UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 30, 2000 Commission file number: 000-29181
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
BOEING RUN, INC.
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(Name of small business issuer in its charter)
COLORADO
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(State or Other Jurisdiction of Incorporation or Organization)
84-1493153
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(I.R.S. Employer Identification No.)
7899 West Frost Drive, Littleton, Colorado 80128
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(Address of Principal Executive Office) (Zip Code)
Issuer's telephone number: 303-979-3224
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Securities Registered Under Section 12(b) of the Act: None
Securities Registered Under
Section 12(g) of the Act: Common Stock, No Par Value
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: None.
The aggregate market value of the voting stock held by non-affiliates shares
(215,000 of $.01 par value Common Stock) was $0 as of June 15, 2000. The
stock price for computation purposes was $-0-, based on the fact that there is
presently no Market for the Company's securities. This value is not intended
to be a representation as to the value or worth of the Registrant's shares of
Common Stock. The number of shares of non-affiliates of the Registrant has
been calculated by subtracting shares held by persons affiliated with the
Registrant from outstanding shares.
The number of shares outstanding of the Registrant's Common Stock as of
the latest practicable date, June 15, 2000 was 1,230,000 shares.
INDEX TO ANNUAL REPORT
ON FORM 10-KSB Page
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Item 1. DESCRIPTION OF BUSINESS . . . . . . . . . . . . .1
Item 2. DESCRIPTION OF PROPERTY . . . . . . . . . . . . .8
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . .8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS . . . . . . . . . . . . . . . . 8
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . .8
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION . . . . . . . . . . . . . . . . . .9
Item 7. FINANCIAL STATEMENTS. . . . . . . . . . . . . . .9
Item 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. . . . . . . . . . . . . . .9
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT. . . . . . . . . . . . . . . . . . 10
Item 10. EXECUTIVE COMPENSATION. . . . . . . . . . . . . 10
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. . . . . . . . . . . . . . . . . . . 10
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 11
Item 13. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . 11
i
PART I
The matters addressed in this report on Form 10-KSB, with the exception
of the historical information presented, contain forward-looking statements
involving risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those factors set forth in the
Description of Business section (Item 1) and elsewhere in this report.
Item 1. DESCRIPTION OF BUSINESS
(a) History of the Company
Boeing Run, Inc. (the "Company" or the "Registrant"), is a Colorado
corporation. Our principal business address is 7899 West Frost Drive,
Littleton, Colorado 80128. Our phone number is 303-979-3224.
We were organized under the laws of the State of Colorado on April 9,
1998 to engage in any lawful corporate undertaking, including selected mergers
and acquisitions.
Our only activity to date has been to attempt to locate and negotiate
with a business entity for the merger of that target company into our Company.
(b) Current Operations
Our current operations consist solely of seeking merger or acquisition
candidates.
We will attempt to locate and negotiate with a business entity for the
merger of that target company into the Company or a wholly owned subsidiary of
the Company formed for the purpose of such a merger. In certain instances, a
target company may wish to become a subsidiary of the Company or may wish to
contribute assets to the Company rather than merge. No assurances can be
given that the Company will be successful in locating or negotiating a
transaction with any target company.
We have attempted to provide a method for a foreign or domestic private
company to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
We believe there are certain perceived benefits to being a reporting
company with a class of publicly-traded securities. These benefits are
commonly thought to include the following:
* the ability to use registered securities to acquire
assets or businesses;
* increased visibility in the marketplace;
* ease of borrowing from financial institutions;
* improved stock trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
Target companies interested in a business combination with the Company
may include the following:
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* a company for whom a primary purpose of becoming
public is the use of its securities for the
acquisition of other assets or businesses;
* a company which is unable to find an underwriter of
its securities or is unable to find an underwriter
of securities on terms acceptable to it;
* a company which desires to become public with less
dilution of its common stock than would occur upon
an underwriting;
* a company which believes that it will be able to obtain
investment capital on more favorable terms after it
has become public;
* a foreign company which may wish an initial entry
into the United States securities market;
* a special situation company, such as a company
seeking a public market to satisfy redemption
requirements under a qualified Employee Stock Option
Plan;
* a company seeking one or more of the other mentioned
perceived benefits of becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the election by the target business of its
own management and board of directors.
The proposed business activities described herein classify the Company
as a "blank check" company. The Securities and Exchange Commission and many
states have enacted statutes, rules and regulations limiting the sale of
securities of blank check companies. At the present time, there is no market
for the Company's securities.
