U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE HARBOR GROUP.NET CO
(Name of Small Business Issuer in its charter)
Nevada 6700 88-0458875
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Classification Code Number) Identification No.)
Organization)
3360 West Sahara Avenue, Suite 200, Las Vegas, Nevada 89102; (702) 732 2253.
(Address and telephone number of Registrant's principal executive offices and
principal place of business)
Shawn F. Hackman, Esq., 3360 West Sahara Avenue, Suite 200, Las Vegas, Nevada
89102; (702) 732-2253, fax: (702) 732-2253
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If this Form is filed to
register additional securities
for an offering pursuant to Rule
462(b) under the Securities Act,
please check the following box
and list the Securities Act
registration number of the
earlier effective registration
statement for the same offering.
?
If this Form is a post-effective
amendment filed pursuant to Rule
462(c) under the Securities Act,
check the following box and list
the Securities Act registration
statement number of the earlier
effective registration statement
for the same offering.
?
If this Form is a post-effective
amendment filed pursuant to Rule
462(d) under the Securities Act,
check the following box and list
the Securities Act registration
statement number of the earlier
effective registration statement
for the same offering.
?
If the delivery of the
prospectus is expected to be
made pursuant to Rule 434, check
the following box.
?
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <S> <S> <S> <S>
Title of each Amount to be Proposed maximum Proposed maximum Amount of
class of registered offering price per aggregate offering registration
securities to unit price fee
be registered
Common shares 2,000,000 $0.05 $100,000.00 $26.40
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Initial Public
Offering
Prospectus
THE HARBOR GROUP
2,000,000 shares of Common Stock
$0.05 per share
Registrant
The Harbor Group
3360 W. Sahara, Suite 200
Las Vegas, NV 89102
Registrant's Attorney
Shawn F. Hackman
3360 W. Sahara, Suite 200
Las Vegas, NV 89102
_________________________
The Offering
Per Share Total
Public Price $0.05 $100,000
Proceeds to
The Harbor Group $0.05 $100,000
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
________________________
The title of each class of securities to be registered is Common Shares.
The amount to be registered is 2,000,000 shares.
Not traded on any national securities exchange or the Nasdaq Stock Market.
This investment involves a high degree of Risk. You should purchase shares
only if you can afford a complete loss. Please consider carefully the risk
factors contained in this prospectus.
This is a continuous offering and sale of securities under Rule 415.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Information contained herein is subject to completion or amendment.
The registration statement relating to the securities has been filed
with the Securities and Exchange
Commission. The securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, Dated _______________, 2000.
The shares being offered by The Harbor Group, Co. are subject to prior
sale, acceptance of the subscriptions by The Harbor Group, Co. and
approval of certain legal matters by counsel to The Harbor Group, Co.
This is our initial public offering of common stock. The initial
offering price per share is .05. We will apply to list our common
stock on the OTC:BB. No public market
currently exists for the shares of common stock.
The Harbor Group, Co. has the right to accept or reject any
subscriptions, in whole or in part, for any reason. Until ______ 2000,
all dealers effecting transactions in
registered securities may be required to deliver a prospectus This is
true whether or not the dealer is participating in this distribution.
Dealers also have an obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
The Harbor Group is conducting a "Blank Check" offering subject to Rule
419 of Regulation C as promulgated by the U.S. Securities and Exchange
Commission (the "S.E.C.") under the securities act of 1933, as amended
(the "Securities Act").The net offering proceeds, after deduction for
offering expenses (estimated at $20,000) and sales commissions, and the
securities to be issued to investors must be deposited in an escrow
account (the "deposited funds" and "deposited securities,"
respectively). While held in the escrow account, the deposited securities may
not be traded or transferred. Except for an amount up to 10% of the deposited
funds otherwise releasable under rule 419, the deposited funds and the
deposited securities may not be released until an acquisition meeting
certain specified criteria has been consummated and a sufficient number
of investors reconfirm their investment in accordance with the
procedures set forth in rule 419.
Pursuant to these procedures, a new prospectus, which describes an
acquisition candidate and its business and includes audited financial
statements, will be delivered to all investors. The Harbor Group must
return the pro rata portion of the deposited funds to any investor who
does not elect to remain an investor. Unless a sufficient number of
investors elect to remain investors, all investors will be entitled to
the return of a pro rata portion of the deposited funds (plus interest)
and none of the deposited securities will be issued to investors. In
the event an acquisition is not consummated within 18 months of the
effective date of this prospectus, the deposited funds will be returned on a
pro
rata basis to all investors. See "risk factors" and "release of deposited
securities and deposited funds."
