing & Investments Nevada 02/11/2000 0-29467
Conservative West, Inc. Nevada 02/11/2000 0-29469
Deerwood, Inc. Nevada 02/11/2000 0-29471
Essential Laser Concepts Ltd. Nevada 02/16/2000 0-29533
Everyday Assembly Productions,Inc. Nevada 02/16/2000 0-29537
Forgotten Investments Company,Inc. Nevada 02/16/2000 0-29539
Green Clover Luck Corporation Nevada 02/16/2000 0-29541
Green Oaks Concepts, Ltd. Nevada 02/16/2000 0-29543
In Full Affect, Inc. Nevada 02/16/2000 0-29545
K.B. Far Incorporation Nevada 02/16/2000 0-29547
Knight Investment Ltd. Nevada 02/16/2000 0-29549
Market Integrity, Inc. Nevada 02/16/2000 0-29569
Nascent Technology, Inc. Nevada 02/16/2000 0-29551
Obligation Futures, Inc. Nevada 02/16/2000 0-29553
Par 3 Services, Inc. Nevada 02/16/2000 0-29555
Passover Management Internation, Inc. Nevada 02/16/2000 0-29571
Profits Emporium, Inc. Nevada 02/16/2000 0-29557
Ring of Fire Marketing, Ltd. Nevada 02/16/2000 0-29559
Seminar Strategies & Marketing, Inc. Nevada 02/16/2000 0-29561
Silver Rose Development, Inc. Nevada 02/23/2000 0-29659
Social Engagements, Inc. Nevada 02/16/2000 0-29563
Superior Global Services, Inc. Nevada n/a n/a
Triumphant Endeavors, Inc. Nevada 02/22/2000 0-29629
Alph-Net Consulting Group, Inc. Nevada 12/2/1999 0-28341
Ambercom Incorporated Nevada n/a n/a
Arthur Morris, Inc. Nevada n/a n/a
Big Surf, Inc Nevada 01/12/2000 0-28857
Casterbridge Management, Inc. Nevada 01/26/2000 0-29157
Cerritos Holdings Nevada 10/20/1999 0-27733
Cirrus Development Corp. Nevada 01/14/2000 0-28899
Clearwater Communications, Corp. Nevada 02/02/2000 0-29289
Flozone Marketing Co., Inc, Nevada n/a n/a
G.E. Pension
Capital Management Corp. Nevada n/a n/a
GENETI Corp. Nevada 01/14/2000 0-28901
Glass Dolphin, Inc. Nevada 01/12/2000 0-28851
H&L Investments, Inc. Nevada 10/20/1999 0-27735
HJS & BDS, Inc. Nevada n/a n/a
Interlock Services, Inc. Nevada 11/08/1999 0-27983
International Lottery &
Gaming, Inc. Nevada 01/25/2000 0-29119
K&L Electronics
Photo and Supply Co. Nevada n/a 333-34754
Klamath Falls Corp. Nevada 1/14/2000 0-28903
Laredo Investments, Inc. Nevada 11/05/1999 0-27959
M.H. Trucking, Inc. Nevada n/a n/a
Models, Inc. Nevada 01/12/2000 0-28855
Morenci Corp. Nevada 10/20/1999 0-27737
Netsite Media, Inc. Nevada n/a n/a
Nova Masonry, Inc. Nevada n/a n/a
Pacific Administrative Services, Inc. Nevada 01/12/2000 0-28849
Peppercorn Industrial Corporation Nevada 01/26/2000 0-29155
Phantom Consulting Corp. Nevada 01/26/2000 0-29159
Providence Holdings, Inc. Nevada n/a n/a
PSM Corp. Nevada 10/20/1999 0-27739
RBO Holdings Inc. Nevada 01/12/2000 0-28859
RK Johnson Ltd. Nevada 01/12/2000 0-28853
Rome in a Day, Inc. Nevada n/a n/a
Solco International, Inc. Nevada 12/02/1999 0-28337
Tridex Investing Inc. Nevada 01/14/2000 0-28905
Troiler USA, Inc. Nevada 01/25/2000 0-29117
Two Sisters Enterprises, Inc. Nevada n/a n/a
Visionary Media, Inc. Nevada n/a n/a
Zenger, Inc. Nevada n/a n/a
Horse Tooth Ventures, Inc. Wyoming n/a n/a
Owl Canyon Ventures, Inc. Wyoming n/a n/a
Table Mountain Resources, Inc. Wyoming n/a n/a
Snake River Resources, Inc. Wyoming n/a n/a
High Peak Ventures, Inc. Wyoming n/a n/a
Grassy Pond Properties, Inc. Wyoming n/a n/a
Expert Investing, Inc. Wyoming n/a n/a
Chinook Winds, Inc. Wyoming n/a n/a
Diamond Opportunities, Inc. Wyoming n/a n/a
Crystal River Resources Wyoming n/a n/a
