U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities
Exchange Act of 1934
FRANKLYN RESOURCES III, INC.
(Name of Small Business Issuer in its charter)
Nevada 84-1491682
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5330 E. 17th Avenue
Denver, Colorado 80220
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 394-1187
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered - N/A
Name of each exchange on which each class is to be
registered - N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
PART I -
Item 1. DESCRIPTION OF BUSINESS
General
The Company was incorporated under the laws of the State of
Nevada on March 2, 1999, and is in the early developmental and
promotional stages. To date, the Company's only activities have been
organizational ones, directed at developing its business plan and
raising its initial capital. The Company has not commenced any
commercial operations. The Company has no full-time employees and
owns no real estate.
The Company has elected to file this Form 10-SB registration
statement on a voluntary basis in order to become a reporting
company under the Securities Exchange Act of 1934. The Company
is a "blind pool" or "blank check" company, whose business plan is to
seek, investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value. The acquisition of a business opportunity may be
made by purchase, merger, exchange of stock, or otherwise, and may
encompass assets or a business entity, such as a corporation, joint
venture, or partnership. The Company has very limited capital, and it
is unlikely that the Company will be able to take advantage of more
than one such business opportunity. The Company intends to seek
opportunities demonstrating the potential of long-term growth as
opposed to short-term earnings.
At the present time the Company has not identified any
business opportunity that it plans to pursue, nor has the Company
reached any agreement or definitive understanding with any person
concerning an acquisition. The Company's officers, directors and
non-management principal shareholders named herein, have previously
been involved in several transactions involving mergers between an
established company and a blind pool or blank check entity, and they
have numerous contacts within the field of corporate finance (See Item
5 "Directors, Executive Officers, Promoters and Control Persons -
Other Blind Pool Activities"). As a result, they have had preliminary
contacts with representatives of numerous companies concerning the
general possibility of a merger or acquisition with a blind pool or
blank check company. However, none of these preliminary contacts
or discussions involved the possibility of a merger or acquisition
transaction with the Company.
Prior to the effective date of this registration statement, it is
anticipated that the Company's officers, directors, and
non-management principal shareholders named herein will contact
broker-dealers and other persons with whom they are acquainted who
are involved in corporate finance matters to advise them of the
Company's existence and to determine if any companies or businesses
they represent have a general interest in considering a merger or
acquisition with a blind pool or blank check entity. No direct
discussions regarding the possibility of a merger with the Company
are expected to occur until after the effective date of this registration
statement. However, no assurance can be given that the Company
will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available
for acquisitions, or that any acquisition that occurs will be on terms
that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and
medium-sized enterprises which have a desire to become public
corporations and which are able to satisfy, or anticipate in the
reasonably near future being able to satisfy, the minimum asset
requirements in order to qualify shares for trading on NASDAQ or on
an exchange such as the American Stock Exchange. (See
"Investigation and Selection of Business Opportunities"). The
Company anticipates that the business opportunities presented to it
will (i) either be in the process of formation, or be recently organized
with limited operating history, or a history of losses attributable to
under-capitalization or other factors; (ii) be experiencing financial or
operating difficulties; (iii) be in need of funds to develop a new
product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a
combination of the characteristics mentioned in (i) through (iv). The
Company intends to concentrate its acquisition efforts on properties or
businesses that it believes to be undervalued or that it believes may
realize a substantial benefit from being publicly owned. Given the
above factors, investors should expect that any acquisition candidate
may have little or no operating history, or a history of losses or low
profitability.
The Company does not propose to restrict its search for
investment opportunities to any particular geographical area or
industry, and may, therefore, engage in essentially any business, to
the extent of its limited resources. This includes industries such as
service, finance, natural resources, manufacturing, high technology,
product development, medical, communications and others. The
Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities,
economic conditions, and other factors.
As a consequence of this registration of its securities, any
entity which has an interest in being acquired by, or merging into the
Company, is expected to be an entity that desires to become a public
company and establish a public trading market for its securities. In
connection with such a merger or acquisition, it is highly likely that
an amount of stock constituting control of the Company would either
be issued by the Company or be purchased from the current principal
shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to be a private transaction rather than a public distribution
of securities, but is also likely to result in substantial gains to the
current shareholders relative to their purchase price for such stock. In
the Company's judgment, none of its officers and directors would
thereby become an "underwriter" within the meaning of Section 2(11)
of the Securities Act of 1933, as amended, as long as the transaction
is a private transaction rather than a public distribution of securities.
The sale of a controlling interest by certain principal shareholders of
the Company could occur at a time when the other shareholders of the
Company remain subject to restrictions on the transfer of their shares.
Depending upon the nature of the transaction, the current
officers and directors of the Company may resign their management
positions with the Company in connection with a change in control of
the Company or its acquisition of a business opportunity (See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of
Continuity in Management"). In the event of such a resignation, the
Company's current management would not have any control over the
conduct of the Company's business following the change in control or
the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its officers and
directors, its other stockholders, professional advisors such as
attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may
present unsolicited proposals. The Company has no plans,
understandings, agreements, or commitments with any individual for
such person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a
merger or acquisition transaction with any business with which its
officers or directors are currently affiliated. Should the Company
determine in the future, contrary to the foregoing expectations, that a
transaction with an affiliate would be in the best interests of the
Company and its stockholders, the Company is in general permitted
by Colorado law to enter into such a transaction if:
(1) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the Board of Directors, and the Board in good faith
authorizes, approves or ratifies the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even
though the disinterested directors constitute less than a quorum; or
(2) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically authorized, approved or ratified in good
faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the Company as of
the time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific
business opportunity may be made upon management's analysis of the
quality of the other company's management and personnel, the
anticipated acceptability of new products or marketing concepts, the
merit of technological changes, the perceived benefit the business
opportunity will derive from becoming a publicly held entity, and
numerous other factors which are difficult, if not impossible, to
analyze through the application of any objective criteria. In many
instances, it is anticipated that the historical operations of a specific
business opportunity may not necessarily be indicative of the potential
for the future because of the possible need to shift marketing
approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make
other changes. The Company will be dependent upon the owners of a
business opportunity to identify any such problems which may exist
and to implement, or be primarily responsible for the implementation
of, required changes. Because the Company may participate in a
business opportunity with a newly organized firm or with a firm
which is entering a new phase of growth, the Company will incur
further risks, because management in many instances will not have
proven its abilities or effectiveness, the eventual market for the
products or services of the business opportunity will likely not be
established, and the business opportunity may not be profitable when
acquired.
It is anticipated that the Company will not be able to diversify,
but will essentially be limited to one such venture because of the
Company's limited financing. This lack of diversification will not
permit the Company to offset potential losses from one business
opportunity against profits from another, and should be considered an
adverse factor affecting any decision to purchase the Company's
securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the
Company's management to complete acquisitions without submitting
any proposal to the stockholders for their consideration. Holders of
the Company's securities should not anticipate that the Company
necessarily will furnish such holders, prior to any merger or
acquisition, with financial statements, or any other documentation,
concerning a target company or its business. In some instances,
however, the proposed participation in a business opportunity may be
submitted to the stockholders for their consideration, either voluntarily
by such directors to seek the stockholders' advice and consent or
because state law so requires.
The analysis of business opportunities will be undertaken by or
under the supervision of the Company's officers and directors, none
of whom are professional business analysts (See "Management").
Although there are no current plans to do so, Company management
might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee.
Since Company management has no current plans to use any outside
consultants or advisors to assist in the investigation and selection of
business opportunities, no policies have been adopted regarding use of
such consultants or advisors, the criteria to be used in selecting such
consultants or advisors, the services to be provided, the term of
service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is
likely that any such fee the Company agrees to pay would be paid in
stock and not in cash. Otherwise, the Company anticipates that it will
consider, among other things, the following factors:
(1) Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
(2) The Company's perception of how any particular business
opportunity will be received by the investment community and by the
Company's stockholders;
(3) Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a
significant prospect in the foreseeable future of becoming sufficient to
enable the securities of the Company to qualify for listing on an
exchange or on a national automated securities quotation system, such
as NASDAQ, so as to permit the trading of such securities to be
exempt from the requirements of Rule 15c2-6 adopted by the
Securities and Exchange Commission (See "Risk Factors - The
Company - Regulation of Penny Stocks").
(4) Capital requirements and anticipated availability of
required funds to be provided by the Company or from operations,
through the sale of additional securities, through joint ventures or
similar arrangements, or from other sources;
(5) The extent to which the business opportunity can be
advanced;
(6) Competitive position as compared to other companies of
similar size and experience within the industry segment as well as
within the industry as a whole;
(7) Strength and diversity of existing management, or
management prospects that are scheduled for recruitment;
(8) The cost of participation by the Company as compared to
the perceived tangible and intangible values and potential; and
(9) The accessibility of required management expertise,
personnel, raw materials, services, professional assistance, and other
required items.
In regard to the possibility that the shares of the Company
would qualify for listing on NASDAQ, the current standards for
initial listing include, among other requirements, that the Company (i)
have net tangible assets of at least $4,000,000, or a market
capitalization of $50,000,000, or net income of not less than $750,000
in its latest fiscal year or in two of the last three fiscal years; (ii) have
a public float (i.e. shares that are not held by any officer, director or
10% shareholder) of at least 1,000,000 shares; (iii) have a minimum
bid price of at least $4.00; (iv) have at least 300 round lot
shareholders (i.e. shareholders who own not less than 100 shares);
and (v) have an operating history of at least one year or a market
capitalization of at least $50,000,000. Many, and perhaps most, of
the business opportunities that might be potential candidates for a
combination with the Company would not satisfy the NASDAQ listing
criteria.