(c) Risks Related to the Plan of Operation
The Company's business is subject to numerous risk factors, including
the following:
WE HAVE NO RECENT OPERATING HISTORY, NO OPERATING REVENUES, AND WE HAVE
MINIMAL ASSETS. The Company has had no operations nor any revenues or
earnings from operations. The Company has only limited assets and financial
resources. The Company will, in all likelihood, sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss
which will increase continuously until the Company can consummate a business
combination with a target company. There is no assurance that the Company can
identify such a target company and consummate such a business combination.
THE SPECULATIVE NATURE OF OUR PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target
company. While management intends to seek business combinations with entities
having established operating histories, there can be no assurance that the
Company will be successful in locating candidates meeting such criteria. In
the event the Company completes a business combination the success of the
Company's operations may be dependent upon the management, operations, and
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financial condition of the target company, and numerous other factors beyond
the Company's control.
THERE IS A SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of
business entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies which may be merger or acquisition target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company.
Consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination.
WE HAVE NO AGREEMENT FOR ANY BUSINESS COMBINATION OR OTHER TRANSACTION.
The Company has no arrangement, agreement or understanding with respect to
engaging in a merger with or acquisition of a business entity. There can be no
assurance the Company will be successful in identifying and evaluating
suitable business opportunities or in concluding a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation by the Company. There is no assurance the
Company will be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a target business opportunity to have achieved to
consider a business combination with it. Accordingly, the Company may enter
into a business combination with a business entity having no significant
operating history, losses, limited or no potential for earnings, limited
assets, negative net worth or other negative characteristics.
OUR MANAGEMENT HAS ONLY A LIMITED TIME COMMITMENT TO THE COMPANY. Our
president has several business interests and will devote a limited amount of
his time to the Company's business. While seeking a business combination, our
president anticipates devoting up to ten hours per month to the business of
the Company. The Company's president has not entered into a written
employment agreement with the Company and he is not expected to do so in the
foreseeable future. We have not obtained key man life insurance on our
president. Notwithstanding the combined limited experience and time commitment
of our president, loss of the services of this individual would adversely
affect development of the Company's business and its likelihood of continuing
operations.
OUR SOLE OFFICER AND DIRECTOR MAY HAVE CONFLICTS OF INTEREST WITH THE
BUSINESS OF OUR COMPANY. The Company's sole officer and director participates
in other business ventures which may result in conflicts of interest and non-
arms length transactions arising in the future. Management has adopted a
policy that the Company will not seek a merger with, or acquisition of, any
entity in which any member of management serves as an officer, director or
partner, or in which they or their family members own or hold any ownership
interest.
BEING A REPORTING COMPANY COMPLICATES AND COULD DELAY AN ACQUISITION.
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act")
requires us to provide certain information about significant acquisitions
including certified financial statements for the company acquired covering one
or two years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target companies to prepare such
statements may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited statements may not be
-3-
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable.
WE HAVE A LACK OF MARKET RESEARCH AND NO MARKETING ORGANIZATION. We have
neither conducted, nor have others made available to us, results of market
research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the event demand is
identified for the type of merger or acquisition contemplated by the Company,
there is no assurance the Company will be successful in completing any such
business combination.
CERTAIN REGULATIONS MAY APPLY TO OUR OPERATIONS. Although the Company
will be subject to regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940, insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. We have not obtained a formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940. If we inadvertently
violate such Act, we could be subjected to material adverse consequences.
THERE WILL BE A CHANGE IN MANAGEMENT. A business combination involving
the issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Any such business combination may require our Management to sell or
transfer all or a portion of the Company's common stock held by them, and to
resign as directors and officers of the Company. The resulting change in
control of the Company will likely result in removal of the present officer
and director of the Company and a corresponding reduction in or elimination of
his participation in the future affairs of the Company.
THE PLAN OF OPERATION PROVIDES FOR SUBSTANTIAL DILUTION TO OUR EXISTING
SHAREHOLDERS AS A RESULT OF A MERGER. Our plan of operation is based upon a
business combination with a business entity which, in all likelihood, will
result in the Company issuing securities to shareholders of such business
entity. The issuance of previously authorized and unissued common stock of
the Company would result in a reduction in percentage of shares owned by the
present shareholders of the Company and would most likely result in a change
in control or management of the Company.
WE MAY NOT BE ABLE TO ENGAGE IN A TAX FREE ACQUISITION. We intend to
structure any business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity. However, there can be
no assurance that such a business combination will meet the statutory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on the parties to the transaction
and therefore the transaction itself.