Platte Holding Company Wyoming n/a n/a
Sharp Spur Financial Wyoming n/a n/a
Blue Mountains, Inc. Wyoming n/a n/a
Shell Canyon Ventures Wyoming n/a n/a
Sunnyside Investments, Inc. Wyoming n/a n/a
Crow Creek Financial Services,Inc. Wyoming n/a n/a
Ponderosa Properties, Inc. Wyoming n/a n/a
Action Investments, Inc. Wyoming n/a n/a
Medicine Bow Investments, Inc. Wyoming n/a n/a
Lonesome Pine Investments,Inc. Wyoming n/a n/a
Tribeworks, Inc. Non-
(fka Pan World Corp.) Nevada Reporting n/a
Kestrel Equity Corporation Arizona 12/17/1999 0-28553
Avaterra.com, Inc. (fka Arizona Non- n/a
Pockets Hldng) Reporting
NetMeasure Techn. (fka Nevada 10/15/1999 0-27675
Powertech, Inc.)
Landstar, Inc. Nevada 01/04/2000 1-15597
Hyaton Corporation Nevada 10/28/1999 0-27853
Phileo Management Company Nevada Non- n/a
Reporting
ImuMed Int'l (fka Viper Nevada Non- n/a
Resources, Inc.) Reporting
Upland Properties, Inc. Nevada Non- n/a
Reporting
Solomon Alliance Group, Inc. Nevada 03/16/2000 0-29973
Pioneer Spirit 2000, Inc. Nevada Non- n/a
Reporting
Merendon International, Inc. Nevada Non- n/a
Reporting
Due to mergers or other business combinations, Mr. Hodges has resigned his
positions, sold or transferred his shares, and has no current affiliation with
the following companies from the above listing:
Cerritos Holdings, Inc. Landstar, Inc.
H&L Investments, Inc. Hyaton Organics, Inc.(fka Hyaton
Interlock Services, Inc. Company, Inc.)
Laredo Investments, Inc. Phileo Management Company, Inc.
Morenci Corp. ImuMed International, Inc. (fka
PSM Corp. ViperResources, Inc.)
Tribeworks, Inc. (fka Pan World Corp.) Upland Properties, Inc.
Kestrel Equity Corp. Solomon Alliance Group, Inc.
Avaterra.com, Inc. (fka Pockets Holding Pioneer Spirit 2000, Inc.
Corp.) Merendon International, Inc.
NetMeasure Technology Inc. (fka Magical Marketing, Inc.
Powertech, Inc. NV)
Peppercorn Industrial Corporation
Executive compensation.
No employment compensation is paid or anticipated to be paid by K & L. K & L has
no understandings or agreements, preliminary or otherwise, in regard to
executive compensation. Its sole director and officer, Mr. Hodges, does not
receive any compensation for his duties. On January 4, 1998, K & L issued 800
shares of common stock as compensation to Mr. Hodges in connection with services
rendered and fees paid by him at the time of the formation of K & L. This
resulted in 800,000 shares after giving effect to a forward stocksplit. Mr.
Hodges has not received any other compensation for his services rendered to K &
L and is not accruing compensation. As of the date of this prospectus, K & L has
no funds available to pay officers and directors.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by K & L for the benefit of any
employees.
Employment agreements.
K & L has no employment agreements with any persons.
Principal shareholders.
The following table presents certain information regarding beneficial ownership
of K & L's common stock as of March 31, 2000, by (i) each person known by K & L
to be the beneficial owner of more than 5% of the outstanding shares of Common
Stock, (ii) each director and executive officer of K & L, and (iii) all
directors and executive officers as a group. Unless otherwise indicated, each
person in the table has sole voting and investment power as to the shares shown.