Until 90 days after the date funds and securities are released from the
escrow or trust account pursuant to Rule 419, all dealers effecting
transactions in the registered securities, whether or not participating
in this distribution, may be required to deliver a prospectus.
This prospectus is not an offer to sell or a solicitation to buy the
securities offered. It is unlawful to make such an offer or
solicitation.
The delivery of this prospectus, nor a sale of the mentioned securities
shall create an implication that there has been no change in the
information in this prospectus. If a material change does occur,
however, this prospectus will be amended or supplemented accordingly
for all existing shareholders and prospective investors.
This prospectus does not intentionally contain a false statement or
material fact, nor does it intentionally omit a material fact. No
person or entity has been authorized by The Harbor Group, Co. to give
any information or make a representation, warranty, covenant, or
agreement, which is not expressly provided for or continued in this
prospectus. Any such information that is given should not be relied
upon as having been authorized.
This Company is not a Reporting Company. Upon written or oral request,
any person who receives a prospectus will have an opportunity to meet
with representatives of
The Harbor Group, Co. to verify any of the information included in the
prospectus and to obtain additional information. Such a person shall
also, upon written or oral request,
receive a copy of any information that is incorporated by reference in
the prospectus and the address (including title or department) and
telephone number. Such information shall
be provided without charge.
All offerees and subscribers will be asked to acknowledge in the
subscription agreement that they have read this prospectus carefully
and thoroughly, they were given the opportunity to obtain additional
information; and they did so to their satisfaction.
A maximum of 2,000,000 shares may be sold on a direct participation-
offering basis. All of the proceeds from the sale of shares will be
placed in an interest-bearing escrow account by 12 o'clock noon of the
fifth business day after receipt thereof, until the sum of the minimum
offering, is received. If less than $20,000, is received from the sale
of the shares within 240 days of the date of this prospectus, all
proceeds will be refunded promptly to purchasers with interest and
without deduction for commission or other expenses. Subscribers will
not be able to obtain return of their funds while in escrow. No
commissions are anticipated. There will be a minimum purchase of 5000
shares at $250.00.
No commissions are anticipated. No sales commission will be paid in
connection with the sales of these shares. The net proceeds to The
Harbor Group are after the payment of certain expenses in connection
with this offering. See "Use of Proceeds."
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY 1
RISK FACTORS 2
INVESTORS RIGHTS AND SUBSTANTIVE 3
PROTECTION UNDER RULE 419
USE OF PROCEEDS 4
DETERMINATION OF OFFERING PRICE 5
DILUTION 6
PLAN OF DISTRIBUTION 7
LEGAL PROCEEDINGS 8
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERSAND CONTROL PERSONS 9
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 10
DESCRIPTION OF SECURITIES 11
INTEREST OF NAMED EXPERTS AND COUNSEL 12
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES 13
ORGANIZATION WITHIN LAST FIVE YEARS 14
DESCRIPTION OF BUSINESS 15
PLAN OF OPERATION 16
DESCRIPTION OF PROPERTY 17
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS 18
MARKET FOR COMMON EQUITY AND RELATED 19
STOCKHOLDER MATTERS
EXECUTIVE COMPENSATION 20
FINANCIAL STATEMENTS 21
CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 22
Prospectus Summary
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus ("Prospectus"). Each
prospective investor is urged to read
this Prospectus, and the attached Exhibits, in their entirety.
The Harbor Group
The Harbor Group, Co., was incorporated on February 15, 2000, under the
laws of the State of Nevada, to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since
inception and has no operations to date. Other than issuing shares to
its original shareholders, The Harbor Group never commenced any
operational activities.
The Harbor Group was formed by Shawn F. Hackman, the initial director,
for the purpose of creating a corporation which could be used to
consummate a merger or acquisition. Mr. Hackman was immediately
replaced by President and Director Ken Heim.
Mr. Heim determined next to proceed with filing a Form SB-2.
Mr. Heim, the President and Director, elected to commence
implementation of The Harbor Group's principal business purpose,
described below under "Item 2, Plan of Operation". As such, The Harbor
Group 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 Harbor
Group as a "blank check" company. Many states have enacted statutes,
rules and regulations limiting the sale securities of "blank check" companies
in their prospective 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 Harbor Group has successfully implemented its business plan
described herein.