THE REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company will require any potential business
combination entity to provide audited financial statements. One or more
attractive prospects may choose to forego the possibility of a business
combination with the Company rather than incur the expenses associated with
preparing audited financial statements.
-4-
Such audited financial statements may not be immediately available. In
such case, the Company intends to obtain certain assurances as to the target
company's assets, liabilities, revenues and expenses prior to consummating a
business combination, with further assurances that an audited financial
statement will be provided after closing of such a transaction. Closing
documents relative thereto will include representations that the audited
financial statements will not materially differ from the representations
included in such closing documents.
(d) Plan of Operation
We intend to merge with or acquire a business entity in exchange for our
securities. We have no particular acquisition in mind and have not entered
into any negotiations regarding such an acquisition.
We anticipate seeking out a target business through solicitation. Such
solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Such persons will have no relationship to
management.
We have no full time employees. The Company's president has agreed to
allocate a portion of his time to the activities of the Company as a
consultant. The president anticipates that the business plan of the Company
can be implemented by his devoting approximately 10 hours per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officer.
The Company's president is currently involved with other companies which
have a business purpose similar to that of the Company. A conflict may arise
in the event that another blank check company with which management is
affiliated is formed and actively seeks a target business. Management
anticipates that target businesses will be located for the Company and other
blank check companies in chronological order of the date of formation of such
blank check companies. It may be that a target business may be more suitable
for or may prefer a certain blank check company formed after the Company. In
such case, a business combination might be negotiated on behalf of the more
suitable or preferred blank check company regardless of date of formation.
The Articles of Incorporation of the Company provide that the Company
may indemnify officers and/or directors of the Company for liabilities, which
can include liabilities arising under the securities laws. Therefore, assets
of the Company could be used or attached to satisfy any liabilities subject to
such indemnification.
Our plan is to seek, investigate and, if such investigation warrants,
acquire an interest in a business entity which desires to seek the perceived
advantages of a corporation which has a class of securities registered under
the Exchange Act. The Company will not restrict its search to any specific
business, industry, or geographical location and the Company may participate
in a business venture of virtually any kind or nature. This discussion of the
proposed business is not meant to be restrictive of the Company's virtually
unlimited discretion to search for and enter into potential business
opportunities.
We may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets,
to develop a new product or service, or for other corporate purposes. The
-5-
Company may acquire assets and establish wholly-owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation.
Such perceived benefits may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, and providing
liquidity for shareholders and other factors. Business opportunities may be
available 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 difficult and complex.
The Company has, and will continue to have, only limited capital with
which to provide the owners of business opportunities with any cash or other
assets. However, we believe the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. Management has not conducted
market research and is not aware of statistical data to support the perceived
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of the Company's president who is not a professional
business analyst. In analyzing prospective business opportunities, management
will consider such matters as available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further
research, development, or exploration; specific risk factors not now
foreseeable, but which then may be anticipated to impact the proposed
activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition or acceptance of
products, services, or trades; name identification; and other relevant
factors. Management will meet personally with management and key personnel of
the target business entity as part of its investigation. To the extent
possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Exchange Act requires that
any merger or acquisition candidate comply with all certain reporting
requirements, which include providing audited financial statements to be
included in the reporting filings made under the Exchange Act. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained at or within a reasonable period of time after
closing of the proposed transaction.
We will in all likelihood not be experienced in matters relating to the
business of a target company, and management will rely upon its own experience
in accomplishing the business purposes of the Company. Therefore, it is
anticipated that outside consultants or advisors may be utilized to assist us
in the search for and analysis of qualified target companies.
The Company will not restrict its search to any specific kind of firm,
but may acquire a venture which is in its preliminary or development stage,
one which is already in operation, or in a more mature stage of its corporate
existence. The acquired business may need to seek additional capital, may
desire to have its shares publicly traded, or may seek other perceived
-6-
advantages which the Company may offer. However, the Company does not intend
to obtain additional funds to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated the
merger or acquisition transaction.
MANNER OF ACQUISITION
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another entity. We also may acquire
stock or assets of an existing business. On the consummation of a transaction
it is probable that the present Management and shareholders of the Company
will no longer be in control of the Company. In addition, the Company's
president and director, as part of the terms of the acquisition transaction,
likely will be required to resign and be replaced by one or more new officers
and directors without a vote of our shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of a transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has entered into an agreement for a business combination or has
consummated a business combination and the Company is no longer considered a
blank check company. Until such time as this occurs, the Company will not
attempt to register any additional securities. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's securities may have a depressive effect on that
market.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition as a "tax-free" reorganization under
Sections 351 or 368 of the Internal Revenue Code of 1986, as amended.
