U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
FILED MARCH 1, 2000
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
TEL-VOICE COMMUNICATIONS, INC.
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(Name of Small Business Issuer in its charter)
NEVADA 88-0409143
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16133 VENTURA BOULEVARD, SUITE 635
ENCINO, CALIFORNIA 91436
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (818) 981-1796
Securities to be registered pursuant to Section 12(b) of the Act: none
Securities to be registered pursuant to Section 12(g) of the Act:
$.001 COMMON STOCK
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(Title of Class)
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . . . . . 3
Item 2. Plan of Operation . . . . . . . . . . . . . . . . . . . . 9
Item 3. Description of Property. . . . . . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . . . . 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . . 16
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . 18
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . . . . . 19
Item 8. Description of Securities. . . . . . . . . . . . . . . . . 20
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . . . . . 21
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 23
Item 3. Changes in and Disagreements with Accountants. . . . . . . 23
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . 23
Item 5. Indemnification of Directors and Officers. . . . . . . . . 26
PART F/S Financial Statements. . . . . . . . . . . . . . . . . . . . 26
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . 28
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 28
2.
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PART I
Item 1. Description of Business
Tel-Voice Communications, Inc. (the "Company") was incorporated
on December 31, 1996, under the laws of the State of Nevada to engage in any
Lawful corporate activity, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to its original
shareholders, the Company never commenced any operational activities. As such,
the Company can be defined as a "shell" company, whose sole purpose at this time
is to locate and consummate a merger or acquisition with a private entity. The
Board of Directors of the Company has elected to commence implementation of the
Company's principal business purpose described below under "Item 2 - Plan of
Operation." The proposed business activities described herein may classify the
Company as a "blank check" company.
The Company is filing this registration statement on a voluntary
basis because the primary attraction of the Company as a merger partner or
acquisition vehicle will be its status as a public company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present stockholders of the Company.
In addition, the Company is filing this registration statement
to enhance investor protection and to provide information if a trading market
commences. On December 11, 1997, the National Association of Securities Dealers,
Inc. (NASD) announced that its Board of Governors had approved a series of
proposed changes for the Over The Counter ("OTC") Bulletin Board and the OTC
market. The principal changes, which were approved by the Securities and
Exchange Commission on January 4, 1999 allows only those companies that report
their current financial information to the Securities and Exchange Commission,
banking, or insurance regulators to be quoted on the OTC Bulletin Board. The
rule provides for a phase-in period for those securities already quoted on the
OTC Bulletin Board.
Risk Factors
The Company's business is subject to numerous risk factors, including
the following:
1. Lack of History.
The Company has had no operating history nor any revenues or earnings from
operations. The Company has no significant assets or financial resources. The
Company will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no assurance that
the Company can identify such a business opportunity and consummate such a
business combination.
3.
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2. The Company's Proposed Operations is Speculative.
The success of the Company's proposed plan of operation will depend to a
great extent on the operations, financial condition and management of the
identified business opportunity. While management intends to seek business
combination(s) with entities having established operating histories, there can
be no assurance that the Company will be successful in locating candidates
meeting such criteria. In the event the Company completes a business
combination, of which there can be no assurance, the success of the Company's
operations may be dependent upon management of the successor firm or venture
partner firm and numerous other factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private and public entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
4. The Company has No Agreement for a Business Combination or Other
Transaction - No Standards for Business Combination.
The Company has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a private or
public entity. There can be no assurance the Company will be successful in
identifying and evaluating suitable business opportunities or in concluding a
business combination. Management has not identified any particular industry or
specific business within an industry for evaluation by the Company. There is no
assurance the Company will be able to negotiate a business combination on terms
favorable to the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net worth or other
criteria which it will require a target business opportunity to have achieved,
and without which the Company would not consider a business combination in any
form with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
4.
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5. Continued Management Control, Limited Time Availability.
While seeking a business combination, management anticipates devoting up to
ten hours per month to the business of the Company. None of the Company's
officers has entered into a written employment agreement with the Company and
none is expected to do so in the foreseeable future. The Company has not
obtained key man life insurance on any of its officers or directors.
Notwithstanding the combined limited experience and time commitment of
management, loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood of continuing
operations. See "Item 5 - Directors, Executive Officers, Promoters and Control
Persons."
6. There May Be Conflicts of Interest. Officers and directors of the
Company may in the future participate in business ventures which could be deemed
to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions may also
arise in the future in the event the Company's officers or directors are
involved in the management of any firm with which the Company transacts
business. Management has adopted a policy that the Company will not seek a
merger with, or acquisition of, any entity in which management serve as
officers, directors or partners, or in which they or their family members own or
hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions.
Sections 13 and 5(d) of the Securities Exchange Act of 1934 (the "1934
Act"), require companies subject thereto to provide certain information about
significant acquisitions, including certified financial statements for the
company acquired, covering one, two, or three years, depending on the relative
size of the acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the 1934 Act are applicable.