No one of the factors described above will be controlling in
the selection of a business opportunity, and management will attempt
to analyze all factors appropriate to each opportunity and make a
determination based upon reasonable investigative measures and
available data. 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.
Potential investors must recognize that, because of the Company's
limited capital available for investigation and management's limited
experience in business analysis, the Company may not discover or
adequately evaluate adverse facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a
business opportunity. It expects, however, that the analysis of
specific proposals and the selection of a business opportunity may take
several months or more.
Prior to making a decision to participate in a business
opportunity, the Company will generally request that it be provided
with written materials regarding the business opportunity containing
such items as a description of products, services and company history;
management resumes; financial information; available projections,
with related assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions
between such company and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risks and
competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable
assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 60 days
following completion of a merger transaction; and other information
deemed relevant.
As part of the Company's investigation, the Company's
executive officers and directors may 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.
It is possible that the range of business opportunities that might
be available for consideration by the Company could be limited by the
impact of Securities and Exchange Commission regulations regarding
purchase and sale of "penny stocks." The regulations would affect,
and possibly impair, any market that might develop in the Company's
securities until such time as they qualify for listing on NASDAQ or
on an exchange which would make them exempt from applicability of
the "penny stock" regulations. See "Risk Factors - Regulation of
Penny Stocks."
Company management believes that various types of potential
merger or acquisition candidates might find a business combination
with the Company to be attractive. These include acquisition
candidates desiring to create a public market for their shares in order
to enhance liquidity for current shareholders, acquisition candidates
which have long-term plans for raising capital through the public sale
of securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of
development of a public market for their securities will be of
assistance in that process. Acquisition candidates which have a need
for an immediate cash infusion are not likely to find a potential
business combination with the Company to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company
may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and
desires of the Company and the promoters of the opportunity and,
upon the basis of that review and the relative negotiating strength of
the Company and such promoters, the legal structure or method
deemed by management to be suitable will be selected. Such structure
may include, but is not limited to leases, purchase and sale
agreements, licenses, joint ventures and other contractual
arrangements. The Company may act directly or indirectly through
an interest in a partnership, corporation or other form of organization.
Implementing such structure may require the merger, consolidation or
reorganization of the Company with other corporations or forms of
business organization. In addition, the present management and
stockholders of the Company most likely will not have control of a
majority of the voting shares of the Company following a merger or
reorganization transaction. As part of such a transaction, the
Company's existing directors may resign and new directors may be
appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such
transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an
acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders
of the acquired company of a controlling interest (i.e. 80% or more)
of the common stock of the combined entities immediately following
the reorganization. If a transaction were structured to take advantage
of these provisions rather than other "tax free" provisions provided
under the Internal Revenue Code, the Company's current stockholders
would retain in the aggregate 20% or less of the total issued and
outstanding shares. This could result in substantial additional dilution
in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might
also be done simultaneously with a sale or transfer of shares
representing a controlling interest in the Company by the current
officers, directors and principal shareholders. (See "Description of
Business - General").
It is anticipated that any new securities issued in any
reorganization would be issued in reliance upon exemptions, if any
are available, from registration under applicable federal and state
securities laws. In some circumstances, however, as a negotiated
element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, or under
certain conditions at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may
have a depressive effect upon such market.
The Company will participate in a business opportunity only
after the negotiation and execution of a written agreement. Although
the terms of such agreement cannot be predicted, generally such an
agreement would require specific representations and warranties by all
of the parties thereto, specify certain events of default, detail the
terms of closing and the conditions which must be satisfied by each of
the parties thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed, set forth remedies upon default,
and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business
opportunity prior to signing a binding agreement. Such a letter of
intent will set forth the terms of the proposed acquisition but will not
bind any of the parties to consummate the transaction. Execution of a
letter of intent will by no means indicate that consummation of an
acquisition is probable. Neither the Company nor any of the other
parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the
acquisition as described in the preceding paragraph is executed. Even
after a definitive agreement is executed, it is possible that the
acquisition would not be consummated should any party elect to
exercise any right provided in the agreement to terminate it on
specified grounds.
It is anticipated that 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 and substantial costs for
accountants, attorneys and others. If a decision is made not to
participate in a specific business opportunity, the costs theretofore
incurred in the related investigation would not be recoverable.
Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate
future time may make it impossible to procure goods and services.
Investment Company Act and Other Regulations
The Company may participate in a business opportunity by
purchasing, trading or selling the securities of such business. The
Company does not, however, intend to engage primarily in such
activities. Specifically, the Company intends to conduct its activities
so as to avoid being classified as an "investment company" under the
Investment Company Act of 1940 (the "Investment Act"), and
therefore to avoid application of the costly and restrictive registration
and other provisions of the Investment Act, and the regulations
promulgated thereunder.
The Company's plan of business may involve changes in its
capital structure, management, control and business, especially if it
consummates a reorganization as discussed above. Each of these
areas is regulated by the Investment Act, in order to protect
purchasers of investment company securities. Since the Company will
not register as an investment company, stockholders will not be
afforded these protections.
Any securities which the Company might acquire in exchange
for its Common Stock are expected to be "restricted securities" within
the meaning of the Securities Act of 1933, as amended (the "Act"). If
the Company elects to resell such securities, such sale cannot proceed
unless a registration statement has been declared effective by the
Securities and Exchange Commission or an exemption from
registration is available. Section 4(1) of the Act, which exempts sales
of securities not involving a public distribution by persons other than
the issuer, would in all likelihood be available to permit a private
sale. Although the plan of operation does not contemplate resale of
securities acquired, if such a sale were to be necessary, the Company
would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry
which is regulated or licensed by federal, state or local authorities.
Compliance with such regulations can be expected to be a
time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in
its efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities may have significantly greater experience, resources and
managerial capabilities than the Company and in that event, will be in
a better position than the Company to obtain access to attractive
business opportunities. The Company also will experience competition
from other public "blind pool" companies, many of which may have
more funds available than does the Company, and from several other
blind pool companies formed by Company management (See "Item 5.
Directors, Executive Officers, Promoters and Control Persons - Other
Blind Pool Activities").
Administrative Offices
The Company currently maintains a mailing address at 5330 E.
17th Avenue, Denver, Colorado 80220, which is the office address of
its President. The Company's telephone number there is (303) 394-
1187. Other than this mailing address, the Company does not
currently maintain any other office facilities, and does not anticipate
the need for maintaining office facilities at any time in the foreseeable
future. The Company pays no rent or other fees for the use of this
mailing address.
Employees
The Company is in the development stage and currently has no
employees. 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 seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether
or not to acquire or participate in specific business opportunities.
Risk Factors
A. Conflicts of Interest. Certain conflicts of interest exist
between the Company and its officers and directors. They have other
business interests to which they currently devote attention, and are
expected to continue to do so. As a result, conflicts of interest may
arise that can be resolved only through their exercise of judgment in a
manner which is consistent with their fiduciary duties to the
Company. See "Management," and "Conflicts of Interest."
In particular, the Company's officers, directors and principal
shareholders formed eight other blind pool or blank check companies
simultaneously with the formation of the Company, which have a
structure and a business plan identical to that of the Company. It is
also likely that the Company's officers and directors will form
additional blind pool or blank check companies in the future, with a
business plan similar or identical to that of the Company. The eight
other blind pool or blank check companies which were formed at the
same time as the Company and have an identical structure and
business plan may be considered to be in direct competition with the
Company for available business opportunities, but that competition
does not currently create a conflict of interest with the Company
because each of such companies currently has an identical group of
shareholders. However, any additional blind pool or blank check
companies formed in the future, which do not have the same
shareholders and an identical capital structure as the Company, would
be in direct competition with the Company for available business
opportunities and would create the potential for conflicts of interest
(See Item 5 - "Directors, Executive Officers, Promoters and Control
Persons - Conflicts of Interest").
It is anticipated that the Company's principal shareholders may
actively negotiate or otherwise consent to the purchase of a portion of
their common stock as a condition to, or in connection with, a
proposed merger or acquisition transaction. In this process, the
Company's principal shareholders may consider their own personal
pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders are not expected to
be afforded the opportunity to approve or consent to any particular
stock buy-out transaction. See "Conflicts of Interest."
B. Possible Need for Additional Financing. The Company
has very limited funds, and such funds may not be adequate to take
advantage of any available business opportunities. Even if the
Company's funds prove to be sufficient to acquire an interest in, or
complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate
success of the Company may depend upon its ability to raise
additional capital. The Company has not investigated the availability,
source, or terms that might govern the acquisition of additional capital
and will not do so until it determines a need for additional financing.
If additional capital is needed, there is no assurance that funds will be
available from any source or, if available, that they can be obtained
on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
C. Regulation of Penny Stocks. The Company's
securities, when available for trading, are expected to be subject to a
Securities and Exchange Commission rule that imposes special sales
practice requirements upon broker-dealers who sell such securities to
persons other than established customers or accredited investors. For
purposes of the rule, the phrase "accredited investors" means, in
general terms, institutions with assets in excess of $5,000,000, or
individuals having a net worth in excess of $1,000,000 or having an
annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the
rule, the broker-dealer must make a special suitability determination
for the purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the rule may affect the
ability of broker-dealers to sell the Company's securities and also may
affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefor.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and
15g-7 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks"
within the meaning of the rules, the rules would apply to the
Company and to its securities. The rules may further affect the
ability of the Company's shareholders to sell their shares in any public
market which might develop.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or
issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii)
"boiler room" practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv)
excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to
a desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses. The Company's
management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be
in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the
confines of practical limitations to prevent the described patterns from
being established with respect to the Company's securities.
