UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
2
PURE COUNTRY
(Exact name of registrant as specified in its charter)
Nevada 88-0439010
(State of organization) (I.R.S. Employer Identification No.)
8764 Carlitas Joy Court, Las Vegas, NV 89117
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 228-4688
Registrant's Agent: Daniel G. Chapman, Esq., 2080 E. Flamingo
Road, Suite 112, Las Vegas, NV 89119
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
Preferred Stock, $0.001 par value per share
ITEM 1. DESCRIPTION OF BUSINESS
Background
Pure Country (the "Company") is a Nevada corporation formed on
July 27, 1995. Its principal place of business is located at 8764
Carlitas Joy Court, Las Vegas, NV 89117. The Company was
organized to engage in any lawful corporate business.
On July 27, 1995, the Company issued 20 shares of its stock to
Cheryl Mall, the original founder for cash. On July 27, 1997,
the Company issued 4,500 shares of its stock to the present
Secretary; 9,100 shares to the present President; 7,180 shares to
its present Treasurer; and 4,200 shares to an individual, who
sold some of his shares to 9 individuals on September 5, 1997. On
September 5, 1997 the current President sold some of his shares
to 24 individuals. The current Treasurer sold some of her shares
to 14 individuals on August 29, 1997. All sales were made
pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
The Company was originally authorized to issue 25,000 shares of
common stock with no par value. On September 21, 1999, the
Company amended its Articles of Incorporation to increase the
authorized capital stock to 50,000,000 shares of common stock
with a par value of $0.001 per share and 10,000,000 shares of
preferred stock with a par value of $0.001 per share. On
September 21, 1999, the Company also approved a forward stock
split on a 240:1 basis, increasing the issued and outstanding
shares from 25,000 to 6,000,000 shares of common stock.
Previous Business Plan
The Company had originally hoped to position itself to take full
advantage of the fast growing Internet industry. It was our
desire to be the leading Internet Company responsible for
introducing the beautiful hand made creations of old world crafts
made in the homes of thousands of people across the world. Our
concept would allow anyone who had a crafting talent to market
his or her wares through a central distribution center. Pure
Country wanted to become the pivotal point around which the
business would operate. Pure Country intended to offer each
craft subscriber the ability to sell his art without the hassle
of bookwork, receipts, mailing costs or even dealing with the
public.
Each crafter would pay to Pure Country a subscription fee of
$100.00 per year. This would allow the individual crafter
display his crafts in an electronic catalogue, which would be
distributed via the Internet to users of the Internet in all
parts of the world.
Pure Country intended to arrange for buyers to be able to use
their credit cards for purchases within a secure site. As
requests would have come in for a certain item, Pure Country
would have made all arrangements for the crafter to receive
payment for his goods sold. A percentage of each sale would have
been retained by Pure Country. Shipping and postage charges would
have been for the account of the crafter. Pure Country would
assist the crafter in finding the best rates for these charges.
After the company had become established it would have wanted to
retail certain items on a seasonal basis while others would have
been offered yearly. With a worldwide supply of crafts we would
have been able to offer novelty items not otherwise seen in the
United States.
Pure Country a Nevada Corporation was organized July 27, 1995 to
act as a conduit for crafters throughout the country. The
original intent of the company was to provide a single hub
whereby the crafters could sell and market their arts through one
entity. This concept was created prior to the onset of the
Internet. With the emergence of the Internet as a gateway to
global e-commerce, Pure Country believed it was in a unique
position to take advantage of its original intent.
The officers and directors of Pure Country became aware over the
years that many talented people across the United States had no
ability to market their products effectively. Pure Country
intended to contact various crafters throughout the United States
by means of the local radio stations and newspapers and
eventually throughout the world to have allowed them access to an
instant personal business whereby they were their own boss and at
the same time provided them the tools needed to market their
crafts. Pure Country intended to market this idea by having
crafters subscribe annually to appear in our catalogue.
We felt that this was the right idea and the right time to have
implemented such an idea. The Company was unable to raise
sufficient funding to pursue that objective, and therefore has
now abandoned its original business plan.
The primary activity of the Company currently involves seeking a
company or companies that it can acquire or with whom it can
merge. The Company has not selected any company as an acquisition
target or merger partner and does not intend to limit potential
candidates to any particular field or industry, but does retain
the right to limit candidates, if it so chooses, to a particular
field or industry. The Company's plans are in the conceptual
stage only.
The Board of Directors has elected to begin implementing the
Company's principal business purpose, described below under "Item
2, Plan of Operation". As such, the Company can be defined as a
"shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules, and regulations limiting the sale of securities
of "blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan.
The Company is filing this registration statement on a voluntary
basis, pursuant to section 12(g) of the Securities Exchange Act
of 1934 (the "Exchange Act"), in order to ensure that public
information is readily accessible to all shareholders and
potential investors, and to increase the Company's access to
financial markets. In the event the Company's obligation to file
periodic reports is suspended pursuant to the Exchange Act, the
Company anticipates that it will continue to voluntarily file
such reports.
Risk Factors
The Company's business is subject to numerous risk factors,
including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company
has had no operating history and has received no revenues or
earnings from operations. The Company has no significant assets
or financial resources. The Company will, in all likelihood,
sustain operating expenses without corresponding revenues, at
least until it completes a business combination. This may result
in the Company incurring a net operating loss which will increase
continuously until the Company completes a business combination
with a profitable business opportunity. There is no assurance
that the Company will identify a business opportunity or complete
a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success
of the Company's proposed plan of operation will depend to a
great extent on the operations, financial condition, and
management of the identified business opportunity. While
management intends to seek business combinations with entities
having established operating histories, it cannot assure that the
Company will successfully locate candidates meeting such
criteria. In the event the Company completes a business
combination, the success of the Company's operations may be
dependent upon management of the successor firm or venture
partner firm together with numerous other factors beyond the
Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is, and will continue to be, an
insignificant participant in the business of seeking mergers and
joint ventures with, and acquisitions of small private entities.