With respect to any merger or acquisition, negotiations with target
company management are expected to focus on the percentage of the Company
which the target company shareholders would acquire in exchange for all of
their shareholdings in the target company. Depending upon, among other
things, the target company's assets and liabilities, the Company's
shareholders will in all likelihood hold a substantially lesser percentage
ownership interest in the Company following any merger or acquisition. The
percentage ownership may be subject to significant reduction in the event the
Company acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a significant
dilutive effect on the percentage of shares held by the Company's shareholders
at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of
such agreements cannot be predicted, generally such agreements will require
certain representations and warranties of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by the parties prior to and after such closing, will
outline the manner of bearing costs, including costs associated with the
Company's attorneys and accountants, and will include miscellaneous other
terms.
-7-
We are presently subject to all of the reporting requirements included
in the Exchange Act. Included in these requirements is the duty of the
Company to file audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If
such audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the Exchange Act, or if the audited financial statements provided do not
conform to the representations made by the target company, the closing
documents may provide that the proposed transaction will be voidable at the
discretion of the present management of the Company.
The Company has adopted a policy that it will not seek an acquisition or
merger with any entity in which the Company's officer, director, and
controlling shareholder or any affiliate or associate serves as an officer or
director or holds any ownership interest.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's limited financial resources and limited
management availability, the Company may be at a competitive disadvantage
compared to the Company's competitors.
Item 2. DESCRIPTION OF PROPERTY
The Company currently occupies offices in the home of its president,
which location also serves as offices for Corporate Management Services, Inc.
as well as other companies. Prior to November 1, 1999, the Company did not
incur rent or other office expenses. On November 1, 1999, the Company began
incurring an expense of $100 per month to Corporate Management Services, Inc.
for rent and other administrative expenses.
Item 3. LEGAL PROCEEDINGS
No legal proceedings to which the Company is a party were pending during
the reporting period, and the Company knows of no legal proceedings of a
material nature, pending or threatened, or judgments entered against the
sole director and officer of the Company in his capacity as such.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of security holders
through solicitation of proxies or otherwise during the reporting period.
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Principal Market or Markets. The Company's stock has not traded
and, at the present time, it has no trading symbol.
(b) Approximate Number of Holders of Common Stock. The number of
holders of record of the Company's Common Stock as of June 2000 was
approximately 47.
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(c) Dividends. Holders of common stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors. No
dividends on the common stock were paid by the Company during the periods
reported herein nor does the Company anticipate paying dividends in the
foreseeable future.
(d) Recent Sales of Unregistered Securities. NOT APPLICABLE
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
Certain statements contained in this annual report on Form 10-KSB
including without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," and words of similar import, constitute
"forward-looking statements." You should not place undue reliance on these
forward-looking statements. Our actual results and the structure of
transactions which may occur in the future could differ materially from those
described in these forward-looking statements for many reasons, including
those set forth in the risk factors included herein and for other reasons
including the demands of the specific business entity with which the company
may elect to engage in a transaction.
Plan of Operation
See Part I, Item 1., "Description of Business-Plan of Operation."
Liquidity and Capital Resources
At April 30, 2000, the Company's fiscal year end, the Company had cash
and cash equivalents of $522, a decrease of $1,562 from April 30, 1999. While
the Company has no foreseeable capital commitments, it also has no present
expectations of generating any cash flow from operations until such time as it
may successfully complete the acquisition of the business, operations, or
assets of an operating entity. At present time, Management has no plans to
raise additional funds through borrowings or the issuance of debt or equity.
We believe that our current cash and equivalents will satisfy our
expected working capital requirements through fiscal 2001.
Item 7. FINANCIAL STATEMENTS
The report of the independent auditors on the financial statements
appears at Page F-2 and the financial statements and their accompanying
footnotes appear at Pages F-3 through F-11 hereof. These financial statements
and related financial information required to be filed hereunder are
incorporated herein by reference.
Item 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The Company did not have any disagreements on accounting and financial
disclosures with its present accounting firm during the reporting period.
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BOEING RUN, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
With
INDEPENDENT AUDITORS' REPORT
April 30, 2000
Prepared By:
Cordovano and Harvey, P.C.
--------------------------
Certified Public Accountants
Denver, Colorado
BOEING RUN, INC.