D. No Operating History. The Company was formed in
March, 1999, for the purpose of registering its common stock under
the 1934 Act and acquiring a business opportunity. The Company has
no operating history, revenues from operations, or assets other than
cash from private sales of stock. The Company faces all of the risks
of a new business and the special risks inherent in the investigation,
acquisition, or involvement in a new business opportunity. The
Company must be regarded as a new or "start-up" venture with all of
the unforeseen costs, expenses, problems, and difficulties to which
such ventures are subject.
E. No Assurance of Success or Profitability. There is no
assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a
business opportunity, there is no assurance that it will generate
revenues or profits, or that the market price of the Company's
outstanding shares will be increased thereby.
F. Possible Business - Not Identified and Highly Risky.
The Company has not identified and has no commitments to enter into
or acquire a specific business opportunity. As a result, it is only able
to make general disclosures concerning the risks and hazards of
acquiring a business opportunity, rather than providing disclosure with
respect to specific risks and hazards relating to a particular business
opportunity. As a general matter, prospective investors can expect
any potential business opportunity to be quite risky. See Item 1
"Description of Business."
G. Type of Business Acquired. The type of business to be
acquired may be one that desires to avoid effecting its own public
offering and the accompanying expense, delays, uncertainties, and
federal and state requirements which purport to protect investors.
Because of the Company's limited capital, it is more likely than not
that any acquisition by the Company will involve other parties whose
primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be
currently unprofitable or present other negative factors.
H. Impracticability of Exhaustive Investigation. The
Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a business opportunity before the
Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility
studies, independent analysis, market surveys and the like which, if
the Company had more funds available to it, would be desirable. The
Company will be particularly dependent in making decisions upon
information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related
to preliminary aspects of completing an acquisition transaction,
whether or not any business opportunity investigated is eventually
acquired.
I. Lack of Diversification. Because of the limited
financial resources that the Company has, it is unlikely that the
Company will be able to diversify its acquisitions or operations. The
Company's probable inability to diversify its activities into more than
one area will subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks
associated with the Company's operations.
J. Possible Reliance upon Unaudited Financial Statements.
The Company generally will require audited financial statements from
any business that it proposes to acquire. No assurance can be given,
however, that audited financials will be available to the Company. In
cases where audited financials are unavailable, the Company will have
to rely upon unaudited information that has not been verified by
outside auditors. The lack of the type of independent verification
which audited financial statements would provide, increases the risk
that the Company, in evaluating an acquisition with such a target
company, will not have the benefit of full and accurate information
about the financial condition and operating history of the target
company. This risk increases the prospect that the acquisition of such
a company might prove to be an unfavorable one for the Company or
the holders of the Company's securities.
Moreover, the Company will be subject to the reporting
provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and thus will be required to furnish certain
information, including audited financial statements, for any existing
business it may acquire. Consequently, acquisition prospects that do
not have, or are unable to provide reasonable assurances that they will
be able to obtain, the required audited statements would not be
considered by the Company to be appropriate for acquisition so long
as the reporting requirements of the Exchange Act are applicable.
Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition of
an entity for which audited financial statements prove to be
unobtainable, the Company would be exposed to enforcement actions
by the Securities and Exchange Commission (the "Commission") and
to corresponding administrative sanctions, including permanent
injunctions against the Company and its management. The legal and
other costs of defending a Commission enforcement action are likely
to have material, adverse consequences for the Company and its
business. The imposition of administrative sanctions would subject
the Company to further adverse consequences.
In addition, the lack of audited financial statements would
prevent the securities of the Company from becoming eligible for
listing on NASDAQ, the automated quotation system sponsored by the
National Association of Securities Dealers, Inc., or on any existing
stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to
serve as market makers in the securities of the Company. Without
audited financial statements, the Company would almost certainly be
unable to offer securities under a registration statement pursuant to the
Securities Act of 1933, and the ability of the Company to raise capital
would be significantly limited until such financial statements were to
become available.
K. Other Regulation. An acquisition made by the
Company may be of a business that is subject to regulation or
licensing by federal, state, or local authorities. Compliance with such
regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the
Company.
L. Dependence upon Management; Limited Participation
of Management. The Company will be heavily dependent upon the
skills, talents, and abilities of its officers and directors to implement
its business plan, and may, from time to time, find that the inability
of such persons to devote their full time attention to the business of
the Company results in a delay in progress toward implementing its
business plan. Furthermore, the Company will be entirely dependent
upon the experience of its officers and directors in seeking,
investigating, and acquiring a business and in making decisions
regarding the Company's operations. See "Management." Because
investors will not be able to evaluate the merits of possible business
acquisitions by the Company, they should critically assess the
information concerning the Company's officers and directors.
M. Lack of Continuity in Management. The Company
does not have an employment agreement with any of its officers or
directors, and as a result, there is no assurance that they will continue
to manage the Company in the future. In connection with acquisition
of a business opportunity, it is likely the current officers and directors
of the Company may resign. A decision to resign will be based upon
the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
N. Dependence upon Outside Advisors. To supplement the
business experience of its officers and directors, the Company may be
required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such
advisors will be made by the Company's officers without any input
from stockholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the
officers of the Company consider it necessary to hire outside advisors,
they may elect to hire persons who are affiliates, if those affiliates are
able to provide the required services.
O. Leveraged Transactions. There is a possibility that any
acquisition of a business opportunity by the Company may be
leveraged, i.e., the Company may finance the acquisition of the
business opportunity by borrowing against the assets of the business
opportunity to be acquired, or against the projected future revenues or
profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity
acquired through a leveraged transaction is profitable only if it
generates enough revenues to cover the related debt and expenses.
Failure to make payments on the debt incurred to purchase the
business opportunity could result in the loss of a portion or all of the
assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
P. Competition. The search for potentially profitable
business opportunities is intensely competitive. The Company expects
to be at a disadvantage when competing with many firms that have
substantially greater financial and management resources and
capabilities than the Company. These competitive conditions will
exist in any industry in which the Company may become interested.
Q. No Foreseeable Dividends. The Company has not paid
dividends on its Common Stock and does not anticipate paying such
dividends in the foreseeable future.
R. Loss of Control by Present Management and
Stockholders. The Company may consider an acquisition in which the
Company would issue as consideration for the business opportunity to
be acquired an amount of the Company's authorized but unissued
Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result
of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the
Company's management could be replaced by persons unknown at this
time. Such a merger would result in a greatly reduced percentage of
ownership of the Company by its current shareholders. In addition, in
conjunction with such a transaction, the Company's current officers,
directors and principal shareholders could sell their controlling block
of stock at a premium price to the acquired company's stockholders.
S. No Public Market Exists. There is no public market
for the Company's common stock, and no assurance can be given that
a market will develop or that a shareholder ever will be able to
liquidate his investment without considerable delay, if at all. If a
market should develop, the price may be highly volatile. Factors such
as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered
hereby. Owing to the low price of the securities, many brokerage
firms may not be willing to effect transactions in the securities. Even
if a purchaser finds a broker willing to effect a transaction in these
securities, the combination of brokerage commissions, state transfer
taxes, if any, and any other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such
securities as collateral for any loans.
T. Rule 144 Sales. All of the outstanding shares of
Common Stock held by present stockholders are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933, as
amended. As restricted shares, these shares may be resold only
pursuant to an effective registration statement or under the
requirements of Rule 144 or other applicable exemptions from
registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has
held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a
company's outstanding common stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There is no
limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner
for a period of at least two years. A sale under Rule 144 or under
any other exemption from the Act, if available, or pursuant to
subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the price of the
Common Stock in any market that may develop. Of the total
3,181,000 shares of common stock held by present stockholders of the
Company, a total of approximately 3,181,000 shares will become
available for resale in accordance with the provisions of Rule 144
commencing in March or April of 2000.
U. Blue Sky Considerations. Because the securities registered
hereunder have not been registered for resale under the blue sky laws
of any state, the holders of such 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 law
restrictions upon the ability of investors to sell the securities and of
purchasers to purchase the securities. Some jurisdictions may not
allow the trading or resale of blind-pool or "blank-check" securities
under any circumstances. Accordingly, investors should consider the
secondary market for the Company's securities to be a limited one.
Item 2. Management's Discussion and Analysis or Plan of
Operations.
Liquidity and Capital Resources
The Company remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources or stockholder's equity other than the receipt of proceeds in
the amount of $3,770 from its inside capitalization funds.
Consequently, the Company's balance sheet for the period of March
2, 1999 (inception) through December 31, 1999, reflects a current
asset value of $2,723 and a total asset value of $2,723 which is all in
the form of cash.
The Company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its liquidity and
capital resources will be diminished prior to the consummation of a
business combination or whether its capital will be further depleted by
the operating losses (if any) of the business entity which the Company
may eventually acquire.
Results of Operations
During the period from March 2, 1999 (inception) through
December 31, 1999, the Company has engaged in no significant
operations other than organizational activities, acquisition of capital
and preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. No revenues were received by
the Company during this period.
For the current fiscal year, the Company anticipates incurring
a loss as a result of organizational expenses, expenses associated with
registration under the Securities Exchange Act of 1934, and expenses
associated with locating and evaluating acquisition candidates. The
Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues other than
limited interest income. The Company may also continue to operate
at a loss after completing a business combination, depending upon the
performance of the acquired business.
