U. S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment No.3
to
Form 10-SB/12g
GENERAL FORM FOR REGISTRATION OF SECURITES
OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of
1934
PROLOGUE
(Name of Small Business Issuer in its charter)
Utah 87-0412110
(State or Other Jurisdiction of(IRS Employer ID Number)
Incorporation or Organization)
3340 East Del Verde Avenue, Salt Lake City, Utah 84109
(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number : (801) 484-0930
Securities to be registered under Section 12 (b) of the Act:
Title of each class to be so registered: Not Applicable
Name of each exchange on which each class is to be registered:
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common, Par Value $0.001
Common Stock, Par Value $0.001
(Title of Class)
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TABLE OF CONTENTS
PART I
ITEM NUMBER AND CAPTION TOTAL NUMBER OF PAGES
ITEM 1.DESCRIPTION OF BUSINESS 3
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR PLAN
OF OPERATIONS 10
ITEM 3.DESCRIPTION OF PROPERTY
11
ITEM 4.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS &
MANAGEMENT 11
ITEM 5.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS 12
ITEM 6.EXECUTIVE COMPENSATION 13
ITEM 7.CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS 13
ITEM 8.DESCRIPTION OF SECURITIES 13
PART II
ITEM 1.MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS 14
ITEM 2.LEGAL PROCEEDINGS 14
ITEM 3.CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS 14
ITEM 4.RECENT SALES OF UNREGISTARED SECURITIES 14
ITEM 5.INDEMNIFICATION OF DIRECTORS AND OFFICERS 14
PART F/S
AUDITED FINANCIAL STATEMENTS 15
PART EXIBITS
Exhibit #1:BY-LAWS OF PROLOGUE
Exhibit #2:ARTICLE OF PROLOGUE
ITEM 1. DESCRIPTION OF BUSINESS
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GENERAL
Prologue (the Company) was incorporated under the laws of
the State of Utah on October 14, 1982, and was previously
engaged in the sales and marketing business. The Company
has no current operations or employees and owns no real
estate. The Company filed a public offering of its
Securities with the Utah Securities Exchange Commission
effective April 15, 1983.
The Company is filing this Form 10-SB on a voluntary basis
in order to become a 12 (g) registered company under the
Securities Exchange Act of 1934. As a "reporting company",
the Company believes it may be more attractive to a
potential business opportunity because it will be able to
list its shares for trading on the National Association of
Securities Dealers ("NASD") Over-The-Counter Bullet Board
("OTCBB"). Company management believes that various
opportunities may also be attracted to the Company because
of their desire to eventually develop a public market in the
Company's stock in order to enhance liquidity for current
and future shareholders; to implement potential plans for
raising capital through the public sale of securities; and
to acquire additional assets through issuance of securities
rather than for cash. There are substantial risks inherent
in the Company's business plan.
The Company's current business plan is to seek, investigate,
and acquire a business opportunity representing assets or
business intended to enhance shareholder value. The Company
is deemed to be a new or start-up venture with all of the
unforeseen costs, expenses, problems, and difficulties to
which such ventures are subject.
At the present time neither the Company nor its officers,
directors or affiliates has identified any business
opportunities to acquire or pursue, nor has the Company
reached any agreement or understanding with any person
concerning a transaction of any kind. The Company is unable
to predict when it may participate in a business
opportunity. It expects, however, that the analysis and
selection of a business opportunity may take several months
or more.
RISK FACTORS
AN ACQUISITION OPPORTUNITY MAY NOT BE FOUND
Because a business opportunity has not been identified, it
is impossible to predict or disclose the specific risks and
hazards of such opportunity. There is no assurance that the
Company will acquire a favorable business opportunity or
that such opportunity will generate revenues or profits, or
that shareholder value will be increased thereby. As such,
any potential business opportunity is expected to be highly
speculative and therefore risky. Such opportunity may be
highly illiquid and could result in a total loss to the
Company and its stockholders.
THE LACK OF CAPITAL MAY LIMIT BUSINESS OPPORTUNITIES AND THE
ABILITY TO INVESTIGATE AND ANALIZE BUSINESS PROSPECTS
The Company has limited capital which may not be adequate to
take advantage of many business opportunity. This lack of
diversification may prevent the Company from pursuing future
opportunities if its first one proves to be unsuccessful.
Moreover, a significant portion of the Company's available
funds may be expended for investigative expenses without any
guarantee that a transaction will be consummated. The
Company's long term success may therefore depend upon its
ability to raise additional capital. However, the Company
has not investigated the availability, source, or terms for
additional capital and will not do so until it determines
such a need. Additionally, there is no assurance that funds
will be available from any source or, if available,
obtainable on terms acceptable to the Company. If not
available, the Company's operations will be limited to those
that can be financed with its limited capital.
Another effect of the Company's limited capital is that its
analysis and investigation of potential opportunities will
also be limited which could increase the company' risk.