(A Development Stage Company)
Index to Financial Statements
Page
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Independent auditors' report F-2
Balance sheet, April 30, 2000 F-3
Statements of operations for the years ended April 30, 2000
and 1999, and for the period from April 9, 1998 (inception)
through April 30, 2000 F-4
Statement of shareholders' equity, from April 9, 1998
(inception) through April 30, 2000 F-5
Statements of cash flows for the years ended April 30, 2000
and 1999, and for the period from April 9, 1998 (inception)
through April 30, 2000 F-6
Notes to financial statements F-7
F-1
To the Board of Directors and Shareholders
Boeing Run, Inc.
Independent Auditors' Report
We have audited the balance sheet of Boeing Run, Inc. (a development stage
company) as of April 30, 2000 and the related statements of operations,
shareholders' equity and cash flows for the years ended April 30, 2000 and
1999, and for the period from April 9, 1998 (inception) through April 30,
2000. 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 audit.
We conducted our audit 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 audit provides 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 Boeing Run, Inc. as of April
30, 2000, and the related statements of operations and cash flows for the
years ended April 30, 2000 and 1999, and for the period from April 9, 1998
(inception) through April 30, 2000 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note A to the financial
statements, the Company has no operations and limited working capital at April
30, 2000. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding those matters
are also described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Cordovano and Harvey, P.C.
Denver, Colorado
July 10, 2000
F-2
BOEING RUN, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
April 30, 2000
----------------------
CURRENT ASSETS
Cash $ 522
Interest income receivable, related party (See note B) 106
----------------------
TOTAL CURRENT ASSETS 628
======================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 459
Accounts payable, related party (See note B) 476
Accrued liabilities 1,500
----------------------
TOTAL CURRENT LIABILITIES 2,435
----------------------
SHAREHOLDERS' EQUITY
Preferred Stock, no par value, 5,000,000 shares
authorized, -0- shares issued and outstanding -
Common stock, no par value, 20,000,000 shares
authorized, 1,230,000 shares issued and outstanding 2,673
Additional paid-in capital 600
Deficit accumulated during the development stage (5,080)
----------------------
TOTAL SHAREHOLDERS' EQUITY (1,807)
----------------------
$ 628
======================
See accompanying notes to financial statements
F-3
BOEING RUN, INC.
(A Development Stage Company)
Statements of Operations
From
April 9, 1998
(Inception)
Year Ended Year Ended Through
April 30, 2000 April 30, 1999 April 30, 2000
------------------ ------------------ ------------------
INCOME
Interest income $ 40 $ 66 $ 106
COSTS AND EXPENSES
Legal fees $ 1,076 $ 218 $ 1,382
Accounting fees 1,646 1,000 2,646
General and
administrative 7 51 58
Rent, related
party (see Note B) 600 - 600
Organizational costs - - 500
------------------ ------------------ ------------------
LOSS FROM OPERATIONS (3,289) (1,203) (5,080)
------------------ ------------------ ------------------
INCOME TAX BENEFIT
(EXPENSE) (NOTE C)
Current tax benefit 650 253 991
Deferred tax expense (650) (253) (991)
------------------ ------------------ ------------------
NET LOSS $ (3,289) $ (1,203) $ (5,080)
================== ================== ==================
BASIC LOSS PER
COMMON SHARE $ * $ *
================== ==================
BASIC WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 1,230,000 1,230,000
================== ==================
* Less than .01 per share
See accompanying notes to financial statements
F-4
<TABLE>
BOEING RUN, INC.
(A Development Stage Company)
Statement of Shareholders' Equity
April 9, 1998 (inception) through April 30, 2000
<CAPTION>
Deficit
Accumulated
Additional During
Preferred Stock Common Stock Paid-In Development
---------------------------- ------------------------
Shares Amount Shares Amount Capital Stage Total
---------- ---------- ---------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning balance,
April 9, 1998 - $ - - $ - $ - $ - $ -
Common stock issued in
exchange for services
and organizational costs - - 1,000,000 500 - - 500
Net loss for the period
ended April 30, 1998 - - - - - (588) (588)
---------- ---------- --------- ---------- --------------- --------------- ---------------
BALANCE, APRIL 30, 1998 - - 1,000,000 500 - (588) (88)
Common stock issued for
cash, net of offering
costs - - 230,000 2,173 - - 2,173
Net loss for year ended
April 30, 1999 - - - - - (1,203) (1,203)
---------- ---------- --------- ---------- --------------- --------------- ---------------
BALANCE, APRIL 30, 1999 - - 1,230,000 2,673 - (1,791) 882
Contributed rent (Note B) - - - - 600 - 600
Net loss for year ended
April 30, 2000 - - - - - (3,289) (3,289)
---------- ---------- --------- ---------- --------------- --------------- ---------------
BALANCE, APRIL 30, 2000 - $ - 1,230,000 $ 2,673 $ 600 $ (5,080) $ (1,807)
========== ========== ========= ========== =============== =============== ===============
See accompanying notes to financial statements
F-5
</TABLE>
BOEING RUN, INC.