Accordingly, each shareholder of The Harbor Group will execute and
deliver a "lock-up" letter agreement, affirming that his/her respective
shares of The Harbor Group's common stock
until such time as The Harbor Group has successfully consummated a
merger or acquisition and The Harbor Group is no longer classified as a
"blank check" company. In order to provide further assurances that no
trading will occur in the The Harbor Group's securities until a merger
or acquisition has been consummated, each shareholder will place
his/her respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully
consummated. However, while management believes that the procedures
established to preclude any sale of The Harbor Group's securities prior
to closing of a merger or acquisition will be sufficient, there can be
no assurances that the procedures established herein will unequivocally
limit any shareholder's The Harbor Group to sell their respective
securities before such closing.
The Offering.
Shares of The Harbor Group will be offered at $.05 per Share. See "Plan
of Distribution, page. The minimum purchase required of an investor is
$250.00. If all the Shares offered are sold the net proceeds to The
Harbor Group will be $100,000 less certain costs associated with this
offering. See "Use of Proceeds." This balance will be used as working
capital for The Harbor Group.
Liquidity of Investment.
Although the Shares will be "free trading," there is no established
market for the Shares and there may not be in the future. Therefore,
an investor should consider his investment to be long-term. See "Risk
Factors, page 6."
RISK FACTORS
The securities offered are highly speculative in nature and
involve a high degree of risk. They should be purchased only by persons
who can afford to lose their entire investment. Therefore, each
prospective investor should, prior to purchase, consider very carefully
the following risk factors among other things, as well as all other
information set forth in this prospectus.
Rule 419 contains restrictive provisions on the sale of shares. Rule
419 generally requires that the securities to be issued and the funds
received in a blank check offering be deposited and held in an escrow
account until an acquisition meeting specified criteria is completed.
Before the acquisition can be completed and before the funds and
securities can be released, the issuer in a blank check offering is
required to update its registration statement with a post-effective amendment.
After the effective date of any such post-effective
amendment, The Harbor Group is required to furnish investors with
the prospectus produced thereby containing information, including
audited financial statements, regarding the proposed acquisition
candidate and its business. Investors must be given no fewer than
20 and no more than 45 business days from the effective date of
the post-effective amendment to decide to remain investors or
require the return of their investment funds. Any investor not
making a decision within said period is automatically to receive
a return of his investment funds.
Although investors may request the return of their investment
funds in connection with the reconfirmation offering required by Rule 419, The
Harbor Group's shareholders will not be afforded an opportunity specifically to
approve or disapprove any particular transaction involving the purchase
of shares from management.
Investors are prohibited from selling or offering to sell shares held
in escrow.
According to Rule15g-8 as promulgated by the S.E.C. under the amended
Securities Exchange Act of 1934, it shall be unlawful for any person to
sell or offer to sell shares or any interest in or related to the shares held
in the Rule 419 escrow account other than pursuant to a qualified domestic
relations order or by will or the laws of descent and distribution. As a
result, contracts for sale to be satisfied by delivery of the deposited
securities are prohibited, for example contracts for sale on a when, as, and if
issued basis.
Because this is a blank check offering, investors will not be able to
evaluate the specific merits or risks of business combinations
As a result of management's broad discretion with respect to the
specific application of the net proceeds of this offering, this offering can be
characterized as a blank check offering. Although substantially all of the net
proceeds of this offering are intended generally to be applied toward effecting
a business combination,such proceeds are not otherwise being designated for any
more specific purposes.
Accordingly, prospective investors will invest in The Harbor Group
without an opportunity to evaluate the specific merits or risks of any one or
more business combinations. Determinations ultimately made by The Harbor Group
relating to the specific allocation of the net proceeds of this
offering do not guarantee The Harbor Group will achieve its business
objectives.
The ability to register shares is limited.
The ability to register or qualify for sale the shares for both initial
sale and secondary trading is limited because a number of states have
enacted regulations pursuant to their securities or "blue sky" laws
restricting or, in some instances, prohibiting, the sale of
securities of blank check issuers, such as The Harbor Group, within
that state. In addition, many states, while not specifically
prohibiting or restricting blank check companies, may not register the
shares for sale in their states. Because of such regulations and other
restrictions, The Harbor Group's selling efforts, and any secondary
market which may develop, may only be conducted in those jurisdictions
where an applicable exemption is available or a blue sky application
has been filed and accepted or where the shares have been registered.
The Harbor Group has had no operating revenue to date and may not
become profitable.