Management decisions will likely be made without detailed
feasibility studies, independent analysis and market survey.
The Company will likely be making decisions upon information
provided by the owner, sponsor, or others associated with
the business opportunity. Such information may not always
be objective.
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GENERAL - [CONTINUE]
SUCCESS MAY DEPEND ON UNCERTAIN ADDITIONAL FINANCING
The Company's long term success may therefore depend upon
its ability to raise additional capital. However, the
Company has not investigated the availability, source, or
terms for additional capital and will not do so until it
determines such a need. Additionally, there is no assurance
that funds will be available from any source or, if
available, obtainable on terms acceptable to the Company.
If not available, the Company's operations will be limited
to those that can be financed with its limited capital.
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 final
structure, which is currently impossible to predict, will be
the result of negotiations, consultation from legal counsel,
and the needs of the specific business
opportunity. Although it is likely, there is no assurance
that the Company would be the surviving entity.
There is also a possibility that the Company may finance the
acquisition of the business opportunity by borrowing against
the assets or against the projected future revenues or
profits of the business opportunity to be acquired. This
could increase the Company's exposure to larger losses. A
business opportunity acquired through a heavily financed
("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 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. There are
currently no loan arrangements or arrangements for any
financing whatsoever relating to any business opportunities.
A reorganization may dilute stockholders equity.
Although the terms and structure of a transaction with the
Company cannot be predicted, it is anticipated that the
transaction would be a "tax free" reorganization under the
Internal Revenue Code of 1986. Such a transaction normally
requires the issuance to the stockholders of the acquired
entity, 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 dilution in the
equity of stockholders of the Company prior to such
reorganization.
It is likely that any business combination entered into by
the Company will result in a change of control as a result
of stock issuance by the Company or shares 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 result in substantial gains to them relative to
their purchase price for such stock. Such sale may occur at
a price not relative to or reflective of any value of the
shares held by such parties, and at a price which may not be
achieved by other individual shareholders of the Company
remain subject to restrictions on the transfer of their
shares. The Company does not believe its officers and
directors would become an "underwriter" within the meaning
of the Section 2 (11) of the Securities Act of 1933, as
amended, with regards to such sales as such sales would
likely be made in non-public transactions.
The Company anticipates that any new securities issued in a
reorganization would be issued in reliance upon exemptions,
if any are available, from registration under applicable
federal and state securities laws. Any securities which the
Company might acquire in exchange for its Common Stock will
likely be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). Sales of
such securities, cannot proceed unless a registration
statement has been declared effective by the Securities and
Exchange Commission or an exemption from registration is
available. The Company would be required to comply with the
provisions of the Act to effect any resale. In the event of
a resale, the Company may rely on
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GENERAL - [CONTINUE]
Section 4(1) of the Act, which exempts sales of securities
not involving a public offering. Also, the Company may
agree to register such securities sometime after the
transaction is consummated. The issuance of additional
securities and their potential sale into any trading market
that might develop in the Company's securities could have a
depressive effect upon the price of the Company's stock.
LIMITED RIGHTS FOR MINORITY STOCKHOLDERS
Utah Business Corporation Act vests authority in the Board
of Directors with written consent to decide and approve the
issuance of stock. While in some instances a proposed
participation in a business opportunity may be submitted to
the stockholders for their consideration, it is unlikely
that the Company's minority shareholders will be furnished
with financial statements, or any other documentation,
concerning a target opportunity, It is also emphasized that
management of the Company could effect transactions having a
potentially adverse impact upon the Company's shareholders.
A shareholder may have no right of at dissent under Utah
law, if a majority of shareholders consent in writing to the
transaction.
Depending upon the nature of the transaction, the current
officers and directors of the Company will likely resign
their positions with the Company upon completion of a
transaction. 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
Company's combination with a business opportunity.
The Company does not foresee that it would enter into any
business opportunity with which its officers or directors
are currently affiliated. Should the Company determine in
the future, contrary to foregoing expectations, that a
transaction with an affiliate would be in the best interests
of the Company and its stockholders, the Company may enter
into such a transaction only if: a) The material facts as
to the relationship or interest of the affiliate are
disclosed to the board of directors and shareholders, and
the Board and/or majority of disinterested shareholders in
good faith authorizes the transaction by the affirmative
vote even though disinterested parties constitute less than
a quorum; b) 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.
BUSINESS PROSPECTS MAY PREFER AN INITIAL PUBLIC OFFERING RATHER
THAN A COMBINATION
Business prospects may have the time, management expenses
and capital resources to pursue an initial pubic offering as
opposed to a business combination thereby limiting the
registrants business opportunities.
ADMINISTRATIVE BURDEN OF PUBLIC REPORTING COMPANY
A business prospect may not have the organizational maturity
and financial resources to fulfill it's disclosure and
reporting obligations as a reporting company without
financial hardship and management disruption.