8. Lack of Market Research or Marketing Organization.
The Company has neither conducted, nor have others made available to it,
results of market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company does not have,
and does not plan to establish, a marketing organization. Even in the event
demand is identified for a merger or acquisition contemplated by the Company,
there is no assurance the Company will be successful in completing any such
business combination.
5.
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9. Lack of Diversification.
The Company's proposed operations, even if successful, will in all
likelihood result in the Company engaging in a business combination with a
business opportunity. Consequently, the Company's activities may be limited to
those engaged in by business opportunities which the Company merges with or
acquires. The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
10. Regulation.
Although the Company will be subject to regulation under the 1934 Act,
management believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event the Company
engages in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such event, the Company
would be required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
11. Probable Change in Control and Management.
A business combination involving the issuance of the Company's Common
Shares will, in all likelihood, result in shareholders of a private company
obtaining a controlling interest in the Company. Any such business combination
may require management of the Company to sell or transfer all or a portion of
the Company's Common Shares held by them, or resign as members of the Board of
Directors of the Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of the Company
and a corresponding reduction in or elimination of their participation in the
future affairs of the Company.
12. Reduction of Percentage Share Ownership Following Business Combination.
The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would result in the
Company issuing securities to shareholders of any such private company. The
issuance of previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control or
management of the Company.
6.
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13. Disadvantages of Blank Check Offering.
The Company may enter into a business combination with an entity that
desires to establish a public trading market for its shares. A business
opportunity may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such an
offering, loss of voting control to public shareholders and the inability or
unwillingness to comply with various federal and state laws enacted for the
protection of investors.
14. Taxation. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
15. Requirement of Audited Financial Statements May Disqualify Business
Opportunities.
Management of the Company believes that any potential business opportunity
must provide audited financial statements for review, for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with the Company, rather than incur the expenses associated with preparing
audited financial statements.
16. Dilution.
Any merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
then shareholders.
17. No Trading Market.
There is no trading market for the Company's common stock at present, and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such market does develop, that it will continue.
The Company intends to request a broker-dealer to make application to the NASD
Regulation, Inc. to have the Company's securities traded on the OTC Bulletin
Board or published in print and electronic media, or either, in the National
Quotation Bureau LLC "Pink Sheet."
7.
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18. Required Year 2000 Compliance.
A business combination will, in all likelihood, result in the Company
disclosing additional Year 2000 matters. Many existing computer programs use
only two digits to identify a year in the date field. These programs were
designed and developed without considering the impact of the upcoming change in
the century. If not corrected, many computer applications could fail or create
erroneous results by or at the Year 2000. The Year 2000 issue affects virtually
all companies and organizations.
19. Disclosure by Public Companies Regarding the Year 2000 Issue.
The business combination will require specific Year 2000 disclosures.
Management of the Company believes that any potential business opportunity may
require a disclosure that many companies must undertake major projects to
address the Year 2000 issue. The disclosure of the potential costs and
uncertainties will depend on a number of factors, including its software and
hardware and the nature of its industry. Companies also must coordinate with
other entities with which they electronically interact, both domestically and
globally, including suppliers, customers, creditors, borrowers, and financial
service organizations. If the Company does not successfully address its Year
2000 issues, the Company may face material adverse consequences. The Company
will be required to review, on an ongoing basis, whether it needs to disclose
anticipated costs, problems and uncertainties associates with Year 2000
consequences, particularly in their filings with the Securities and Exchange
Commission. The Company may have to disclose this information in the Securities
and Exchange Commission filings because (i) the form or report may require the
disclosure, or (ii) in addition to the information that the Company is
specifically required to disclose, the disclosure rules require disclosure of
any additional material information necessary to make the required disclosure
not misleading.
If the Company determines that it should make a Year 2000 disclosure,
applicable rules or regulations must be followed. If the Company has not made an
assessment of its Year 2000 issues or has not determined whether it has material
Year 2000 issues, a disclosure of this known uncertainty is required. In
addition, the Securities and Exchange Commission staff believes that the
determination as to whether the Company's Year 2000 issues should be disclosed
should be based on whether the Year 2000 issues are material to the Company's
business, operations, or financial condition, without regard to related
countervailing circumstances (such as Year 2000 remediation programs or
contingency plans). If the Year 2000 issues are determined to be material,
without regard to countervailing circumstances, the nature and potential impact
of the Year 2000 issues as well as the countervailing circumstances will be
required. As part of this disclosure, the following topics will be addressed:
o the Company's general plans to address the Year 2000 issues
relating to its business, its operations (including operating
systems) and, if material, its relationships with customers,
suppliers, and other constituents; and its timetable for carrying
out those plans; and
8.
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o the total dollar amount that the Company estimates will be spent
to remediate its year 2000 issues, if such amount is expected to
be material to the Company's business, operations or financial
condition, and any material impact these expenditures are
expected to have on the Company's results of operations,
liquidity and capital resources.
Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the Company and
such other company as of the date of this registration statement.
The Company has no full time or part-time employees.
None of the officers and directors anticipates devoting more
than ten (10%) percent of his or her time to Company activities. The Company's
President and Secretary have agreed to allocate a portion of said time to the
activities of the Company, without compensation. These officers anticipate that
the business plan of the Company can be implemented by their devoting minimal
time per month to the business affairs of the Company and, consequently,
conflicts of interest may arise with respect to the limited time commitment by
such officers. See "Item 5 - Directors, Executive Officers, Promoters and
Control Persons - Resumes."
General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the advantages of an
Issuer who has complied with the 1934 Act. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
See Item F/S, "Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against gains
from another.
9.
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The Company may seek a business opportunity with entities which
have recently commenced operations, or which wish to utilize the public
marketplace in order to raise additional capital in order to expand into new
products or markets, to develop a new product or service, or for other corporate
purposes. The Company may acquire assets and establish wholly owned subsidiaries
in various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely risky. Due to
general economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that there
are numerous firms seeking the benefits of an Issuer who has complied with the
1934 Act. Such benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all shareholders and other factors.
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.
The Company has, and will continue to have, no capital with
which to provide the owners of business opportunities with any significant cash
or other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in an Issuer who has complied with the 1934 Act without
incurring the cost and time required to conduct an initial public offering. The
owners of the business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business opportunity,
including the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and
related reports and documents. The 1934 Act, specifically requires that any
merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the 1934 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
The Company has made no determination as to whether or not it
will file periodic reports in the event its obligation to file such reports is
suspended under the 1934 Act. Hagit Bernstein, an officer and director of the
Company, has agreed to provide the necessary funds, without interest, for the
Company to comply with the 1934 Act reporting requirements, provided that she is
an officer and director of the Company when the obligation is incurred.
The analysis of new business opportunities will be undertaken
by, or under the supervision of, the officers and directors of the Company, none
of whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be brought
to its attention through present associations of the Company's officers and
directors, or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
10.
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services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, will rely upon their own
efforts in accomplishing the business purposes of the Company. It is not
anticipated that any outside consultants or advisors will be utilized by the
Company to effectuate its business purposes described herein. However, if the
Company does retain such an outside consultant or advisor, any cash fee by such
party will need to be paid by the prospective merger acquisition candidate, as
the Company has no cash assets with which to pay such obligation. There have
been no contracts or agreements with any outside consultants and none are
anticipated in the future.
The Company will not restrict its search for any specific kind
of firms, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other advantages which the Company may offer. However, the Company does
not intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses
in the implementation of its business plan described herein. Because the Company
has no capital with which to pay these anticipated expenses, present management
of the Company will pay these charges with their personal funds, as interest
free loans to the Company or as capital contributions. However, if loans, the
only opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a proposed
transaction.
The Company has no plans, proposals, arrangements, or
understanding with respect to the sale or issuance of additional securities
prior to the location of an acquisition or merger candidate.
11.
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Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another corporation
or entity. It may also acquire stock or assets of an existing business. On the
consummation of a transaction, it is probable that the present management and
shareholders of the Company will no longer be in control of the Company. In
addition, the Company's directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of the
Company's shareholders or may sell their stock in the Company. Any terms of sale
of the shares presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar terms and
conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from registration
under applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of its transaction, the Company may agree to
register all or a part of such securities immediately after the transaction is
consummated or at specified times thereafter. If such registration occurs, of
which there can be no assurance, it will be undertaken by the surviving entity
after the Company has successfully consummated a merger or acquisition and the
Company is no longer considered a "shell" company. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's securities may have a depressive effect on the value of
the Company's securities in the future, if such a market develops, of which
there is no assurance.
While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a taxable
event and thereby structure the acquisition in a so-called "tax-free"
reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code (the
"Code"). In order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company, would retain less than 20% of the issued and outstanding shares of the
surviving entity, which would result in significant dilution in the equity of
such shareholders.
As part of the Company's investigation, officers and directors of
the Company will meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
12.
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With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of the Company
which the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only
after the negotiation and execution of appropriate written agreements. Although
the terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties prior
to and after such closing, will outline the manner of bearing costs, including
costs associated with the Company's attorneys and accountants, will set forth
remedies on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial statements
within a reasonable period of time after closing of the proposed transaction.
The Company is subject to all of the reporting requirements included in the 1934
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a merger
or acquisition, as well as the Company's audited financial statements included
in its annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of the 1934
Act, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents will provide that the proposed transaction will be
voidable, at the discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision providing for
the acquisition entity to reimburse the Company for all costs associated with
the proposed transaction.
13.
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Competition
The Company will remain an insignificant participant among the
firms which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933, as amended, and the 1934 Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences. The Company's Board
of Directors unanimously approved a resolution stating that it is the Company's
desire to be exempt from the Investment Company Act of 1940 under Regulation
3a-2 thereto.