A large number of established and well-financed entities,
including venture capital firms, are active in mergers and
acquisitions of companies which may also be desirable target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise,
and managerial capabilities than the Company. The Company is,
consequently, at a competitive disadvantage in identifying
possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete
with numerous other small public companies in seeking merger or
acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no
arrangement, agreement, or understanding with respect to engaging
in a business combination with any private entity. There can be
no assurance the Company will successfully identify and evaluate
suitable business opportunities or conclude a business
combination. Management has not identified any particular
industry or specific business within an industry for evaluations.
The Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to its
original shareholders, the Company never commenced any
operational activities. There is no assurance the Company will be
able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business
opportunity to have achieved, and without which the Company would
not consider a business combination in any form with such
business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no
significant operating history, losses, limited or no potential
for earnings, limited assets, negative net worth, or other
negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While
seeking a business combination, management anticipates devoting
up to twenty hours per month to the business of the Company. The
Company's officers have not entered into written employment
agreements with the Company and are not expected to do so in the
foreseeable future. The Company has not obtained key man life
insurance on its officers or directors. Notwithstanding the
combined limited experience and time commitment of management,
loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood
of continuing operations. See "MANAGEMENT."
CONFLICTS OF INTEREST - GENERAL. The Company's officers and
directors participate in other business ventures which compete
directly with the Company. Additional conflicts of interest and
non "arms-length" transactions may also arise in the event the
Company's officers or directors are involved in the management of
any firm with which the Company transacts business. The Company's
Board of Directors has adopted a resolution which prohibits the
Company from completing a combination with any entity in which
management serve as officers, directors or partners, or in which
they or their family members own or hold any ownership interest.
Management is not aware of any circumstances under which this
policy could be changed while current management is in control of
the Company. See "ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS - CONFLICTS OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Companies subject to Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act") must provide certain information about
significant acquisitions, including certified financial
statements for the company acquired, covering one or two years,
depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to
prepare such statements may significantly delay or even preclude
the Company from completing an otherwise desirable acquisition.
Acquisition prospects that do not have or are unable to obtain
the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act
are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company
has not conducted or received results of market research
indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have,
and does not plan to establish, a marketing organization. If
there is demand for a business combination as contemplated by the
Company, there is no assurance the Company will successfully
complete such transaction.
LACK OF DIVERSIFICATION. In all likelihood, the Company's
proposed operations, even if successful, will result in a
business combination with only one entity. Consequently, the
resulting activities will be limited to that entity's business.
The Company's inability to diversify its activities into a number
of areas may subject the Company to economic fluctuations within
a particular business or industry, thereby increasing the risks
associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes
the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not
be engaged in the business of investing or trading in securities.
In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation
under the Investment Company Act of 1940. In such event, the
Company would be required to register as an investment company
and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to
the status of the Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject
the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a private company obtaining
a controlling interest in the Company. Any such business
combination may require management of the Company to sell or
transfer all or a portion of the Company's common stock held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors
of the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of such private company. Issuing previously
authorized and unissued common stock of the Company will reduce
the percentage of shares owned by present and prospective
shareholders, and a change in the Company's control and/or
management.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into
a business combination with an entity that desires to establish a
public trading market for its shares. A target company may
attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business
combination with the Company. The perceived adverse consequences
may include, but are not limited to, time delays of the
registration 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 securities laws enacted for the protection of investors.
These securities laws primarily relate to registering securities
and full disclosure of the Company's business, management, and
financial statements.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination
the Company may undertake. Typically, these transactions may be
structured to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize
the federal and state tax consequences to both the Company and
the target entity. Management cannot assure that a business
combination will meet the statutory requirements for a tax-free
reorganization, or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes, which may have an adverse effect on both
parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY
BUSINESS OPPORTUNITIES. Management believes that any potential
target company must provide audited financial statements for
review, and for the protection of all parties to the business
combination. One or more attractive business opportunities may
forego a business combination with the Company, rather than incur
the expenses associated with preparing audited financial
statements.
BLUE SKY CONSIDERATIONS. Because the securities registered
hereunder have not been registered for resale under the blue sky
laws of any state, and the Company has no current plans to
register or qualify its shares in any state, holders of these
shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that
there may be significant state blue sky restrictions upon the
ability of new investors to purchase the securities. These
restrictions could reduce the size of any potential market. As a
result of recent changes in federal law, non-issuer trading or
resale of the Company's securities is exempt from state
registration or qualification requirements in most states.
However, some states may continue to restrict the trading or
resale of blind-pool or "blank-check" securities. Accordingly,
investors should consider any potential secondary market for the
Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from the
expectations are disclosed in this Statement, including, without
limitation, in conjunction with those forward-looking statements
contained in this Statement.
Plan of Operation - General
The Company's plan is to seek, investigate, and if such
investigation warrants, acquire an interest in one or more
business opportunities presented to it by persons or firms
desiring the perceived advantages of a publicly held corporation.
At this time, the Company has no plan, proposal, agreement,
understanding, or arrangement to acquire or merge with any
specific business or company, and the Company has not identified
any specific business or company for investigation and
evaluation. No member of Management or any promoter of the
Company, or an affiliate of either, has had any material
discussions with any other company with respect to any
acquisition of that company. The Company will not restrict its
search to any specific business, industry, or geographical
location, and may participate in business ventures of virtually
any kind or nature. Discussion of the proposed business under
this caption and throughout this Registration Statement is
purposefully general and is not meant to restrict the Company's
virtually unlimited discretion to search for and enter into a
business combination.
The Company may seek a combination with a firm which only
recently commenced operations, or a developing company in need of
additional funds to expand into new products or markets or
seeking to develop a new product or service, or an established
business which may be experiencing financial or operating
difficulties and needs additional capital which is perceived to
be easier to raise by a public company. In some instances, a
business opportunity may involve acquiring or merging with a
corporation which does not need substantial additional cash but
which desires to establish a public trading market for its common
stock. The Company may purchase assets and establish wholly-owned
subsidiaries in various businesses or purchase existing
businesses as subsidiaries.