(A Development Stage Company)
Statements of Cash Flows
From
April 9, 1998
(Inception)
Year Ended Year Ended Through
April 30, 2000 April 30, 1999 April 30, 2000
------------------ ------------------ ------------------
CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES
Net loss $ (3,289) $ (1,203) $ (5,080)
Non-cash
transactions:
Common stock
issued for
services - - 500
Changes in
operating
assets and
liabilities:
Contributed rent
(Note B) 600 - 600
Accounts payable
and accrued
liabilities 1,167 1,180 2,435
Interest income
receivable (40) (66) (106)
------------------ ------------------- ------------------
NET CASH PROVIDED
BY (USED IN)
OPERATING
ACTIVITIES (1,562) (89) (1,651)
================== =================== ==================
FINANCING ACTIVITIES
Sale of common
stock - 2,300 2,300
Offering costs
incurred - (127) (127)
------------------ ------------------- ------------------
NET CASH PROVIDED
BY (USED IN)
FINANCING
ACTIVITIES - 2,173 2,173
------------------ ------------------- ------------------
NET INCREASE IN CASH (1,562) 2,084 522
Cash, beginning of
period 2,084 - -
------------------ ------------------- ------------------
CASH, END OF PERIOD $ 522 $ 2,084 $ 522
================== =================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ - $ -
================== =================== ==================
Income taxes $ - $ - $ -
================== =================== ==================
Non-cash financing activities:
1,000,000 shares
common stock
issued for
services $ - $ - $ 500
================== =================== ==================
See accompanying notes to financial statements
F-6
BOEING RUN, INC.
(A Development Stage Company)
Notes To Financial Statements
Note A: Organization and summary of significant accounting policies
Organization
------------
Boeing Run, Inc. (the "Company") was incorporated under the laws of Colorado
on April 9, 1998 to engage in any lawful corporate undertaking. The Company
is a development stage enterprise in accordance with Statement of Financial
Accounting Standard (SFAS) No. 7 and is a "blank check" company with the
purpose to evaluate, structure and complete a merger with, or acquisition of,
a privately owned corporation.
The Company has been in the development stage since inception and has no
operations to date.
As of April 30, 2000, the Company has had no operating history nor any
revenues or earnings from operations. The Company has no significant assets
or financial resources. The Company's success is dependent upon locating and
consummating a business combination with an operating company. There is no
assurance that the Company can identify such a target company and consummate
such a business combination. These factors, among others, raise substantial
doubt about its ability to continue as a going concern.
From April 9, 1998 (inception) through April 30, 2000, the Company raised
initial working capital through the sale of common stock. The Company's
ability to continue as a going concern is dependent upon raising additional
capital and achieving profitable operations through the consummation of a
business combination with an operating entity. There is no assurance that the
Company will be successful in its efforts to complete a business combination,
raise additional working capital, or achieve profitable operations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Summary of significant accounting policies
------------------------------------------
Cash equivalents
----------------
The Company's financial instruments consist of accounts payable and accrued
liabilities. For financial accounting purposes and the statement of cash
flows, cash equivalents include all highly liquid debt instruments purchased
with an original maturity of three months or less.
Use of estimates
----------------
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities;
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. Accordingly, actual results could differ from those
estimates.
F-7
BOEING RUN, INC.
(A Development Stage Company)
Notes To Financial Statements
Note A: Organization and summary of significant accounting policies, concluded
Income Taxes
------------
The Company reports income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes", which requires the liability method in accounting for
income taxes. Deferred tax assets and liabilities arise from the difference
between the tax basis of an asset or liability and its reported amount on the
financial statements. Deferred tax amounts are determined by using the tax
rates expected to be in effect when the taxes will actually be paid or refunds
received, as provided under currently enacted law. Valuation allowances are
established when necessary to reduce the deferred tax assets to the amounts
expected to be realized. Income tax expense or benefit is the tax payable or
refundable, respectively, for the period plus or minus the change during the
period in the deferred tax assets and liabilities.
