SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A-4
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
Aswan Investments, Inc.
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(Name of Small Business Issuer in Its Charter)
Nevada 87-0643635
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1403 East 900 South Salt Lake City, Utah 84105
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(Address of Principal Executive Offices) (Zip Code)
(801) 582-9609
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act:
Title of Each Class to be so registered:
Common Stock ($0.001 Par Value)
Name of Each Exchange on Which Each Class is to be Registered: N/A
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TABLE OF CONTENTS
PART I
Page No.
Item 1. Description of Business..........................................2
Item 2. Management's Discussion and Analysis
or Plan of Operation............................................12
Item 3. Description of Property.........................................13
Item 4. Security Ownership of Certain Beneficial
Owners and Management...........................................13
Item 5. Directors, Executive Officers, Promoters
and Control Persons.............................................14
Item 6. Executive Compensation..........................................18
Item 7. Certain Relationships and Related Transactions..................19
Item 8. Description of Securities.......................................19
PART II
Item 1. Market for Common Equity and Related Stockholder Matters........20
Item 2. Legal Proceedings...............................................21
Item 3. Changes in and Disagreements with Accountants...................22
Item 4. Recent Sales of Unregistered Securities.........................22
Item 5. Indemnification of Directors and Officers.......................24
PART F/S
Consolidated Financial Statements - December 31, 1999 and 1998........F-1 to F-8
PART III
Item 1. Index to Exhibits...............................................26
Signatures....................................................................27
Item 2. Description of Exhibits.........................................28
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Aswan Investments, Inc. (the "Company") was formed as a Nevada corporation on
December 10, 1999, to engage in any lawful undertaking, including but not
limited to, transacting mergers and acquisitions. The Company has been in the
developmental stage since inception and has never engaged in any operational
activities, other than issuing shares to its shareholders. Accordingly, the
Company may be defined as a "blank check" or "shell" company whose sole purpose
at this time is to identify and complete a merger or acquisition with a private
entity.
The Company is filing this registration statement on a voluntary basis since the
primary attraction of the Company as a merger partner or acquisition vehicle
will be its status as a reporting public company. It is the position of the
Office of Small Business of the Securities & Exchange Commission (per No Action
Letter, NASD Regulation, Inc., dated January 21, 2000) that Rule 144 is not
available for resale transactions involving securities sold by promoters and
affiliates of a blank check company, and their transferees, and anyone else who
has been issued securities from a blank check company, and that securities
issued by a blank check company to promoters and affiliates, and their
transferees, can only be resold through registration under the Securities Act.
Therefore, the Company may only be able to obtain a listing on the NASD OTC:BB
after filing an appropriate registration under the Securities Act of 1933 which
would most likely occur subsequent to the Company completing a business
combination.
General
The Company was incorporated on December 10, 1999 as a "blank check " or "shell"
corporation that seeks to identify and complete a merger or acquisition with a
private entity whose business presents an opportunity for Company shareholders.
The Company's management will review and evaluate business ventures for possible
mergers or acquisitions. The Company has not yet entered into any agreement, nor
does it have any commitment or understanding to enter into or become engaged in
a transaction, as of the date of this filing(1). Further, the business
objectives discussed herein are extremely general and are not intended to
restrict the discretion of the Company's management.
A decision to participate in a specific business opportunity will be made based
upon a Company analysis of the quality of the prospective business opportunity's
management and personnel, asset base, the anticipated acceptability of business'
products or marketing concepts, the merit of a business plan, and numerous other
factors which are difficult, if not impossible, to analyze using any objective
criteria.
The Company has no plans or arrangements proposed or under consideration for the
issuance or sale of additional securities, as of April 3, 2000 ("the effective
date"), prior to the identification of a business opportunity. Consequently,
management anticipates that it will initially be able to participate in only one
business opportunity, due primarily to the Company's limited capital. The
resultant lack of diversification should be considered a substantial risk,
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(1)As of the filing date of the Form 10-SB/A-4 (August 16, 2000), the
Company has not entered into and is not presently negotiating a probable
material transaction.
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as the Company will not be able to offset potential losses from one venture
against gains from another (See table, Part I, Item 5 "Directors, Executive
Officers, Promoters, And Control Persons," page 14).
The Company has no plans to obtain lock-up agreements with the major
shareholders, Ruairidh Campbell and Richard Surber (See table, Part I, Item 4:
"Security Ownership of Certain Beneficial Owners And Management," page 14).
Selection of a Business
The Company anticipates that potential business opportunities will be referred
from various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, persons involved in
the financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on the personal contacts of its officers and
directors and their affiliates, as well as indirect associations with other
business and professional people. Management's reliance on "word of mouth" may
limit the number of potential business opportunities identified. While it is not
presently anticipated that the Company will engage unaffiliated professional
firms specializing in business acquisitions or reorganizations, such firms may
be retained if management deems it in the best interest of the Company. Finder's
fees paid to professional acquisition firms could involve one-time cash
payments, payments based on a percentage of the business opportunity's revenues
or product sales volume, payments involving issuance of securities (including
those of the Company), or any combination of these or other compensation
arrangements. Consequently, the Company is unable to predict the cost of
utilizing such services. As of April 3, 2000, there have been no discussions,
agreements or understandings with any professional advisors, financial
consultants, broker-dealers or venture capitalists. The Company's present
intentions are to rely upon its president to effect those services normally
provided by professional advisors or financial consultants.
The Company will not restrict its search to any particular business, industry,
or geographical location. Management reserves the right to evaluate and enter
into any type of business in any location. In seeking a business venture, the
decision of management will not be controlled by an attempt to take advantage of
any anticipated or perceived appeal of a specific industry, management group,
product, or industry, but will be based on the business objective of seeking
long-term capital appreciation. The Company may participate in a newly organized
business venture or in a more established business. Participation in a new
business venture entails greater risks since, in many instances, management of
such a venture may not have a proven track record; the eventual market for such
ventures product or services will likely not be established; and the
profitability of the venture will be untested and impossible to accurately
forecast. Should the Company participate in a more established venture that is
experiencing financial difficulty, risks may stem from the Company's inability
to generate sufficient funds to manage or reverse the circumstances causing such
financial problems.
The analysis of new businesses will be undertaken by or under the supervision of
the Company's officers and directors. In analyzing prospective businesses,
Company's management will consider, to the extent applicable, the available
technical, financial and managerial resources of any given business venture.
Management will also consider the nature of present and expected competition;
potential advances in research and development or exploration; the potential for
growth and expansion; the likelihood of sustaining a profit within given time
frames; the perceived public recognition or acceptance of products, services,
trade or service marks; name identification; and other relevant factors. The
Company anticipates that the results of operations of a specific business
venture may not necessarily be indicative of the potential for future earnings,
which may be impacted by a change in marketing strategies, business expansion,
modifying product emphasis, changing or substantially augmenting management, and
other factors.
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The Company has no present intention to hire any independent advisors or
consultants. The Company's officers will act in these capacities. The Company
may pay finders a fee for finding a merger, acquisition or business combination
candidate. No criteria will be used in determining who can act as a finder for
the Company, other than the Company will require such finder to have all the
necessary state and/or federal licenses to act in such capacity. The finder will
only be paid if the Company closes upon a transaction. All other terms of
service will be negotiated on an individual basis and have not been determined
as of yet. The Company has not contacted nor had any discussions with any
finders as of the date of this filing.