Selecting a business opportunity will be complex and extremely
risky. Because of general economic conditions, rapid
technological advances being made in some industries, and
shortages of available capital, management believes that there
are numerous firms seeking the benefits of a publicly-traded
corporation. Such perceived benefits of a publicly traded
corporation may include facilitating or improving the terms on
which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for
providing incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes) for all shareholders, and other items.
Potentially available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and
complex.
Management believes that the Company may be able to benefit from
the use of "leverage" to acquire a target company. Leveraging a
transaction involves acquiring a business while incurring
significant indebtedness for a large percentage of the purchase
price of that business. Through leveraged transactions, the
Company would be required to use less of its available funds to
acquire a target company and, therefore, could commit those funds
to the operations of the business, to combinations with other
target companies, or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the
assets of the acquired business. If that business is not able to
generate sufficient revenues to make payments on the debt
incurred by the Company to acquire that business, the lender
would be able to exercise the remedies provided by law or by
contract. These leveraging techniques, while reducing the amount
of funds that the Company must commit to acquire a business, may
correspondingly increase the risk of loss to the Company. No
assurance can be given as to the terms or availability of
financing for any acquisition by the Company. During periods when
interest rates are relatively high, the benefits of leveraging
are not as great as during periods of lower interest rates,
because the investment in the business held on a leveraged basis
will only be profitable if it generates sufficient revenues to
cover the related debt and other costs of the financing. Lenders
from which the Company may obtain funds for purposes of a
leveraged buy-out may impose restrictions on the future
borrowing, distribution, and operating policies of the Company.
It is not possible at this time to predict the restrictions, if
any, which lenders may impose, or the impact thereof on the
Company.
The Company has insufficient capital with which to provide the
owners of businesses significant cash or other assets. Management
believes the Company will offer owners of businesses the
opportunity to acquire a controlling ownership interest in a
public company at substantially less cost than is required to
conduct an initial public offering. The owners of the businesses
will, however, incur significant post-merger or acquisition
registration costs in the event they wish to register a portion
of their shares for subsequent sale. The Company will also incur
significant legal and accounting costs in connection with the
acquisition of a business opportunity, including the costs of
preparing post-effective amendments, Forms 8-K, agreements, and
related reports and documents. Nevertheless, the officers and
directors of the Company have not conducted market research and
are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the
owners of a businesses. The Company does not intend to make any
loans to any prospective merger or acquisition candidates or to
unaffiliated third parties.
The Company will not restrict its search for any specific kind of
firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in
essentially any stage of its corporate life. It is impossible to
predict at this time the status of any business in which the
Company may become engaged, in that such business may need to
seek additional capital, may desire to have its shares publicly
traded, or may seek other perceived advantages which the Company
may offer. However, the Company does not intend to obtain funds
in one or more private placements to finance the operation of any
acquired business opportunity until such time as the Company has
successfully consummated such a merger or acquisition. The
Company also has no plans to conduct any offerings under
Regulation S.
Sources of Opportunities
The Company will seek a potential business opportunity from all
known sources, but will rely principally on personal contacts of
its officers and directors as well as indirect associations
between them and other business and professional people. It is
not presently anticipated that the Company will engage
professional firms specializing in business acquisitions or
reorganizations.
Management, while not especially experienced in matters relating
to the new business of the Company, will rely upon their own
efforts and, to a much lesser extent, the efforts of the
Company's shareholders, in accomplishing the business purposes of
the Company. It is not anticipated that any outside consultants
or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee earned
by such party will need to be paid by the prospective
merger/acquisition candidate, as the Company has no cash assets
with which to pay such obligation. There have been no
discussions, understandings, contracts or agreements with any
outside consultants and none are anticipated in the future. In
the past, the Company's management has never used outside
consultants or advisors in connection with a merger or
acquisition.
As is customary in the industry, the Company may pay a finder's
fee for locating an acquisition prospect. If any such fee is
paid, it will be approved by the Company's Board of Directors and
will be in accordance with the industry standards. Such fees are
customarily between 1% and 5% of the size of the transaction,
based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably
down to 1% in a $4,000,000 transaction. Management has adopted a
policy that such a finder's fee or real estate brokerage fee
could, in certain circumstances, be paid to any employee,
officer, director or 5% shareholder of the Company, if such
person plays a material role in bringing a transaction to the
Company.
The Company will not have sufficient funds to undertake any
significant development, marketing, and manufacturing of any
products which may be acquired. Accordingly, if it acquires the
rights to a product, rather than entering into a merger or
acquisition, it most likely would need to seek debt or equity
financing or obtain funding from third parties, in exchange for
which the Company would probably be required to give up a
substantial portion of its interest in any acquired product.
There is no assurance that the Company will be able either to
obtain additional financing or to interest third parties in
providing funding for the further development, marketing and
manufacturing of any products acquired.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by
or under the supervision of the officers and directors of the
Company (see "Item 5). Management intends to concentrate on
identifying prospective business opportunities which may be
brought to its attention through present associations with
management. In analyzing prospective business opportunities,
management will consider, among other factors, such matters as;
1. the available technical, financial and managerial resources
2. working capital and other financial requirements
3. history of operation, if any
4. prospects for the future
5. present and expected competition
6. the quality and experience of management services which may
be available and the depth of that management
7. the potential for further research, development or
exploration
8. specific risk factors not now foreseeable but which then may
be anticipated to impact the proposed activities of the Company
9. the potential for growth or expansion
10. the potential for profit
11. the perceived public recognition or acceptance of products,
services or trades
12. name identification
Management will meet personally with management and key personnel
of the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, the Company intends to
utilize written reports and personal investigation to evaluate
the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be
obtained.
