10SB12G
1
ALAMO FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0409172
(State of organization) (I.R.S. Employer Identification No.)
3360 West Sahara, Suite 200, Las Vegas, NV 89102
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 732-2253
Registrant's Attorney: Shawn Hackman, Esq., 3360 W. Sahara Ave., Suite
200,
Las Vegas, NV 89102,
(702) 732-2253. Fax: (702) 940-4006
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common
ITEM 1. DESCRIPTION OF BUSINESS
Background
Alamo Financial Services, Inc. (the "Company") is a Nevada corporation
formed on June 13th, 1996. Its principal place of business is located
at 3360 W. Sahara Ave., Suite 200, Las Vegas, NV 89102. The Company was
organized to engage in any lawful corporate business, including but not
limited to, participating in mergers with and acquisitions of other
companies.
The Company has been in the developmental stage since inception and has
no operating history other than organizational matters.
The Company was organized June 13th, 1996, under the laws of the State
of Nevada, as Alamo Financial Services, Inc. The company has no
operations and in accordance with SFAS #7, is considered a development
stage company.
The Company was incorporated by Cort W. Christie. He no longer holds
any position with the Company and holds none of the Company's stock. On
Sept. 24, 1996, 5,000 shares were issued to 24 shareholders. On Nov. 1,
1999, there was a 200-1 stock split. There are currently 24
shareholders.
The primary activity of the Company currently involves seeking a
company or companies that it can acquire or with whom it can merge. The
Company has not selected any company as an acquisition target or merger
partner and does not intend to limit potential candidates to any
particular field or industry, but does retain the right to limit
candidates, if it so chooses, to a particular field or industry. The
Company's plans are in the conceptual stage only.
The Board of Directors has elected to begin implementing the Company's
principal business purpose, described below under "Item 2, Plan of
Operation." As such, the Company can be defined as a "shell" company,
whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity. The proposed business activities
described herein classify the Company as a "blank check" company. Many
states have enacted statutes, rules, and regulations limiting the sale
of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to
cause a market to develop in the Company's securities until such time
as the Company has successfully implemented its business plan. The
Company is filing this registration statement on a voluntary basis,
pursuant to section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act"), in order to ensure that public information is readily
accessible to all shareholders and potential investors, and to increase
the Company's access to financial markets. In the event the Company's
obligation to file periodic reports is suspended pursuant to the
Exchange Act, the Company anticipates that it will continue to
voluntarily file such reports.
Risk Factors
The Company's business is subject to numerous risk factors, including
the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had
no operating history and has received no revenues or earnings from
operations. The Company has no significant assets or financial
resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until it completes a
business combination. This may result in the Company incurring a net
operating loss which will increase continuously until the Company
completes a business combination with a profitable business
opportunity. There is no assurance that the Company will
identify a business opportunity or complete 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
combinations with entities having established operating histories, it
cannot assure that the Company will successfully locate candidates
meeting such criteria. In the event the Company completes a business
combination, the success of the Company's operations may be dependent
upon management of the successor firm or venture partner firm together
with numerous other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is, and will continue to be, an insignificant
participant in the business of seeking mergers and joint ventures with,
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
also be desirable target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical
expertise, and managerial capabilities than the Company.
The Company is, consequently, at a competitive disadvantage in
identifying possible business opportunities and successfully completing
a business combination. Moreover, the Company will also compete with
numerous other small public companies in seeking merger or acquisition
candidates.
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 business combination with
any private entity. There can be no assurance the Company will
successfully identify and evaluate suitable business opportunities or
conclude a business combination. Management has not identified any
particular industry or specific business within an industry for
evaluations. The Company has been in the developmental stage since
inception and has no operations to date. Other than issuing shares to
its original shareholders, the Company never commenced any operational
activities. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the Company.
The Company has not established a specific length of operating history
or a specified level of earnings, assets, net worth or other criteria
which it will require a target business opportunity to have achieved,
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, management anticipates devoting up to twenty
hours per month to the business of the Company. The Company's officers
have not entered into written employment agreements with the Company
and are not expected to do so in the foreseeable future. The Company
has not obtained key man life insurance on its officers or directors.
Notwithstanding the combined limited experience and time commitment of
management, loss of the services of any of these individuals would
adversely affect development of the Company's business and its
likelihood of continuing operations. See "MANAGEMENT."