SOURCES OF OPPORTUNITES
Business opportunities may come to the Company's attention
from various sources, including its officers and directors,
its 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, understanding agreements, or commitments with any
individual to act as a finder of opportunities for the
Company. The analysis of business opportunities will be
undertaken by or under the supervision of the Company's
president, who is not a professional business analyst. See
"Management". Although there are no current plans to do so,
Company management may hire an outside consultant to assist
in the investigation and selection of business
opportunities, and may pay a finder's fee. No
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SOURCES OF OPPORTUNITES - [CONTINUED]
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 the total amount of fees that may be
paid. And, because of the limited resources of the Company,
it is likely that any fee the Company agrees to pay would be
in stock instead of cash.
It is possible that the range of business opportunities
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
another exchange which would make them exempt form
applicability of the "penny stock" regulations.
INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
Management will make a decision to participate in a specific
business opportunity based on an analysis of quality of the
opportunity's business plan, its management and personnel,
the anticipated market acceptability of new products or
marketing concepts, the merit of technological changes, the
entity, and numerous other factors which are difficult, if
not impossible, to analyze through the application of any
objective criteria. It is likely that the historical
operations of a specific business opportunity may not be
indicative of its future potential because of possible
future changes in marketing approaches, expansion plans,
product emphasis, management, or other changes.
The Company will be dependent upon the owners of a business
opportunity to identify any potential future problems and to
implement necessary 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 may incur further risks because management and
the
Company's products or services may be unproven and
unprofitable when acquired. Business opportunities
presented to the Company may (i) be recently organized with
no 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) though (iv). The Company
intends to concentrate its acquisition efforts on properties
of businesses that it believes to be undervalued. Given the
above factors, investors should expect that any acquisition
candidate may have a history of losses or low profitability.
The Company's search will be directed primarily towards
small and medium sized business opportunities with or
without revenues and earnings which desire to become public
corporations and which are able to satisfy, the minimum
asset requirements in order to qualify shares for trading on
NASDAQ or a stock exchange. The Company intends to seek
opportunities demonstrating the potential of long growth.
The Company's investigation of business opportunities will
not be restricted to any particular geographical area,
industry, or stage of growth and may, therefore, engage in
essentially any business, to the extent of its limited
resources. No specific factors described herein will be
controlling in the selection of a business opportunity.
Management will attempt to analyze the factors it deems
appropriate to each opportunity and make a determination
based upon a reasonable investigation of available data.
Prior to making a decision to participate in a business
opportunity, the Company will generally request that it be
provided with a business plan regarding the business
opportunity containing such items as a description of
products, services and company history; management resumes;
financial information; available projection, with related
assumptions upon which they are based; an explanation of
proprietary products and services; evidence of existing
patents, trademarks, or
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INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES -
[CONTINUE]
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
and estimated capital requirements.
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. However, it is also
possible that an investigation of such opportunities may be
exclusively by phone, mail, facsimile, email or other
methods not involving a physical meeting or inspection with
such opportunities.
The Company will likely require audited financial statements
from opportunities with which it proposes to acquire or
merge because 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 audited financial statements for any opportunity in
which it engages. Failure to do so could expose the Company
to enforcement actions by the Securities and Exchange
Commission which could result in penalties, legal fees
and/or injunctive action, which would have a material
adverse effect on the Company and its operations.
In the event that audited financial statements are not
available, the Company may still engage in such an
opportunity if it believes that audited financial statements
will be provided within a reasonable time after the company
enters into a transaction with such opportunity. However,
without audited financial information, the Company will not
have the benefit for full and accurate information provided
by independent verification about the financial condition
and recent interim operating history of the target company.
This could substantially increase the risk of a potential
transaction.
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 the parties thereto,
specify certain event 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. 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.
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
will have significantly greater experience, resources and
managerial capabilities than the Company and will therefore
be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will
possibly experience competition from other public companies
seeking such opportunities, some of which may have more
funds available than does the Company.
REGULATION
The Company may acquire an opportunity that is subject to
regulation or licensing by federal, state, or local
authorities which may be a time-consuming, expensive process
and may limit other investment opportunities of the Company.
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REGULATION [CONTINUED]
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, and therefore intends to avoid
being classified as an "investment company" under the
Investment Company Act of 1940 (the "Investment Act"). Such
a classification could subject the Company to a costly
registration process. Section 3(a) of the Investment Act
excludes from the definition of an "investment company," any
entity that does not engage primarily in the business of
investing, reinvesting or trading in securities, or that
does not engage in the business of investing, owning,
holding or trading "investment securities" (defined as "all
securities other than government securities or securities of
majority-owned subsidiaries") the value of which exceeds 40%
of the value of its total assets (excluding government
securities, cash or cash items.) Since the Company will not
register as an investment company, stockholders will not be
afforded certain protections under the Investment Act.
Regulation of Penny Stocks. The Company's securities, when
available for trading, will 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 consent prior to the sale of a security.