Opportunities in which the Company participates will present
certain risks, many of which cannot be identified adequately
prior to selecting a specific opportunity. The Company's
shareholders must, therefore, depend on Management to identify
and evaluate such risks. Promoters of some opportunities may have
been unable to develop a going concern or may present a business
in its development stage (in that it has not generated
significant revenues from its principal business activities prior
to the Company's participation.) Even after the Company's
participation, there is a risk that the combined enterprise may
not become a going concern or advance beyond the development
stage. Other opportunities may involve new and untested products,
processes, or market strategies which may not succeed. Such risks
will be assumed by the Company and, therefore, its shareholders.
The investigation of specific business opportunities and the
negotiation, drafting, and execution of relevant agreements,
disclosure documents, and other instruments will require
substantial management time and attention as well as substantial
costs for accountants, attorneys, and others. If a decision is
made not to participate in a specific business opportunity the
costs incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to
consummate that transaction may result in the loss by the Company
of the related costs incurred.
There is the additional risk that the Company will not find a
suitable target. Management does not believe the Company will
generate revenue without finding and completing a transaction
with a suitable target company. If no such target is found,
therefore, no return on an investment in the Company will be
realized, and there will not, most likely, be a market for the
Company's stock.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, franchise, or
licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. Once a
transaction is complete, it is possible that the present
management and shareholders of the Company will not be in control
of the Company. In addition, a majority or all of the Company's
officers and directors may, as part of the terms of the
transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable Federal and state securities laws.
In some circumstances, however, as a negotiated element of this
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of
substantial additional securities and their potential sale into
any trading market which may develop in the Company's Common
Stock may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to
avoid the creation of a taxable event and thereby structure the
acquisition in a so called "tax free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986,
as amended (the "Code"). In order to obtain tax free treatment
under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company,
including investors in this offering, would retain less than 20%
of the issued and outstanding shares of the surviving entity,
which could result in significant dilution in the equity of such
shareholders.
As part of the Company's investigation, officers and directors of
the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management
expertise.
The manner in which the Company participates in an opportunity
with a target company will depend on the nature of the
opportunity, the respective needs and desires of the Company and
other parties, the management of the opportunity, and the
relative negotiating strength of the Company and such other
management.
With respect to any mergers or acquisitions, negotiations with
target company management will be expected to focus on the
percentage of the Company which the target company's shareholders
would acquire in exchange for their shareholdings in the target
company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will, in all
likelihood, hold a lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage
ownership may be subject to significant reduction in the event
the Company acquires a target company with substantial assets.
Any merger or acquisition effected by the Company can be expected
to have a significant dilutive effect on the percentage of shares
held by the Company's then shareholders, including purchasers in
this offering.
Management has advanced, and will continue to advance, funds
which shall be used by the Company in identifying and pursuing
agreements with target companies. Management anticipates that
these funds will be repaid from the proceeds of any agreement
with the target company, and that any such agreement may, in
fact, be contingent upon the repayment of those funds.
Competition
The Company is an insignificant participant among firms which
engage in business combinations with, or financing of,
development-stage enterprises. There are many established
management and financial consulting companies and venture capital
firms which have significantly greater financial and personal
resources, technical expertise and experience than the Company.
In view of the Company's limited financial resources and
management availability, the Company will continue to be at
significant competitive disadvantage vis-a-vis the Company's
competitors.
Year 2000 Compliance
The Company is aware of the issues associated with the
programming code in existing computer systems as the year 2000
approaches. The Company has assessed these issues as they relate
to the Company, and since the Company currently has no operating
business and does not use any computers, and since it has no
customers, suppliers or other constituents, it does not believe
that there are any material year 2000 issues to disclose in this
Form 10-SB.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment
company" as an issuer which is or holds itself out as being
engaged primarily in the business of investing, reinvesting or
trading securities. While the Company does not intend to engage
in such activities, the Company may obtain and hold a minority
interest in a number of development stage enterprises. The
Company could be expected to incur significant registration and
compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to
review the Company's activities from time to time with a view
toward reducing the likelihood the Company could be classified as
an "investment company".
The Company intends to structure a merger or acquisition in such
manner as to minimize Federal and state tax consequences to the
Company and to any target company.
Employees
The Company's only employees at the present time are its officers
and directors, who will devote as much time as the Board of
Directors determine is necessary to carry out the affairs of the
Company. (See "Item 5).
ITEM 3. DESCRIPTION OF PROPERTY.
The Company neither owns nor leases any real property at this
time. The Company does have the use of a limited amount of office
space from one of the directors, Lewis M. Eslick at no cost to
the Company, and Management expects this arrangement to continue.
The Company pays its own charges for long distance telephone
calls and other miscellaneous secretarial, photocopying, and
similar expenses. This is a verbal agreement between Lewis M.
Eslick and the Board of Directors.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth each person known to the Company,
as of January 12, 2000, to be a beneficial owner of five percent
(5%) or more of the Company's common stock, by the Company's
directors individually, and by all of the Company's directors and
executive officers as a group. Except as noted, each person has
sole voting and investment power with respect to the shares
shown.
<TABLE>
<S> <C> <C> <C>
Title of Name/Address Shares Percentage
Class of Owner Beneficially Ownership
Owned
Common Leslie B. Eslick 1,000,000 16.67%
8452 Boseck St., Unit
272
Las Vegas, NV 89128
Common Lewis M. Eslick 1,050,000 17.50%
8452 Boseck St., Unit
272
Las Vegas, NV 89128
Common Patsy L. Harting 1,000,000 16.67%
14133 Elmira Circle
Magnolia, CA 95954
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The members of the Board of Directors of the Company serve until
the next annual meeting of the stockholders, or until their
successors have been elected. The officers serve at the pleasure
of the Board of Directors.
There are no agreements for any officer or director to resign at
the request of any other person, and none of the officers or
directors named below are acting on behalf of, or at the
direction of, any other person.
The Company's officers and directors will devote their time to
the business on an "as-needed" basis, which is expected to
require 5-10 hours per month.