CONFLICTS OF INTEREST - GENERAL. The Company's officers and directors
participate in other business ventures which compete directly with the
Company. Additional conflicts of interest and non "arms-length"
transactions may also arise in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. The Company's Board of Directors has
adopted a resolution which prohibits the Company from completing a
combination with 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. Management is not aware of any
circumstances under which this policy could be changed while current
management is in control of the Company. See "ITEM 5. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS OF
INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Companies
subject to Section 13 of the Securities Exchange Act of 1934 (the
"Exchange Act") must provide certain information about significant
acquisitions, including certified financial statements for the company
acquired, covering one or two years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly delay
or even preclude the Company from completing an otherwise desirable
acquisition. Acquisition prospects that do not have or are unable to
obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934
Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has not
conducted or received results of market research indicating that market
demand exists for the transactions contemplated by the Company.
Moreover, the Company does not have, and does not plan to establish, a
marketing organization. If there is demand for a business combination
as contemplated by the Company, there is no assurance the Company will
successfully complete such transaction.
LACK OF DIVERSIFICATION. In all likelihood, the Company's proposed
operations, even if successful, will result in a business combination
with only one entity. Consequently, the resulting activities will be
limited to that entity's business. 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, thereby
increasing 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 stock will, in all
likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may
require management of the Company to sell or transfer all or a portion
of the Company's common stock held by them, or resign as members of the
Board of Directors of the Company. The resulting change in control of
the Company could result in removal of one or more present officers and
directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of
the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.
The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would
result in the Company issuing securities to shareholders of such
private company. Issuing previously authorized and unissued common
stock of the Company will reduce the percentage of shares owned by
present and prospective shareholders, and a change in the Company's
control and/or management.
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 target company 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. The
perceived adverse consequences may include, but are not limited to,
time delays of the registration proess, significant expenses to be
incurred in such an offering, loss of voting control to public
shareholders, and the inability or unwillingness to comply with
various federal and state securities laws enacted for the protection of
investors. These securities laws primarily relate to registering
securities and full disclosure of the Company's business, management,
and financial statements.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may
undertake. Typically, these transactions may be structured 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. Management cannot assure that a
business combination will meet the statutory requirements for a tax-
free reorganization, or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes, which may have an adverse effect on both parties to the
transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management believes that any potential target company
must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or more
attractive business opportunities may forego a business combination
with the Company, rather than incur the expenses associated with
preparing audited financial statements.
BLUE SKY CONSIDERATIONS. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any
state, and the Company has no current plans to register or qualify its
shares in any state, holders of these shares and persons who desire to
purchase them in any trading market that might develop in the future,
should be aware that there may be significant state blue sky
restrictions upon the ability of new investors to purchase the
securities. These restrictions could reduce the
size of any potential market. As a result of recent changes in federal
law, non-issuer trading or resale of the Company's securities is
exempt from state registration or qualification requirements in most
states. However, some states may continue to restrict the trading or
resale of blind-pool or "blank-check" securities. Accordingly,
investors should consider any potential secondary market for the
Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and "forward-
looking statements" as that term is defined in Section 27A of the
Securities Act of 1933 as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934 as amended (the "Exchange
Act"). All statements that are included in this Registration Statement,
other than statements of historcal fact, are forward-looking
statements. Although Management believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been
correct. Important factors that could cause actual results to differ
materially from the expectations are disclosed in this Statement,
including, without limitation, in conjunction with those forward-
looking statements contained in this Statement.
Plan of Operation - General
The Company's plan is to seek, investigate, and if such investigation
warrants, acquire an interest in one or more business opportunities
presented to it by persons or firms desiring the perceived advantages
of a publicly held corporation. At this time, the Company has no plan,
proposal, agreement, understanding, or arrangement to acquire or merge
with any specific business or company, and the Company has not
identified any specific business or company for investigation and
evaluation. No member of Management or any promoter of the Company, or
an affiliate of either, has had any material discussions with any other
company with respect to any acquisition of that company. The Company
will not restrict its search to any specific business, industry, or
geographical location, and may participate in business ventures of
virtually any kind or nature. Discussion of the proposed business under
this caption and throughout this Registration Statement is purposefully
general and is not meant to restrict the Company's virtually unlimited
discretion to search for and enter into a business combination.