Consequently, the rule may affect the ability of broker-
dealers to sell the Company's securities in an offering or
in any market that might develop thereafter. (See 15g - 9
General Rules and Regulations under the Securities and
Exchange Act of 1934, Sales Practice and Requirements for
Certain Low Priced Securities.)
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 owners of Shares to sell the
securities of the Company in any market that might develop
for them.
Shareholders should be aware that 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 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.
Blue Sky Consideration. Because the securities to be
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 purchaser to purchase the securities.
Warning is hereby given that the shares may be "restricted"
from resale. In the event of a violation of state laws
regarding resale of the shares, the Company could be liable
for civil and criminal penalties which would be a
substantial impairment to the Company.
At the date of this registration statement, the Company has
no intention of offering further shares in a private
offering to anyone. Further, the policy of the Board of
Directors is that any future
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REGULATION [CONTINUED]
offering of shares will only be made after an acquisition
has been made and can be disclosed in appropriate 8-K
filings.
Rule 144 Sales. Shares of the Company's Common Stock that
are held by officers, directors, and any stockholder owing
greater than 10% of the total issued and outstanding shares
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 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 non-affiliated after the
restricted securities have been held by the owner for a
period of two years. A sale under Rule 144 or under any
other exemption from the Act, if available, or pursuant to
subsequent registration 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 shares outstanding, 41,990,000 shares are available
for resale (subject to volume limitations for affiliates)
under Rule 144. Affiliates of a business combination may be
deemed underwriters and Securities held by such persons may
be governed by Rule 144. It is the viewpoint of the SEC that
reliance on Rule 144 sales will not be available to all
shareholders and not limited to just affiliates.
ADMINISTRATIVE OFFICES
The Company currently maintains a mailing address at the
home of its president at 3340 Del Verde Avenue, Salt Lake
City, Utah 84109. 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 a development stage company and currently has
no employees and does not anticipate a need to engage any
full-time employees so long as it is seeking and evaluating
business opportunities.
The Company currently has three individuals who are serving
as its officers and directors on a part time basis. The
Company will be heavily dependent upon their skills,
talents, and abilities to implement its business plan, and
may, from time to time, find that the inability of these
persons to devote full time attention to the business of the
Company may result in a delay in progress toward
implementing its business plan. Additionally, conflicts of
interest may arise that can be resolved only through
exercise of good judgement as is consistent with fiduciary
duties to the Company. 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. Certain of the officers and
directors of the Company may be directors and/or principal
shareholders of other companies and, therefore, could face
conflicts of interest with respect to potential
acquisitions. In addition, 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. The Company's Board of Directors has adopted a
policy that the Company will not seek a merger with, or
acquisition of, any entity in which management serve as
officers or directors, or in which family members own or
hold a controlling ownership interest. Although the Board
of Directors could elect to change this policy, the Board of
Directors has no present intention to do so. In addition,
if the Company and other companies with which the Company's
officers and directors are affiliated both desire to take
advantage of a potential business opportunity, then the
Board of Directors has agreed that potential business
opportunity, then the Board of Directors has agreed that
said opportunity should be available to each such company in
the order in which such companies registered or became
current in the filing of annual reports under the Exchange
Act subsequent to January 1, 2000.
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EMPLOYEES - [CONTINUED]
The Company's officers and directors or majority
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. It is anticipated that a
substantial premium over the initial cost of such shares may
be paid by the purchaser in conjunction with any sale of
shares by the Company's officers and directors which is 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 the Company's officers and directors
to acquire their shares creates a potential conflict of
interest for them in satisfying their fiduciary duties to
the Company and its profit to them, they would be legally
required to make the decision based upon the best interests
of the Company and the Company's other shareholders, rather
than their own personal pecuniary benefit. A breach of
loyalty owed to shareholders is sanctionable and may be
compensable by a court of competent jurisdiction. A shareholder
may initiate a civil suit and/or notify the regulatory
authorities.
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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED DECEMBER 31,
1999
The Company remains in the development stage and has no
revenues. Current expenses are being paid by the president,
Allen Avery, including the costs of becoming a reporting
company under the Securities Exchange Act of 1934.
Management is hopeful that becoming a reporting company will
increase the quality and number of prospective business
ventures that may be available to the Company. Net losses
for 1999 ($115.00) and 1998 ($115.00) are general and
administrative expenses. Such losses will continue unless a
business opportunity with revenues and profits can be
acquired by the Company. There is no assurance that
revenues or profitability will ever be achieved by the
Company.
The Company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its lack
of liquidity and capital resources will impair the
consummation of a business combination or whether it will
incur further operating losses through any business entity
which the Company may eventually acquire.
RESULT OF OPERATIONS
Calendar year ended December 31, 1999 and 1998 (audited).
Net losses for the years 1999 and 1998 have been $0.00 per
share. For the current fiscal year, the President has
agreed to pay the expenses associated with the registration
under the Securities Exchange Act of 1934 and if necessary
pay for the 10-QSB and 10-KSB filings for the calendar year 2000.