Name and Address Amount of
Title of Class of Beneficial Owner Beneficial Owner Percent of Class
------------- ------------------ ---------------- ----------------
Common Daniel L. Hodges 800,000 shares 80%
President and Director
2102 N. Donner Avenue
Tucson, AZ 85749
Certain transactions
On January 4, 1998, K & L issued 1,000 shares of its common stock in the
following manner. In consideration of Mr. Hodges contributing $450 toward the
organizational expenses of K & L and for $350 in services rendered, K & L issued
Mr. Hodges 800 shares. On October 20, 1999, the outstanding shares were forward
split 1,000 to 1 and the par value was changed to $.001, resulting in a total of
1,000,000 shares outstanding, 800,000 of which are owned by Mr. Hodges.
Under Rule 405 promulgated under the Securities Act of 1933, Mr. Hodges may be
deemed to be a promoter of K & L. No other persons are known to management who
would be deemed to be promoters.
Description of securities
Each shareholder of common stock, either in person or by proxy, may cast one
vote per share of common stock held on all matters to be voted on. The presence,
in person or by proxy, of the holders of a majority of the total number of
shares entitled to vote constitutes a quorum for the transaction of business.
Assuming that a quorum is present, the affirmative vote of a majority of the
shares of K & L present in person or represented by proxy is required. K & L's
articles of incorporation do not provide for cumulative voting or preemptive
rights.
There are no outstanding options or warrants of any kind for K & L's common
stock.
Indemnification of officers and directors
Under the Nevada Business Associations Act, a company's articles of
incorporation may contain a provision eliminating or limiting the personal
liability of a director or officer to the corporation or its shareholders for
damages for breach of fiduciary duty. If this type of limiting provision is
included in articles of incorporation, it cannot eliminate or limit the
liability of a director or officer for (a) acts or omissions that involve
intentional misconduct, fraud or a knowing violation of law or (b) the payment
of an unlawful distribution to shareholders.
K & L's articles of incorporation contain the provision that no director or
officer of K & L shall be personally liable to K & L or any of its shareholders
for damages for breach of fiduciary duty as a director or officer involving any
act or omission of any such director or officer; provided, however, that the
foregoing provision shall not eliminate or limit the liability of a director or
officer (i) for acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes.
K & L's by-laws provide that K & L shall indemnify any and all of its directors
and officers, and its former directors and officers, or any person who may have
served at K & L's request as a director or officer of another corporation in
which it owns shares of capital stock or of which it is a creditor, against
expenses actually and necessarily incurred by them in connection with the
defense of any action, suit or proceeding in which they, or any of them, are
made parties, or a party, by reason of being or having been director(s) or
officer(s) except, in relation to matters as to which the director or officer or
former director or officer or person shall be adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the performance of duty.
Such indemnification shall not be deemed exclusive of any other rights to which
those indemnified may be entitled, under by-law, agreement, vote of shareholders
or otherwise.
Transfer agent, warrant agent and registrar
The transfer agent, warrant agent and registrar for the common stock is Holladay
Stock Transfer, 2939 67th Place, Scottsdale, AZ 85251.
Shares eligible for future sale
Upon the effectiveness of this registration statement, K & L will have 200,000
shares of common stock outstanding and registered for resale by the selling
shareholders under the Securities Act of 1933. Prior to this offering, no public
trading market has existed for K & L's shares of common stock. The sale, or
availability for sale, of substantial amounts of common stock in the public
trading market could adversely affect the market prices for K & L's common
stock.
Plan of distribution
To our knowledge, none of the selling shareholders has made any arrangement with
any brokerage firm for the sale of the shares. We have been advised by the
selling shareholders that they presently intend to dispose of the shares through
broker-dealers in ordinary brokerage transactions at market prices prevailing at
the time of the sale. The selling shareholders and their affiliates are limited
in offering and selling the shares and are prohibited from directly or
indirectly bidding for or purchasing shares of the K & L's common stock, or
attempting to induce any person to do so, until the offering by the selling
shareholders is completed.
Any broker-dealers or agents who act in connection with the sale of the shares
may be deemed to be underwriters. Any discounts, commissions or concessions
received by any broker-dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
K & L has not registered its shares for resale under the securities or blue sky
laws of any state and has no plans to register or qualify its shares in any
state. Current shareholders and persons who desire to purchase the shares in any
trading market that may develop in the future, should be aware that there may be
significant state blue sky restrictions upon the ability of new investors to
purchase the securities. These restrictions could reduce the size of any
potential trading market. Under federal law, non-issuer trading or resale of K &
L's common stock may be exempt from most state registration or qualification
requirements. However, some states may continue to restrict the ability to
register or qualify K & L's common stock for both initial sale and secondary
trading by regulations prohibiting or imposing limitations on the sale of
securities of blank check issuers.