Information as to the directors and executive officers of the
Company is as follows:
<TABLE>
<S> <C> <C>
Name/Address Age Position
Lewis M. Eslick 61 President/Direc
8452 Boseck Dr., Unit tor
272
Las Vegas, NV 89145
Leslie B. Eslick 46 Secretary/Di
8452 Boseck Dr., Unit rector
272
Las Vegas, NV 89145
Patsy Harting 59 Treasurer/Di
14133 Elmira Circle rector
Magnolia, CA 95954
</TABLE>
Lewis M. Eslick; President
Mr. Lewis M. Eslick has been President and a Director of the
Registrant since April 1997.
Since August of 1995, he has been an owner and served as
Geschaeftsfuehrer (Assistant Managing Director) of Xaxon
Immobilien und Anlagen Consult GmbH. Under Mr. Eslick's
direction, the company was awarded a full 34-C License, which
allows every business except banking operations. The company
consults with major development companies of the European
Economic Community and the United States of America.
From April, 1994, through December, 1994, Mr. Eslick was CEO of
Travel Masters, where he developed strategy and a business plan
for the company, and the structure to establish a central
reservation complex to replace Airline City Ticketing Offices in
Reno and Las Vegas, Nevada using Electronic Ticket Delivery
Networks (ETDN) which led to ticketless travel.
From 1986 to the Present, Mr. Eslick has been CEO of Mirex, Inc.,
an international consulting firm. He was responsible for several
successful negotiations on behalf of Bechtel Engineering and
Minerals, including:
A twelve-berth harbor to accommodate ocean cargo vessels of
up to 50,000 DTW at Mawan Harbor, the mouth of the Pearl
River
The Shenzhen Petro-Chemical Refinery, with an operating
capacity of 68,000 barrels per day.
Arranged financing for the Mawan Port Facility with the
assistance of Triad Enterprises S.A. Banco Arabe de Espanole
secured a bank commitment for $375,000,000 (US) with very
favorable interest rates and set-off principal payments.
From 1983 to 1986, Mr. Eslick conceptualized and delivered to EF
Hutton the plan for what is now known as "Reservoir Inadequacy
Insurance," the methods by which investors are protected against
inadequate oil reserves or dry wells. He developed and co-
authored with Lloyds of London syndication that backed the
policies.
From 1981 to 1983, Mr. Eslick was the project manager for
Rosendin Electric, overseeing the complete wiring of the building
that tracks the Space Shuttle for Lockheed. For 1979 to 1981, Mr.
Eslick served as the Managing Director of Interface Idrocaruare,
Inc. S.A., a corporation with offices in Geneva, Switzerland, and
Konigswinter, West Germany, that actively traded in the
international spot oil market.
From 1954 to 1958, Mr. Eslick served in the US Navy as an
Aviation Electronics technician.
Leslie B. Eslick; Secretary
Ms. Leslie B. Eslick has been a Shareholder Director and
Secretary of the issuer since April 1997.
Since August of 1995, she has been an owner and served as
Geschaeftsfuehrena (Assistant Managing Director) of Xaxon
Immobilien und Anlagen Consult GmbH. Ms. Eslick assisted in
obtaining for the company, a full 34-C License, which allows
every business except banking operations. The company consults
with major development companies of the European Economic
Community and the Unites States of America.
Prior to 1995, she was a Director and Vice-President of Mirex,
Inc., where she assisted with several successful negotiations as
well as being responsible for accounts payable & receivable for
the firm. From 1983 to 1986, Ms. Eslick assisted
conceptualization and delivery to E.F. Hutton, the plan for what
is now known as Reservoir Inadequacy Insurance. She co-developed
and co-authored with Lloyds of London, the syndication that
backed the policies. Ms. Eslick served as an Assistant Managing
Director of Interface Indrocarbuare, Inc. S.A., a corporation
with offices in Geneva, Switzerland, and Konigswinter, West
Germany that actively traded in the international spot oil
market. Ms. Eslick attended the University of California at
Berkley.
Patsy Harting; Treasurer
Ms. Harting has been an officer and director of the Company since
April 1997.
Since 1996, Mrs. Harting has been a Phlebotomist working in the
Intensive Care Unit and the laboratory at Inlow Hospital, Chico,
California. Her duties consist of the normal activities
associated with the care of the critically ill and post surgery
patients.
Prior to that, during the years from 1983 until 1996, Mrs.
Harting was the owner of PJ's Red Onion, a very successful
restaurant located in Paradise, CA. She operated a thriving
business and supplied Specialty Pies to the largest restaurants
in Chico and Orville, CA for over twelve years. Ms. Harting sold
her business interests in the early part of 1996.
Blank Check Experience
In addition to the experience described above, Mr. Lewis Eslick
is or has been an officer and/or director of the following blank
check companies:
Triumph International Foods, Inc. - Officer and Director.
Was Officer and Director of LPI, Inc. from June, 1991
through April, 1997. He resigned as part of the merger
agreement with Triumph in April, 1997. Mr. Eslick
received no compensation as part of the merger, other
than shares in Triumph which were granted in the same
amount as all other shareholders received. In 1998, the
previous officers and directors of Triumph had not
filed necessary papers to keep the company current with
the Nevada Secretary of State. At a special meeting of
shareholders, Mr. Eslick was re-elected to the Board of
Directors, and was reappointed as President.
American Flintlock Company - Officer and Director from
December, 1992 to February 1998.
Facade Systems, Inc. - Officer and Director since June,
1997.
Glucose Tech, Inc. - Officer and Director since September,
1997.
Vista Medical Terrace, Inc. - Currently President and
Director.
Winecup Lands & Cattle Company - Officer and Director since
December, 1991.
In addition to the experience described above, Ms. Leslie Eslick
is or has been an officer and/or director of the following blank
check companies:
American Flintlock Company - Officer and Director from
December 1992 to April 1999.
Corporate Tours & Travel, Inc. - Officer and Director since
September, 1993.
Winecup Lands & Cattle Company - Officer and Director since
December, 1991.
Travel Masters - Officer and Director since April 1994
through March 1995.
Mrs. Harting does not have any experience as an officer or
director of any public company.
Lewis Eslick and Leslie Eslick were husband and wife; Lewis
Eslick and Patsy Harting are brother and sister. The Company's
Board of Directors has not established any committees.