The Company's officers anticipate acting on the Company's behalf in encouraging
a broker dealer to act as the Company's market maker. No fee will be paid to
them for acting on the Company's behalf regarding this matter. The Company does
not intend to hire any consultants, advisors or others to act in this capacity.
No preliminary discussions or understandings have occurred or have been made
with any market maker. The Company anticipates that it will engage in such
discussions with Olsen Payne & Company subsequent to this Form 10-SB/A-4
clearing comments by the Securities & Exchange Commission which may be before or
after an acquisition or merger. However, there is a greater probability than not
that such discussions will be immaterial until such time as an acquisition or
merger candidate is found and a legal opinion is obtained directing the Company
to file a registration statement or a valid exemption from registration is found
regarding the trading status of such shares which may be used to create a public
market in light of the Securities & Exchange Commission's position regarding
shell companies' ability to rely on various exemptions from registration.
The Company's officers and directors have used the services of Hudson Consulting
Group, Inc. and/or Canton Financial Services Corporation, both of which are
subsidiary companies of CyberAmerica Corporation. CyberAmerica Corporation, and
its subsidiaries have used the services of A-Z Professional Consultants, Inc., a
beneficial shareholder of the CyberAmerica Corporation. A-Z Professional
Consultants, Inc. is a Utah corporation, which is owned 100% by Allen Z.
Wolfson. Allen Z. Wolfson is also the uncle of Richard D. Surber. All of the
above mentioned entities and their personnel have been used by Richard Surber as
either advisors or consultants because of Richard Surber's position with
CyberAmerica Corporation as its president and a director and his relationship
with Allen Z. Wolfson. Irrespective of Mr. Surber's relationship or use of the
abovementioned entities, it is the Company's intention to rely solely on the
expertise of its officers as advisors. The Company may rely on the clerical and
accounting services of Hudson Consulting Group, Inc., but will not rely upon
Allen Wolfson, A-Z Professional Consultants, Inc., Hudson Consulting Group, Inc.
or Canton Financial Services Corporation to find a potential acquisition or
merger candidate for the Company. The probability that a fee will be paid to
Ruairidh Campbell or Richard Surber is greater than for any other person who may
solicit the Company for a merger, acquisition or business combination.
Richard Surber usually uses the services of Olsen Payne & Company as his broker
dealer. There is greater than a 50% chance that the Company may retain the
services of Olsen Payne & Company.
The Company will analyze all relevant factors and make a determination based on
a composite of available information, without reliance on any single factor. The
period within which the Company will decide to participate in a given business
venture cannot be predicted and will depend on certain factors, including the
time involved in identifying businesses, the time required for the Company to
complete its analysis of such businesses, the time required to prepare
appropriate documentation to effect a merger or acquisition, and other
circumstances.
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Acquisition of a Business
The implementing of a structure that will effect any given business transaction,
may cause the Company to become party to a merger, consolidation, purchase and
sale of assets, purchase or sale of stock, or other reorganization involving
another corporation, joint venture, partnership or licensee. The exact structure
of the anticipated business transaction cannot yet be determined.
Notwithstanding the above, the Company does not intend to participate in a
business through the purchase of minority stock positions. In other words, the
Company does not intend to merely buy non-controlling interests in other
businesses. Rather, its current focus is to acquire a controlling interest in a
business. Upon the completion of a transaction, it is likely that the Company's
present management will no longer control Company affairs. Further, a majority
or all of the Company's present directors may, as part of the terms of a
prospective business transaction, resign and be replaced by new directors
without a vote of the Company's shareholders.
In connection with the Company's merger or acquisition of a business venture,
the present shareholders of the Company, including Ruairidh Campbell and Richard
Surber, officers and directors, may, as a negotiated part of the transaction,
sell a portion or all of the Company's Common Stock held by them at a
significant premium over their original investment in the Company. If the
Company's current shareholders sell their stock as part of a merger/acquisition,
they may decide to sell a controlling interest (i.e., over 50%) of the Company
to the other entity (including such other entity's shareholders and affiliates)
that participates in the merger/acquisition. The affiliates of the
reorganization might only buy shares from Ruairidh Campbell and/or Richard
Surber, or same might only buy enough shares to obtain a controlling interest in
the Company. However, there is no degree of certainty that the other entity will
buy any of the Company's shares, whether from Ruairidh Campbell or Richard
Surber or any other shareholder. Conversely, it is possible the other entity may
offer to buy out all or most of the shareholders' stock at prices comparable to
those offered to Ruairidh Campbell or Richard Surber. It is possible that the
entity may pay a higher price for shares belonging to insider shareholders than
for shares belonging to non-insider shareholders. Although the Company's
insiders have no present intentions to buy shares from other insiders, it is a
possibility that insiders could buy shares from other insiders. Management does
not intend to actively negotiate for or otherwise require the purchase of all or
any portion of its stock as a condition to or in connection with any proposed
merger or acquisition. Although the Company's present shareholders did not
acquire their shares of Common Stock with a view towards any subsequent sale in
connection with a business reorganization, it is not unusual for affiliates of
the entity participating in the reorganization to negotiate to purchase shares
held by the present shareholders. This is done in order to reduce the amount of
shares held by persons no longer affiliated with the Company and thereby reduce
the potential adverse impact on the public market in the Company's common stock
that could result from substantial sales of such shares after the business
reorganization. Public investors will not receive any portion of the premium
that may be paid in the foregoing circumstances. Furthermore, the Company's
shareholders may not be afforded an opportunity to approve or consent to any
particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated part of a future merger or acquisition,
a conflict of interest may arise since directors will be negotiating for the
merger or acquisition on behalf of the Company and for the sale of their shares
for their own respective accounts. Where a business opportunity is well suited
for merger or acquisition by the Company, but affiliates of the prospective
business opportunity impose a condition that management sell their shares at a
price which is unacceptable to them, management may not sacrifice their
financial interest for the Company to complete the transaction. Where the
business opportunity is not well suited, but the price offered management for
their shares is high, management may be inclined to effect the acquisition in
order to realize a substantial gain on their shares in the Company.
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Management has not adopted any policy for resolving the foregoing potential
conflicts, should they arise, and does not intend to obtain an independent
appraisal to determine whether any price that may be offered for their shares is
fair. Shareholders must rely, instead, on the obligation of management to
fulfill its fiduciary duty under state law to act in the best interests of the
Company and its shareholders.
Although the terms of any registration rights and the number of securities, if
any, which may be registered cannot be determined at this time, it may be
expected that any registration of securities by the Company would entail
substantial expense to the Company.
It is the position of the Office of Small Business of the Securities & Exchange
Commission (per No Action Letter, NASD Regulation, Inc., dated January 21, 2000)
that Rule 144 is not available for resale transactions involving securities sold
by promoters and affiliates of a blank check company, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act. Upon consummation of a merger, the Company may decide to file the necessary
and appropriate registration statements to register the shares of promoters and
affiliates and their transferees. In addition, the promoters or affiliates of
blank check companies, as well as their transferees, are deemed to be
"underwriters" of the securities issued both before and after any business
combination.
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 such market.