K & L's selling efforts, and any secondary trading market which may develop, may
only be conducted in those jurisdictions where an applicable exemption is
available or where the shares have been registered. K & L has no current plan to
register its shares for offer and sale within any state. K & L does not
anticipate that a secondary trading market for the shares will develop in any
state until after the consummation of a merger or acquisition, if at all.
However, investors should be aware that state law limitations might affect the
transferability or the ability to resell the shares. K & L has not taken, and
does not contemplate taking, any steps to ensure compliance with state
securities laws.
K & L does not have lock-up agreements with its shareholders affirming that they
will not sell their respective shares until such time as K & L has successfully
consummated a merger or acquisition and K & L is no longer classified as a blank
check company.
Legal matters
The validity of the common stock offered hereby has been passed upon for K & L
by Robert H. Domico, Esquire, Attorney-at-Law, 3200 Baffetto Court, Henderson,
Nevada 89052.
Experts
The financial statements and schedules of K & L, reviewed as of June 30, 2000
and 1999 and audited as of December 31, 1999 and 1998 included in this
prospectus and elsewhere in the registration statement have been prepared by
Robison, Hill & Co., independent public accountants for K & L, as set forth in
its report, and are included in reliance upon such report, given upon the
authority of such firm as experts in accounting and auditing.
Additional information
K & L has filed with the SEC a registration statement on Form SB-2 under
Securities Act of 1933, with respect to 200,000 of its issued and outstanding
shares of common stock. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in the registration
statement as permitted by applicable SEC rules and regulations. Statements in
this prospectus about any contract, agreement or other document are not
necessarily complete. With respect to each such contract, agreement, or document
filed as an exhibit to the registration statement, reference is made to the
exhibit for a more complete description of the matter involved, and the validity
of each such statement is limited by this reference.
The registration statement may be inspected without charge and copies may be
obtained at prescribed rates at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street NW, Room 1024, Washington, DC 20549, or on the
Internet at http://www.sec.gov.
K & L will furnish to its shareholders annual reports containing audited
financial statements reported on by independent public accountants for each
fiscal year and make available quarterly reports containing unaudited financial
information for the first three quarters of each fiscal year.
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
K & L ELECTRONICS PHOTO AND SUPPLY CO.
Page
Independent Auditor's Report Dated July 27, 2000 F - 1
Balance Sheets
June 30, 2000 and December 31, 1999 F - 2
Statements of Operations
For the Three and Six Months Ended June 30, 2000 and
from October 20, 1999 (Inception) to June 30, 2000 F - 3
Statements of Cash Flows
For the Six Months Ended June 30, 2000 and
from October 20, 1999 (Inception) to June 30, 2000 F - 4
Notes to Financial Statements F - 5
Independent Auditor's Report Dated January 4, 2000 F - 8
Balance Sheets
December 31, 1999 and 1998 F - 9
Statements of Operations
For the Years Ended December 31, 1999 and 1998 F - 10
Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 1999 and 1998 F - 11
Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998 F - 12
Notes to Financial Statements F - 13
<PAGE>
INDEPENDENT ACCOUNTANT'S REPORT
K&L Electronics Photo and Supply Co.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of K&L Electronics
Photo and Supply Co. (a development stage company) as of June 30, 2000 and
December 31, 1999, and the related statements of operations for the three and
six months, and cash flows for the six month periods ended June 30, 2000 and
1999. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ ROBISON, HILL & CO.
---------------------------
Certified Public Accountants
Salt Lake City, Utah
July 27, 2000
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
BALANCE SHEETS
June 30, December 31,
2000 1999
----------- -------------
ASSETS $ - $ -
=========== =============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ - $ -
----------- -------------
Total Liabilities - -
----------- -------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 Shares at June 30,
2000 and December 31, 1999 1,000 1,000
Paid-In Capital 2,800 250
Retained Deficit (1,100) (1,100)
Deficit Accumulated During the
Development Stage (2,700) (150)
----------- --------------
Total Stockholders' Equity - -
----------- --------------
Total Liabilities and
Stockholders' Equity $ - $ -
=========== ==============
See accompanying notes and accountants' report.