The Company anticipates that until a business combination
is completed with an acquisition candidate, it will not
generate revenues and may continue to operate at a loss after
completing a business combination, depending upon the performance
of the acquired business.
NEED FOR ADDITIONAL FINANCING
Management believes that the Company has sufficient cash to
meet the anticipated needs of the Company's operations
through at least the first calendar quarter of 2001.
However, there can be no assurances to that effect, as the
Company has no revenues and the Company's need for capital
may change dramatically if it acquires an interest in a
business opportunity during that period. In the event the
Company requires additional funds, the Company will have to
seek loans or equity placements to cover such cash needs.
There is no assurance additional capital will be available
to the Company on acceptable terms. In the event the
Company is able to complete a business combination during
this period, lack of its existing capital may be a
sufficient impediment to prevent it from accomplishing the
goal of completing a business combination. There is no
assurance, however, that without funds it will ultimately
allow registrant to complete a business combination. Once a
business combination is completed, the Company's needs for
additional financing are likely to increase substantially.
Other than previously stated, no commitments to provide
additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that
any additional funds will be available to the Company to
allow it to cover its expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to
be adequate to meet the Company's operational needs, the
Company might seek to compensate providers of services by
issuance's of stock in lieu of cash.
11
<PAGE>
YEAR 2000 ISSUES
Year 2000 problems result primarily from the inability of
some computer software to properly store, recall, or use
data after December 31, 1999. These problems may affect
many computers and other devices that contain embedded
computer chips. The Company's operations, however, do not
rely on information technology (IT) systems. Accordingly,
the Company does not believe it will be material affected by
Year 2000 problems.
The Company relies on non-IT systems that may suffer from
Year 2000 problems, including telephone systems and
facsimile and other office machines. Moreover, the Company
relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations,
including banks, oil field operators, and utilities. In
light of the Company's substantially reduced operations, the
Company does not believe that such non-IT systems or third-
party Year 2000 problems will affect the Company in a manner
that is different or more substantial than such problems
affect other similarly situated companies or industry
generally. Consequently, the Company does not currently
intend to conduct a readiness assessment of Year 2000
problems or to develop a detailed contingency plan with
respect to Year 2000 problems that may affect the Company.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no property. The Company does not currently
maintain an office or any other facilities. It does
currently maintain a mailing address at the home of its
resident and director at 3340 East Del Verde Avenue, Salt
Lake City, Utah 84109. 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.
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 be executive officers,
directors and persons who hold 5.0% 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.
SHARE HOLDERS AND NUMBER OF OWNERSHIP
BENEFICIAL OWNERS (1) SHARES PERCENTAGE
_____________________ __________ __________
Allen Avery
3340 East Del Verde Ave.
Salt Lake City, Utah 84109 40,400,000 80.8%
Bill Ross
2306 Richard Court
Henderson , Nevada 89014 1,500,000 3.0%
Stan Adams
680 East 6th South
Salt Lake City, Utah 84102 90,000 .2%
All directors and executive
officers as a group 41,990,000 83%
(1) Except as otherwise indicated, all shares are directly
owned.
12
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
The directors and executive officers currently serving the
Company are as follows:
NAME AGE POSITION SINCE
ALLEN AVERY 63 DIRECTOR 1994
BILL ROSS 53 DIRECTOR 1986
STAN ADAMS 53 DIRECTOR 1999
ALLEN AVERY PRESIDENT 1999
BILL ROSS VICE PRESIDENT 1999
STAN ADAMS SECRETARY/TREASURER 1999
Mr. Avery is a graduate of the University of Utah and has
been self-employed for 25 years managing his own investments
and management consulting. For the past 5 years Mr. Avery
has assembled the Company's corporate records for audits,
filed tax returns, filed disclosure documents with a NASD
broker-dealer and the Securities and Exchange Commission.
In preparation for the preceding activities, Mr. Avery has
familiarized himself with the relevant laws and regulations.
Also Mr. Avery has reviewed numerous business plans and
opportunities in behalf of the Company and continues this
effort as of this date.
Mr. Ross is a graduate of the University of Illinois and for
the past 5 years has been self-employed as owner of Ross
Promotional Marketing, an advertising specialties business and
as sales and lease executive for Towbin Dodge.
Mr. Adams is a member of the Utah State Bar Association and
a practicing attorney for the past 25 years. Mr. Adams also
develops real estate, rehabilitating properties on the
National Historic Register. Mr. Adams is a director of the Arts,
Inc., a private corporation.
All of the Directors have been officers and directors of
publicly traded companies over 10 years ago and Mr. Adams
was an officer and director of Investestate, a reporting
company during his tenure. Mr. Adams specializes in
criminal and domestic relations law.
Directors serve one year terms until annual meetings, and
officers serve at the board of directors discretion.