The Company may seek a combination with a firm which only recently
commenced operations, or a developing company in need of additional
funds to expand into new products or markets or seeking to develop a
new product or service, or an established business which may be
experiencing financial or operating difficulties and needs additional
capital which is perceived to be easier to raise by a public company.
In some instances, a business opportunity may involve acquiring or
merging with a corporation which does not need substantial additional
cash but which desires to establish a public trading market for its
common stock. The Company may purchase assets and establish wholly-
owned subsidiaries in various businesses or purchase existing
businesses as subsidiaries. Selecting a business opportunity will be
complex and extremely risky. Because of general economic conditions,
rapid technological advances being made in some industries, and
shortages of available capital, management believes that there are
numerous firms seeking the benefits of a publicly-traded corporation.
Such perceived benefits of a publicly traded corporation may include
facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for the principals of a
business, creating a means for providing incentive stock options or
similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statues) for all shareholders, and other
items. Potentially available business opportunities may occur in many
different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
Management believes that the Company may be able to benefit from the
use of "leverage" to acquire a target company. Leveraging a transaction
involves acquiring a business while incurring significant indebtedness
for a large percentage of the purchase price of that business. Through
leveraged transactions, the Company would be required to use less of
its available funds to acquire a target company and, therefore, could
commit those funds to the operations of the business, to combinations
with other target companies, or to other activities. The borrowing
involved in a leveraged transaction will ordinarily be secured by the
assets of the acquired business. If that business is not able to
generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business, the lender would be able to
exercise the remedies provided by law or by contract. These
leveraging techniques, while reducing the amount of funds that the
Company must commit to acquire a business, may correspondingly increase
the risk of loss to the Company. No assurance can be given as to the
terms or availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates,
because the investment in the business held on a leveraged basis will
only be profitable if it generates sufficient revenues to cover the
related debt and other costs of the financing. Lenders from which the
Company may obtain funds for purposes of a leveraged buy-out may impose
restrictions on the future borrowing, distribution, and operating
policies of the Company. It is not possible at this time to predict the
restrictions, if any, which lenders may impose, or the impact thereof
on the Company. The Company has insufficient capital with which to
provide the owners of businesses significant cash or other assets.
Management believes the Company will offer owners of businesses the
opportunity to acquire a controlling ownership interest in a public
company at substantially less cost than is required to conduct an
initial public offering. The owners of the businesses will, however,
incur significant post-merger or acquisition registration costs in the
event they wish to register a portion of their shares for subsequent
sale. The Company will also incur significant legal and accounting
costs in connection with the acquisition of a business opportunity,
including the costs of preparing post-effective amendments, Forms 8-K,
agreements, and related reports and documents. Nevertheless, the
officers and directors of the Company have not conducted market
research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the
owners of a businesses. The Company does not intend to make any loans
to any prospective merger or acquisition candidates or to unaffiliated
third parties. The Company will not restrict its search for any
specific kind of firms, but may acquire a venture which is in its
preliminary or development stage, which is already in operation, or in
essentially any stage of its corporate life.
It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to
seek additional capital, may desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer.
However, the Company does not intend to obtain funds in one or more
private placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated
such a merger or acquisition. The Company also has no plans to conduct
any offerings under Regulation S.
Sources of Opportunities
The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers
and directors as well as indirect associations between them and other
business and professional people. It is not presently anticipated that
the Company will engage professional firms specializing in business
acquisitions or reorganizations. Management, while not especially
experienced in matters relating to the new business of the Company,
will rely upon their own efforts and, to a much lesser extent, the
efforts of the Company's shareholders, in accomplishing the business
purposes of the Company. It is not anticipated that any outside
consultants or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business
purposes described herein. However, if the Company does retain such an
outside consultant or advisor, any cash fee earned by such party will
need to be paid by the prospective merger/acquisition candidate, as the
Company has no cash assets with which to pay such obligation. There
have been no discussions, understandings, contracts or agreements with
any outside consultants and none are anticipated in the future. In the
past, the Company's management has never used outside consultants or
advisors in connection with a merger or acquisition.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be
approved by the Company's Board of Directors and will be in accordance
with the industry standards. Such fees are customarily between 1% and
5% of the size of the transaction, based upon a sliding scale of the
amount involved. Such fees are typically in the range of 5% on a
$1,000,000 transaction ratably down to 1% in a $4,000,000 transaction.