F-2
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
Since October
20, 1999
inception of
For the three months For the six months development
ended June 30, ended June 30, stage
-------------------- -------------------
2000 1999 2000 1999
--------- -------- -------- -------- ------------
Revenues: $ - $ - $ - $ - $ -
Expenses:
General &
Administrative - - 2,550 - 2,700
--------- -------- -------- -------- -----------
Net Loss $ - $ - $(2,550) $ - $(2,700)
========= ======== ======== ======== ===========
Basic & Diluted
loss per share $ - $ - $ - $ -
========= ======== ======== ========
See accompanying notes and accountants' report.
F-3
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative since
For the six months ended October 20,
1999
June 30, Inception of
------------------------- Development
2000 1999 Stage
----------- ---------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,550) $ - $(2,700)
Increase (Decrease) in Accounts - - (100)
Payable ---------- ---------- ---------------
Net Cash Used in operating activities (2,550) - (2,800)
activities ---------- ---------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by investing - - -
activities ---------- ---------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by shareholder 2,550 - 2,800
---------- ---------- ---------------
Net Cash Provided by Financing
Activities 2,550 - 2,800
---------- ---------- ---------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
---------- ---------- ---------------
Cash and Cash Equivalents
at Beginning of Period - - -
---------- ---------- ----------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
========== ========== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 200
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
None
See accompanying notes and accountants' report.
F-4
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for K&L Electronics Photo
and Supply Co. (a development stage company) is presented to assist
in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial
statements.
The unaudited financial statements as of June 30, 2000 and for
the six months then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to fairly state the financial position and results of
operations for the six months. Operating results for interim
periods are not necessarily indicative of the results which can be
expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of
Nevada on December 31, 1997. The Company ceased all operating
activities during the period from December 31, 1997 to October 20,
1999 and was considered dormant. Since October 20, 1999, the
Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company has no products or services as of June 30, 2000.
The Company was organized as a vehicle to seek merger or acquisition
candidates. The Company intends to acquire interests in various
business opportunities, which in the opinion of management will
provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles required management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
F-5
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the
basic loss per share computations are as follows:
Income Shares Per-Share Amount
------ ------- ----------------
(Numerator) (Denominator)
For the three months ended June 30, 2000
------------------------------------------
Basic Loss per Share
Loss to common shareholders $ - 1,000,000 $ -
========== =========== ============
For the six months ended June 30, 2000
-----------------------------------------
Basic Loss per Share
Loss to common shareholders $ (2,550) 1,000,000 $ -
========== =========== ============
For the three months ended June 30, 1999
Basic Loss per Share
Loss to common shareholders $ - 1,000,000 $ -
========== =========== =============
For the six months ended June 30, 1999
Basic Loss per Share
Loss to common shareholders $ - 1,000,000 $ -
=========== =========== =============
The effect of outstanding common stock equivalents are anti-dilutive for
June 30, 2000 and 1999 and are thus not considered.
F-6
<PAGE>
K&L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Continued)
Reclassification
Certain reclassifications have been made in the 2000 and 1999
financial statements to conform with the June 30, 2000 presentation.
NOTE 2 - INCOME TAXES
As of June 30, 2000, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately
$3,800 that may be offset against future taxable income through
2011. Current tax laws limit the amount of loss available to be
offset against future taxable income when a substantial change in
ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a
50% or greater chance the carry-forwards will expire unused.
Accordingly, the potential tax benefits of the loss carry-forwards
are offset by a valuation allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common
with a development stage company, the Company has had recurring
losses during its development stage.
NOTE 4 - COMMITMENTS
As of June 30, 2000 all activities of the Company have been
conducted by corporate officers from either their homes or business
offices. Currently, there are no outstanding debts owed by the
company for the use of these facilities and there are no commitments
for future use of the facilities.
NOTE 5 - STOCK SPLIT
On October 20, 1999 the Board of Directors authorized 1,000 to
1 stock split, changed the authorized number of shares to
100,000,000 shares and the par value to $.001 for the Company's
common stock. As a result of the split, 999,000 shares were issued.
All references in the accompanying financial statements to the
number of common shares and per-share amounts for 1999 and 1998 have
been restated to reflect the stock split.
F-7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
K & L Electronics Photo and Supply Co.
(A Development Stage Company)
We have audited the accompanying balance sheets of K & L
Electronics Photo and Supply Co. (a development stage company) as of
December 31, 1999 and 1998, and the related statements of operations
and cash flows for the two years ended December 31, 1999 and the
statement of stockholder's equity from December 31, 1997 (inception)
to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
K & L Electronics Photo and Supply Co. (a development stage company)
as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the two years ended December 31, 1999 in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ ROBISON, HILL & CO.