While the actual terms of a transaction to which the Company may be a party
cannot be determined at this time, it may be expected that the parties to any
business transaction will find it desirable to structure the merger or
acquisition as a so-called "tax-free" event under sections 351 or 368(a) of the
Internal Revenue Code of 1986 (the "Code"). In order to obtain tax-free
treatment under section 351 of the Code, it would be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would retain less than
20% of the issued and outstanding shares of the surviving entity. Section
368(a)(1) of the Code provides for tax-free treatment of certain business
reorganizations between corporate entities where one corporation is merged with
or acquires the securities or assets of another corporation. Generally, the
Company expects to be the acquiring corporation in such a business
reorganization, and the tax-free status of the transaction will not depend on
the issuance of any specific amount of the Company's voting securities under
Section 368. The acquiring corporation will issue securities in such an amount
that the shareholders of the acquired corporation will hold 50% or more of the
voting stock of the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately prior to the
transaction would retain less than 50% of the issued and outstanding shares of
the surviving entity. Therefore, regardless of the form of the business
acquisition, it may be anticipated that stockholders immediately prior to the
transaction will experience a significant reduction in their percentage of
ownership in the Company.
Notwithstanding the fact that the Company is technically the merging or
acquiring entity in the foregoing circumstances, generally accepted accounting
principles will ordinarily require that such transaction be accounted for as if
the Company had been acquired by the other entity owning the business and,
therefore, will not permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
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The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be determined at this time, generally such agreements will
require specific representations and warranties by all of the parties thereto,
will specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to such closing,
will outline the manner of bearing costs if the transaction is not closed, will
set forth remedies on default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its merger or acquisition of a business will
be dependent on the nature of the business and the interest acquired. The
Company is unable to determine at this time whether the Company will be in
control of the business or whether present management will be in control of the
Company following the acquisition. It may be expected that the business will
present various risks, which cannot be predicted at the present time.
Government Regulation
It is impossible to anticipate government regulations, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets to conduct a business which the Company may acquire could subject it
to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable business
opportunities.
Employees
The Company is a development stage company and currently has no employees.
Executive officers will devote only such time to the affairs of the Company as
they deem appropriate, which is estimated to be approximately five (5) hours per
month per person. Management of the Company expects to use consultants,
attorneys, and accountants as necessary, and does not anticipate a need to
engage any full-time employees so long as it is identifying and evaluating
businesses. The need for employees and their availability will be addressed in
connection with a decision whether or not to acquire or participate in a
specific business venture.
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RISK FACTORS
No Operating History, Revenue And Assets
The Company has no operating history nor any revenues or earnings from
operations. The Company has little or no tangible assets or financial resources.
The Company will, in all likelihood, continue to sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no assurance that
the Company can identify such a business opportunity or consummate such a
business combination.
Speculative Nature Of Company's 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
business opportunity. While management intends to seek business combination(s)
with entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of which
there can be no assurance, the success of the Company's operations may be
dependent upon management of the successor business and numerous other factors
presently beyond the Company's control.
Lack of Sufficient Operating Capital
The Company is a "blank check" or shell corporation and therefore has no
guarantee that it will be able to obtain the funds necessary to continue as a
going concern. The nominal amount of capital contributed thus far by the major
shareholders (See table, Part I, Item 4: "Security Ownership of Certain
Beneficial Owners And Management," page 14) has been used exclusively for
organizational purposes and there is no guarantee that funding will be available
from these sources in the future. Management has no plans to obtain additional
financing from outside sources. There is no obligation or commitment from any
shareholder to provide further capital to ensure the Company continues as a
going concern. However, it is anticipated that the major shareholders will
continue to support the Company in the form of loans in amounts sufficient to
cover operating costs and professional expertise as needed to keep the Company
current with its reporting requirements.
State Blue Sky Registration; Restricted Resales Of The Securities
Transferability of the shares of Common Stock of the Company is very limited
because a significant number of states have enacted regulations pursuant to
their securities or so-called "blue sky" laws restricting or, in many instances,
prohibiting, the initial sale and subsequent resale of securities of "blank
check" companies such as the Company within that state. In addition, many
states, while not specifically prohibiting or restricting "blank check"
companies, would not register the securities of the Company for sale or resale
in their states. Because of these regulations, the Company currently has no plan
to register any securities of the Company with any state. To ensure that any
state laws are not violated through the resales of the securities of the
Company, the Company will refuse to register the transfer of any securities of
the Company, to residents of any state, which prohibit such resale or if no
exemption is available for such resale. It is not anticipated that a secondary
trading market for the Company's securities will develop in any state until the
completion of a business combination, if at all.
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The shares issued pursuant to the December 16, 1999 private placement of 35,500
shares of the Company's common stock to 71 non-U.S. persons were issued under
Regulation S under the Securities Act of 1933, as amended (the "Act"). It is the
position of the Office of Small Business of the Securities & Exchange Commission
(per No Action Letter, NASD Regulation, Inc., dated January 21, 2000) that Rule
144 is not available for resale transactions involving securities sold by
promoters and affiliates of a blank check company, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act. Upon consummation of a merger, the Company may decide to file the necessary
and appropriate registration statements to register the affiliates' shares. In
addition, the promoters or affiliates of blank check companies, as well as their
transferees, are deemed to be "underwriters" of the securities issued both
before and after any business combination.
No shares were issued in any state which prohibits the issuance of shares in a
blank check company; no shares were issued to any individuals outside of the
State of Utah or the State of Texas, excepting issuances made to offshore
investors. The shares issued to offshore investors were issued pursuant to
Regulation S under the Securities Act of 1933.
The Company's stock was issued to Richard Surber pursuant to the State of Utah's
Uniform Securities Act ss. 61-1-14(1)(j), which provides for a self-executing
exemption for securities issued under a benefit plan covering officers,
directors, and employees. Consultants would be covered under ss. 61-1-14(2)(n),
the limited offering exemption, which is also self-executing. The future resale
of securities by shareholders is under the scope of ss. 61-1-14(2)(b) relating
to a manual exemption such as a listing in Standard & Poor's or (2)(c) relating
to sales through a registered broker dealer. No filing is needed under (b) or
(c).
The Company's stock was issued to Ruairidh Campbell pursuant to the State of
Texas Securities Act ss. 5.I(b), Exempt Transactions, which provides for a
self-executing exemption from registration for any transaction related to the
issuance and sale of securities issued under a benefit plan to directors and
employees that is effected without public solicitation or advertisement.
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, joint ventures and acquisitions of small private
entities. A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of companies which
may be desirable target candidates for the Company. Nearly all such entities
have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the Company will be
at a competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete in seeking merger or acquisition candidates with numerous other small
public companies.
No Agreement For Business Combination Or Other Transaction - No Standards For
Business Combination
The Company has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a private or
public entity. There can be no assurance 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
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operating history or a specified level of earnings, assets, net worth or other
criteria which it will require a target business opportunity to have achieved,
and without which the Company would not consider a business combination in any
form with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
Continued Management Control, Limited Time Availability
While seeking a business combination, Ruairidh Campbell, President of the
Company and Richard Surber, Secretary and Treasurer of the Company anticipate
devoting up to five hours each per month to the business of the Company.
Ruairidh Campbell and Richard Surber will be the only individuals responsible
for conducting the day to day operations of the company including searches,
evaluations, and negotiations with potential merger or acquisition candidates.
The Company has not entered into any written employment agreement with Ruairidh
Campbell or Richard Surber and is not expected to do so in the foreseeable
future. The Company has not obtained key man life insurance on Ruairidh Campbell
or Richard Surber. The loss of the services of Ruairidh Campbell or Richard
Surber would adversely affect development of the Company's business and its
likelihood of continuing operations.
Conflicts Of Interest - General
Ruairidh Campbell and Richard Surber may participate in business ventures which
could be deemed to compete directly with the Company. Ruairidh Campbell and
Richard Surber are serving as officers and directors of a number of other blank
check companies (See table, Part I, Item 5 "Directors, Executive Officers,
Promoters, And Control Persons," page 14). Additional conflicts of interest and
non-arms length transactions may also arise in the future in the event the
Company's future officers or directors are involved in the management of any
firm with which the Company transacts business. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity in
which management serve as officers, directors or partners, or in which they or
their family members own or hold any ownership interest.