The Harbor Group has had no operating history nor any revenues or
earnings from operations. The Harbor Group has no significant assets or
financial resources. The Harbor Group will, in all likelihood, sustain
operating expenses without corresponding revenues, at least until the
consummation of a business combination. This may result in The Harbor
Group incurring a net operating loss which will increase continuously
until The Harbor Group can consummate a business combination with a
profitable business opportunity. The Harbor Group may not be able to
identify such a business opportunity and consummate such a business
combination.
Success of The Harbor Group's business operations may depend on
management outside of The Harbor Group's control.
The success of The Harbor Group'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, there can be no assurance that The Harbor Group
will be successful in locating candidates meeting such criteria. In
the event The Harbor Group completes a business combination, the
success of The Harbor Group's operations may be dependent upon
management of the successor firm or venture partner firm and numerous
other factors beyond The Harbor Group's control.
The Harbor Group is at a competitive disadvantage and in a highly
competitive market searching for business combinations and
opportunities.
The Harbor Group is and will continue to be an insignificant
participant in the business of seeking mergers with, 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 be
desirable target candidates for The Harbor Group. Nearly all such
entities have significantly greater financial resources, technical
expertise and managerial capabilities than The Harbor Group and,
consequently, The Harbor Group will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing
a business combination. Moreover, The Harbor Group will compete in
seeking merger or acquisition candidates with numerous other small
public companies.
The Harbor Group has no agreement for a merger nor any standards set
for acceptable candidates for merger.
The Harbor Group has no arrangement, agreement or understanding with
respect to engaging in a merger with, joint venture with or acquisition
of, a private entity. The Harbor Group may not be successful in
identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified any
particular industry or specific business within an industry for
evaluations. The Harbor Group has been in the developmental stage
since inception and has no operations to date. Other than issuing
shares to its original shareholders, The Harbor Group never commenced
any operational activities. The Harbor Group may not be able to
negotiate a business combination on terms favorable to The Harbor
Group.
The Harbor Group 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 Harbor Group would not consider a
business combination in any form with such business opportunity.
Accordingly, The Harbor Group 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.
The Harbor Group's management lack certain business skills and will be
devoting only part-time work hours.
While seeking a business combination, management anticipates devoting
up to twenty hours per month to the business of The Harbor Group. The
Harbor Group's two officers have not entered into written employment
agreements with The Harbor Group and are not expected to do so in the
foreseeable future. The Harbor Group has not obtained key man life
insurance on either of its officers or directors. Notwithstanding the
combined limited experience and time commitment of management, loss of
the services of any of these individuals would adversely affect
development of The Harbor Group's business and its likelihood of
continuing operations.
Furthermore, The Harbor Group's officers and directors are not
professional business analysts. Lack of experience will be a detriment
to The Harbor Group's efforts.
The Harbor Group may, on occasion, enter into business agreements that
have a conflict of interest.
Currently, The Harbor Group's officers and directors have no conflict
of interest. However, changes in officers and directors or business
agreements entered into could potentially show conflicts of interest.
In such instance that The Harbor Group's officers or directors are
involved in the management of any firm with which The Harbor Group
transacts business. The Harbor Group's board of directors will adopt a
resolution which prohibits The Harbor Group from completing a merger
with, or acquisition of, any entity in which management serve as
officers, directors or partners, or in which they or their family
members own or hold any ownership interest. Management is not aware of
any circumstances under which this policy could be changed while
current management is in control of The Harbor Group.
Potential merger or acquisition candidates must meet SEC requirements
that may delay or preclude The Harbor Group's business plan.
Section 13 of the Securities Exchange Act of 1934, requires companies
falling under Section 13 of the Securities Exchange Act of 1934 to
provide certain information about significant acquisitions, including
certified financial statements for The Harbor Group 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
essentially preclude consummation of an otherwise desirable acquisition
by The Harbor Group. 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.
The Harbor Group is at a competitive disadvantage because it lacks any
market research or marketing organization.
The Harbor Group has neither conducted, nor have others made available
to it, results of market research indicating that market demand exists
for the transactions contemplated by The Harbor Group. Moreover, The
Harbor Group does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger or
acquisition contemplated by The Harbor Group, there is no assurance
The Harbor Group will be successful in completing any such business
combination.
The Harbor Group will limited to the business opportunities of any
company
The Harbor Group's proposed operations, even if successful, will in all
likelihood result in The Harbor Group engaging in a business
combination with only one business opportunity. Consequently, The
Harbor Group's activities will be limited to those engaged in by the
business opportunity which The Harbor Group merges with or acquires.