Plan of Operations
During its current fiscal year ending December 31, 2000, the
Company plans to complete its registration under the Securities
Exchange Act of 1934 and thereafter to initiate efforts to locate a
suitable business acquisition candidate. There is no assurance as to
when or whether the Company will locate a suitable business
acquisition candidate or complete a business acquisition transaction.
Need for Additional Capital
The Company's existing capital is not expected to be sufficient
to enable it to meet its cash needs in conjunction with completing its
registration under the Securities Exchange Act of 1934, compliance
with its reporting obligations under such Act following completion of
its registration and payment of costs expected to be incurred in
conjunction with efforts to locate a suitable business acquisition
candidate. Accordingly, the Company will require additional capital
during the current fiscal year.
As of the date of this registration statement on Form 10SB, the
Company has received a commitment from certain investors for the
purchase of 300,000 shares of common stock at a price of $.03 per
share in a private placement transaction. In the event the Company
completes this transaction, it will receive a total of approximately
$9,000 of additional capital which it expects will be sufficient to
satisfy its cash needs for a period of approximately 12 months.
There is no assurance, however, that such additional funds will be
received, or that, if received, they will ultimately prove to be
adequate to allow the Company to carry out its business plan and
complete a business combination. In addition, once a business
combination is completed, the Company's needs for additional
financing are likely to increase substantially.
Regardless of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company
might seek to compensate providers of services by issuances of stock
in lieu of cash. For information as to the Company's policy in regard
to payment for consulting services, see "Certain Relationships and
Transactions."
Item 3. Description of Property.
The Company currently maintains a mailing address at 5330 E.
17th Avenue, Denver, Colorado 80220, which is the address of its
President. The Company pays no rent for the use of this mailing
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 its
plan of operations described herein. The Company's telephone
number is (303) 394-1187.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of the date of this
Registration Statement, the number of shares of Common Stock
owned of record and beneficially by executive officers, directors and
persons who hold 5% or more of the outstanding Common Stock of
the Company. Also included are the shares held by all executive
officers and directors as a group.
<TABLE>
<CAPTION>
%
Number of of
Name and Shares Owned Class
Address Beneficially Owned
<S> <C> <C>
Deborah A. Salerno <F1>
355 South End Avenue, Suite 22B
New York, NY 10280 1,000,000 31.44%
Frank L. Kramer <F1>
5330 E. 17th Avenue
Denver, CO 80220 1,150,000<F2> 36.15%
John P. O'Shea
355 South End Avenue, Suite 22B
New York, NY 10280 1,000,000 31.44%
All directors and executive
officers (2 persons) 2,150,000 67.59%
<FN>
<F1> The person listed is an officer, a director, or both, of the Company.
<F2> Includes 150,000 shares owned by Mr. Kramer's spouse, of which
Mr. Kramer may be deemed to be the beneficial owner.
</FN>
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are as
follows:
<TABLE>
<CAPTION>
Positions Held
and
Name Age Tenure
<S> <C> <C>
Deborah A. Salerno 46 Secretary, Treasurer, and
a Director since March, 1999
Frank L. Kramer 57 President and a
Director since March, 1999
</TABLE>
The directors named above will serve until the first annual
meeting of the Company's stockholders. Thereafter, directors will be
elected for one-year terms at the annual stockholders' meeting.
Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding
between any of the directors or officers of the Company and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer, and there is no arrangement, plan or
understanding as to whether non-management shareholders will
exercise their voting rights to continue to elect the current directors to
the Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management shareholders may directly
or indirectly participate in or influence the management of the
Company's affairs.
The directors and officers will devote their time to the
Company's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within
the range of five to ten hours per month. There are no agreements or
understandings for any officer or director to resign at the request of
another person, and none of the officers or directors are acting on
behalf of, or will act at the direction of, any other person.
Biographical Information
Frank L. Kramer
Frank Lloyd Kramer, President and a director, obtained his BS
in Business Administration from Louisiana State University in 1964.
From 1968 through 1981, then from 1987 to 1990, Mr. Kramer was
employed by New York Life Insurance Company in various positions,
including agent, sales manager and general manager. From 1981 to
1987, and from 1990 to present, he has been self-employed as a
private investor and financial consultant in the Denver area assisting
companies in obtaining financing for their business operations. Mr.
Kramer has had significant experience in "shell" or "blank check"
companies.
In addition to serving as President and a director of the
Company, Mr. Kramer is also currently an officer director of 8 other
corporations which were incorporated on March 2, 1999 and were
formed to seek acquisitions. He is the president and director of Park
Hill Capital I Corp., Park Hill Capital II Corp., Franklyn Resources
I, Inc., and Franklyn Resources II, Inc., and is the
Secretary/Treasurer and a director of OSK Capital I Corp., OSK
Capital II Corp., OSK Capital III Corp., and Park Hill Capital III
Corp.
Deborah A. Salerno
Deborah A. Salerno, the Company's Secretary/Treasurer and a
director, is president (and owner) of DAS Consulting, Inc., a private
corporation located in New York City, providing financial consulting
services to corporations since 1988.
Ms. Salerno, who attended Pace University, has also been
employed as a trader in the over-the-counter market. (Greentree
Securities, October, 1986 through March, 1987); and as Vice
President and Syndicate Manager (Yves Hentic & Company, Inc.,
Jersey City, New Jersey, 1985 through 1986). She was also involved
with the risk arbitrage market from 1978 through 1985, and was Vice
President of Bodkin Securities (1980 through 1985) and Assistant
Options P&S Manager for Ivan F. Boesky, from 1978 through 1980.
Ms. Salerno has had significant experience with "shell" or
"blank check" companies.
In addition to serving as the Company's Secretary/Treasurer
and a director, Ms. Salerno is also currently an officer and director of
8 other corporations which were incorporated on March 2, 1999, and
were formed to seek acquisitions. She is the Secretary/Treasurer of
Park Hill Capital I Corp., Park Hill Capital II Corp., Franklyn
Resources I, Inc., and Franklyn Resources II, Inc. She is the
President and a director of OSK Capital I Corp., OSK Capital II
Corp., OSK Capital III Corp., and Park Hill Capital III Corp.
Ms. Salerno is also currently the Vice President and a director
of Strategic Acquisitions, Inc., which was incorporated on October
16, 1989.
Other Blind Pool Activities
Each of the Company's executive officers, directors, and
principal shareholders is also an officer, director and/or principal
shareholder of several other blind pool or blank check companies. The
Company and each of these other entities will be in competition with
each other for prospective companies to acquire. See "Conflicts of
Interest" below.
In addition, the Company's officers, directors and certain of its
principal shareholders have been affiliated in the past with other blind
pool companies. Such other companies and such affiliations are set
forth in this section below.
Frank Kramer
Frank Kramer served as president and a director from 1984 to
1987 of Fi-Tek Corp., a "blind pool" company headquartered in
Aurora, Colorado, which completed an offering of securities in 1986.
In 1987, Fi-Tek Corp. acquired Boston Technology, Inc. and moved
its operations to Cambridge, Massachusetts. The company has since
been acquired by Converse Technology (CMVT). From May 1987 to
November 1988, Mr. Kramer served as president, treasurer, and the
chairman of the board of Fi-Tek II, Inc., a "blind pool" company
headquartered in Aurora, Colorado, which completed an offering of
securities in July 1988. In October 1988, Fi-Tek II, Inc., acquired
OnLine Communications, Inc., and moved its operations to San Jose,
California. The company subsequently changed its name to OnLine
Network, Inc., and has since ceased operations. Mr. Kramer also
served, commencing in November 1988, as the president, treasurer
and a director of Fi-Tek III, Inc., a Delaware-chartered "blind pool"
corporation which completed an offering of securities in September
1989, and which in August 1990 acquired Videoconferencing
Systems, Inc., a Norcross, Georgia-based company. Effective as of
the date of acquisition, Mr. Kramer resigned as president and
treasurer, but retained his position on the board of directors. The
company has since changed its name to VSI Enterprises, Inc. and Mr.
Kramer resigned his position as director on July 15, 1991. From
February 1987 until December 1989, he was also the treasurer and a
director of Bluestone Capital Corp., a Colorado "blind pool"
corporation which completed an offering of securities in November
1988 and which moved its operations to Braintree, Massachusetts after
acquiring Dialogue, Inc. in December 1989. The company has since
ceased operations. Mr. Kramer also served as an officer and director
of Catalina Capital Corp. ("Catalina"), a Delaware chartered "blind
pool" corporation which completed a public offering of its securities
in April 1991 and which moved its operations to Scottsdale, Arizona
after acquiring Explore Technology, Inc. ("Explore") in August 1992.
Mr. Kramer resigned all positions with Catalina upon the closing of
the acquisition of Explore. Explore has since changed its name to
Instant Video Technology, Inc. Mr. Kramer also served as president,
treasurer, and a director of Fi-Tek IV, Inc., a Delaware chartered
"blind pool" corporation which completed an offering of securities in
September 1990. During December 1992, Fi-Tek IV completed a
reverse acquisition (stock-for-stock exchange) of DBS Network, Inc.,
a Mill Valley, California-based company, which through its equity
ownership of another entity, holds an interest in a permit granted by
the Federal Communications Commission for launch and operation of
direct broadcast satellites and is otherwise engaged in the automated
meter reading business for public utilities from satellites. Fi-Tek IV
has since changed its name to DBS Industries, Inc. For approximately
a one-month period in October 1990, Mr. Kramer served as a director
of Power Capital, Inc., (now known as 1st National Film Corp.), a
"blind pool" company which completed a public offering of its
securities in November 1989. Mr Kramer is also an officer and
director of another "blind pool" company, Fi-Tek V, Inc., which
completed a "blind pool" public offering of its securities in January
1992. On June 7, 1999, Fi-Tek IV completed a reverse acquisition
with Laidlaw Global Holdings and resigned his position as President.