-------------------------
Certified Public Accountants
Salt Lake City, Utah
January 4, 2000
F-8
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
BALANCE SHEETS
December 31,
-----------------------------
1999 1998
------ ------
Assets $ - $ -
============ ============
Liabilities - Accounts Payable $ - $ 100
------------ ------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 shares at
December 31, 1999 and 1998 1,000 1,000
Paid-In Capital 250 -
Retained Deficit (1,100) (1,100)
Deficit Accumulated During the
Development Stage (150) -
------------ ------------
Total Stockholders' Equity - (100)
------------ ------------
Total Liabilities and
Stockholders' Equity $ - $ -
============ ============
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative Since
For Year Ended October 20, 1999 Inception
December 31, of Development Stage
------------------------- ---------------------------
1999 1998
------ -------
Revenues: $ - $ - $ -
Expenses: 150 1,100 150
----------- ----------- -------------
Net Loss $ (150) $ 1,100 $ (150)
----------- ----------- -------------
Basic & Diluted loss
per share $ - $ -
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE DECEMBER 31, 1997 (INCEPTION) TO DECEMBER 31, 1999
Deficit
Accumulated
Since October
20, 1999
Inception
of
Common Stock Paid-In Retained Development
Shares Par Capital Deficit Stage
Value
-------- -------- --------- ---------- -----------
Balance at December 31,
1997 (inception) - $ - $ - $ - $ -
January 4, 1998 Issuance
of Stock for Services and
payment of Accounts
Payable 1,000 1,000 - - -
Net Loss - - - (1,100) -
--------- --------- ---------- ----------- ---------
Balance at December 31,
1998
As Originally Reported 1,000 1,000 - (1,100) -
Retroactive adjustment
for 1,000 to 1 stock
split October 20, 1999 999,000 - - - -
--------- --------- ---------- ------------- --------
Restated balance
January 1, 1999 1,000,000 1,000 - (1,100) -
Capital contributed by
Shareholder - - 250 - -
Net Loss - - - - (150)
---------- ---------- --------- ------------- --------
Balance at December
31, 1999 1,000,000 $1,000 $250 $ (1,100) $(150)
=========== ========== ========= ============= ========
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
since October
20, 1999
For the years ended Inception
of
December 31, Development
------------------------
1999 1998 Stage
------- ------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (150) $ (1,100) $ (150)
Issuance of Stock for
Services & Expenses - 1,000 -
Increase (Decrease) in
Accounts Payable (100) 100 (100)
-------- --------- ----------
Net Cash Used in operating
activities (250) - (250)
-------- --------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by
investing activities - - -
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder 250 - 250
------- ---------- -----------
Net Cash Provided by
Financing Activities 250 - 250
------- ---------- -----------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
-------- ---------- ------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
========= ========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ 200 $ - $ 200
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
None
The accompanying notes are an integral part of these financial statements
F-12
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for K & L Electronics Photo
and Supply Co. is presented to assist in understanding the Company's
financial statements. The accounting policies conform to generally
accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of
Nevada on December 31, 1997. The Company ceased all operating
activities during the period from December 31, 1997 to October 20,
1999 and was considered dormant. Since October 20, 1999, the
Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company has no products or services as of December 31,
1999. The Company was organized as a vehicle to seek merger or
acquisition candidates. The Company intends to acquire interests in
various business opportunities, which in the opinion of management
will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles required management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
F-13
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the
basic loss per share computations are as follows:
PerShare
Income Shares Amount
--------- --------- -----------
(Numerator) (Denominator)
For the year ended December 31, 1999
--------------------------------------
Basic Loss per Share
Loss to common shareholders $ (150) 1,000,000 $ -
========== =========== ===========
For the year ended December 31, 1998
--------------------------------------
Basic Loss per Share
Loss to common shareholders $(1,100) 1,000,000 $ -
========= =========== ===========
The effect of outstanding common stock equivalents would be
anti-dilutive for December 31, 1999 and 1998 and are thus not
considered.
NOTE 2 - INCOME TAXES
As of December 31, 1999, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately
$1,000 that may be offset against future taxable income through
2011. Current tax laws limit the amount of loss available to be
offset against future taxable income when a substantial change in
ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a
50% or greater chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss carryforwards
are offset by a valuation allowance of the same amount.
F-14
<PAGE>
K & L ELECTRONICS PHOTO AND SUPPLY CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common
with a development stage company, the Company has had recurring
losses during its development stage.