Conflicts of Interest
Insofar as the officers and directors are engaged in other
business activities, management anticipates it will devote only a
minor amount of time to the Company's affairs. The officers and
directors of the Company may in the future become shareholders,
officers or directors of other companies which may be formed for
the purpose of engaging in business activities similar to those
conducted by the Company. The Company does not currently have a
right of first refusal pertaining to opportunities that come to
management's attention insofar as such opportunities may relate
to the Company's proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation
which come to their attention, either in the performance of their
duties or in any other manner, will be considered opportunities
of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the
officer or director. Subject to the next paragraph, if a
situation arises in which more than one company desires to merge
with or acquire that target company and the principals of the
proposed target company have no preference as to which company
will merge or acquire such target company, the company of which
the President first became an officer and director will be
entitled to proceed with the transaction. Except as set forth
above, the Company has not adopted any other conflict of interest
policy with respect to such transactions.
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company
will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive
investment interests in a number of entities, the Company could
be subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission
as to the status of the Company under the Investment Company Act
of 1940 and, consequently, any violation of such Act would
subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers and/or directors receive any
compensation for their respective services rendered to the
Company, nor have they received such compensation in the past.
They both have agreed to act without compensation until
authorized by the Board of Directors, which is not expected to
occur until the Registrant has generated revenues from operations
after consummation of a merger or acquisition. As of the date of
this registration statement, the Company has no funds available
to pay directors. Further, none of the directors are accruing any
compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity
may desire to employ or retain one or more members of the
Company's management for the purposes of providing services to
the surviving entity, or otherwise provide other compensation to
such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of
management will not be a consideration in the Company's decision
to undertake any proposed transaction. Each member of management
has agreed to disclose to the Company's Board of Directors any
discussions concerning possible compensation to be paid to them
by any entity which proposes to undertake a transaction with the
Company and further, to abstain from voting on such transaction.
Therefore, as a practical matter, if each member of the Company's
Board of Directors is offered compensation in any form from any
prospective merger or acquisition candidate, the proposed
transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may refer
a prospective merger or acquisition candidate to the Company. In
the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form
of cash consideration. However, if such compensation is in the
form of cash, such payment will be tendered by the acquisition or
merger candidate, because the Company has insufficient cash
available. The amount of such finder's fee cannot be determined
as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like
transactions. No member of management of the Company will receive
any finders fee, either directly or indirectly, as a result of
their respective efforts to implement the Company's business plan
outlined herein. Persons "associated" with management is meant to
refer to persons with whom management may have had other business
dealings, but who are not affiliated with or relatives of
management.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the
Registrant for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors has passed a resolution which contains a
policy that the Company will not seek an acquisition or merger
with any entity in which any of the Company's Officers,
Directors, principal shareholders or their affiliates or
associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under
which this policy may be changed through their own initiative.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities
of "blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan
described herein.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
There is no current market for the Company's stock. Management
has not undertaken any discussions, preliminary or otherwise,
with any prospective market maker concerning the participation of
such market maker in the after-market for the Company's
securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a
merger or acquisition. There is no assurance that a trading
market will ever develop or, if such a market does develop, that
it will continue.
After a merger or acquisition has been completed, one or both of
the Company's officers and directors will most likely be the
persons to contact prospective market makers. It is also possible
that persons associated with the entity that merges with or is
acquired by the Company will contact prospective market makers.
The Company does not intend to use consultants to contact market
makers.
Market Price
The Registrant's Common Stock is not quoted at the present time.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and
(ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve
a person's account for transactions in penny stocks, the broker
or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating
to the penny stock market, which, in highlight form, (i) sets
forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in
secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny
stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has recently made changes in
the criteria for initial listing on the NASDAQ Small Cap market
and for continued listing. For initial listing, a company must
have net tangible assets of $4 million, market capitalization of
$50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years.
For initial listing, the common stock must also have a minimum
bid price of $4 per share. In order to continue to be included on
NASDAQ, a company must maintain $2,000,000 in net tangible assets
and a $1,000,000 market value of its publicly-traded securities.
In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction
with any merger or acquisition candidate which will allow the
Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to
insure continued listing. The failure of the Company to qualify
its securities or to meet the relevant maintenance criteria after
such qualification in the future may result in the discontinuance
of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter
market. As a result, a shareholder may find it more difficult to
dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
Holders
There are 55 holders of the Company's Common Stock. On July 27,
1995, the Company issued 20 shares to the initial founder for
$200.00 cash. On July 27, 1997, the Company issued 24,980 shares
of its stock to four individuals, three of whom sold some of
their shares to 47 individuals and business acquaintances. All of
the issued and outstanding shares of the Company's Common Stock
were issued in accordance with the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933.
Dividends
The Registrant has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On July 27, 1997, the Company issued 24,980 shares of its stock
to four individuals for a total consideration of $5,996.50 cash.
With respect to the sales made, the Registrant relied on Section
4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the shares. The
securities were offered for investment only and not for the
purpose of resale or distribution, and the transfer thereof was
appropriately restricted.
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.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorizes the issuance
of 50,000,000 shares of Common Stock, $0.001 par value per share,
of which 6,000,000 are issued and outstanding. The shares are non-
assessable, without pre-emptive rights, and do not carry
cumulative voting rights. Holders of common shares are entitled
to one vote for each share on all matters to be voted on by the
stockholders. The shares are fully paid, non-assessable, without
pre-emptive rights, and do not carry cumulative voting rights.
Holders of common shares are entitled to share ratably in
dividends, if any, as may be declared by the Company from time-to-
time, from funds legally available. In the event of a
liquidation, dissolution, or winding up of the Company, the
holders of shares of common stock are entitled to share on a pro-
rata basis all assets remaining after payment in full of all
liabilities.