Laidlaw Global Holdings is a provider of global investment and
financial services with offices in Miami, Paris, Geneva, Athens,
Nassau, Barcelona, Hong Kong, and Singapore. Mr. Kramer was an
officer and director of Harbour Capital Corp. which completed a
"blind pool" public offering of its securities in October 1993. On
May 16, 1997, the company effected a reverse acquisition (stock-for-
stock exchange) with Benefits Administration, Inc. and Telesave
Corporation. Mr. Kramer also served as an officer and director of Fi-
Tek VI, Inc., a "blind pool" company, from its inception in January
1990 until September 1997, at which time Fi-Tek VI completed a
reverse acquisition with Golble Water Technologies (GWT), and Mr.
Kramer resigned his positions with Fi-Tek VI. GWT, through its
subsidiary PSI and through its subsidiary Applied Water Technologies
(AWT), provides customers with proprietary non-chemical water
treatment, and is a world-wide supplier of water towers for the
power, refining, chemical HVAC and process industries.
Frank Kramer is President and a director of Fi-Tek VII, Inc.,
a Delaware corporation formed to seek acquisitions.
Deborah A. Salerno
Deborah Salerno has previously been an officer and director of
twelve blank check corporations, all of which have completed merger
or acquisition transactions. (However, the acquisition transaction of
one of the corporations, Strategic Acquisitions, Inc., was subsequently
canceled when the acquiree failed to meet certain contractual
obligations which were deemed to be conditions precedent.)
The blank check companies with which Ms. Salerno has been
involved have concentrated primarily on companies with plans for
expansion and/or the introduction of new products or services; such
new products or services were, in some cases, an addition to existing
lines of business.
Ms. Salerno's past and present blank check affiliations are as
follows:
- Formerly President and a director of Amsterdam Capital
Corporation until it acquired Care Concepts, Inc. as of June 16, 1989.
(The registration statement for Amsterdam Capital Corporation
became effective on January 17, 1989.)
- Formerly President of East End Investment, Inc., until it
acquired The Theme Factory, Inc., as of October 16, 1989. (Ms.
Salerno continued to serve as a director of The Theme Factory, Inc.,
until her resignation in July, 1992. The registration statement for
East End Investment, Inc., became effective on September 8, 1989.
- Formerly President and a director of West End Ventures,
Inc., until January 26, 1990, when it acquired Future Medical
Technologies. (The registration statement for West End Ventures, Inc.
Corporation became effective on January 2, 1990.)
- Formerly President and a director of Sharon Capital
Corporation until it acquired Process Engineers, Inc. as of April 5,
1990. (The registration statement for Sharon Capital Corporation
became effective on February 14, 1990.)
- Formerly President and a director of Fulton Ventures, Inc.,
until June 16, 1990, when it acquired Triad Warranty Corporation.
(The registration statement for Fulton Ventures, Inc. became effective
on April 10, 1990.)
- Formerly President and a director of Elmwood Capital
Corporation whose registration statement was declared effective on
June 27, 1990. Elmwood Capital Corporation acquired U.S.
Environmental Solutions, Inc. as of March 5, 1991 at which time Ms.
Salerno ceased acting as an officer or director.
- Formerly President and a director of Carnegie Capital
Corporation, whose registration statement became effective on
February 1, 1991. During November, 1991, Carnegie Capital
Corporation acquired Nevada construction supply, which later
changed its name to National Building Supply. Ms. Salerno resigned
as President upon the acquisition, but continued in her position as a
director until September 29, 1992.
- Formerly President and a director of Avalon Correctional
Services, Inc., which had its registration statement declared area
effective on March 26, 1991, and which acquired Southern
Corrections Systems, Inc. on June 15, 1992. The company's name
was thereafter changed to Avalon Community Services, Inc., and a
post-effective amendment to its registration statement became effective
on November 16, 1991.
- Formerly President and a director of South End Ventures,
Inc., whose registration statement became effective on November 15,
1991, South End Ventures completed an acquisition of Shore Group,
Inc., a private company located in Philadelphia, Pennsylvania, during
December 1992, at which time Ms. Salerno resigned as officer and
director. The name of the company has been changed to Shore Group
Incorporated.
- Formerly President and a director of Hard Funding, Inc., a
blank check company merged with Marinex and subsequently which
merged with Texas Equipment Corp.
- Ms. Salerno is currently Vice President and a director of
Strategic Acquisitions, Inc. which had a registration statement
declared effective by the Commission on October 16, 1989.
Subsequently Strategic Acquisitions, Inc. acquired Viatool, Inc., but
the transaction was later canceled as the acquiree failed to meet
certain terms of the acquisition agreement which were deemed to be
conditions precedent. Litigation arising from the transaction was
eventually settled. (Substantially all of the unexpended net proceeds
of the offering was repaid to the company, and its securities issued in
the transaction were also returned.) Ms. Salerno resumed her former
positions as Vice President and director upon the settlement of the
lawsuits.
- Former President and director of Bishop Equities, Inc. was
registered with the SEC effective March 8, 1999, and completed
acquisition of Aethlon Medical on March 3, 1993.
The officers and directors of the Company may also establish
additional blind pool or blank check companies in the future.
Conflicts of Interest
None of the officers of the Company will devote more than a
portion of his or her time to the affairs of the Company. There will
be occasions when the time requirements of the Company's business
conflict with the demands of the officers' other business and
investment activities. Such conflicts may require that the Company
attempt to employ additional personnel. There is no assurance that
the services of such persons will be available or that they can be
obtained upon terms favorable to the Company.
Each of the Company's officers and directors is also currently
an officer and a director of several other blind pool or blank check
companies. See "Other Blind Pool Activities." Although these other
companies will, in effect, be in direct competition with the Company
for acquisition of available business opportunities, the potential that
such competition will create a conflict of interest for the officers and
directors of the Company is minimized by the fact that each of the
entities currently has substantially the same shareholders, and is
expected to continue to have the same shareholders until a business
acquisition has been completed.
As a way of further minimizing any potential conflict of
interest in the process of acquisition of available business
opportunities, it is the stated policy of the persons who are officers
and directors of the Company and of other blind pool or blank check
companies, to present the opportunity to the available blind pool or
blank check company that has had its securities registered pursuant to
Section 12(g) of the 1934 Act for the longest period of time. In the
event that none of the pools is more mature than the others, the
officers and directors will arbitrarily assign the particular business
opportunity to one of the pool companies. Potential investors should
expect that, because of the policy that will be employed by the
Company's officers and directors as set forth above, whereby more
"mature" pool companies will have business opportunities presented to
them first, the Company and its shareholders may have to wait a
significant amount of time before an appropriate business opportunity
for the Company is identified.
The officers, directors and principal shareholders of the
Company may actively negotiate for the purchase of a portion of their
common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. Members of management, and
other principal shareholders of the Company, acquired their shares for
consideration totalling $3,000 in cash. This consideration is the
equivalent of $.001 per share. It is anticipated that a substantial
premium may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers, directors and principal shareholders
made as a condition to, or in connection with, a proposed merger or
acquisition transaction. The fact that a substantial premium may be
paid to members of Company management to acquire their shares
creates a conflict of interest for them and may compromise their state
law fiduciary duties to the Company's other shareholders. In making
any such sale, members of Company management may consider their
own personal pecuniary benefit rather than the best interests of the
Company and the Company's other shareholders, and the other
shareholders are not expected to be afforded the opportunity to
approve or consent to any particular buy-out transaction involving
shares held by members of Company management.
Item 6. Executive Compensation.
No officer or director has received any remuneration or
compensation from the Company. Until the Company acquires
additional capital, it is not anticipated that any officer or director will
receive additional compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of the
Company. See "Certain Relationships and Related Transactions."
The Company has no stock option, retirement, pension, or
profit-sharing programs for the benefit of directors, officers or other
employees, but the Board of Directors may recommend adoption of
one or more such programs in the future.
The Company may employ a spouse of an officer or director,
or an employee of a company owned by an officer or director, to
perform administrative or secretarial services required by the
Company. Such individuals would be paid standard, "going rate"
hourly compensation for services rendered.
Item 7. Certain Relationships and Related Transactions.
No officer, director, promoter, or affiliate of the Company
has, or proposes to have, any direct or indirect material interest in
any asset proposed to be acquired by the Company through security
holdings, contracts, options, or otherwise.
The Company has adopted a policy under which any consulting
or finder's fee that may be paid to a third party for consulting services
to assist management in evaluating a prospective business opportunity
would be paid in stock rather than in cash. Any such issuance of
stock would be made on an ad hoc basis. Accordingly, the Company
is unable to predict whether, or in what amount, such a stock issuance
might be made.
It is not currently anticipated that any salary, consulting fee, or
finder's fee shall be paid to any of the Company's directors or
executive officers, or to any other affiliate of the Company except as
described under "Executive Compensation" above.
The Company does not maintain an office, but it does maintain
a mailing address at the residence of its President, for which it pays
no rent, and for which it does not anticipate paying rent in the future.
It is likely that the Company will not establish an office until it has
completed a business acquisition transaction, but it is not possible to
predict what arrangements will actually be made with respect to future
office facilities.
