SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File No.: 000-29421
Alamo Financial Services, Inc.
(Exact name of registrant as it appears in its charter)
NEVADA 88-0409172
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3360 W. Sahara, Suite 200, Las Vegas, NV
89102
(Address of Principal Executive Office)
(Zip Code)
Registrant's telephone number, including area code: (702) 732-2253
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (b) of the Act:
Class A Common Stock $0.001 Par Value
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months ( or such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes No
At the end of the quarter ending 3/31/2000 there were 5,000,000 issued and
outstanding shares of the registrants common stock.
There is no active market for the registrant's securities.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
See attached exhibit
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS 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 historical 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,
mong 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").
The Company has had no operations during this quarter.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of matters To a Vote of Security Holders
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 10-Q
(a) The following documents are filed as part of this report:
Financial Statements as of March 31, 2000 as prepared by Kurt D. Saliger, C.P.A
Exhibits:
3.1 Articles of Incorporation
Incorporated by reference The Company's Form 10-
SB/A filed on July 5th, 2000.
3.2 By-Laws Incorporated by reference The Company's Form 10-
SB/A filed on July 5th, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alamo Financial Services, Inc.
Dated: July 3, 2000
By: /S/
Paul Salas, President