Management is not aware of any circumstances in which additional
shares of any class or series of the Company's stock would be
issued to management or promoters, or affiliates or associates of
either.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance
of 10,000,000 shares of preferred stock, $0.001 par value per
share, none of which have been issued. The Company currently has
no plans to issue any preferred stock. The Company's Board of
Directors has the authority, without action by the shareholders,
to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting
rights, preferences as to dividends and liquidation, conversion
rights, and other rights of such series. The preferred stock, if
and when issued, may carry rights superior to those of common
stock; however no preferred stock may be issued with rights equal
or senior to the preferred stock without the consent of a
majority of the holders of then-outstanding preferred stock.
The Company considers it desirable to have preferred stock
available to provide increased flexibility in structuring
possible future acquisitions and financings, and in meeting
corporate needs which may arise. If opportunities arise that
would make the issuance of preferred stock desirable, either
through public offering or private placements, the provisions for
preferred stock in the Company's Certificate of Incorporation
would avoid the possible delay and expense of a shareholder's
meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result,
however, in a series of securities outstanding that will have
certain preferences with respect to dividends and liquidation
over the common stock which would result in dilution of the
income per share and net book value of the common stock. Issuance
of additional common stock pursuant to any conversion right which
may be attached to the terms of any series of preferred stock may
also result in dilution of the net income per share and the net
book value of the common stock. The specific terms of any series
of preferred stock will depend primarily on market conditions,
terms of a proposed acquisition or financing, and other factor
existing at the time of issuance. Therefore it is not possible at
this time to determine in what respect a particular series of
preferred stock will be superior to the Company's common stock or
any other series of preferred stock which the Company may issue.
The Board of Directors does not have any specific plan for the
issuance of preferred stock at the present time, and does not
intend to issue any preferred stock at any time except on terms
which it deems to be in the best interest of the Company and its
shareholders.
The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. Further, certain
provisions of Nevada law could delay or make more difficult a
merger, tender offer, or proxy contest involving the Company.
While such provisions are intended to enable the Board of
Directors to maximize shareholder value, they may have the effect
of discouraging takeovers which could be in the best interests of
certain shareholders. There is no assurance that such provisions
will not have an adverse effect on the market value of the
Company's stock in the future.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its
shareholders for errors in judgment or other acts or omissions
not amounting to intentional misconduct, fraud, or a knowing
violation of the law, since provisions have been made in the
Articles of incorporation and By-laws limiting such liability.
The Articles of Incorporation and By-laws also provide for
indemnification of the officers and directors of the Company in
most cases for any liability suffered by them or arising from
their activities as officers and directors of the Company if they
were not engaged in intentional misconduct, fraud, or a knowing
violation of the law. Therefore, purchasers of these securities
may have a more limited right of action than they would have
except for this limitation in the Articles of Incorporation and
By-laws.
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means such officers and directors
are required to exercise good faith and integrity in handling the
Company's affairs. A shareholder may be able to institute legal
action on behalf of himself and all others similarly stated
shareholders to recover damages where the Company has failed or
refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce
their rights, including rights under certain federal and state
securities laws and regulations. Shareholders who have suffered
losses in connection with the purchase or sale of their interest
in the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of
the proceeds from the sale of these securities, may be able to
recover such losses from the Company.
ITEM 13. FINANCIAL STATEMENTS.
The financial statements and supplemental data required by this
Item 13 follow the index of financial statements appearing at
Item 15 of this Form 10-SB.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation,
and Management has had no disagreements with the findings of its
accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
Report of Independent Auditors, Barry L. Friedman, P.C.
dated April 3, 2000
Balance Sheet as of as of March 31, 2000, December 31,
1999, and December 31, 1998
Statement of Operation for the period January 1, 2000
to March 31, 2000 and the two years ended December
31, 1999, December 31, 1998 and the period July 27,
1995 (inception) to March 31, 2000
Statement of Stockholders' Equity
Statement of Cash Flows for the period January 1, 2000
to March 31, 2000 and the two years ended December
31, 1999, December 31, 1998 and the period July 27,
1995 (inception) to March 31, 2000
Notes to Financial Statements
INDEPENDENT AUDITORS' REPORT
Board of Directors April 3,
2000
Pure Country
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of Pure Country (A
Development Stage Company), as of March 31, 2000, December 31,
1999, and December 31, 1998 and the related statement of
stockholder's equity for March 31, 2000, December 31, 1999, and
December 31, 1998 and the statements of operations and cash flows
for the period January 1, 2000 to March 31, 2000 and the two
years ended December 31, 1999, December 31, 1998 and the period
July 27, 1995 (inception) to March 31, 2000. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pure
Country (A Development Stage Company), as of as of March 31,
2000, December 31, 1999, and December 31, 1998 and the related
statement of stockholder's equity for March 31, 2000, December
31, 1999, and December 31, 1998 and the statements of operations
and cash flows for the period January 1, 2000 to March 31, 2000
and the two years ended December 31, 1999, December 31, 1998 and
the period July 27, 1995 (inception) to March 31, 2000 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 #5 to the financial statements, the Company has suffered
recurring losses from operations and has no established source of
revenue. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
Phone: (702) 361-8414
Pure Country
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<S> <C> <C> <C>
March 31, 2000 December 31, December 31,
1999 1998
ASSETS
CURRENT ASSETS: 0 0 0
TOTAL CURRENT ASSETS 0 0 0
OTHER ASSETS; 0 0 0
Organization Costs (Net) 0 0 0
TOTAL OTHER ASSETS 0 0 0
TOTAL ASSETS 0 0 0
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES;