Management has adopted a policy that such a finder's fee or real estate
brokerage fee could, in certain circumstances, be paid to any employee,
officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company. The
Company will not have sufficient funds to undertake any significant
development, marketing, and manufacturing of any products which may be
acquired. Accordingly, if it acquires the rights to a product, rather
than entering into a merger or acquisition, it most likely would need
to seek debt or equity financing or obtain funding from third parties,
in exchange for which the Company would probably be required to give up
a substantial portion of its interest in any acquired product. There is
no assurance that the Company will be able either to obtain additional
financing or to interest third parties in providing funding for the
further development, marketing and manufacturing of any products
acquired.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or
under the supervision of the officers and directors of the Company (see
"Management"). Management intends to concentrate on identifying
prospective business opportunities which may be brought to its
attention through present associations with management. In analyzing
prospective business opportunities, management will consider, among
other factors, such matters as;
1. the available technical, financial and managerial resources
2. working capital and other financial requirements
3. history of operation, if any
4. prospects for the future
5. present and expected competition
6. the quality and experience of management services which may be
available and the depth of that management
7. the potential for further research, development or exploration
8. specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company
9. the potential for growth or expansion
10. the potential for profit
11. the perceived public recognition or acceptance of products,
services or trades
12. name identification
Management will meet personally with management and key personnel of
the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize
written reports and personal investigation to evaluate the above
factors. The Company will not acquire or merge with any company for
which audited financial statements cannot be obtained. Opportunities in
which the Company participates will present certain risks,
many of which cannot be identified adequately prior to selecting a
specific opportunity. The Company's shareholders must, therefore,
depend on Management to identify and evaluate such risks. Promoters of
some opportunities may have been unable to develop a going concern or
may present a business in its development stage (in that it has not
generated significant revenues from its principal business activities
prior to the Company's participation.) Even after the Company's
participation, there is a risk that the combined enterprise may not
become a going concern or advance beyond the development stage. Other
opportunities may involve new and untested products, processes, or
market strategies which may not succeed. Such risks will be assumed by
the Company and, therefore, its shareholders. The investigation of
specific business opportunities and the negotiation, drafting, and
execution of relevant agreements, disclosure documents, and
other instruments will require substantial management time and
attention as well as substantial costs for accountants, attorneys, and
others. If a decision is made not to participate in a specific business
opportunity the costs incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to
consummate that transaction may result in the loss by the Company of
the related costs incurred.
There is the additional risk that the Company will not find a suitable
target. Management does not believe the Company will generate revenue
without finding and completing a transaction with a suitable target
company. If no such target is found, therefore, no return on an
investment in the Company will be realized, and there will not, most
likely, be a market for the Company's stock.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization,
joint venture, franchise, or licensing agreement with another
corporation or entity. It may also purchase stock or assets of an
existing business. Once a transaction is complete, it is possible
that the present management and shareholders of the Company will not be
in control of the Company. In addition, a majority or all of the
Company's officers and directors may, as part of the terms of the
transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders. It is anticipated that
securities issued in any such reorganization would be issued in
reliance on exemptions from registration under applicable Federal
and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to
register such securities either at the time the transaction
is consummated, under certain conditions, or at specified time
thereafter. The issuance of substantial additional securities and their
potential sale into any trading market which may develop in the
Company's Common Stock 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 predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a
taxable event and thereby structure the acquisition in a so called "tax
free" reorganization under Sections 368(a)(1) or 351 of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to obtain tax
free treatment under the Code, it may be necessary for the owners
of the acquired business to own 80% or more of the voting stock of
the surviving entity. In such event, the shareholders of the Company,
including investors in this offering, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which could
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may
visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited financial resources
and management expertise. The manner in which the Company participates
in an opportunity with a target company will depend on the nature of
the opportunity, the respective needs and desires of the Company and
other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the
Company which the target company's shareholders would acquire in
exchange for their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, the
Company's shareholders will, in all likelihood, hold a lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders, including purchasers
in this offering.
Management has advanced, and will continue to advance, funds which
shall be used by the Company in identifying and pursuing agreements
with target companies. Management anticipates that these funds will be
repaid from the proceeds of any agreement with the target company, and
that any such agreement may, in fact, be contingent upon the repayment
of those funds.