Although management has no current plans to cause the
Company to do so, it is possible that the Company may enter into an
agreement with an acquisition candidate requiring the sale of all or a
portion of the Common Stock held by the Company's current
stockholders to the acquisition candidate or principals thereof, or to
other individuals or business entities, or requiring some other form of
payment to the Company's current stockholders, or requiring the
future employment of specified officers and payment of salaries to
them. It is more likely than not that any sale of securities by the
Company's current stockholders to an acquisition candidate would be
at a price substantially higher than that originally paid by such
stockholders. Any payment to current stockholders in the context of
an acquisition involving the Company would be determined entirely
by the largely unforeseeable terms of a future agreement with an
unidentified business entity.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the
issuance of 25,000,000 shares of Common Stock. Each record holder
of Common Stock is entitled to one vote for each share held on all
matters properly submitted to the stockholders for their vote. In the
election of Directors, a plurality of the votes cast shall elect. In all
other matters, the action shall be approved if the number of votes cast
in favor of the action exceed the number of votes cast in opposition to
the action.
Holders of outstanding shares of Common Stock have no
preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares
when offered and sold will be, duly authorized, validly issued, fully
paid, and nonassessable. To the extent that additional shares of the
Company's Common Stock are issued, the relative interests of then
existing stockholders may be diluted.
Transfer Agent
The Company's Transfer Agent is Mountain Share Transfer,
Inc., 1625 Abilene Drive, Broomfield, Colorado 80020.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual
report for each fiscal year ending December 31 containing financial
statements audited by its independent certified public accountants. In
the event the Company enters into a business combination with
another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the
Company may, in its sole discretion, issue unaudited quarterly or
other interim reports to its stockholders when it deems appropriate.
The Company intends to comply with the periodic reporting
requirements of the Securities Exchange Act of 1934.
PART II
Item 1. Market Price and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
No public trading market exists for the Company's securities
and all of its outstanding securities are restricted securities as defined
in Rule 144. As of the date of this registration statement, there are
approximately 31 holders of record of the Company's common stock.
No dividends have been paid to date and the Company's Board of
Directors does not anticipate paying dividends in the foreseeable
future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings,
and no such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner
of record or beneficial owner of more than 5.0% of the securities of
the Company, or any associate of any such director, officer or
security holder is a party adverse to the Company or has a material
interest adverse to the Company in reference to pending litigation.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since March 2, 1999 (the date of inception) the Company has sold
its Common Stock to the persons listed in the table below in transactions
summarized as follows:
<TABLE>
<CAPTION>
Aggregate Purchase
Name Date of Shares Purchase Price
Sale Price Per Share
<S> <C> <C> <C> <C>
Frank L. Kramer 3/5/99 1,000,000 $1,000 $.001
John P. O'Shea 3/5/99 1,000,000 $1,000 $.001
$19,000 in
services $.019
Deborah A. Salerno 3/5/99 1,000,000 $1,000 $.001
$19,000 in
services $.019
Lynn Sauve 3/5/99 150,000 $150 cash $.001 and
$19,000 in services
services $.019 of
$2,850 @
$.019
Heather Z.
Anderson 3/5/99 1,000 $20 $.002
Elizabeth Kramer 3/5/99 1,000 $20 $.002
Kevin Whatley 3/5/99 1,000 $20 $.002
Philip Berman 4/1/99 1,000 $20 $.002
Raymond F.
McKinstry 4/3/99 1,000 $20 $.002
Anne Marie
McKinstry 4/3/99 1,000 $20 $.002
Jeffrey S. Rose 4/7/99 1,000 $20 $.002
Susan Slow 4/7/99 1,000 $20 $.002
George Groehsl 4/7/99 1,000 $20 $.002
Edward Slow 4/7/99 1,000 $20 $.002
Robert L. Krekel 4/21/99 1,000 $20 $.002
Alvin D. Leach 4/21/99 1,000 $20 $.002
Don Sullivan 4/20/99 1,000 $20 $.002
Holly R. Zane 4/20/99 1,000 $20 $.002
Kathleen E.
Borchard 4/22/99 1,000 $20 $.002
Frederick E.
Welsh, Jr. 4/22/99 1,000 $20 $.002
Claudia J. Kelly 4/22/99 1,000 $20 $.002
Robert Bruce
Christopher 4/22/99 1,000 $20 $.002
David Hepworth 4/22/99 1,000 $20 $.002
Daniel B. Sweeney 4/28/99 1,000 $20 $.002
Thomas D. Gearke 4/28/99 1,000 $20 $.002
Nancy J. Sullivan 4/28/99 1,000 $20 $.002
Rhadica Singh 4/28/99 1,000 $20 $.002
Richard Wong 4/28/99 1,000 $20 $.002
Gary Greenberg 4/28/99 1,000 $20 $.002
John J. Memolo 4/28/99 1,000 $20 $.002
Linda M. Carlson 4/28/99 1,000 $20 $.002
Lincoln W.
Anderson 5/9/99 1,000 $20 $.002
Jennifer R. Bell 5/22/99 1,000 $20 $.002
Britta Rueschhoff 7/1/99 1,000 $20 $.002
Bernard Rueschhoff 7/1/99 1,000 $20 $.002
</TABLE>
Each of the sales listed above was made for cash in reliance
upon the exemption from registration offered by Regulation D and
Section 4(2) of the Securities Act of 1933. Based upon the
Subscription Agreement executed by each of the purchasers, and
based upon the pre-existing relationship between the cash subscribers
and the Company's officers and directors, the Company had
reasonable grounds to believe immediately prior to making an offer to
the private investors, and did in fact believe, when such subscriptions
were accepted, that such purchasers (1) were purchasing for invest-
ment and not with a view to distribution, and (2) had such knowledge
and experience in financial and business matters that they were
capable of evaluating the merits and risks of their investment and
were able to bear those risks. The purchasers had access to pertinent
information enabling them to ask informed questions. The shares
were issued without the benefit of registration. An appropriate
restrictive legend is imprinted upon each of the certificates
representing such shares, and stop-transfer instructions have been
entered in the Company's transfer records. All such sales were
effected without the aid of underwriters, and no sales commissions
were paid.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company
do not provide for indemnification of officers, directors or controlling
persons. The General Corporation Law of the State of Nevada (NRS
78.7502) provides that "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...or in defense
of any claim, issue or matter therein, the corporation shall indemnify
him against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the defense."
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for Franklyn Resources III, Inc. for
the initial period from inception (March 2, 1999) to December 31,
1999, are attached. See following pages.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
Financial Statements
For the initial period from inception (March 2, 1999)
to December 31, 1999 (audited)
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
[S] [C]
Report of Independent Certified Public Accountant 42
Balance Sheet 43
Statements of Operations 44
Statement of Stockholders' Equity 46
Statements of Cash Flows 47
Notes to Financial Statements 48
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
The Board of Directors and Stockholders of
Franklyn Resources III, Inc.
We have audited the accompanying balance sheet of Franklyn
Resources III, Inc. (a development stage company) as of December 31,
1999, and the related statements of operations, stockholders' equity,
and cash flows for the initial period from inception (March 2, 1999) 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
Franklyn Resources III, Inc. as of December 31, 1999, and the results
of its operations and cash flows for the initial period then ended in
conformity with generally accepted accounting principles.
Denver, Colorado
March 10, 2000
Comiskey & Co.
PROFESSIONAL CORPORATION
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,723
Total current assets 2,723
TOTAL ASSETS $ 2,723
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ -
Total current liabilities -
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value;
25,000,000 shares authorized;
3,181,000 shares issued and
outstanding 3,181
Additional paid-in capital 60,439
Deficit accumulated during the
development stage (60,897)
Total stockholder's equity 2,723
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,723
</TABLE>
The accompanying notes are an integral part of the financial statements.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the initial period from inception (March 2, 1999)
to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
REVENUES $ -
EXPENSES
Selling, general and administrative $ 60,897
Total expenses 60,897
NET LOSS (60,897)
Accumulated deficit
Balance, beginning of period -
Balance, end of period (60,897)
NET LOSS PER SHARE $(0.02)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 3,181,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the initial period from inception (March 2, 1999)
to December 31, 1999
(Page 1 of 2)
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-in
shares Amount Capital
<S> <C> <C> <C>
Common stock issued for
cash and services,
May 26, 1999 at $0.02
per share 3,150,000 $ 3,150 $ 59,850
Common stock issued for
cash, May 26, 1999, at
$0.02 per share 31,000 31 589
Net loss for the period ended
December 31, 1999 - - -
Balance, December 31, 1999 3,181,000 $ 3,181 $ 60,439
</TABLE>
The accompanying notes are an integral part of the financial statements.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the initial period from inception (March 2, 1999)
to December 31, 1999
(Page 2 of 2)
<TABLE>
<CAPTION>
Deficit
accumulated
during the Total
development Stockholders'
stage equity
<S> <C> <C>
Common stock issued for
cash and services,
May 26, 1999 at $0.02
per share - $ 63,000
Common stock issued for
cash, May 26, 1999, at
$0.02 per share - 620
Net loss for the period ended
December 31, 1999 (60,897) (60,897)
Balance, December 31, 1999 $(60,897) $ 2,723
</TABLE>
The accompanying notes are an integral part of the financial statements.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the initial period from inception (March 2, 1999)
to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(60,897)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Stock issued for services 59,850
Net cash flows from
operating activities (1,047)
CASH FLOWS FROM INVESTING ACTIVITIES -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 3,770
Net cash flows from
financing activities 3,770
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,723
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,723
</TABLE>
The accompanying notes are an integral part of the financial statements.
FRANKLYN RESOURCES III, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. Summary of Significant Accounting Policies
Development Stage Company
Franklyn Resources III, Inc. (a development stage company) (the
"Company") was incorporated under the laws of the State of Nevada
on March 2, 1999. The principal office of the corporation is 5330 E.
17th Avenue, Denver, Colorado 80220.