The directors named above will serve until the next annual
meeting of the Company's stockholders. Thereafter,
directors will be elected for positions as directed by the
board of directors. Currently, none of the Company's
officers nor directors have any employment agreement with
the Company, nor is any currently contemplated. There is no
arrangement or understanding between the directors and
officers of the Company and any other Person pursuant to
which any director or officer was or is to be selected as a
director officer.
The directors and officers of the Company will devote such
time to the Company's affairs on an "as needed' basis, but
less than 20 hours per month. As a result, the actual
amount of time which they will devote to the Company's
affairs is unknown and is likely to vary substantially from
month to month.
While it is unexpected, it is possible that after the
Company consummates a transaction with an unaffiliated
business opportunity, that entity may employ or retain a
member of the Company's management for future services.
However, the Company has adopted a policy whereby the offer
of any post-transaction compensation 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.
13
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS - [CONTINUE]
It is possible that persons associated with or known to
management may be responsible for introducing a potential
business opportunity to the Company and may therefore be
compensated with a finder's fee in cash or stock. The
amount of such finders fee, if applicable, cannot be
determined as of the date of filing this report, but is
expected to be comparable to consideration paid in similar
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 herein.
EXCLUSION OF LIABILITY
The Utah Business Corporation Act exclude personal liability
for its directors for monetary damages based upon any
violation of their duties as directors, except as to
liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation
of the Utah Business Corporation Act, or any transaction
from which a director receives an improper personal benefit.
This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any
director's liability under federal or applicable state
securities laws.
ITEM 6. EXECUTIVE COMPENSATION
No officer or director has received any other remuneration
in the two year period prior to the filing of this
registration statement. Although there is no current plan
in existence, it is possible that the Company will adopt a
plan to pay or accrue compensation to its officers and
directors for services related to seeking business
opportunities and completing a merger or acquisition
transaction. 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.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation authorized the
issuance of 50,000,000 shares of Common Stock $.001 par
value. Each record holder of Common Stock is entitled to
one vote for each share hold on all matters properly
submitted to the stockholders for their vote. Cumulative
voting for the election of directors is not permitted by the
Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled
to such dividends as may be declared from time to time by
the Board of Directors out of legally available funds; and,
in the event of liquidation, dissolution or winding up of
the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to
stockholders. 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.
SHAREHOLDERS
Each shareholder has sole investment power and sole voting
power over the shares owned by such shareholder. No
shareholder has entered into or delivered any lock up
agreement or letter agreement regarding their shares or
options thereon.
14
<PAGE>
TRANSFER AGENT
American Registrar and Transfer Company, 342 East 9th South,
Salt Lake City, Utah 84111.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual
report for each fiscal year 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. The Company intends to comply with the
periodic reporting requirements of the Securities Exchange
Act of 1934 for so long as it is subject to those
requirements, and to file unaudited quarterly reports and
annual reports with audited financial statements as required
by the Securities Exchange Act of 1934. The President has
agreed to pay the 10-QSB expenses, if necessary, for calendar
year 2000.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
No prices quoted in 1998 and 1999.
Bid Ask
First quarter for calendar year 2000 $0.02 $0.05
Second quarter for calendar year 2000 $0.02 $0.05
As of August 24, 2000 the Company had approximately 408
shareholders of record. No dividends have been paid to date
and the Company's Board of Directors does not anticipate
paying dividends in the foreseeable future. The registrant
filed a public stock offering with the Utah Securities and
Exchange Commission effective April 15, 1983 under a
3(a)(11) Intra-State Exemption from the Securities Act of
1933.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding,
and no such proceeding 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% 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 any litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
None. Registrant has not issued any shares since 1994 (See
Audited Equities Statement).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Utah Statutes, the Company may indemnify its
directors and officers against expenses and liabilities they
incur to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or
having been Company directors or officers unless, in any
such action, they are adjudged to have acted with gross
negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in
that Act and is, therefore, unenforceable.
15
<PAGE>
PART F/S
Filed herewith are the Company's audited financial
statements for the calendar years ended December 31, 1999
and 1998 and for the period from the re-entering of
development stage on May 1, 1991 through December 31, 1999.