Officers Advances (Note #5) $475 $475 $350
TOTAL CURRENT LIABILITIES $475 $475 $350
STOCKHOLDERS' EQUITY (Note #4)
Preferred stock, $0.001 par
value
Authorized 10,000,000 shares
Issued and outstanding at
March 31, 2000 - none
Common stock, $0.001 par value, $6,196
Authorized 50,000,000 shares
Issued and outstanding at
December 31, 1998 - 25,000
shares
December 31, 1999 - 6,000,000 $6,000
shares
March 31, 2000 - 6,000,000 $6,000
shares
Additional paid-in Capital 196 196 0
Deficit accumulated during the -6,671 -6,671 -6,546
development stage
TOTAL STOCKHOLDERS' EQUITY $-475 $-475 $-350
TOTAL LIABILITIES AND $0 $0 $0
STOCKHOLDERS' EQUITY
</TABLE>
The accompanying notes are an integral part of these financial
statements
Pure Country
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
Jan. 1, Year Ended Year Dec. Jul. 27,
2000 to Dec. 31, 31, 1998 1995
Mar. 31, 1999 (Inception)
2000 to Mar. 31,
2000
INCOME:
Revenue 0 0 0 0
EXPENSES:
General, Selling 0 $125 $350 $6,671
and
Administrative
Total Expenses 0 125 350 6,671
Net Profit/Loss(-0 -125 -350 -6,671
)
Net Profit/Loss NIL NIL -.0006 -.0011
(-) Per weighted
Share (Note #1)
Weighted average 6,000,000 6,000,000 6,000,000 6,000,000
Number of common
Shares
outstanding
</TABLE>
The accompanying notes are an integral part of these financial
statements
Pure Country
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C>
Common Shares Stock Amount Additional paid- Accumulated
in Capital Deficit
Balance, 25,000 $6,196 0 $-6,196
December 31, 1997
Net loss year ended -350
December 31, 1998
Balance, 25,000 $6,196 $0 $-6,546
December 31, 1998
September 21, 1999 -6,171 +6,171
Changed from no par
value to $0.001
September 21, 1999 5,975,000 +5,975 -5,975
Forward Stock Split
240 to 1
Net loss year ended -125
December 31, 1999
Balance, 6,000,000 $6,000 $196 $-6,671
December 31, 1999
Net Loss January 1, 0
2000 to March 31,
2000
Balance, 6,000,000 $6,000 $196 $-6,671
March 31, 2000
</TABLE>
The accompanying notes are an integral part of these financial
statements
Pure Country
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
Jan. 1, 2000 to Year Ended Dec. Year Ended Dec. Jul. 27, 1995
Mar. 31, 2000 31, 1999 31, 1998 (Inception) to
Mar. 31, 2000
Cash Flows from
Operating Activities:
Net Loss $0 $-125 $-350 $-6,671
Adjustment to
Reconcile net loss to
cash provided by
operating activities:
Changes in Assets and
Liabilities:
Increase in current
Liabilities:
Officers Advances 0 +125 +350 +475
Net cash used in 0 0 0 $-6,196
Operating activities
Cash Flows from 0 0 0 0
Investing Activities
Cash Flows from
Financing Activities:
Issuance of common 0 0 0 +6,196
stock for cash
Net increase 0 0 0 0
(decrease)
Cash, Beginning of 0 0 0 0
period
Cash, end of period 0 0 0 0
</TABLE>
The accompanying notes are an integral part of these financial
statements
Pure Country
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000, December 31, 1999, and December 31, 1998
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized July 27, 1995, under the laws of the
State of Nevada as Pure Country. The Company currently has no
operations and in accordance with SFAS #7, is considered a
development company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method.
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 equivalents
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits. For
the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are
considered to be cash equivalents. There are no cash equivalents
as of March 31, 2000.
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Reporting on Costs of Start-up Activities
In April 1998, the American Institute of Certified Public
Accoutnants issued Statement of Position 98-5 ("SOP 98-5"),
"Reporting the Costs of Start-up Activities" which provides
guidance on the financial reporting of start-up costs and
organizational costs. It requires costs of start-up activities
and organization costs to be expenses as incurred. SOP 98-5 is
effective for fiscal years beginning after December 15, 1998,
with initial adoption reported as the cumulative effect of a
change in accounting principal.
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of December 31, 1999, the Company had no dilative
common stock equivalents such as stock options.
Year End
The Company has selected December 31st as its year-end.
Year 2000 Disclosure
Computer programs that have time sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruption of normal business activities.
The company's potential software suppliers have verified that
they will provide only certified "Year 2000" compatible software
for all of the company's computing requirements. Because the
company's products and services are sold to the general public
with no major customers, the company believes that the "Year
2000" issue will not pose significant operational problems and
will not materially affect future financial results.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended
December 31, 1999, due to the net loss and no state income tax in
Nevada, the state of the Company's domicile and operations. The
Company's total deferred tax asset as of December 31, 1999 is as
follows:
Net operation loss carry forward $6,671
Valuation allowance $6,671
Net deferred tax asset $ 0
The federal net operation loss carry forward will expire 2017 to
2019.
This carry forward may be limited upon the consummation of a
business combination under IRC Section 381.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of
50,000,000, shares with a par value $.001 per share.
On July 27, 1995, the Company issued 20 shares of its no par
value common stock in consideration of $200.00 in cash to one of
its directors.
On July 27, 1997, the Company issued 24,980 shares of its no par
value common stock in consideration of $5,996.00 in cash to three
additional directors.
On September 21, 1999, the State of Nevada approved the company's
restated Articles of Incorporation, which increased its
capitalization from 25,000 common shares of no par value to
50,000,000 common shares with a par value of $.001 and added
10,000,000 preferred shares with a par value of $.001.
On September 21, 1999, the company forward split its common stock
240:1, thus increasing the number of outstanding common shares
from 25,000 to 6,000,000 shares.
Preferred Stock
The authorized preferred stock of the corporation consists of
10,000,000 shares with a par value of $0.001 per share.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets,
nor does it have an established source of revenues sufficient to
cover its operating costs and to allow it to continue as a going
concern. It is the intent of the Company to seek a merger with an
existing, operating company. Until that time, the
stockholders/officers and or directors have committed to
advancing the operating costs of the Company interest free.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal
property. An officer of the corporation provides office services
without charge. Such costs are immaterial to the financial
statements and accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other
business activities and may, in the future, become involved in
other business opportunities. If a specific business
opportunity becomes available, 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 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional share of common stock.
EXHIBITS
3.1aArticles of Incorporation
3.2bBy-Laws