Lock-Up Agreement
Each of the officers and directors of the Company has executed
and delivered a "lock-up" letter agreement affirming that they shall not sell
their respective shares of the Company's common stock until such time as the
Company has entered into a merger or acquisition agreement, or the Company is no
longer classified as a "blank check" company, whichever first occurs.
Item 3. Description of Property
The Company has no properties and at this time has no agreements
to acquire any properties.
The Company presently occupies office space supplied by a
shareholder at 16133 Ventura Boulevard, Suite 635, Encino, California 91436.
This space is provided to the Company on a rent-free basis, and it is
anticipated that this arrangement will remain until such time as the Company
successfully consummates a merger or acquisition. Management believes that this
arrangement will meet the Company's needs for the foreseeable future.
14.
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for
each class of equity securities of the Company beneficially owned by all
directors and officers of the Company.
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Owner of Class (1)
- --------- ---------- ----------- ---------
Common Hagit Bernstein 200,000 17.84
16133 Ventura Boulevard, Ste 635
Encino, California 91436
Common Raphi Shram 200,000 17.84
41 Edmond Seager Drive
Thornhill, Ontario, Canada L4JSB1
Common Naomi Shram 195,000 17.40
41 Edmond Seager Drive
Thornhill, Ontario, Canada L4JSB1
Common All Officers and 595,000 53.08
Directors as a Group
(three [3] individuals)
(b) Security Ownership of Management.
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Owner of Class (1)
- --------- ---------- ----------- ---------
Common Hagit Bernstein 200,000 17.84
16133 Ventura Boulevard, Ste 635
Encino, California 91436
Common Raphi Shram 200,000 17.84
41 Edmond Seager Drive
Thornhill, Ontario, Canada L4JSB1
Common Naomi Shram 195,000 17.40
41 Edmond Seager Drive
Thornhill, Ontario, Canada L4JSB1
Common All Officers and 595,000 53.08
Directors as a Group
(three [3] individuals)
(1) Percent of class is based on 1,121,000 shares of Common Stock outstanding
as of February 28, 2000. The total of the Company's outstanding Common
Shares are held by 25 persons.
15.
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
Name Age Position
---- --- --------
Hagit Bernstein 28 President/Secretary/Director
Raphi Shram 54 Treasurer/Director
Naomi Shram 49 Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death, resignation,
retirement, removal, or disqualification, or until their successors have been
duly elected and qualified. Vacancies in the existing Board of Directors are
filled by majority vote of the remaining Directors. Officers of the Company
serve at the will of the Board of Directors. There are no agreements or
understandings for any officer or director to resign at the request of another
person and no officer or director is acting on behalf of or will act at the
direction of any other person. Raphi Shram and Naomi Shram are husband and wife.
Except for said relationship, there is no family relationship between any
executive officer and director of the Company.
Resumes
Hagit Bernstein
- ---------------
Hagit Bernstein has been a major shareholder of the Company since 1996 and has
been its President and a director of the Company since 1999. Ms. Bernstein is
currently a visual presentation designer working as a freelance consultant
internationally. She has been working at the Expo unit of Home Depot for two
years, and was previously employed by Macy's as an interior designer. Ms.
Bernstein is a graduate of the Fashion Institute of Design and Management in Los
Angeles.
Raphi Shram
- -----------
Raphi Shram has been a major shareholder of the Company since 1996 and has been
its Treasurer and a director of the Company since 1999. Mr. Shram has been a
real estate developer in the Toronto metropolitan area for 15 years and has been
involved in different businesses in various industries. Mr. Shram has broad
experienced in numerous industries and in the financial markets.
Naomi Shram
- ----------
Naomi Shram has been a major shareholder of the Company since 1996 and has been
a director of the Company since 1999. Ms. Shram has owned and operated a variety
of businesses throughout her career, ranging from an art gallery to a retail
bakery. Ms. Shram has extensive business experience and has invested in various
start-up ventures in the past.
16.
<PAGE>
Previous Blank Check Companies - Current
Blank Check Companies
The officers and directors of the Company have been officers and
directors in another blank check offering. The officers and directors continue
to anticipate in becoming involved with additional blank check companies who may
file registration statements under the Securities Act of 1933, as amended, and
the 1934 Act, or either. In addition, the officers and directors of the Company
may become involved in additional blank check companies which may request a
broker-dealer to request clearance from the NASD Regulation, Inc. for trading
clearance in the applicable quotation medium.
Hagit Bernstein, the president and secretary of the Company,
and Raphi Shram, the treasurer of the Company, are currently involved with
other blank check companies, and are involved in creating additional companies
similar to this one. The initial business purpose of each of these companies was
or is to engage in a business combination with an unidentified company or
companies and each were or will be classified as a blank check company until
completion of a business combination.