In the event an affiliate finds an acquisition, merger or business combination
candidate the Company may pay up to 9.9% of the value of such transaction to
that person or entity irrespective of whether such person or entity is an
affiliate or non affiliate of the Company. The Company has no present intentions
to pay any financial advisors whether affiliates or non affiliates for acting as
financial advisors in any capacity other than as a finder for the Company. There
are no present circumstances that the Company currently anticipates where the
Company would pay an affiliate for acting as financial advisors other than as a
finder, as discussed above. However, the Company may agree to register shares
currently held by affiliates pursuant to an available registration statement in
the event a merger, acquisition, or business combination candidate is found. The
Company may register such shares irrespective of whether the candidate is found
by an affiliate or non affiliate, which could be at the expense of the Company.
Lack Of Market Research Or Marketing Organization
The Company has neither conducted, nor have others made available to it, results
of market research indicating that market demand exists for the business
strategy contemplated by the Company. Moreover, the Company does not have, and
does not plan to establish, a marketing organization. Even in the event demand
is identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
10
<PAGE>
Lack Of Diversification
The Company's proposed operations, even if successful, will in all likelihood
result in the Company engaging in a business combination with a business
opportunity. Consequently, the Company's activities may be limited to those
engaged in by the business opportunity with which the Company merges or
acquires. The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
Regulation
Although the Company will be subject to regulation under the Securities Exchange
Act of 1934, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In the event the
Company engages in business combinations which result in the Company holding
passive investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of 1940. In such event,
the Company would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange Commission as
to the status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
Probable Change In Control And Management
A business combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may require
management of the Company to sell or transfer all or a portion of the Company's
Common Shares held by them, or resign as members of the Board of Directors of
the Company. The resulting change in control of the Company could result in the
removal of Ruairidh Campbell and Richard Surber and a corresponding reduction in
or elimination of his participation in the future affairs of the Company.
Potential Reduction Of Percentage Share Ownership Following Business Combination
The Company's primary plan of operation is based upon a business combination
with a private concern which, depending on the terms of merger or acquisition,
may result in the Company issuing securities to shareholders of any such private
company. The issuance of previously authorized and unissued Common Shares of the
Company would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control or
management of the Company.
Disadvantages Of Blank Check Offering
The Company may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with the Company. Such adverse
consequences may include, but are not limited to, time delays of the
registration process, the significant expenses incurred in a public offering,
loss of voting control to public shareholders.
11
<PAGE>
Taxation
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination the Company may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions. The
Company intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the target entity;
however, there can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to a transaction.
Requirement Of Audited Financial Statements May Disqualify Business
Opportunities
Section 13 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), require companies subject thereto to provide certain information about
significant acquisitions, including audited financial statements for the company
acquired, covering one, two or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare such statements may preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited financial statements may
not be appropriate for acquisition so long as the reporting requirements of the
1934 Act are applicable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
The Company's plan of operation for the coming year, as discussed above, is to
identify and acquire a favorable business opportunity. The Company does not plan
to limit its options to any particular industry, but will evaluate each
opportunity on its merits. The Company anticipates that its owners, affiliates,
and consultants will provide it with sufficient capital to continue operations
until the end of the first quarter of 2000, but there can be no assurance that
this expectation will be fully realized.
Results of Operations
Fiscal Years ending December 31, 1999.
The Company had no revenue from continuing operations from inception through
period ended December 31, 1999.
General and administrative expenses for the period ended December 31, 1999 were
$910. General and administrative expenses for 1999 consisted of expenses to keep
the Company in good corporate standing, fees to Transfer Agents, and minimal
expenses for office and bank account administration.
The Company had a net loss of $910 for the period ended December 31, 1999. The
Company's net losses for fiscal 1999 were attributable to general and
administrative expenses.
The Company does not expect to generate any meaningful revenue or incur
operating expenses unless and until it acquires an interest in an operating
company.
12
<PAGE>
Liquidity and Capital Resources
As of April 3, 2000 the Company had no major assets. The Company is currently
authorized to issue 45,000,000 shares of common stock, of which 6,044,500 shares
are issued and outstanding, and 5,000,000 shares of preferred stock, none of
which is outstanding as of April 3, 2000. Management is hopeful that becoming a
reporting company will increase the number of prospective business ventures that
may be available to the Company. Management believes that the Company has
sufficient resources to meet the anticipated needs of the Company's operations
through at least the calendar year ending December 31, 2000. The company
anticipates that its major shareholders will contribute sufficient funds to
satisfy the cash needs of the Company through calendar year ending December 31,
2000. However, there can be no assurances to that effect, as the Company has no
revenues and the Company's need for capital may change dramatically if it
acquires an interest in a business opportunity during that period. Further, the
Company has no plans to raise additional capital through private placements or
public registration of its securities until a merger or acquisition candidate is
identified. However, it is the position of the Office of Small Business of the
Securities & Exchange Commission (per No Action Letter, NASD Regulation, Inc.,
dated January 21, 2000) that Rule 144 is not available for resale transactions
involving securities sold by promoters and affiliates of a blank check company,
and their transferees, and anyone else who has been issued securities from a
blank check company, and that securities issued by a blank check company to
promoters and affiliates, and their transferees, can only be resold through
registration under the Securities Act. Upon consummation of a merger, the
Company may decide to file the necessary and appropriate registration statements
to register the affiliates' shares. In addition, the promoters or affiliates of
blank check companies, as well as their transferees, are deemed to be
"underwriters" of the securities issued both before and after any business
combination.
The Company projects that its operating requirements will not exceed $15,000
over the next twelve months. If no acquisition candidate is found for the
Company during this time, Ruairidh Campbell and Richard Surber plan to loan the
Company sufficient funds to cover these costs over the next twelve months.
Ruairidh Campbell and Richard Surber will provide their expertise in preparing
the necessary documentation to keep the Company current with its reporting
requirements with the Securities & Exchange Commission and those costs will
accrue on the Company's balance sheet. In the event that a merger or acquisition
occurs over the next twelve months, the target company will be responsible for
paying these costs back to the major shareholders, or the major shareholders may
waive these costs depending on the nature of the acquisition or merger
transaction.
ITEM 3. DESCRIPTION OF PROPERTY
The Company currently maintains its offices at 1403 East 900 South, Salt Lake
City, Utah 84105. The office space is owned by Ruairidh Campbell, an officer,
director and substantial shareholder of the Company. The Company pays no rent
for the use of this address. The Company does not believe that it will need to
maintain an office at any time in the foreseeable future in order to carry out
the plan of operation described herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of April 3, 2000, the number and percentage
of outstanding shares of common stock which, according to the information
supplied to the Company, were beneficially owned by (i) each current director of
the Company, (ii) each current executive officer of the Company, (iii) all
current directors and executive officers of the Company as a group, and (iv)
each person who, to the knowledge of the Company, is the beneficial owner of
more than 5% of the Company's outstanding common stock. Except as otherwise
indicated, the persons named in the table below have sole voting and dispositive
power with respect to all shares beneficially owned, subject to community
property laws (where applicable).