The Harbor Group's inability to diversify its activities into a number
of areas may subject The Harbor Group to economic fluctuations within a
particular business or industry and therefore increase the risks
associated with The Harbor Group's operations.
Potential determination by the SEC that The Harbor Group is an
investment company could cause material adverse consequences.
Although The Harbor Group will be regulated under the Securities
Exchange Act of 1933, management believes The Harbor Group will not be
regulated under the Investment Company Act of 1940, insofar as The
Harbor Group will not be engaged in the business of investing or
trading in securities. In the event The Harbor Group engages in
business combinations, which result in The Harbor Group holding passive
investment interests in a number of entities, the The Harbor Group
could be under regulation of the Investment Company Act of 1940. In
such event, The Harbor Group would be required to register as an
investment company and could be expected to incur significant
registration and compliance costs The Harbor Group has obtained no
formal determination from the Securities and Exchange Commission as to
the status of The Harbor Group under the Investment Company Act of 1940
and, consequently, any violation of such Act would subject The Harbor
Group to material adverse consequences.
Any business combination will probably result loss of management and
control by The Harbor Group shareholders.
A business combination involving the issuance of The Harbor Group's
common stock will, in all likelihood, result in shareholders of a
private company obtaining a controlling interest in The Harbor Group.
Any such business combination may require management of The Harbor
Group to sell or transfer all or a portion of The Harbor Group's common
stock held by them, or resign as members of the board of directors of
The Harbor Group. The resulting change in control The Harbor Group
could result in removal of one or more present officers and directors
of The Harbor Group and a corresponding reduction in or elimination of
their participation in the future affairs of The Harbor Group.
Should The Harbor Group meet its business plan of merging, shareholders
in The Harbor Group will most likely suffer a reduction in percentage
share ownership of the newly formed company.
The Harbor Group's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would
result in The Harbor Group issuing securities to shareholders of such
private company. The issuance of previously authorized and unissued
common stock of The Harbor Group would result in reduction in
percentage of shares owned by present and prospective shareholders of
The Harbor Group and would most likely result in a change in control or
management of The Harbor Group.
Potential acquisition or merger candidates may wish to avoid potential
adverse consequences of merging with The Harbor Group.
The Harbor Group may enter into a business combination with an entity
that desires to establish a public trading market for its shares. A
business opportunity may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a
business combination with The Harbor Group.
Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such
an offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state
securities laws enacted for the protection of investors. These
securities laws primarily relate to provisions regarding the
registration of securities which require full disclosure of The Harbor
Group's business, management and financial statements.
Many business decisions made by The Harbor Group can have major tax
consequences and many associated risks.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination The Harbor Group may
undertake. Currently, such transactions may be structured so as to
result in tax-free treatment to both companies, pursuant to various
federal and state tax provisions. The Harbor Group intends to
structure any business combination so as to minimize the federal and
state tax consequences to both The Harbor Group and the target entity;
however, there can be no assurance that such business combination will
meet the statutory requirements of a tax-free reorganization or that
the parties will obtain the intended tax-free treatment upon a transfer
of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes, which may have an
adverse effect on both parties to the transaction.
The requirement of audited financial statements of potential merging
entities may cause some potential merger candidates to forego merging
with The Harbor Group.
Management of The Harbor Group believes that any potential business
opportunity 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 choose to forego the
possibility of a business combination with The Harbor Group, rather
than incur the expenses associated with preparing audited financial
statements.
The Harbor Group securities may be limited to only a few markets
because of blue-sky laws.
Because the securities registered hereunder have not been registered
for resale under the blue sky laws of any state, and The Harbor Group
has no current plans to register or qualify its shares in 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 restrictions upon the
ability of new investors to purchase the securities which could reduce
the size of the potential market. As a result of recent changes in
federal law, non-issuer trading or resale of The Harbor Group's
securities is exempt from state registration or qualification
requirements in most states. However, some states may continue to
attempt to restrict the trading or resale of blind pool or blank-check
securities. Accordingly, investors should consider any potential
secondary market for The Harbor Group's securities to be a limited one.
Certain officers, directors, principal shareholders or affiliates may
purchase shares, thereby increasing their percentage share.
Certain officers, directors, principal shareholders and affiliates may
purchase, for investment purposes, a portion of the shares offered
hereby, which could, upon conversion, increase the percentage of the
shares owned by such persons. The purchases by these control persons
may make it possible for the offering to meet the escrow amount.
The Harbor Group may not be able to sale enough shares to follow
through with the business plan.