Generally target companies will be located for the Company and
other identical blank check companies in chronological order of the date of
formation of such blank check companies or, in the case of blank check companies
formed on the same date, alphabetically. However, certain blank check companies
may differ from the Company in certain items such as place of incorporation,
number of shares and shareholders, working capital, types of authorized
securities,preference of a certain blank check company name by management of the
target company, or other items. It may be that a target company may be more
suitable for or may prefer a certain blank check company formed after the
Company. In such case, a business combination might be negotiated on behalf of
the more suitable or preferred blank check company regardless of date of
formation.
The following chart summarizes certain information concerning
recent blank check companies with which Ms. Bernstein and Mr. Shram are or have
been involved which filed a registration statement on Form 10-SB. In most
instances that a business combination is transacted with one of these companies,
it is required to file a Current Report on Form 8-K describing the transaction.
Reference is made to the Form 8-K filed for any company listed below for
detailed information concerning the business combination entered into by that
company.
Registration
Form/Effective
Date; File
Corporation Number Status
- ----------- -------------- -------------
Solar Enterprises, Form 10-SB/ Has not entered into an
Inc. (1)(2) 3/20/00; 0-29035 agreement for a business
Combination
D.W.C. Installations(1) (2) Form 10-SB/ Has not entered into an
4/18/00; 0-29611 Agreement for a business
combination
17
<PAGE>
- -----------------
(1) Ms. Bernstein is the president, secretary, director and beneficial
shareholder.
(2) Mr. Shram is the treasurer, director and beneficial shareholder.
Conflicts of Interest
Members of the Company's management are associated with other
firms involved in a range of business activities. Consequently, there are
potential inherent conflicts of interest in their acting as officers and
directors of the Company. Insofar as the officers and directors are engaged in
other business activities, management anticipates it will devote only a minor
amount of time to the Company's affairs.
The officers and directors of the Company are now and may in the
future become shareholders, officers or directors of other companies which may
be engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company or the companies in which the officers and directors are
affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy with respect
to such transactions.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the Company, nor have
they received such compensation in the past. They all have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Company has generated revenues from operations after
consummation of a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay directors. Further, none of
the directors are accruing any compensation pursuant to any agreement with the
Company.
18.
<PAGE>
It is possible that, after the Company successfully consummates
a merger or acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or a number of members of the Company's management for the
purposes of providing services to the surviving entity, or otherwise provide
other compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer
a prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
Item 7. Certain Relationships and Related Transactions.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation S-B.
Hagit Bernstein has agreed to provide the necessary funds,
without interest, for the Company to comply with the 1934 Act provided that she
is an officer and director of the Company when the obligation is incurred. All
advances will be interest-free.
19.
<PAGE>
Item 8. Description of Securities.
The Company's authorized capital stock consists of 75,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock, par value $.001
per share. There are 1,121,000 Common Shares issued and outstanding as of the
date of this filing.
Common Stock
- ------------
All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
as fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and non-assessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
Preferred Stock
- ---------------
The Company is authorized to issue 10,000,000 shares of "blank
check" preferred stock, par value $0.001 per share, in one or more series from
time to time with such designations, rights and preferences as may be determined
from time to time by the Board of Directors, including, but not limited to (i)
the designation of such series; (ii) the dividend rate of such series, the
conditions and dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any other class or
classes or series of our capital stock and whether such dividends shall be
cumulative or non-cumulative; (iii) whether the shares of such series shall be
subject to redemption for cash, property or rights, including securities of any
other corporation, by the Company or upon the happening of a specified event
and, if made subject to any such redemption, the times or events, prices, rates,
adjustments and other terms and conditions of such redemption; (iv) the terms
and amount of any sinking fund provided for the purchase or redemption of the
shares of such series (v) whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the holder or the
Company or upon the happening of a specified event, shares of any other class or
classes or of any other series of the same class of the Company's capital stock
and, if provision be made for the conversion or exchange, the times or events,
prices, rates, adjustments and other terms and conditions of such conversions or
exchanges; (vi) the restrictions, if any, on the issue or reissue of any
additional preferred stock; (vii) the rights of the holders of the shares of
20.
<PAGE>
such series upon the voluntary or involuntary liquidation, dissolution or
winding up of the Company; and (viii) the provisions as to voting, optional
and/or other special rights and preferences, if any, including, without
limitation, the right to elect one or more directors. Accordingly, the Board of
Directors is empowered, without stockholder approval, to issue preferred stock
with dividend, liquidation, conversion, voting or other rights which adversely
affect the voting power or other rights of the holders of the common stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a way of discouraging, delaying or preventing an acquisition
or change in control of the Company.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. There is no assurance that
a trading market will ever develop or, if such a market does develop, that it
will continue. The Company intends to request a broker-dealer to make
application to the NASD Regulation, Inc. to have the Company's securities traded
on the OTC Bulletin Board Systems or published, in print and electronic media,
or either, in the National Quotation Bureau LLC "Pink Sheets."
(a) Market Price. The Company's Common Stock is not quoted at the present
time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
21.