13
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name And Address of Amount And Nature of Percent of Class
Beneficial Owner Beneficial Ownership
<S> <C> <C> <C>
Common Ruairidh Campbell, President 3,000,000 49.7%
Stock 3310 Werner Avenue
Austin, Texas 78722
Common Richard Surber, Secretary and 3,000,000 49.7%
Stock Treasurer
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Common All Executive Officers and 6,000,000 99.4%
Stock Directors as a Group
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The following individuals constitute all of the Company's Executive Officers and
Directors as of April 3, 2000.
Name Age Position
---- --- --------
Ruairidh Campbell 37 President and Director
Richard D. Surber 27 Secretary, Treasurer and Director
No other persons are expected to make any significant contributions to the
Company who are not executive officers or directors of the Company.
All executive officers are elected by the Board and hold office until the next
Annual Meeting of stockholders and until their successors are elected and
qualify.
Ruairidh W. Campbell, 37, graduated from the University of Texas at Austin with
a Bachelor of Arts in History and then from the University of Utah College of
Law with a Juris Doctorate with an emphasis in corporate law, including
securities and taxation. He has been an officer and director of several public
companies that include: NovaMed, Inc., a manufacturer of medical devices
(president and director from 1995 to present), Bren-Mar Minerals, Ltd., a
Canadian mineral resource development company (president and director 1995 to
present), and Allied Resources Inc., a Canadian based oil and gas development
company (president and director 1998 to present). Mr. Campbell is also the
President and a Director of three private shell companies that intend to become
fully reporting public companies. Mr. Campbell began his one-year term as the
Company's President and Director on December 10, 1999.
Richard D. Surber, 27, graduated from the University of Utah with a Bachelor of
Science degree in Finance and then with a Juris Doctorate with an emphasis in
corporate law, including securities, taxation, and bankruptcy. He serves, or has
served, as an officer and director of the following public companies:
CyberAmerica Corporation, a holding company whose subsidiaries invest in real
estate and provide financial consulting services (president and director from
1992 to the present); Chattown.com Network, Inc. (f/k/a Vaxcel, Inc.), which is
unrelated to the Company (president and director from June, 1999 to April 10,
2000); Kelly's Coffee, Group, Inc., a shell company whose plan is to acquire an
unidentified company (president and director from May, 1999 to the present);
164
<PAGE>
Innovative Property Development Corporation ("IPDC"), n/k/a China Mall USA.com,
Inc., a former subsidiary of CyberAmerica Corporation, which currently is a
non-reporting Chinese Internet company (president and director 1992 to June,
1999); Eurotronics Corporation, f/k/a Hamilton Exploration, Inc., a shell
company which is currently unrelated to the Company (president and director
1994-1996), and whose post-1996 operations if any are not known; Area Investment
Development Company, which was a shell company unrelated to the Company
(president and director 1994-1996), and which has recently acquired an Internet
company whose content revolves around religious events; Youthline USA, Inc.,
f/k/a Ult-i-Med Health Centers, Inc., a non-reporting shell company that
acquired an educational company which distributes education newspapers to
children in grades K-12 (secretary and director from April 6, 1999 to July
29,1999); Premier Brands, Inc., a shell company (president and director April,
1998 - September, 1998); and Golden Opportunity Development Corporation, a
wholly owned subsidiary of CyberAmerica Corporation, (president and director
from September, 1999 to present) whose operations consist of operating a 134
room hotel in Baton Rouge, Louisiana; Power Exploration, Inc., an oil and gas
company (director from January 28, 2000 to the present). Mr. Surber is also the
President and a Director of several private shell companies that intend to
become fully reporting public companies. Mr. Surber began his one-year term as
the Company's President and Director on December 10, 1999.
The SEC reporting shell companies that Ruairidh Campbell is serving as President
and Director are listed in the following table:
<TABLE>
<CAPTION>
CORPORATION NAME FORM TYPE FILE NUMBER DATE OF FILING
---------------- --------- ----------- --------------
<S> <C> <C> <C>
Alexandria Holdings, Inc. 10-SB 000-29325 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
Aswan Investments, Inc. 10-SB 000-29321 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
Cairo Acquisitions, Inc. 10-SB 000-29323 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
</TABLE>
Mr. Campbell is the President and a Director of the following additional public
companies:
CORPORATION NAME EXCHANGE
---------------- --------
NovaMed, Inc. OTC:BB
Bren-Mar Minerals, Ltd. CDNX
Allied Resources, Inc. CDNX
Mr. Campbell is the Secretary and a Director of the following private shell
companies, all of which are incorporated in the State of Nevada:
CORPORATION NAME
----------------
EnterNet, Inc.
InvestNet, Inc.
FundNet, Inc.
Mr. Campbell has no present plans to file a 10-SB Registration document on any
of the aforementioned private shell companies.
The SEC reporting shell companies that Richard Surber is serving an Officer and
Director are listed in the following table:
<TABLE>
<CAPTION>
CORPORATION NAME FORM TYPE FILE NUMBER DATE OF FILING
---------------- --------- ----------- --------------
<S> <C> <C> <C>
Alexandria Holdings, Inc. 10-SB 000-29325 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
Aswan Investments, Inc. 10-SB 000-29321 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
Cairo Acquisitions, Inc. 10-SB 000-29323 February 3, 2000
10-SB/A-1 April 17, 2000
10-SB/A-2 June 27, 2000
10-SB/A-3 July 28, 2000
10-SB/A-4 August 16, 2000
Cyberbotanical, Inc. 10-SB 000-29383 February 8, 2000
10-SB/A February 15, 2000
10-SB/A-2 April 6, 2000
10-SB/A-3 May 18, 2000
10-SB/A-4 June 23, 2000
10-SB/A-5 July 11, 2000
10-SB/A-6 July 18, 2000
10-SB/A-7 July 20, 2000
Cyberboy, Inc. 10-SB 000-29505 February 15, 2000
10-SB/A-1 July 20, 2000
Cybercosmetics, Inc. 10-SB 000-29601 February 18, 2000
10-SB/A-1 July 20, 2000
Cyberexcellence, Inc. 10-SB 000-29605 February 18, 2000
10-SB/A-1 July 20, 2000
Cyber Soccer, Inc. 10-SB 000-29635 February 22, 2000
10-SB/A-1 July 20, 2000
</TABLE>
The corporations for which Richard Surber may be filing Forms 10-SB are listed
in the table below. All corporations are organized under the laws of the State
of Nevada. There is currently no timetable for the 10- SB filings for these
companies.
CORPORATION NAME FORM TYPE
---------------- ---------
Cyberenergy, Inc 10-SB
Cyber Equestrian, Inc 10-SB
Cybereye, Inc 10-SB
Cyber Fishing, Inc 10-SB
Cybergate, Inc 10-SB
Cyberlead, Inc 10-SB
Cyberlife, Inc 10-SB
Cyber Oil, Inc 10-SB
Cyber Skiing, Inc 10-SB
Cyber Tennis, Inc 10-SB
Cybertyme, Inc 10-SB
Cyberwholesale, Inc 10-SB
Cyber Wrestling, Inc 10-SB
Cyberwrite, Inc 10-SB
Richard Surber may file additional Forms 10-SB with the SEC for shell companies
of which he is sole officer and director. Ruairidh Campbell has no present
intention of filing any further Forms 10-SB with the SEC for shell companies.
None of the companies listed in the tables above have engaged in an acquisition
or merger as of the filing date of this Form 10-SB/A-4.
Conflicts Of Interest
The Company's Officers and Directors are associated with other firms involved in
a range of business activities. Consequently, there are potential inherent
conflicts of interest in their acting as Officers and Directors of the Company.