Competition
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development-stage
enterprises. There are many established management and financial
consulting companies and venture capital firms which have significantly
greater financial and personal resources, technical expertise and
experience than the Company. In view of the Company's limited financial
resources and management availability, the Company will continue to be
at significant competitive disadvantage vis-a-vis the Company's
competitors.
Year 2000 Compliance
The Company is aware of the issues associated with the programming code
in existing computer systems as the year 2000 approaches. The Company
has assessed these issues as they relate to the Company, and since the
Company currently has no operating business and does not use any
computers, and since it has no customers, suppliers or other
constituents, it does not believe that there are any material year 2000
issues to disclose in this Form 10-SB.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as
an issuer which is or holds itself out as being engaged primarily in
the business of investing, reinvesting or trading securities. While the
Company does not intend to engage in such activities, the Company may
obtain and hold a minority interest in a number of development stage
enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the
Investment Company Act of 1940. Accordingly, management will continue
to review the Company's activities from time to time with a view toward
reducing the likelihood the Company could be classified as an
investment company". The Company intends to structure a merger or
acquisition in such manner as to minimize Federal and state tax
consequences to the Company and to any target company.
Employees
The Company's only employees at the present time are its officers and
directors, who will devote as much time as the Board of Directors
determine is necessary to carry out the affairs of the Company. (See
"Management").
ITEM 3. DESCRIPTION OF PROPERTY.
The Company neither owns nor leases any real property at this time.
Paul Salas provides office services for Alamo Financial Services Sark,
Inc.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth each person known to the Company, as of
December 31, 1999, to be a beneficial owner of five percent (5%) or
more of the Company's common stock, by the Company's directors
individually, and by all of the Company's directors and executive
officers as a group. Except as noted, each person has sole voting and
investment power with respect to the shares shown.
Title Name Shares Percentage of
of Class of Owner Beneficially Ownership
Owned
[S] [C] [C] [C]
Common Paul Salas 200,000 4%
Common Edward Figueroa, Jr. 200,000 4%
Common Natibe Latouf 200,000 4%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The members of the Board of Directors of the Company serve until the
next annual meeting of the stockholders, or until their successors have
been elected. The officers serve at the pleasure of the Board of
Directors. There are no agreements for any officer or director to
resign at the request of any other person, and none of the officers or
directors named below are acting on behalf of, or at the direction of,
any other person. The Company's officers and directors will devote
their time to the business on an "as-needed" basis, which is expected
to require 5-10 hours per month. Information as to the directors and
executive officers of the Company is as follows:
Name Age Position
[S] [C] [C]
Paul Salas 47 President
Edward Figueroa, Jr. 28 Secretary/Treasurer
Paul Salas; President.
Paul Salas, age 47, is the owner of Big City Graph-X. Mr. Salas's
company engages in the business of graphic design, printing, and silk
screening. Previously, Mr. Salas worked for the New York Mercantile
Exchange from July 1989 to June 1992. Mr. Salas was also a sales
representative for Sunglasses Hut from June 1992 to March 1995.
Edward Figueroa; Secretary/Treasurer
Edward Figueroa, Jr. age 28, is the owner of Trillenium Graphic-X. Mr.
Figueroa's company engages in the business of graphic design and vinyl
cutting. Previously, he worked for Columbia Printing as a
silkscreening, printing, and vinyl technician from 1983 to 1988. He
worked at 4 Star Signs from 1988 to 1990 as a manger of a vinyl
cutting, printing, and awnings manager. He was a vinyl cutting
technician/manger for Glow Signs from 1990 to 1993. He was a vinyl
cutting technician for Rockway Graph-X from 1993 to 1995. Mr. Figueroa
was also a silkscreening technician from March 1995 to January 1999.
There is no family relationship between any of the officers and
directors of the Company. The Company's Board of Directors has not
established any committees.
Conflicts of Interest
Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount
of time to the Company's affairs. The officers and directors of the
Company may in the future become shareholders, officers or directors of
other companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company. The
Company does not currently have a right of first refusal pertaining to
opportunities that come to management's attention insofar as such
opportunities may relate to the Company's proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties or
in any other manner, will be considered opportunities of, and be made
available to the Company and the companies that they are affiliated
with on an equal basis. A breach of this requirement will be a breach
of the fiduciary duties of the officer or director. Subject to the next
paragraph, if a situation arises in which more than one company desires
to merge with or acquire that target company and the principals of
the proposed target company have no preference as to which company will
merge or acquire such target company, the company of which the
President first became an officer and director will be entitled to
proceed with the transaction. Except as set forth above, the Company
has not adopted any other conflict of interest policy with respect to
such transactions.