<PAGE>
For the initial listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $4 million or market capitalization of $50 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
(b) Holders.
There are twenty-five (25) holders of the Company's Common Stock. In 1996,
the Company issued 1,121,000, as adjusted for the stock split, of its Common
Shares for cash. All of the issued and outstanding shares of the Company's
Common Stock were issued in accordance with the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended.
As of the date of this report, all of the issued and outstanding shares of
the Company's Common Stock are eligible for sale under Rule 144 promulgated
under the Securities Act of 1933, as amended, subject to certain limitations
included in said Rule. Except for the officers and directors of the Company, no
shareholder has executed and delivered to the Company a "lock-up" letter
affirming that he or she shall not sell their respective shares of the Company's
Common Stock until such time as the Company has successfully consummated a
merger or acquisition and the Company is no longer classified as a "blank check"
company.
22.
<PAGE>
As of the date of this registration statement, 526,000 shares of the
Company's Common Stock held by non-affiliates are eligible for sale under Rule
144 promulgated under the Securities Act of 1933, as amended, subject to certain
limitations included in said Rule. In general, under Rule 144, a person (or
persons whose shares are aggregated), who has satisfied a one year holding
period, under certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume during the four
calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate of the Company.
(c) Dividends.
The Company has not paid any dividends to date, and has no plans to do so
in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the
Company.
Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
The Company has not changed accountants since its formation and
there are no disagreements with the findings of said accountants.
Item 4. Recent Sales of Unregistered Securities.
(a) Securities sold.
The Company has sold and issued its securities during the three year period
preceding the date of this registration statement. All of the shares of Common
Stock of the Company were sold and issued on September 25, 1996 and have been
issued for investment purposes in a "private transaction" and are "restricted"
shares as defined in Rule 144 under the Securities Act of 1933, as amended.
These shares may not be offered for public sale except under Rule 144, or
otherwise, pursuant to said Act.
In summary, Rule 144 applies to affiliates (that is, control persons) and
non-affiliates when they resell restricted securities (those purchased from the
issuer or an affiliate of the issuer in nonpublic transactions). Non-affiliates
reselling restricted securities, as well as affiliates selling restricted or
nonrestricted securities, are not considered to be engaged in a distribution
and, therefore, are not deemed to be underwriters as defined in Section 2(11) of
the Securities Act of 1933, as amended, if six conditions are met:
23.
<PAGE>
(1) Current public information must be available about the issuer
unless sales are limited to those made by non-affiliates after two years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by an
affiliate after one year, there are limitations on the amount of securities
that may be sold; when restricted securities are sold by non-affiliates
between the first and second years, there are identical limitations; after
two years, there are no volume limitations for resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates
after two years, all sales must be made in brokers' transactions as defined
in Section 4(4) of the Securities Act of 1933, as amended, or a transaction
directly with a "market maker" as that term is defined in Section 3(a)(38)
of the 1934 Act.
(5) Except for sales of restricted securities made by
non-affiliates after two years, a notice of proposed sale must be filed
for all sales in excess of 500 shares or with an aggregate sales price
in excess of $10,000.
(6) There must be a bona fide intention to sell within a reasonable
time after the filing of the notice referred to in (5) above.
(b) Underwriters and other purchasers.
There were no underwriters in connection with the sale and issuance of any
securities.
All of the shareholders have had a pre-existing personal or business
relationship with the Company or its officers and directors. By reason of their
business experience, each have been involved financially and by virtue of a time
commitment in business projects with the officers of the Company. Further, each
of the shareholders have established a pre-existing personal relationship with
the officers and directors of the Company. The following are the names of the 25
issuees and the number of shares purchased by each of them.
24.
<PAGE>
Number of
Name Shares
---- ---------
Hagit Bernstein 2,000
Raphi Shram 2,000
Naomi Shram 1,950
Frederick Manlunas 550
Anna Marie Manlunas 550
Eyal Shrem 550
Maya Rubin 550
Eileen Lee 250
Robert Lee 250
Sherwin Escanuela 250
Samuel Utomo 250
Asuncion Utomo 250
Rachel Littaua 250
Emmanuel Corpus 250
Paul Hain 250
Rose Zulueta 250
Raul Zulueta 250
Lauro Reyes 250
Elizabeth Reyes 250
Philip Pangilinan 10
Severino Oliva 10
Ira Rimer 10
William Nance 10
Amnon Even 10
Ronald Brown 10
------
11,210
Raphi Shram and Naomi Shram, Frederick Manlunas and Anna Marie Manlunas,
Eileen Lee and Robert Lee, Samuel Utomo and Asuncion Utomo, Rose Zulueta and
Raul Zulueta, and Lauro Reyes and Elizabeth Reyes are, respectively, husbands
and wives.
(c) Consideration.
Each of the shares of stock were sold for cash. Prior to the forward stock
split, each shareholder paid $0.50 per share for the shares, the Company sold
and issued 11,210 shares, and the aggregate consideration received by the
Company was $5,605.00.