Insofar as the Officers and Directors are engaged in other business activities,
management anticipates it will devote only a relatively minor amount of time to
the Company's affairs.
The Officers and Directors of the Company are and may in the future become
shareholders, officers or directors of other companies that may be formed for
the purpose of engaging in business activities similar to those conducted by the
Company. Accordingly, additional direct conflicts of interest may arise in the
future with respect to such individuals acting on behalf of the Company or other
entities.
15
<PAGE>
Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
The Officers and Directors are, so long as they are Officers or Directors of the
Company, subject to the restriction that all opportunities contemplated by the
Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and made available to the Company and the companies that they
are affiliated with on an equal basis. A breach of this requirement will be a
breach of the fiduciary duties of the officer or director. If the Company or the
companies in which the Officers or Directors are affiliated with both desire to
take advantage of an opportunity, then such Officer or Director would abstain
from negotiating and voting upon the opportunity. However, the Officer and
Director may still take advantage of an opportunity if the Company should
decline to do so. Except as set forth above, the Company has not adopted any
other conflict of interest policy with respect to such transactions. There is no
order of preference or priority over the other affiliated companies to proceed
with a proposed transaction with a target business. The Company will consider
retaining an independent director to vote on such matters, if necessary, before
such transactions are consummated, in the event of a conflict of interest.
Ruairidh Campbell, President of the Company and Richard Surber, Secretary of the
Company will be compensated in the form of shares of common stock of the Company
upon completion of an acquisition or merger. It is possible that such
compensation may become a factor in negotiations and present a conflict of
interest. Ruairidh Campbell and Richard Surber will use their best efforts to
resolve equitably any conflicts that might arise during negotiations for an
acquisition or merger.
There are no agreements or understandings for Ruairidh Campbell or Richard
Surber to resign at the request of another person. Ruairidh Campbell and Richard
Surber are not acting on behalf of or will act at the direction of any other
person, except at the time of a acquisition or merger and at the request of the
controlling persons of the acquisition or merger candidate. The Company expects
that the controlling persons of a acquisition or merger candidate would ask the
current Officers and Directors to resign at the time of the acquisition or
merger as any such transaction would change control of the Company.
There are no current plans, proposals, arrangements or understandings with
respect to the issuance of additional securities by the Company prior to the
merger with or acquisition of a business or businesses.
ITEM 6. EXECUTIVE COMPENSATION
No cash compensation was paid to any of the Company's executive officers during
the fiscal year ended December 31, 1999. No cash compensation has been paid to
any of the executive officers since the beginning of 2000, and it is not
expected any such compensation will be paid during the remainder of 2000. The
Company, as of April 3, 2000, has issued Ruairidh Campbell a total of 2,500,000
Shares for his services to the Company valued at $2,500. The Company, as of
April 3, 2000, has issued Richard Surber a total of 2,500,000 Shares for his
services to the Company valued at $2,500. There is currently no policy in place
that prevents the Company from compensating Ruairidh Campbell, Richard Surber or
any future officer, director or affiliate in the form of the Company's shares of
common stock or other non-cash compensation. The Company has no current plans to
compensate any of the aforementioned entities in this manner in the foreseeable
future. However, the Company may agree to register the Shares pursuant to an
appropriate registration statement on or after the Company effects a merger or
acquisition.
16
<PAGE>
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. The Company
has no plan, agreement, or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the issuance to such persons of any shares of the Company's authorized and
unissued common stock. There is no understanding between the Company and any of
its present stockholders regarding the sale of a portion or all of the common
stock currently held by them in connection with any future participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers, directors, or principal stockholders, or
any of their affiliates or associates, would receive funds, stock, or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
Upon the merger or acquisition of a business, it is possible that current
management will resign and be replaced by persons associated with the business
acquired, particularly if the Company participates in a business by effecting a
stock exchange, merger, or consolidation as discussed under the "BUSINESS"
heading above. In the event that any member of current management remains after
effecting a business acquisition, that member's time commitment and compensation
will likely be adjusted based on the nature and location of such business and
the services required, which cannot now be foreseen.
Compensation of Directors
Currently there are no plans to compensate the Directors of the Company for
their services.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 10, 1999 the Company issued 1,000,000 shares of Common Stock to
Ruairidh Campbell (500,000) and Richard Surber (500,000), Officers and Directors
of the Company, at par value of $0.001for a total of $1,000.
On January 12, 2000, the Company issued 5,000,000 shares of Common Stock to
Ruairidh Campbell (2,500,000) and Richard Surber (2,500,000) valued at par
($0.001) in exchange for services rendered.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 45,000,000 shares of common stock, par value
$0.001 per share, of which 6,044,500 shares are issued and outstanding as of
April 3, 2000. The Company is also authorized to issue 5,000,000 shares of
preferred stock, par value $0.001 per share, of which none are issued and
outstanding as of April 3, 2000. Holders of both the common and preferred stock
are entitled to one vote per share on each matter submitted to a vote at any
meeting of stockholders. Neither the holders of common stock nor of preferred
stock have cumulative voting rights. The Company's Board of Directors has
authority, without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock, which would
reduce the percentage ownership in the Company of its stockholders and which may
dilute the book value of the common stock. Likewise, the Company's Board of
Directors has authority, without action by the holders of preferred stock, to
issue all or any portion of the authorized but unissued shares of preferred
stock so long as such shares are on a parity with or junior to the rights of the
preferred stock, which would reduce the percentage ownership of the preferred
stockholders and which may dilute the book value of the stock.
17
<PAGE>
Holders of either the Company's common or preferred stock have no pre-emptive
rights to acquire additional shares of stock. The common stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Company, the shares of common stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. Additional
rights, if any, for holders of preferred stock, in the event of liquidation are
yet to be determined by the Board of Directors.
Holders of the common stock are entitled to receive such dividends as the Board
of Directors may from time to time declare out of funds legally available for
the payment of dividends. The rights of holders of the preferred stock to
receive dividends, if any, are yet to be determined by the Board of Directors.
The Company has not paid dividends on either its common stock or its preferred
stock, and it does not anticipate that it will pay dividends in the foreseeable
future.
Dividend, Voting and Preemption Rights
The Company has two classes of authorized shares: $0.001 par value common stock
and $.001 par value preferred stock. Holders of common stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available. The rights of holders of preferred stock, if any, to
receive a dividend, are yet to be determined by the Board of Directors. The
Company has not paid dividends on either its common stock or its preferred
stock, and it does not anticipate that it will pay dividends in the foreseeable
future. For more information on the Company's dividend policy, see Part II. Item
1, "Market Price of and Dividends on the Registrant's Common Equity and Other
Shareholder Matters."
Holders of the Company's common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the security holders. The
rights of holders of preferred stock, if any, to vote on all matters submitted
to a vote of the security holders is yet to be determined by the Board of
Directors. The holders of common stock are not entitled to cumulative voting
rights.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company currently has no public trading market. The Company intends to file
a Form 15c-(2)(11) in an effort to obtain a listing on the NASD over the counter
bulletin board to create a public market upon this Form 10-SB/A-4 becoming
effective. Management believes that the creation of a public trading market for
the Company's securities would make the Company a more attractive acquisition or
merger candidate. However, there is no guarantee that the Company will obtain a
listing on the NASD over-the-counter bulletin board or that a public market for
the Company's securities will develop or, if such a market does develop, that it
will continue, even if a listing on the NASD over the counter bulletin board is
obtained. It is the position of the Office of Small Business of the Securities &
Exchange Commission (per No Action Letter, NASD Regulation, Inc., dated January
21, 2000) that Rule 144 is not available for resale transactions involving
securities sold by promoters and affiliates of a blank check company, and their
transferees, and anyone else who has been issued securities from a blank check
company, and that securities issued by a blank check company to promoters and
affiliates, and their transferees, can only be resold through registration under
the Securities Act. Therefore, the Company may only be able to obtain a listing
on the NASD OTC:BB after filing an appropriate registration under the Securities
Act of 1933 which would most likely occur subsequent to the Company completing a
business combination. In addition, the promoters or affiliates of blank check
companies, as well as their transferees, are deemed to be "underwriters" of the
securities issued both before and after any business combination.