Loss per common share
---------------------
The Company reports loss per share using a dual presentation of basic and
diluted loss per share. As of April 30, 2000, there were no common stock
equivalents.
Organization costs
------------------
Costs related to the organization of the Company have been expensed as
incurred.
Fiscal year
------------
The Company operates on a fiscal year ending April 30.
Stock based compensation
------------------------
SFAS No. 123, "Accounting for Stock-Based Compensation" was issued in October
1995. This accounting standard permits the use of either a fair value based
method or the method defined in Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") to account for
stock-based compensation arrangements. Companies that elect to use the method
provided in APB 25 are required to disclose pro forma net income and earnings
per share that would have resulted from the use of the fair value based
method. The Company has elected to continue to determine the value of
stock-based compensation arrangements under the provisions of APB 25. For
stock issued to officers the fair value approximates the intrinsic value.
Therefore, no pro forma disclosures are presented.
F-8
BOEING RUN, INC.
(A Development Stage Company)
Notes To Financial Statements
Note B: Related party transactions
The Company has issued an affiliate 1,000,000 shares of common stock in
exchange for services related to management and organization costs of $500.00.
The affiliate will provide administrative and marketing services as needed.
The affiliate may, from time to time, advance to the Company any additional
funds that the Company needs for operating capital and for costs in connection
with searching for or completing an acquisition or merger.
On behalf of the Company, an affiliate sold 230,000 shares of the Company's
common stock in a private placement for $2,300. The private placement also
included the offering of common shares in nineteen other corporations. The
costs related to the offering and certain legal fees and general and
administrative fees were allocated to each of the twenty companies
participating in the offering. The Company's pro rate one twentieth share of
the costs and expenses were deducted from the gross proceeds from the sale of
the Company's common shares. The gross proceeds of $2,300 were transferred to
the Company net of offering costs of $127 and certain general and
administrative costs incurred by the affiliate of $89, resulting in a cash
balance at April 30, 1999 of $2,084. During the year ended April 30, 2000 the
Company paid accounting expenses of $1,146, legal expenses of $409, and bank
charges totaling $7, resulting in a cash balance at April 30, 2000 of $522.
During the years ended April 30, 2000 and 1999 the Company incurred $2,722 and
$1,218 in professional fees, respectively. During the year ended April 30,
2000 the affiliate advanced the Company $375 for payment of these expenses.
This amount is included in the accompanying financial statements as accounts
payable, related party.
On November 1, 1999 the Company began incurring expense of $100 per month for
rent and other administrative services which are performed by Corporate
Management Services on behalf of the Company. For the year ended April 30,
2000 the Company had incurred rent and administrative service expense of $600,
which has been charged to additional paid-in capital.
For the year ended April 30, 2000 the affiliate earned $800 in interest
income. The Company's pro rata share of that interest income is $40 at April
30, 2000 and is included on the balance sheet as interest income receivable,
related party.
F-9
BOEING RUN, INC.
(A Development Stage Company)
Notes To Financial Statements
Note C: Income taxes
A reconciliation of U.S. statutory federal income tax rate to the effective
rate for the period from April 9, 1998 (inception) through April 30, 2000 is
as follows:
April 8, 1998
Year Year (Inception)
Ended Ended Through
April 30, 2000 April 30, 1999 April 30, 2000
---------------- ---------------- ----------------
U.S. statutory federal
rate 15.00% 15.00% 15.00%
State income tax rate,
net of federal benefit 4.04% 4.04% 4.04%
Offering costs, permanent
difference 0.58% 1.58% 0.38%
Net operating loss (NOL)
for which no tax
benefit is currently
available -19.62% -20.62% -19.42%
---------------- ---------------- ----------------
0.00% 0.00% 0.00%
================ ================ ================
The valuation allowance offsets the net deferred tax asset for which there is
no assurance of recovery. The change in the valuation allowance for the years
ended April 30, 2000 and 1999, and for the period from April 9, 1998
(inception) through April 30, 2000 was $397, $117, and $991, respectively.
NOL carry forward at April 30, 2000 will begin to expire in 2018. The
valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized.
At that time, the allowance will either be increased or reduced; reduction
could result in the complete elimination of the allowance if positive evidence
indicates that the value of the deferred tax asset is no longer impaired and
the allowance is no longer required.
Should the Company undergo an ownership change, as defined in Section 382 of
the Internal Revenue Code, the Company's tax net operating loss carry forward
generated prior to the ownership change will be subject to an annual
limitation which could reduce or defer the utilization of those losses.