Investment Company Act of 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and 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.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers and/or directors receive any
compensation for their respective services rendered to the Company, nor
have they received such compensation in the past. They both have agreed
to act without compensation until authorized by the Board of Directors,
which is not expected to occur until the Registrant has generated
revenues from operations after consummation of a merger or acquisition.
As of the date of this registration statement, the Company has no funds
available to pay directors. Further, none of the directors are accruing
any compensation pursuant to any agreement with the Company. It is
possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or more members of the Company's management for
the purposes of providing services to the surviving entity, or
otherwise provide other compensation to such persons. However, the
Company has adopted a policy whereby the offer of any post-transaction
remuneration to members of management will not be a consideration in
the Company's decision to undertake any proposed transaction. Each
member of management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation
to be paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member of
the Company's Board of Directors is offered compensation in any form
from any prospective merger or acquisition candidate, the proposed
transaction will not be approved by the Company's Board of Directors as
a result of the inability of the Board to affirmatively approve such a
transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the
event the Company consummates a transaction with any entity referred by
associates of management, it is possible that such an associate will be
compensated for their referral in the form of a finder's fee. It is
anticipated that this fee will be either in the form of restricted
common stock issued by the Company as part of the terms of the proposed
transaction, or will be in the form of cash consideration. However, if
such compensation is in the form of cash, such payment will be tendered
by the acquisition or merger candidate, because the Company has
insufficient cash available. The amount of such finder's fee cannot be
determined as of the date of this registration statement, but is
expected to be comparable to consideration normally paid in like
transactions. No member of management of the Company will receive any
finders fee, either directly or indirectly, as a result of their
respective efforts to implement the Company's business plan outlined
herein. Persons "associated" with management is meant to refer to
persons with whom management may have had other business dealings, but
who are not affiliated with or relatives of management. No retirement,
pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by the Registrant for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors has passed a resolution which contains a policy
that the Company will not seek an acquisition or merger with any entity
in which any of the Company's Officers, Directors, principal
shareholders or their affiliates or associates serve as officer or
director or hold any ownership interest. Management is not aware of any
circumstances under which this policy may be changed through their own
initiative. The proposed business activities described herein classify
the Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of
securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to
cause a market to develop in the Company's securities until such time
as the Company has successfully implemented its business plan described
herein. Accordingly, each shareholder of the Company has executed and
delivered a "lock-up" letter agreement, affirming that he/she shall not
sell his/her respective shares of the Company's common stock until such
time as the Company has successfully consummated a merger or
acquisition and the Company is no longer classified as a "blank check"
company. In order to provide further assurances that no trading will
occur in the Company's securities until a merger or acquisition has
been consummated, each shareholder has agreed to place his/her
respective stock certificate with the Company's legal counsel, who
will not release these respective certificates until such time as legal
counsel has confirmed that a merger or acquisition has been
successfully consummated. The Company's legal counsel is Shawn F.
Hackman, PC, 3360 W. Sahara Ave., Suite 200, Las Vegas, NV 89102.
However, while management believes that the procedures established to
preclude any sale of the Company's securities prior to closing of a
merger or acquisition will be sufficient, there can be no assurances
that the procedures established herein will unequivocally limit any
shareholder's ability to sell their respective securities before such
closing.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no such action by or against the
Company has been threatened.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is not traded on any exchange or OTC market.
Management has not undertaken any discussions, preliminary or
otherwise, with any prospective market maker concerning the
participation of such market maker in the after-market for the
Company's securities and management does not intend to initiate any
such discussions until such time as the Company has consummated a
merger or acquisition. There is no assurance that a trading market will
ever develop or, if such a market does develop, that it will continue.
After a merger or acquisition has been completed, one or both of the
Company's officers and directors will most likely be the persons to
contact prospective market makers. It is also possible that persons
associated with the entity that merges with or is acquired by the
Company will contact prospective market makers. The Company
does not intend to use consultants to contact market makers.
Market Price
The Registrant's Common Stock is not quoted at the present time.