18
<PAGE>
Record Holders
As of April 3, 2000 there were seventy-nine (79) shareholders of record holding
a total of 6,044,500 shares of Common Stock. The holders of the Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Holders of the Common Stock have no preemptive rights and
no right to convert their Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock.
Dividends
The Company has not declared any dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
Penny Stock
Until the Company's shares qualify for inclusion in the NASDAQ system, the
trading of the Company's securities, if any, will be in the over-the-counter
markets which are commonly referred to as the "pink sheets" or on the OTC
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission adopted Rule
15g-9, which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
ITEM 2. LEGAL PROCEEDINGS
The Company is currently not a party to any legal proceedings.
19
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no disagreements with its independent accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On December 10, 1999 the Company issued 1,000,000 shares of Common Stock to
Ruairidh Campbell (500,000) & Richard Surber (500,000), Officers and Directors
of the Company, at par value of $0.001 for a total of $1,000. The Company relied
on exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended. The Company made this offering based on the following factors: (1) the
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only four offerees who were
consultants to and Directors of the Company; (3) the offerees will not resell
the stock but will continue to hold it for at least one year; (4) there were no
subsequent or contemporaneous public offerings of the stock; (5) the stock was
not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offerees and the Company.
On December 16, 1999, the Company completed a private placement of 37,500 shares
of Common Stock to 75 non-U.S. persons at a purchase price of $0.01 per share.
The Company relied on exemptions provided by Regulation S of the Securities Act
of 1933, as amended, for the issuance of the 37,500 shares of Common Stock to
these non-U.S. persons. It is the position of the Office of Small Business of
the Securities & Exchange Commission (per No Action Letter, NASD Regulation,
Inc., dated January 21, 2000) that Rule 144 is not available for resale
transactions involving securities sold by promoters and affiliates of a blank
check company, and their transferees, and anyone else who has been issued
securities from a blank check company, and that securities issued by a blank
check company to promoters and affiliates, and their transferees, can only be
resold through registration under the Securities Act.
On January 12, 2000 the Company issued 5,007,000 shares of Common Stock to
Ruairidh Campbell (2,500,000), Richard Surber (2,500,000), Susan Santage (5,000)
and Kevin Schillo (2,000), valued at par ($0.001) for services rendered in
reliance upon the exemptions provided by Section 4(2) of the Securities Act of
1933, as amended. The Company made this offering based on the following factors:
(1) the issuance was an isolated private transaction by the Company which did
not involve a public offering; (2) there were only four offerees who were
consultants to and Directors of the Company; (3) the offerees will not resell
the stock but will continue to hold it for at least one year; (4) there were no
subsequent or contemporaneous public offerings of the stock; (5) the stock was
not broken down into smaller denominations; and (6) the negotiations for the
sale of the stock took place directly between the offerees and the Company. It
is the position of the Office of Small Business of the Securities & Exchange
Commission (per No Action Letter, NASD Regulation, Inc., dated January 21, 2000)
that Rule 144 is not available for resale transactions involving securities sold
by promoters and affiliates of a blank check company, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act.
All stock certificates issued exhibit restrictive legends in accordance with the
rules and regulations of the Securities Act of 1933 as described below. However,
it is the position of the Office of Small Business of the Securities & Exchange
Commission (per No Action Letter, NASD Regulation, Inc., dated January 21, 2000)
that Rule 144 is not available for resale transactions involving securities sold
by promoters and affiliates of a blank check company, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act.
20
<PAGE>
In general, under Rule 144, a person (or persons whose shares are aggregated)
who has satisfied a one year holding period, under certain circumstances, may
sell within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of the
Company.
It is the position of the Office of Small Business of the Securities & Exchange
Commission (per No Action Letter, NASD Regulation, Inc., dated January 21, 2000)
that Rule 144 is not available for resale transactions involving securities sold
by promoters and affiliates of a blank check company, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act.
Regulation S provides generally that any offer or sale that occurs outside of
the United States is exempt from the registration requirements of the Securities
Act of 1933, provided that certain conditions are met. Regulation S has two safe
harbors. One safe harbor applies to offers and sales by issuers, securities
professionals involved in the distribution process pursuant to contract, their
respective affiliates, and persons acting on behalf of any of the foregoing (the
"issuer safe harbor"), and the other applies to resales by persons other than
the issuer, securities professionals involved in the distribution process
pursuant to contract, their respective affiliates (except certain officers and
directors), and persons acting on behalf of any of the forgoing (the "resale
safe harbor"). An offer, sale or resale of securities that satisfied all
conditions of the applicable safe harbor is deemed to be outside the United
States as required by Regulation S. The distribution compliance period for
shares sold in reliance on Regulation S is one year.
The Company has complied with the requirements of Regulation S by having no
directed selling efforts made in the United States, By selling only to buyers
who were outside the United States at the time the buy orders originated,
ensuring that each person is a non-U.S. person with address in a foreign country
and having each person make representation to the Company certifying that he or
she is not a U.S. person and is not acquiring the Securities for the account or
benefit of a U.S. person other than persons who purchased Securities in
transactions exempt from the registration requirements of the Securities Act;
and also agrees only to sell the Securities in accordance with the registration
provisions of the Securities Act or an exemption therefrom, or in accordance
with the provisions of the Regulation.
The Company has obligations to ensure that any state laws are not violated
through the sale and resale of its securities. Ruairidh Campbell, President of
the Company, and Richard Surber, Secretary and Treasurer of the Company,
understood and agreed that the securities of the Company issued to them are
unregistered and may not be sold, transferred or otherwise disposed of unless
registered or qualified under applicable state securities laws or an exemption
therefrom is available. It is the position of the Office of Small Business of
the Securities & Exchange Commission (per No Action Letter, NASD Regulation,
Inc., dated January 21, 2000) that Rule 144 is not available for resale
transactions involving securities sold by promoters and affiliates of a blank
check company, such as Mr. Campbell and Mr. Surber, and their transferees, and
anyone else who has been issued securities from a blank check company, and that
securities issued by a blank check company to promoters and affiliates, and
their transferees, can only be resold through registration under the Securities
Act. Thus Rule 144 is not available for resale of the shares owned by Messrs.
Campbell and Surber.
21
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and section 78.751 of the Nevada Revised Statutes provide
for indemnification of the Company's officers and directors in certain
situations where they might otherwise personally incur liability, judgments,
penalties, fines and expenses in connection with a proceeding or lawsuit to
which they might become parties because of their position with the Company.
Section 78.751. Indemnification of officers, directors, employees and agents;
advancements of expenses, states the following:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation,
by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonable entitled to indemnity
for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections 1 and 2,
or in defense of any claim, issue or matter therein, he must be
indemnified by the corporation against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the
defense.