NOTE 4 - COMMITMENTS
As of December 31, 1999 all activities of the Company have been
conducted by corporate officers from either their homes or business
offices. Currently, there are no outstanding debts owed by the
company for the use of these facilities and there are no commitments
for future use of the facilities.
NOTE 5 - STOCK SPLIT
On October 20, 1999 the Board of Directors authorized 1,000 to 1
stock split, changed the authorized number of shares to
100,000,000 shares and the par value to $.001 for the Company's
common stock. As a result of the split, 999,000 shares were issued.
All references in the accompanying financial statements to the
number of common shares and per-share amounts for 1999 and 1998 have
been restated to reflect the stock split.
F-15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Nevada Business Associations Act Title 7, Chapter 78, the
articles of incorporation may contain a provision eliminating or
limiting the personal liability of a director or officer to the
corporation or its stockholders for damages for breach of fiduciary
duty. If this type of limiting provision is included in articles of
incorporation, such a provision cannot eliminate or limit the
liability of a director or officer for (a) acts or omissions that
involve intentional misconduct, fraud or a knowing violation of law
or (b) the payment of an unlawful distribution to stockholders.
K & L's Articles of Incorporation contain the provision that no
director or officer of K & L shall be personally liable to K & L or
any of its stockholders for damages for breach of fiduciary duty as
a director or officer involving any act or omission of any such
director or officer; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or officer
(i) for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised
Statutes. K & L's By-Laws provide that K & L shall indemnify any
and all of its directors and officers, and its former directors and
officers, or any person who may have served at K & L's request as a
director or officer of another corporation in which it owns shares
of capital stock or of which it is a creditor, against expenses
actually and necessarily incurred by them in connection with the
defense of any action, suit or proceeding in which they, or any of
them, are made parties, or a party, by reason of being or having
been director(s) or officer(s) of K & L, or of such other
corporation, except, in relation to matters as to which any such
director or officer or former director or officer or person shall be
adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such
indemnification shall not be deemed exclusive of any other rights to
which those indemnified may be entitled, under By-Law, agreement,
vote of shareholders or otherwise.
ITEM 25. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION
K & L estimates that expenses in connection with the offering
described in this registration statement (other than the
underwriting discount and commissions and reasonable expense
allowance) will be as follows:
SEC registration fee $ 100
Printing and engraving expenses $ 2,000*
Accounting fees and expenses $ 1,000*
Legal fees and expenses (other than Blue Sky) $ 15,000*
Blue sky fees and expenses (including legal and filing fees) $ 1,000*
Miscellaneous $ 1,000*
-------------
Total $ 20,100*
*Estimated Amounts.
All expenses of the registration of the shares will be borne by K & L.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following securities were issued by K & L within the past three
years and were not registered under the Securities Act, in reliance
upon there being "no sale" as defined in Section 2(3) of the
Securities Act, or Section 4(2) of the Securities Act for United States
residents or Regulation S of the Securities Act for the Canadian
residents:
Method of
Original
Date of Issuance
Name of Original (i.e.
Security Holder Issue purchase,
----------------- ---------- gift, etc.)