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 stocks in both public
offerings 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. The National Association of Securities Dealers,
Inc. (the "NASD"), which administers NASDAQ, has recently made changes
in the criteria for initial listing on the NASDAQ Small Cap market and
for continued listing. For initial listing, a company must have net
tangible assets of $4 million, market capitalization of $50 million or
net income of $750,000 in the most recently completed fiscal year or in
two of the last three fiscal years. For initial listing, the common
stock must also have a minimum bid price of $4 per share. In order to
continue to be included on NASDAQ, a company must maintain $2,000,000
in net tangible assets and a $1,000,000 market value of its publicly-
traded securities. In addition, continued inclusion requires two
market-makers and a minimum bid price of $1.00 per share. Management
intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's
securities to be traded without the aforesaid limitations. However,
there can be no assurances that, upon a successful merger or
acquisition, the Company will qualify its securities for listing on
NASDAQ or some other national exchange, or be able to maintain the
maintenance criteria necessary to insure continued listing. The failure
of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result
in the discontinuance of the inclusion of the Company's securities on a
national exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter market.
As a result, a shareholder may find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, the Company's
securities.
Holders
There are 24 holders of the Company's Common Stock. Initially, founders
shares were issued to 24 holders in transactions exempt from
registration pursuant to section 4 of the Securities Act of 1933, as
amended. All such transactions took place prior to or during 1996. All
shareholders have held their stock since that time. All of the issued
and outstanding shares of the Company's Common Stock were issued in
accordance with the exemption from registration afforded by Section
4(2) of the Securities Act of 1933.
Dividends
The Registrant has not paid any dividends to date, and has no plans to
do so in the immediate future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
With respect to the sales made, the Registrant relied on Section 4(2)
of the Securities Act of 1933, as amended. No advertising or general
solicitation was employed in offering the shares. The securities were
offered for investment only and not for the purpose of resale or
distribution, and the transfer thereof was appropriately
restricted.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
25,000,000 shares of Common, of which 5,000,000 are issued and
outstanding. The shares are non-assessable, without pre-emptive rights,
and do not carry cumulative voting rights. Holders of common shares are
entitled to one vote for each share on all matters to be voted on by
the stockholders. The shares are fully paid, non-assessable, without
pre-emptive rights, and do not carry cumulative voting rights. Holders
of common shares are entitled to share ratably in dividends, if any, as
may be declared by the Company from time-to-time, from funds legally
available. In the event of a liquidation, dissolution, or winding up of
the Company, the holders of shares of common stock are entitled
to share on a pro-rata basis all assets remaining after payment in full
of all liabilities. Management is not aware of any circumstances in
which additional shares of any class or series of the Company's stock
would be issued to management or promoters, or affiliates or associates
of either.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its shareholders
for errors in judgment or other acts or omissions not amounting to
intentional misconduct, fraud, or a knowing violation of the law, since
provisions have been made in the Articles of Incorporation and By-laws
limiting such liability. The Articles of Incorporation and By-laws also
provide for indemnification of the officers and directors of the
Company in most cases for any liability suffered by them or arising
from their activities as officers and directors of the Company if they
were not engaged in intentional misconduct, fraud, or a knowing
violation of the law. Therefore, purchasers of these securities may
have a more limited right of action than they would have except for
this limitation in the Articles of Incorporation and By-laws.
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means such officers and directors are
required to exercise good faith and integrity in handling the Company's
affairs. A shareholder may be able to institute legal action on behalf
of himself and all others similarly stated shareholders to recover
damages where the Company has failed or refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure, be
able to bring a class action or derivative suit to enforce their
rights, including rights under certain federal and state securities
laws and regulations. Shareholders who have suffered losses in
connection with the purchase or sale of their interest in the Company
in connection with such sale or purchase, including the misapplication
by any such officer or director of the proceeds from the sale of these
securities, may be able to recover such losses from the Company.
ITEM 13. FINANCIAL STATEMENTS.
The financial statements and supplemental data required by this Item 13
follow the index of financial statements appearing at Item 15 of this
Form 10-SB.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation, and
Management has had no disagreements with the findings of its
accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
Balance sheet as of December 31, 1997, December 31, 1998, December 31,
1999 and March 31, 2000.
Statement of Changes in Stockholders' Equity.
Statement of Cash Flows
EXHIBITS
3.1 Articles of Incorporation
3.2 By-Laws