PROLOGUE
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1999
16
<PAGE>
PROLOGUE
[A Development Stage Company]
CONTENTS
PAGE
Independent Auditors' Report 18
Balance Sheet, December 31, 1999 19
Statements of Operations, for the
years ended December 31, 1999
and 1998 and from the re-entering
of the development stage on May 1,
1991 through December 31,1999 20
Statement of Stockholders' Equity (Deficit),
from the re-entering of the development
stage on May 1, 1991 through December 31,
1999 21 - 22
Statements of Cash Flows, for the years
ended December 31, 1999 and 1998
and from the re-entering of the development
stage on May 1, 1991 through December 31,
1999 23
Notes to Financial Statements 24 - 26
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
PROLOGUE
Salt Lake City, Utah
We have audited the accompanying balance sheet of Prologue [a
development stage company] at December 31, 1999, and the related
statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 1999 and 1998 and from the
re-entering of development stage on May 1, 1999 through 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of
Prologue as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31,
1999 and 1998 and from the re-entering of development stage on
May 1, 1991 through December 31, 1999, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 7 to the financial statements, the Company has incurred
losses since inception has insufficient working capital, and has
no on-going operations, raising substantial doubt about its
ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 7. The
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
February 23, 2000
Salt Lake City, Utah
18
<PAGE>
PROLOGUE
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1999
___________
CURRENT ASSETS:
Cash in bank $ 20
___________
Total Current Asset 20
___________
$ 20
____________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ -
___________
Total Current Liabilities -
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
50,000,000 shares issued and
outstanding 50,000
Capital in excess of par value 1,689
Retained deficit (47,579)
Deficit accumulated during the
development stage (4,090)
___________
Total Stockholders' Equity (Deficit) (20)
___________
$ 20
____________
The accompanying notes are an integral part of this financial statement.
19
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From the
Re-entering of
For the Development
Year Ended Stage on May 1,
December 31, 1991 Through
_______________________ December 31,
1999 1998 1999
__________ ____________ _______________
REVENUE $ - $ - $ -
COST OF SALES - - -
__________ ____________ _______________
GROSS PROFIT - - -
EXPENSES:
General and Administrative 195 115 4,090
__________ ____________ _______________
LOSS FROM OPERATONS
BEFORE INCOME TAXES (195) (115) (4,090)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ ____________ _______________
NET LOSS $ (195) $ (115) $ (4,090)
__________ ____________ _______________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00)
__________ ____________ _______________
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF THE RE-ENTERING OF DEVELOPMENT STAGE ON
MAY 1, 1991 THROUGH DECEMBER 31, 1999
Deficit
Accumulated
Common Stock Capital in During the
_______________________ Excess of Retained Development
Shares Amount Par Value Deficit Stage
__________ ___________ _________ _________ ____________
BALANCE,
May 1, 1991 8,600,000 8,600 38,979 (47,579) -
Net loss for
the period
ended
December 31,
1991 - - - - (790)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1991 8,600,000 8,600 38,979 (48,579) (790)
Net loss for
the year ended
December 31,
1992 - - - - -
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1992 8,600,000 8,600 38,979 47,579 (3,070)
Net loss for
the year ended
December 31,
1993 - - - - -
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1993 8,600,000 8,600 38,979 47,579 (3,701)
Issuance of
41,400,000
shares common
stock for
services at
$0.00003 per
share December,
1994 41,400,000 41,400 (40,365) - -
Net loss for
the year ended
December 31,
1994 - - - - (245)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1994 50,000,000 50,000 (1,386) (47,579) (1,035)
Contribution
of capital - - 1,925 - -
Net loss for
the year ended
December 31,
1995 - - - - (1,925)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1995 50,000,000 50,000 539 (47,579) (2,960)
Contribution
capital - - 110 - -
Net loss for
the year ended
December 31,
1996 - - - - (110)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1996 50,000,000 50,000 649 (47,579) (3,070)
Contribution
of capital - - 710 - -
Net loss for
the year ended
December 31,
1997 - - - - (710)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1997 50,000,000 50,000 1,359 (47,579) (3,780)
Contribution
of capital - - 115 - -
Net loss for
the year ended
December 31,
1998 - - - - (115)
__________ ___________ _________ _________ ____________
[Continued]
21
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF THE RE-ENTERING OF DEVELOPMENT STAGE ON
MAY 1, 1991 THROUGH DECEMBER 31, 1999
[Continued]
Deficit
Accumulated
Common Stock Capital in During the
_______________________ Excess of Retained Development
Shares Amount Par Value Deficit Stage
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1998 50,000,000 50,000 1,474 (47,579) (3,895)
Contribution
of capital - - 215 - -
Net loss for
the year ended
December 31,
1999 - - - - (195)
__________ ___________ _________ _________ ____________
BALANCE,
December 31,
1999 50,000,000 $ 50,000 $ 1,689 $(47,579) $ (4,090)
__________ ___________ _________ _________ ____________
The accompanying notes are an integral part of this financial statement.