(d) Exemption from Registration Relied Upon.
The sale and issuance of the shares of stock was exempt from registration
under the Securities Act of 1933, as amended, by virtue of section 4(2) as a
transaction not involving a public offering. Each of the shareholders had
acquired the shares for investment and not with a view to distribution to the
public. From the date of the issuance to the date of this report, there were no
transfers of the stock sold and issued.
25.
<PAGE>
Item 5. Indemnification of Directors and Officers.
Except for acts or omissions which involve intentional
misconduct, fraud or known violation of law or for the payment of dividends in
violation of Nevada Revised Statutes, there shall be no personal liability of a
director or officer to the Company, or its stockholders for damages for breach
of fiduciary duty as a director or officer. The Company may indemnify any person
for expenses incurred, including attorneys fees, in connection with their good
faith acts if they reasonably believe such acts are in and not opposed to the
best interests of the Company and for acts for which the person had no reason to
believe his or her conduct was unlawful. The Company may indemnify the officers
and directors for expenses incurred in defending a civil or criminal action,
suit or proceeding as they are incurred in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount of such expenses if it is
ultimately determined by a court of competent jurisdiction in which the action
or suit is brought determined that such person is fairly and reasonably entitled
to indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to officers, directors or
persons controlling the Company pursuant to the foregoing, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.
PART F/S
The Company's balance sheets as of December 31, 1999 and
December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the period December 31, 1996 (inception) to December
31, 1999, have been examined to the extent indicated in their report by
Merdinger, Fruchter, Rosen, Corso,P.C., independent certified accountant, and
have been prepared in accordance with generally accepted accounting principles
and pursuant to Regulation S-B as promulgated by the Securities and Exchange
Commission and are included herein, on the following pages, in response to Part
F/S of this Form 10-SB
26
<PAGE>
INDEX
PAGE
INDEPENDENT AUDITORS' REPORT F/S-1
BALANCE SHEETS F/S-2
STATEMENTS OF OPERATIONS F/S-3
STATEMENT OF STOCKHOLDER'S EQUITY F/S-4
STATEMENTS OF CASH FLOWS F/S-5
NOTES TO FINANCIAL STATEMENT F/S-6-8
27
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF TEL-VOICE COMMUNICATIONS, INC.:
We have audited the accompanying balance sheets of Tel-Voice Communications,
Inc. (A Development Stage Company) as of December 31, 1999 and 1998 and the
related statements of operations, stockholders' equity and cash flows for the
years then ended and for the period from December 31, 1996 (inception) to
December 31, 1999. These financials statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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 Tel-Voice Communications, Inc.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for the years then ended and for the period from December 31, 1996
(inception) to December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 of the
accompanying financial statements, the Company has no established source of
revenue, which raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also discussed in Note
1. These financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
MERDINGER, FRUCHTER ROSEN & CORSO, P.C.
Certified Public Accountants
Los Angeles, California
February 28, 2000
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31,
---------------------------
1999 1998
----------- ------------
ASSETS
TOTAL ASSETS $ - $ -
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL LIABILITIES $ - $ -
----------- ------------
STOCKHOLDERS' EQUITY:
Common stock, no par value;
25,000 shares authorized;
11,120 shares issued and
outstanding 5,605 5,605
Deficit accumulated during the
the development stage (5,605) (5,605)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY - -
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ - $ -
=========== ============
The accompanying notes are an integral part of the financial statements
F/S-2
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Period
From
For The Year Ended December 31, 1996
December 31, (inception) to
------------------------ December 31,
1999 1998 1999
--------- ---------- ---------------
REVENUE $ - $ - $ -
ADMINISTRATIVE EXPENSES - - 5,605
--------- ---------- ----------------
NET LOSS $ - $ - $ (5,605)
========= ========== ===============
NET LOSS PER COMMON SHARE
- basic and diluted $ - $ - $ (0.50)
========= ========== ===============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING
- basic and diluted 11,210 11,210 11,210
========= ========== ==============
The accompanying notes are an integral part of the financial statements.
F/S-3
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the Total
------------------- Development Stockholders'
Shares Amount Stage Equity
------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 - $ - $ - $ -
Issuance of common stock
for cash on December 31, 1996
at $0.50 per share 11,210 5,605 - 5,605
Net loss - - (5,605) (5,605)
------- -------- ----------- -----------
Balance, December 31, 1996 11,210 5,605 (5,605) -
Net loss - - - -
------- -------- ----------- -----------
Balance, December 31, 1997 11,210 5,605 (5,605) -
Net loss - - - -
------- -------- ----------- -----------
Balance, December 31, 1998 11,210 5,605 (5,605) -
Net loss - - -
------- -------- ----------- -----------
Balance, December 31, 1999 11,210 $ 5,605 $ (5,605) $ -
======= ======== =========== ===========
</TABLE>
The accompanying notes are integral part of the financial statements.