22
<PAGE>
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or;
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
5. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of
the final disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or
otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either
an action in his official capacity or an action in another
capacity while holding his office, except that indemnification,
unless ordered by a court pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law
and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
To the extent that indemnification may be related to liability arising under the
Securities Act, the Securities and Exchange Commission takes the position that
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
23
<PAGE>
PART F/S
The Company's audited financial statements since inception for the fiscal year
ended December 31, 1999 are attached hereto as F-1 through F-8.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Audited Financial Statements
December 31, 1999
<PAGE>
CONTENTS
Page
Independent Auditors' Report.................................................F-2
Balance Sheet................................................................F-3
Statement of Operations......................................................F-4
Statement of Stockholders' Equity............................................F-5
Statement of Cash Flows......................................................F-6
Notes to Financial Statements................................................F-7
F-1
<PAGE>
[TANNER +CO.
675 EAST 500 SOUTH, SUITE 640
SALT LAKE CITY, UTAH 84102
PHONE: 801-532-7444
FAX: 801-532-4911
EMAIL [email protected]]
INDEPENDENT AUDITORS' REPORT
To the Stockholders' and
Board of Directors of
Aswan Investments, Inc.
We have audited the accompanying balance sheet of Aswan Investments, Inc. (a
development stage company), as of December 31, 1999 and the related statements
of operations and stockholders' equity, and cash flows for the period from
December 7, 1999 (date of 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 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 Aswan Investments, Inc. (a
development stage company), as of December 31, 1999 and the results of its
operations and its cash flows for the period from December 7, 1999 (date of
inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's revenue generating activities are not in
place and the Company has incurred a loss. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters also are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Tanner+Co.
Salt Lake City, Utah
January 19, 2000
F-2
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets - stock subscription receivable $ 465
Liabilities and Stockholders' Equity
Current liabilities $ -
------------------
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued or outstanding -
Common stock, $.001 par value, 45,000,000 shares
authorized, 1,037,500 shares issued and outstanding 1,038
Additional paid-in capital 337
Accumulated deficit (910)
------------------
Total stockholders' equity 465
------------------
$ 465
==================
</TABLE>
See notes to financial statements
F-3
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Statement of Operations
December 7, 1999 (Date of Inception) to December 31, 1999
Revenues $ -
General and administrative costs 910
---------------
Net loss before income taxes (910)
Provision for income taxes -
---------------
Net loss $ (910)
===============
Loss per common share - basic and diluted $ -
===============
Weighted average common shares - basic and diluted 1,037,000
===============
See notes to financial statements
F-4
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Statement of Stockholders' Equity
December 7, 1999 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
----------------------------------------------------------------- Paid-in Accumlated
Shares Amount Shares Amount Capital Deficit Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 7, 1999 (date
of inception) - $ - - $ - $ - $ - $ -
Issuance of common stock for:
Cash - - 572,500 573 337 - 910
Stock subscription
receivable - - 465,000 465 - - 465
Net loss - - - - - (910) (910)
----------------------------------------------------------------------------------------------
Balance at December 31, 1999 - $ - 1,037,500 $ 1,038 $ 337 $ (910) $ 465
================================================================================================
</TABLE>
See notes to financial statements
F-5
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Statement of Cash Flows
December 7, 1999 (Date of Inception) to December 31, 1999
Cash flows from operating activities -
net loss $ (910)
------------------
Cash flows from investing activities -
------------------
Cash flows from financing activities-
issuance of common stock 910
------------------
Net increase in cash -
Cash, beginning of period -
------------------
Cash, end of period $ -
==================
See notes to financial statements
F-6
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Notes to Financial Statements
December 31, 1999
1. Organization and Summary of Significant Accounting Policies
Organization
The Company was organized under the laws of the State of Nevada on
December 7, 1999 (date of inception). The Company has not commenced
planned principal operations. The Company proposes to seek business
ventures which will allow for long-term growth. Further, the Company is
considered a development stage company as defined in SFAS No. 7 and has
not, thus far, engaged in business activities of any kind. The Company
has, at the present time, not paid any dividends and any dividends that
may be paid in the future will depend upon the financial requirements
of the Company and other relevant factors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
Income Taxes
Deferred income taxes are provided in amounts sufficient to give effect
to temporary differences between financial and tax reporting,
principally related to net operating loss carryforwards.
Earnings Per Share
The computation of basic earning per common share is based on the
weighted average number of shares outstanding during each period.
The computation of diluted earnings per common share is based on the
weighted average number of shares outstanding during the period plus
the common stock equivalents which would arise form the exercise of
stock options and warrants outstanding using the treasury stock method
and the average market price per share during the period. The Company
did not have any stock options or warrants outstanding at December 31,
1999.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the 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-7
<PAGE>
ASWAN INVESTMENTS, INC.
(A Developmental Stage Company)
Notes to Financial Statements
December 31, 1999
2. Going Concern
As of December 31, 1999, the Company's revenue generating activities
are not in place, and the Company has incurred a loss for the period
then ended. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
Management intends to seek additional funding through business
ventures. There can be no assurance that such funds will be available
to the Company, or available on terms of acceptable to the Company.
3. Income Taxes
The difference between income taxes at statutory rates and the amount
presented in the financial statements is a result of an increase in the
valuation allowance to offset the deferred tax asset related to the net
operating loss carryforward.
The Company has net operating loss carryforwards of approximately $900,
which begin to expire in the year 2019. The amount of net operating
loss carryforward that can be used in any one year will be limited by
significant changes in the ownership of the Company and by the
applicable tax laws which are in effect at the time such carryforwards
can be utilized.
4. Supplemental Cash Flow Information
No amounts were paid for interest or income taxes during the period
ended December 31, 1999.
During the period ended December 31, 1999, the Company issued common
stock in exchange for a stock subscription receivable. The stock
subscription receivable was collected subsequent to December 31, 1999.
5. Preferred Stock
The Company has authorized up to 5,000,000 shares of preferred stock
with a par value of $.001 per share. The preferred stock can be issued
in various series with varying dividend rates and preferences.
6. Recent Accounting Pronouncements
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective date of
FASB Statements No. 133." SFAS 133 establishes accounting and reporting
standards of all derivatives as assets or liabilities in the statement
of financial position and measurement of those instruments at fair
value. SFAS 133 is now effective for fiscal years beginning after June
15, 2000. The Company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the Company.
7. Subsequent Event
On January 12, 2000, the Company issued 5,007,000 shares of common
stock in exchange for services.
F-8
<PAGE>
PART III
ITEM 1. EXHIBITS
(a) Exhibits. Exhibits required to be attached are listed in the Index to
Exhibits beginning on page 28 of this form 10-SB/A-4 under "Item 2,
Description of Exhibits."
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
26
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, this 16th day of August, 2000.
Aswan Investments, Inc.
/s/ Ruairidh Campbell
---------------------------------
Name: Ruairidh Campbell
Title: President/CEO and Director
Signature Title Date
--------- ----- ----
/s/ Ruairidh Campbell
----------------------
Ruairidh Campbell President and Director August 16, 2000
/s/ Richard Surber
-------------------
Richard Surber Secretary and Director August 16, 2000
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
27
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhib. Page
No. No. Description
----- ---- -----------
3(i) * Articles of Incorporation of Aswan Investments, Inc., a
Nevada corporation, filed with the State of Nevada on
December 10, 1999.
3(ii) * By-laws of the Company adopted on December 7, 1999.
4 * Employee Benefit Plan adopted on December 14 , 1999.
27 * Financial Data Schedule "CE"
* Incorporated by reference from Form 10-SB/A-2 filed June 27, 2000.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
28