The Company is a new enterprise in the development stage as defined
by Statement No. 7 of the Financial Accounting Standards Board and
has not engaged in any business other than organizational efforts. It
has no full-time employees and owns no real property. The Company
intends to operate as a capital market access corporation by registering
with the U.S. Securities and Exchange Commission under the
Securities Exchange Act of 1934. After this, the Company intends to
seek to acquire one or more existing businesses that have existing
management, through merger or acquisition. Management of the
Company will have virtually unlimited discretion in determining the
business activities in which the Company might engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year for Franklyn Resources III, Inc. is December 31.
Loss per Share
Loss per share was computed using the weighted average number of
shares outstanding during the period. Shares issued to insiders in
anticipation of a public offering have been accounted for as
outstanding since inception.
Organization Costs
Costs to incorporate the Company are charged to expense as incurred.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities that represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such amount.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
Use of Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that effect the
amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
Consideration of Other Comprehensive Income Items
SFAF 130 - Reporting Comprehensive Income, requires companies
to present comprehensive income (consisting primarily of net income
plus other direct equity changes and credits) and its components as
part of the basic financial statements. For the year ended December
31, 1999, the Company's financial statements do not contain any
changes in equity that are required to be reported separately in
comprehensive income.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received in
exchange.
2. Stockholders' Equity
As of December 31, 1999, 25,000,000 shares of the Company's $0.001
par value common stock had been authorized, of which 3,181,000
were issued and outstanding. Of the total shares authorized for
issuance, 3,150,000 were issued for cash of $0.001 per share and
services of $0.019 per share, with a total of $59,850 recorded as
general and administrative costs in connection with the formation of
the Company. The other 31,000 shares were issued for $620, or $0.02
per share.
3. Related Party Transactions
As of the date hereof, two shareholders are acting as officers and
directors of the Company, and are the owners of 2,000,000 shares of
its issued and outstanding common stock, constituting approximately
63% of the Company's issued and outstanding common stock. The
shares were issued for cash of $0.001 per share and services provided
which have been valued at a total of $38,000.
Officers and directors are reimbursed for all out-of-pocket expenses.
4. Income Taxes
The Company has Federal net operating loss carryforwards of
approximately $61,000 expiring during the year 2019. The tax benefit
of these net operating losses is approximately $11,700 and has been
offset by a full allowance for realization. This carryforward may be
limited upon consummation of a business combination under IRC
Section 381.
PART III
Item 1. INDEX TO EXHIBITS
The Exhibits listed below are filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
Exhibit
No. Document
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
27 Financial Data Schedule
</TABLE>
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.
FRANKLYN RESOURCES III, INC.
By: /s/ ________________________________
Frank L. Kramer, President and Director
Date: March 21, 2000
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
FRANKLYN RESOURCES III, INC.
(Name of Small Business Issuer in its charter)
Nevada 84-1491682
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5330 E. 17th Avenue
Denver, Colorado 80220
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 394-1187
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Document
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
27 Financial Data Schedule
</TABLE>
EXHIBIT 3.1 - ARTICLES OF INCORPORATION OF FRANKLYN
RESOURCES III, INC.
ARTICLES OF INCORPORATION
OF
FRANKLYN RESOURCES III, INC.
FIRST: The name of this corporation is:
FRANKLYN RESOURCES III, INC.
SECOND: Its principal office in the State of Nevada is
located at 502 East John Street, Carson City, Nevada, 89706. The new
name and address of its resident agent is CSC Services of Nevada, Inc.,
at the above address.
THIRD: The nature of the business or objects or purposes
proposed may be organized under the General Corporation Law of the
State of Nevada;
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the
State of Nevada.
FOURTH: The total authorized capital stock of the
corporation is 25,000,000 Common Shares with 0.001 Par Value.
FIFTH: The governing board of this corporation shall be
known as directors, and the number of directors may from time to time
be increased or decreased in such manner as shall be provided in the by-
laws of this corporation, provided that the number of directors shall not
be reduced less than one unless there is less than one stockholder.
The name and post office address of the first board of directors, which
shall be 2 in number, is as follows:
NAME POST OFFICE ADDRESS
Deborah A. Salerno 355 Southend Avenue, #22B, New
York, NY 10500
Frank L. Kramer 5330 East 17th Avenue, Denver,
CO 80220
SIXTH: The capital stock, after the amount of the
subscription price, or par value, has been paid in, shall not be subject to
assessment to pay the debts of the corporation.
SEVENTH: The name and post office address of the incorporator
signing the articles of incorporation is as follows:
NAME POST OFFICE ADDRESS
Vera M. Norris 1013 Centre Road
Wilmington, DE 19805
EIGHTH: The corporation is to have perpetual existence.
NINTH: In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized,
subject to the by-laws, if any, adopted by the shareholders, to make, alter
or amend the by-laws of the corporation.
TENTH: Meetings of stockholders may be held outside of
the State of Nevada at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the
corporation.
ELEVENTH: This corporation reserves the right to amend, alter,
change or repeal any provision contained in the articles of incorporation,
in the manner now or hereafter prescribed, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the sole incorporator herein
before named for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Nevada, do make and file these
articles of incorporation, hereby declaring and certifying that the facts
herein stated are true, and accordingly have hereunto set my hand this
twenty-six day of February, A.D. 1999.
/s/_______________________________
Vera M. Norris,
Incorporator
EXHIBIT 3.2 - BYLAWS OF FRANKLYN RESOURCES III, INC.
BYLAWS
OF
FRANKLYN RESOURCES III, INC.
(a Nevada Corporation)
_____________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder
of stock in the corporation shall be entitled to have a certificate signed
by, or in the name of, the corporation by the Chairman or Vice-
Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation or by agents
designated by the Board of Directors, certifying the number of shares
owned by him in the corporation and setting forth any additional
statements that may be required by the General Corporation Law of the
State of Nevada (General Corporation Law). If any such certificate is
countersigned or otherwise authenticated by a transfer agent or transfer
clerk, and by a registrar, a facsimile of the signature of the officers, the
transfer agent or transfer clerk or the registrar of the corporation may be
printed or lithographed upon the certificate in lieu of the actual
signatures. If any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on any certificate
or certificates shall cease to be such officer or officers of the corporation
before such certificate or certificates shall have been delivered by the
corporation, the certificate or certificates may nevertheless be adopted by
the corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates, or whose facsimile
signature or signatures shall have been used thereon, had not ceased to be
such officer or officers of the corporation.
Whenever the corporation shall be authorized to issue more than
one class of stock or more than one series of any class of stock, the
certificates representing stock of any such class or series shall set forth
thereon the statements prescribed by the General Corporation Law. Any
restrictions on the transfer or registration of transfer of any shares of
stock of any class or series shall be noted conspicuously on the certificate
representing such shares.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the owner of any
lost, stolen, or destroyed certificate, or his legal representative, to give
the corporation a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation is not
obliged to but may execute and deliver a certificate for or including a
fraction of a share. In lieu of executing and delivering a certificate for a
fraction of a share, the corporation may proceed in the manner
prescribed by the provisions of Section 78.205 of the General
Corporation Law.
3. STOCK TRANSFERS. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if
any, transfers or registration of transfers of shares of stock of the
corporation shall be made only on the stock ledger of the corporation by
the registered holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
corporation or with a transfer agent or a registrar, if any, and on
surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes, if any, due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose
of determining the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or the allotment of
any rights, or entitled to exercise any rights in respect of any change,
conversion, or exchange of stock or for the purpose of any other lawful
action, the directors may fix, in advance, a record date, which shall not
be more than sixty days nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. If no record
date is fixed, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; the record date for determining
stockholders entitled to express consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is
expressed; and the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto. A determination of
the stockholders of record entitled to notice of or to vote at any meeting
of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used in these Bylaws
in respect of the right to notice of a meeting of stockholders or a waiver
thereof or to participate or vote thereat or to consent or dissent in writing
in lieu of a meeting, as the case may be, the term "share" or "shares" or
"share of stock" or "shares of stock" or "stockholder" or "stockholders"
refers to an outstanding share or shares of stock and to a holder or
holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock, and said reference
is also intended to include any outstanding share or shares of stock and
any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the Articles of Incorporation confers
such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers
such rights notwithstanding that the articles of incorporation may provide
for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder; provided, however,
that no such right shall vest in the event of an increase or a decrease in
the authorized number of shares of stock of any class or series which is
otherwise denied voting rights under the provisions of the Articles of
Incorporation.
6. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at
the time fixed, from time to time, by the directors, provided, that the
first annual meeting shall be held on a date within thirteen months after
the organization of the corporation, and each successive annual meeting
shall be held on a date within thirteen months after the date of the
preceding annual meeting. A special meeting shall be held on the date
and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be
held at such place, within or without the State of Nevada, as the directors
may, from time to time, fix.
- CALL. Annual meetings and special meetings may be
called by the directors or by any officer instructed by the directors to call
the meeting.
- NOTICE OR WAIVER OF NOTICE. Notice of all
meetings shall be in writing and signed by the President or a Vice-
President, or the Secretary, or an Assistant Secretary, or by such other
person or persons as the directors must designate. The notice must state
the purpose or purposes for which the meeting is called and the time
when, and the place, where it is to be held. A copy of the notice must
be either delivered personally or mailed postage prepaid to each
stockholder not less than ten nor more than sixty days before the
meeting. If mailed, it must be directed to the stockholder at his address
as it appears upon the records of the corporation. Any stockholder may
waive notice of any meeting by a writing signed by him, or his duly
authorized attorney, either before or after the meeting; and whenever
notice of any kind is required to be given under the provisions of the
General Corporation Law, a waiver thereof in writing and duly signed
whether before or after the time stated therein, shall be deemed
equivalent thereto.