------------
Frank Anjakos 1/4/98 Gift
1971 N. Lindenwood Drive
Tucson, AZ 85712
Cindy Baker 1/4/98 Gift
P. O. Box 40484
Tucson, AZ 85717
Steve Bays 1/4/99 Gift
5637 E. Spring Street
Tucson, AZ 85712
Brain Delfs 1/4/98 Gift
10130 E. Winding Trail
Tucson, AZ 85749
James Delfs 1/4/98 Gift
3730 N. Tucson Blvd.
Tucson, AZ 85716
Sam Erbst 1/4/98 Gift
770 N. Dodge #33
Tucson, AZ 85749
Gus Fotinos 1/4/98 Gift
6547 N. Turnberry Drive
Tucson, AZ 85718
Allyson Fox 1/4/98 Gift
61 Kennedy Parkway
Toronto, Canada
Audra Guthery 1/4/98 Gift
4810 E. Seneca
Tucson, AZ 85712
David H. Hack 1/4/98 Gift
232 W. Smoot Drive
Tucson, AZ 85705
Daniel L. Hodges 1/4/98 For
2102 N. Donner Avenue services
Tucson, AZ 85749 rendered
Matthew S. Hodges 1/4/98 Gift
1529 N. Desmond
Tucson, AZ 85712
Kim Lasater 1/4/98 Gift
5531 E. Spring Street
Tucson, AZ 85712
Jeff Milton 1/4/98 Gift
2519 E. Helen
Tucson, AZ 85716
Suzanne Morvay 1/4/98 Gift
4042 N. Pontatoc Road
Tucson, AZ 85718
Mike Neighbors 1/4/98 Gift
128 N. Southern Swale Avenue
Tucson, AZ 85748
Thomas Nieman 1/4/98 Gift
7825 E. Sabino Hollow Court
Tucson, AZ 85749
Ron Olson 1/4/98 Gift
9969 E. Paseo San Ardo
Tucson, AZ 85747
Mark Polifka 1/4/98 Gift
1132 Mohawk
Topanga, CA 90290
Sophie Radecki 1/4/98 Gift
207 Hallam Street
Toronto, Canada M6H1X6
Jonathan Roberts 1/4/98 Gift
2102 N. Donner Avenue
Tucson, AZ 85749
Lowell E. Robinson 1/4/98 Gift
P. O. Box 23
Arivaca, AZ 85601
Monica Romero 1/4/98 Gift
2528 W. Criswell Court
Tucson, AZ 85745
Melissa Saucedo 1/4/98 Gift
7019 W. Avondale
Tucson, AZ 85743
Kevin Sherlock 1/4/98 Gift
630 N. Craycroft
Tucson, AZ 85710
Howard Smith 1/4/98 Gift
4050 N. Hiddencove Place
Tucson, AZ 85749
John Sylvester 1/4/98 Gift
10222 E. Sylvester Road
Hereford, AZ 85615
Raymond Willey 1/4/98 Gift
1192 Joseph Ct.
Ripton, CA 95366
Jennifer L. Worden 1/4/98 Gift
9055 E. Catlina Highway
No. 5206
Tucson, AZ 85749
ITEM 27. EXHIBITS
(a) The following exhibits are filed as part of this registration
statement:
EXHIBIT NUMBER DESCRIPTION
---------------- ----------------------
3.1* Articles of Incorporation of K & L
3.2* Amendment to Articles of Incorporation of K & L
3.3* By-Laws
4.1* Form of Common Stock Certificate
5.1 Opinion of Robert H. Domico, Esquire
23.1 Consent of Robinson, Hill & Co.
23.2 Consent of Robert H. Domico, Esquire
(included as part of Exhibit 5.1)
27.1 Financial Data Schedule as of June 30, 2000
27.2 Financial Data Schedule as of December 31, 1999
* previously filed
ITEM 28. UNDERTAKINGS
(a) The undersigned company hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, each
post-effective amendment shall be treated as a new registration
statement of the securities offered, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of K & L pursuant to the foregoing provisions, or otherwise, K & L has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by K & L of expenses incurred
or paid by a director, officer or a controlling person of K &L in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, K & L
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of competent jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
in the city of Tucson, state of Arizona, on September 20, 2000.
K & L ELECTRONICS PHOTO AND SUPPLY CO.
BY: /s/ Daniel L. Hodges
-------------------------
Daniel L. Hodges, President, and
signing in his capacity as
principal executive officer, principal
accounting officer and sole director
<PAGE>
[To be placed on the outside back cover]
TABLE OF CONTENTS
Page
-----
Prospectus summary............................................... 1
Selected financial data.......................................... 1
Risk factors..................................................... 2
Use of proceeds.................................................. 8
Market information............................................... 9
Selling shareholders............................................. 9
Management's discussion and analysis of financial condition
and results of operations...................................... 13
Business......................................................... 16
Management....................................................... 17
Certain transactions............................................. 22
Description of securities........................................ 23
Indemnification of officers and directors........................ 23
Transfer agent, warrant agent and registrar...................... 23
Shares eligible for future sale.................................. 24
Plan distribution................................................ 24
Legal matters.................................................... 25
Experts.......................................................... 25
Additional information........................................... 25
Index to Financial Statements
Until 90 days after the effective date, all dealers that effect
transactions in these shares, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition
to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
No dealer, sales representative or any other person has been authorized
to give any information or to make any representations in connection
with the offering described in this prospectus other than those
contained in this prospectus, and, if given or made, such information
or representations must not be relied upon as having been authorized by
K & L. Neither the delivery of this prospectus nor any sale made
pursuant to this prospectus shall, under any circumstances, create any
implication that there has been no change in the affairs of K & L since
the date of this prospectus or that the information contained in it is
correct as of any time subsequent to its date.