F/S-4
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Period
From
For The Year Ended December 31, 1996
December 31, (inception) to
------------------------ December 31,
1999 1998 1999
--------- ---------- ---------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ - $ - $ (5,605)
--------- --------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common
stock for cash - - 5,605
--------- --------- -------------
Net change in cash
and cash equivalents - - -
--------- --------- -------------
Cash and cash equivalents
- beginning of period - - -
--------- --------- -------------
Cash and cash equivalents
- ending of period $ - $ - $ -
========= ========= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year -
Interest paid $ - $ - $ -
========= ========= =============
Income taxes paid $ - $ - $ -
========= ========= =============
The accompanying notes are an integral part of the financial statements.
F/S-5
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND DECEMBER 31, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
--------------------
Tel-Voice Communications, Inc. (the "Company") is currently a
development stage company under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 7. The Company was
incorporated under the laws of the State of Nevada on December
31, 1996. It is management's' objective to seek a merger with an
existing operating company.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has no established source of revenue. This
factor raises substantial doubt about the Company's ability to
continue as a going concern. Without realization of additional
capital, it would be unlikely for the Company to continue as a
going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amount, or amounts and classification of
liabilities that might be necessary should the Company be unable
to continue in existence. It is management's' objective to seek
additional capital through a merger with an existing operating
company.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased
with original maturities of three months or less to be cash
equivalents.
Concentration of Credit Risk
----------------------------
The Company places its cash in what it believes to be
credit-worthy financial institutions. However, cash balances
may exceed FDIC insured levels at various times during the year.
F/S-6
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND DECEMBER 31, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Income Taxes
------------
Income taxes are provided for based on the liability method of
accounting pursuant to SFAS No. 109, "Accounting for Income
Taxes". Deferred income taxes, if any, are recorded to reflect
the tax consequences on future years of differences between the
tax bases of assets and liabilities and their financial reporting
amounts at each year-end.
Earnings Per Share
------------------
During 1998, the Company adopted SFAS No. 128, "Earnings Per
Share", which requires presentation of basic loss per share and
diluted loss per share. The computation of basic loss per share
is computed by dividing loss available to common stockholders by
the weighted average number of outstanding common shares during
the period. Diluted loss per share gives effect to all dilutive
potential common shares outstanding during the period. The
computation of diluted LPS does not assume conversion, exercise
or contingent exercise of securities that would have an
antidilutive effect on earnings.
Comprehensive Income
--------------------
In June 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, "Reporting Comprehensive Income". SFAS No.
130 establishes standards for the reporting and display of
comprehensive income and its components in the financial
statements. As of December 31, 1999, the Company has no items
that represent comprehensive income and therefore, has not
included a schedule of comprehensive income in the accompanying
financial statements.
Impact of Year 2000 Issue
-------------------------
As of December 31, 1999, the Company does not have any computer
systems or customers and suppliers. Therefore, the issue of the
year 2000 has no effect on the Company's current activities.
F/S-7
<PAGE>
TEL-VOICE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND DECEMBER 31, 1998
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal
property. The sole officer/director of the Company provides
office services without charge. Such costs are immaterial to the
financial statement and, accordingly, have not been reflected
therein. The officer/director of the Company is involved in other
business activities and may, in the future, become involved in
other business opportunities. If a business opportunity becomes
available for the Comapny, such persons may face a conflict in
selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of
such conflicts.
NOTE 3 SUBSEQUENT EVENTS
In February 2000, the Company restated its Articles of
Incorporation to designate 10,000,000 shares of preferred stock
with a par value of $0.001 and increase the authorized number of
common stock from 25,000 to 75,000,000 shares.
The Board of Directors is authorized to provide from time to time
for the issuance of shares of preferred stock in series and to
fix and determine from time to time, before issuance, the
designation and relative rights and preferences of the shares of
each series of preferred stock and the restrictions or
qualifications. As of February 2000, no preferred stock nor
designations of preferred stock have been determined.
In February 2000, the Company completed a forward split of its
common stock 100:1, thus increasing the number of outstanding and
issued shares of the Company's common stock from 11,210 to
1,121,000.
F/S-8
<PAGE>
PART III
Item 1. Exhibit Index
Sequential
No. Page No.
--- ----------
(3) Articles of Incorporation and Bylaws
3.1.1 Articles of Incorporation* 37
3.1.2 Amendment of Articles of Incorporation* 42
3.2 Bylaws* 44
(12) Lock-Up Agreement
12.1 Hagit Bernstein* 56
12.2 Raphi Shram* 57
12.3 Naomi Shram* 58
(27) Financial Data Schedule
27.1 Financial Data Schedule* 59
* Previously filed
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
TEL-VOICE COMMUNICATIONS, INC.
Amendment No. 1
Date: March 15, 2000 By: /s/ Hagit Bernstein
-------------------
Hagit Bernstein
President
28.