Note D: Shareholders' equity
Proposed offering of common stock
---------------------------------
The Company's Board of Directors approved an offering of up to 250,000 shares
of the Company's no par value common stock at $.01 per share.
F-10
BOEING RUN, INC.
(A Development Stage Company)
Notes To Financial Statements
Note D: Shareholders' equity, concluded
Preferred Stock
---------------
The preferred stock may be issued in series as determined by the Board of
Directors. As required by law, each series must designate the number of share
in the series and each share of a series must have identical rights of (1)
dividend, (2) redemption, (3) rights in liquidation, (4) sinking fund
provisions for the redemption of the share, (5) terms of conversion and (6)
voting rights.
F-11
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
(a) Directors and Executive Officers. The Company has one director
and officer as follows:
Name Age Position Since
George G. Andrews 74 Director and President April 1998
George Andrews has been the sole officer and director of the Company
since its inception, and is now serving his third consecutive one-year term.
Mr. Andrews is also an officer, director, and employee of Akid Corporation,
Bail Corporation, and Brass Incorporated, entities similar in all respects to
the Company, which filed their Forms 10-SB with the Securities and Exchange
Commission on September 15, 1999 (Akid Corporation); August 16, 1999 (Bail
Corporation); and September 13, 1999 (Brass Incorporated). Mr. Andrews has
been a director of GREKA Energy Corporation, a publicly traded company since
April, 1998. Mr. Andrews has been a consultant and private investor since his
retirement from the oil and gas industry in 1987. From 1982 until 1987 he was
employed as corporate Vice President of Intercontinental Energy Corporation of
Englewood, Colorado directing the company's land acquisition, lease and
management operations. Between June 1981 and November 1982 Mr. Andrews was
Vice President of Shelter Hydrocarbons, Inc. of Denver, Colorado where he
directed all land management and operation procedures including contract
systems and negotiations of acquisition agreements. From 1979 to June of 1981
Mr. Andrews was Senior Landman for the National Cooperative Refinery
Association in Denver, Colorado where he was responsible for negotiation and
acquisition of oil and gas leases, certifying title requirements and ongoing
daily operations. Mr. Andrews obtained his Bachelor of Science degree from
the University of Tulsa, Tulsa, Oklahoma in 1947 where he majored in
Economics.
Item 10. EXECUTIVE COMPENSATION
Mr. Andrews has not directly received compensation from the Company for
his services.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 30, 2000, each person known
by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all directors individually and all directors and
officers of the Company as a group. Except as noted, each person has sole
voting and investment power with respect to the shares shown.
Amount and Nature
Name and Address of Beneficial Percentage
of Beneficial Owner Ownership of Class
------------------ ------------ -----------
Corporate Management Services, Inc. (1) 1,000,000 81.3%
7899 West Frost Dr.
Littleton, CO 80128
George G. Andrews (2) 1,010,000 82.1%
7899 West Frost Dr.
Littleton, CO 80128
-10-
Amount and Nature
Name and Address of Beneficial Percentage
of Beneficial Owner Ownership of Class
------------------ ------------ -----------
Barbara Davidson (3) 1,005,000 81.7%
2171 Jonathan Pl.
Boulder, CO 80304
All Executive Officers
and Directors as a
Group (1 Person) 1,010,000 82.1%
(1) Corporate Management Services, Inc. ("CMS") is controlled by George
Andrews and Barbara Davidson each of whom own 50% of the outstanding stock.
(2) Includes the shares of CMS and 5,000 shares owned by his spouse.
(3) Includes the shares of CMS.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 11, 1998, the Company issued a total of 1,000,000 shares of
Common Stock to the following persons for marketing services with an agreed
upon value of $500:
NAME NUMBER OF TOTAL SHARES CONSIDERATION
------ --------------------- -------------
Corporate Management Services, Inc. 1,000,000 Services
valued at $500
The Company paid $1,076 in legal fees to Michael V. Anderson, Esq., and
$1,646 in accounting fees to Cordovano & Harvey, P.C. during this reporting
period.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following financial information is filed as part of this report:
1) Financial Statements
2) Schedules
3) Exhibits. The following exhibits are furnished as part of this
report:
Item 601
Exhibit No. Description
3.1 Articles of Incorporation
3.2 Bylaws
27 Financial Data Schedule (filed herewith).
Reports on Form 8-K
(b) Reports on Form 8-K filed during the fourth quarter of 1999
- None.
-11-
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant): Boeing Run, Inc.
By: /s/ George G. Andrews Date: July 28, 2000
-----------------------
George G. Andrews
President
-12-