22
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From the
Re-entering of
For the Development
Year Ended Stage on May 1,
December 31, 1991 Through
_______________________ December 31,
1999 1998 1999
__________ ____________ _______________
Cash Flows From Operating
Activities:
Net loss $ (195) $ (115) $ (4,090)
Adjustments to
reconcile net
loss to net
cash used by
operating activities:
Contribution of
capital 115 115 2,975
Change in assets and
liabilities:
Accounts payable - - -
__________ ____________ _______________
Net Cash Flows
(Used) by
Operating
Activities (80) - (1,115)
__________ ____________ _______________
Cash Flows From Investing
Activities:
Purchase of investment - - -
__________ ____________ _______________
Net Cash Flows
(Used) by
Investing
Activities - - -
__________ ____________ _______________
Cash Flows From Financing
Activities:
Proceeds from common
stock issuance - - 1,035
Contribution of capital 100 - 100
__________ ____________ _______________
Net Cash Flows
Provided by
Financing
Activities 100 - 1,135
__________ ____________ _______________
Net Increase (Decrease)
in Cash 20 - 20
Cash at Beginning of
Period - - -
__________ ____________ _______________
Cash at End of Period $ 20 $ - $ 20
__________ ____________ _______________
Supplemental Disclosures
of Cash Flow Information:
Cash paid during the
period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the period ended December 31, 1999:
An officer/shareholder of the Company paid expense totaling
$115 on behalf of the Company.
For the period ended December 31, 1998:
An officer/shareholder of the Company paid expense totaling
$115 on behalf of the Company.
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Utah on October 14, 1982 and was previously engaged in
the sales and marketing business. The Company currently has no
ongoing operations and is considered a development stage company
as defined in SFAS No. 7. The company is currently seeking
business opportunities or potential business acquisitions.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 6].
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
SFAS No. 134, "Accounting for Mortgage-Backed Securities." and
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections" were recently issued. SFAS No. 132, 133, 134 and
135 have no current applicability to the Company or their effect
on the financial statements would not have been significant.
Accounting 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, the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from
those estimated.
NOTE 2 -DISCONTINUED OPERATIONS
Discontinued Operations - The accompanying financial statements
as of December 31, 1999 and 1998 have been reclassified to
reflect management's decision to discontinue the Company's
operations in sales and marketing on May 1, 1991. Revenue for
the years ended December 31, 1999, and 1998 and for the period
from inception through December 31, 1999 relating to these
discontinued operations were $0, $0, and $30,871, respectively.
NOTE 3 - CAPITAL STOCK
During 1983 Prologue filed a Registration Statement with the
Utah Securities Commission and completed a public sale of
5,000,000 shares of stock. In 1987 a wholly owned subsidiary
named Bio-Clean was formed. On November 23, 1987 600,000
shares of Prologue stock was issued to Kapitol Klean-All of
Phoenix, AZ as partial consideration for some equipment and
solvent. Because of latent defects in the equipment all
activities were terminated and Bio-Clean was dissolved on May
1, 1991. On June 14, 1988, 1,500,000 shares of Prologue stock
was issued to an officer of Prologue in lieu of wages for
services rendered in behalf of the Company.
24
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK
On December 19, 1994, 41,400,000 shares of stock were issued
to an individual in exchange for payment of the current and
back taxes due the state of Utah along with other
reinstatement fees. As a result of the stock issuance control
of the corporation changed hands and the individual became an
officer of the Company. This agreement also includes the
payment of all necessary accounting and attorney fees and the
production of an information package on Prologue to be used in
promoting the Company's future business activities.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1999, the Company has
available unused operating loss carryforwards of approximately
$4,000, which may be applied against future taxable income and
which expire in various years through 2019.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred tax
assets are approximately $1,360 as of December 31, 1999 with an
offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $60 during
1999.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods ended December 31,
1999 and 1998 the Company did not pay any compensation to any
officer/directors of the Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his home as a mailing address, as needed, at no
expense to the Company.
Expenses - An officer has paid certain expenses on behalf of the
corporation. The amounts of these payments are shown as
contributions to capital in excess of par value.
25
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share and the effect on income and the weighted average number of
shares of dilutive potential common stock for the year ended
December 31, 1999 and 1998 and from the re-entering of
development stage on May 1, 1991 through December 31, 1999:
From the
Re-entering of
For the Development
Year Ended Stage on May 1,
December 31, 1991 Through
_______________________ December 31,
1999 1998 1999
__________ ____________ _______________
Loss from continuing
operations
available to
common stock
holders (numerator) $ (195) $ (115) $ (4,090)
__________ ____________ _______________
Weighted average
number of
common shares
outstanding
used in earnings
per share
during the period 50,000,000 50,000,000 32,634,400
__________ ____________ _______________
Dilutive earnings per share was not presented, as the Company had
no common equivalent shares for all periods presented that would
effect the computation of diluted earnings (loss) per share.
NOTE 7 - GOING CONCERN
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 incurred losses since its inception has
insufficient working capital, and has no on-going operations.
These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard,
management is seeking potential business opportunities and is
proposing to raise any necessary additional funds not provided by
operations through loans and/or through additional sales of its
common stock. There is no assurance that the Company will be
successful in raising additional capital or achieving profitable
operations. The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
26
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PART III
Exhibits
SEC Ref. Exhibit Description
No. No.
_______ _____ __________
EX-3.1 1 By-Laws
EX-3.2 2 Articles of Incorporation
EX-27 Financial Data Schedule
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: October 23, 2000
Prologue
By: /s/ Allen Avery
Allen Avery, President
27
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