- CONDUCT OF MEETING. Meetings of the
stockholders shall be presided over by one of the following officers in the
order of seniority and if present and acting - the Chairman of the Board,
if any, the Vice-Chairman of the Board, if any, the President, a Vice-
President, or, if none of the foregoing is in office and present and acting,
by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or in his absence, an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary
of the meeting.
- PROXY REPRESENTATION. At any meeting of
stockholders, any stockholder may designate another person or persons to
act for him by proxy in any manner described in, or otherwise authorized
by, the provisions of Section 78.355 of the General Corporation Law.
- INSPECTORS. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election to
act at the meeting or any adjournments thereof. If an inspector or
inspectors are not appointed, the person presiding at the meeting may,
but need not, appoint one or more inspectors. In case any person who
may be appointed as an inspector fails to appear or act, the vacancy may
be filled by appointment made by the directors in advance of the meeting
or at the meeting by the person presiding thereat. Each inspector, if any,
before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors,
if any, shall determine the number of shares of stock outstanding and the
voting power of each, the shares of stock represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. Stockholders holding at least a majority of
the voting power are necessary to constitute a quorum at a meeting of
stockholders for the transaction of business unless the action to be taken
at the meeting shall require a greater proportion. The stockholders
present may adjourn the meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder
thereof to one vote. In the election of directors, a plurality of the votes
cast shall elect. Any other action is approved if the number of votes cast
in favor of the action exceeds the number of votes cast in opposition to
the action, except where the General Corporation Law, the Articles of
Incorporation, or these Bylaws prescribe a different percentage of votes
and/or a different exercise of voting power. In the election of directors,
voting need not be by ballot; and, except as otherwise may be provided
by the General Corporation Law, voting by ballot shall not be required
for any other action.
Stockholders may participate in a meeting of stockholders by
means of a conference telephone or similar method of communication by
which all persons participating in the meeting can hear each other.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Except
as may otherwise be provided by the General Corporation Law, any
action required or permitted to be taken at a meeting of the stockholders
may be taken without a meeting if a written consent thereto is signed by
stockholders holding at least a majority of the voting power; provided
that if a different proportion of voting power is required for such an
action at a meeting, then that proportion of written consents is required.
In no instance where action is authorized by written consent need a
meeting of stockholders be called or noticed.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs
of the corporation shall be managed by the Board of Directors of the
corporation. The Board of Directors shall have authority to fix the
compensation of the members thereof for services in any capacity. The
use of the phrase "whole Board" herein refers to the total number of
directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director must be
at least 18 years of age. A director need not be a stockholder or a
resident of the State of Nevada. The initial Board of Directors shall
consist of two persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation
and except for the first Board of Directors, such number may be fixed
from time to time by action of the stockholders or of the directors, or, if
the number is not fixed, the number shall be two. The number of
directors may be increased or decreased by action of the stockholders or
of the directors.
3. ELECTION AND TERM. Directors may be elected in the
manner prescribed by the provisions of Sections 78.320 through 78.335
of the General Corporation Law of Nevada. The first Board of Directors
shall hold office until the first election of directors by stockholders and
until their successors are elected and qualified or until their earlier
resignation or removal. Any director may resign at any time upon
written notice to the corporation. Thereafter, directors who are elected
at an election of directors by stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next election of directors by stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. In the interim between elections of directors by stockholders,
newly created directorships and any vacancies in the Board of Directors,
including any vacancies resulting from the removal of directors for cause
or without cause by the stockholders and not filled by said stockholders,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall
fix, except that the first meeting of a newly elected Board shall be held
as soon after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or
without the State of Nevada as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be
called by or at the direction of the Chairman of the Board, if any, the
Vice-Chairman of the Board, if any, or the President, or by a majority of
directors in office.
- NOTICE OR ACTUAL CONSTRUCTIVE WAIVER. No
notice shall be required for regular meetings for which the time and place
have been fixed. Written, oral, or any other mode of notice of the time
and place shall be given for special meetings in sufficient time for the
convenient assembly of the directors thereat. Notice if any need not be
given to a director or to any member of a committee of directors who
submits a written waiver of notice signed by him before or after the time
stated therein.
- QUORUM AND ACTION. A majority of directors then in
office, at a meeting duly assembled, shall constitute a quorum. A
majority of the directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place. Except as the Articles
of Incorporation or these Bylaws may otherwise provide, and except as
otherwise provided by the General Corporation Law, the act of the
directors holding a majority of the voting power of the directors, present
at a meeting at which quorum is present, is the act of the Board. The
quorum and voting provisions herein stated shall not be construed as
conflicting with any provisions of the General Corporation Law and these
Bylaws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board or action of disinterested
directors.
Members of the Board or of any committee which may be
designated by the Board may participate in a meeting of the Board or of
any such committee, as the case may be, by means of a telephone
conference or similar method of communication by which all persons
participating in the meeting hear each other. Participation in a meeting
by said means constitutes presence in person at the meeting.
- CHAIRMAN OF THE MEETING. The Chairman of the Board,
if any and if present and acting, shall preside at all meetings. Otherwise,
the Vice-Chairman of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the
Board, shall preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors
may be removed for cause or without cause in accordance with the
provisions of the General Corporation Law.
6. COMMITTEES. Whenever its number consists of two or
more, the Board of Directors may designate one or more committees
which have such powers and duties as the Board shall determine. Any
such committee, to the extent provided in the resolution or resolutions of
the Board, shall have and may exercise the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation and may authorize the seal or stamp of the corporation to be
affixed to all papers on which the corporation desires to place a seal or
stamp. Each committee must include at least one director. The Board of
Directors may appoint natural persons who are not directors to serve on
committees.
7. WRITTEN ACTION. Any action required or permitted to be
taken at a meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if, before or after the action, a written
consent thereto is signed by all members of the Board or of the
committee, as the case may be.
ARTICLE III
1. OFFICERS. The corporation must have a President, a
Secretary, and a Treasurer, and, if deemed necessary, expedient, or
desirable by the Board of Directors, a Chairman of the Board, a Vice-
Chairman of the Board, an Executive Vice-President, one or more other
Vice-Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers and agents with such titles as the
resolution choosing them shall designate. Each of any such officers must
be natural persons and must be chosen by the Board of Directors or
chosen in the manner determined by the Board of Directors.
2. QUALIFICATIONS. Except as may otherwise be provided in
the resolution choosing him, no officer other than the Chairman of the
Board, if any, and the Vice-Chairman of the Board, if any, need be a
director.
Any person may hold two or more offices, as the directors may
determine.
3. TERM OF OFFICE. Unless otherwise provided in the
resolution choosing him, each officer shall be chosen for a term which
shall continue until the meeting of the Board of Directors following the
next annual meeting of stockholders and until his successor shall have
been chosen or until his resignation or removal before the expiration of
his term.
Any officer may be removed, with or without cause, by the
Board of Directors or in the manner determined by the Board.
Any vacancy in any office may be filled by the Board of
Directors or in the manner determined by the Board.
4. DUTIES AND AUTHORITY. All officers of the corporation shall
have such authority and perform such duties in the management and
operation of the corporation as shall be prescribed in the resolution
designating and choosing such officers and prescribing their authority and
duties, and shall have such additional authority and duties as are incident
to their office except to the extent that such resolutions or instruments
may be inconsistent therewith.
ARTICLE IV
REGISTERED OFFICE
The location of the initial registered office of the corporation in
the State of Nevada is the address of the initial resident agent of the
corporation, as set forth in the original Articles of Incorporation.
The corporation shall maintain at said registered office a copy,
certified by the Secretary of State of the State of Nevada, of its Articles
of Incorporation, and all amendments thereto, and a copy, certified by
the Secretary of the corporation, of these Bylaws, and all amendments
thereto. The corporation shall also keep at said registered office a stock
ledger or a duplicate stock ledger, revised annually, containing the
names, alphabetically arranged, of all persons who are stockholders of
the corporation, showing their places of residence, if known, and the
number of shares held by them respectively or a statement setting out the
name of the custodian of the stock ledger or duplicate stock ledger, and
the present and complete post office address, including the street and
number, if any, where such stock ledger or duplicate stock ledger is
kept.
ARTICLE V
CORPORATE SEAL OR STAMP
The corporate seal or stamp shall be in such form as the Board of
Directors may prescribe.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BYLAWS
The power to amend, alter, and repeal these Bylaws and to make
new Bylaws shall be vested in the Board of Directors subject to the
Bylaws, if any, adopted by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and
correct copy of the Bylaws of Franklyn Resources III, Inc., a Nevada
corporation, as in effect on the date hereof.
WITNESS my hand and the seal or stamp of the corporation.
Dated: May 28, 1999
By: /s/________________________
Deborah Salerno
Secretary of Franklyn Resources III, Inc.
(SEAL)
City of Denver
County of Denver
May 28, 1999
EXHIBIT 4.1 - SPECIMEN STOCK CERTIFICATE
CONTENTS:
State of Incorporation
Name of Company
Number of authorized shares of common stock
Name of individual shareholder
Number of shares owned by individual shareholder
Fully paid and non-assessable shares
Date of issuance of certificate
Signatures of President and Secretary
Restrictive transfer legend
EXHIBIT 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,723
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,723
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,723
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,181
<OTHER-SE> 60,439
<TOTAL-LIABILITY-AND-EQUITY> 2,723
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 60,897
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (60,897)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,897)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