The 2,000,000 common shares are to be offered directly by The Harbor
Group, and no individual, firm, or corporation has agreed to purchase
or take down any of the shares. It is not know whether The Harbor
Group will be able to sell any shares.
The Harbor Group's offering price is arbitrary and the value of The
Harbor Group securities may never actually reach the offering price.
The offering price of the shares bears no relation to book value,
assets, earnings, or any other objective criteria of value. They have
been arbitrarily determined by The Harbor Group. There can be no
assurance that, even if a public trading market develops for The Harbor
Group's securities, the shares will attain market values commensurate
with the offering price.
The Harbor Groupshares are to be offered based on a direct
participation offering basis.
The shares are offered by The Harbor Groupon a direct participation
offering basis, and no individual, firm or corporation has agreed to
purchase or take down any of the offered shares. The Harbor
Groupcannot and does not make any statement guaranteeing that shares
will be sold. Provisions have been made to deposit in escrow the funds
received from the purchase of shares sold by The Harbor Group.
The Harbor Group's shares may never actually be traded and therefore
purchasers may never be able to resale.
Prior to the offering, there has been no public market for the shares
being offered. An active trading market may not develop.
Consequently, purchasers of the shares may not be able to resell their
securities at prices equal to or greater than the respective initial
public offering prices. The market price of the shares may be affected
significantly by factors such as announcements by The Harbor Group or
its competitors, variations in The Harbor Group's results of
operations, and market conditions in the retail, electron commerce, and
internet industries in general. Movements in prices of stock may also
affect the market price in general. As a result of these factors,
purchasers of the shares offered hereby may not be able to liquidate an
investment in the shares readily or at all.
Shares sold in the future may have to comply with Rule 144.
All of the 3,000,000 shares, which are held by management, have been
issued in reliance on the private placement exemption under the amended
Securities Act of 1933. Such shares will not be available for sale in
the open market without separate registration except in reliance upon
Rule 144 under the Act.
In general, under Rule 144 a person (or persons whose shares are
aggregated) who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
affiliates of The Harbor Group (as that term is defined under the Act)
would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding
shares of common stock, or the average weekly reported trading volume
on all national securities exchanges and through NASDAQ during the four
calendar weeks preceding such sale, provided that certain current
public information is then available. If a substantial number of the
shares owned by management were sold pursuant to Rule 144 or a
registered offering, the market price of the common stock could be
adversely affected.
The Harbor Group faces uncertainty with regard to the Y2K issue.
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognise the year 2000 as 1900 or some other date, resulting in errors
when information using the year 2000 date is processed. The effects of
the Year 2000 issue may be experienced before, on, or after January 1,
2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failure
which could affect The Harbor Group's ability to conduct normal
business operations. This creates potential risk for all companies,
even if their own computer systems are Year 2000 compliant. It is not
possible to be certain that all aspects of the Year 2000 issue
affecting The Harbor Group, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
The Harbor Group's Year 2000 plans are based on management's best
estimates. Based on currently available information, management does
not believe that the Year 2000 issues will have a material adverse
impact on The Harbor Group's financial condition or results of
operations; however, because of the uncertainties in this area,
assurance cannot be given in this regard.
Investors' rights and substantive protection under rule 419.
Deposit of offering proceeds and securities.
Rule 419 requires that the net offering proceeds, after deduction for
underwriting compensation and offering costs, and all securities to be
issued be deposited into an escrow or trust account (the "Deposited
Funds" and "Deposited Securities," respectively) governed by an
agreement which contains certain terms and provisions specified by the
rule. Under Rule 419, the Deposited Funds and Deposited Securities will
be released to The Harbor Group and to investors, respectively, only
after the Company has met the following three conditions: First, The
Harbor Group must execute an agreement for an acquisition(s) meeting
certain prescribed criteria; second, The Harbor Group must successfully
complete a reconfirmation offering which includes certain prescribed
terms and conditions; and third, the acquisition(s) meeting the
prescribed criteria must be
consummated.
Prescribed acquisition criteria.
Rule 419 requires that before the Deposited Funds and the Deposited
Securities can be released, The Harbor Group must first execute an
agreement(s) to acquire an acquisition candidate(s) meeting certain
specified criteria. The agreement must provide for the acquisition of a
business(es) or assets valued at not less than 80% of the maximum
offering proceeds, but excluding underwriting commissions, underwriting
expenses and dealer allowances payable to non-affiliates. Once the
acquisition agreements meeting
the above criteria have been executed, The Harbor Group must
successfully complete
the mandated reconfirmation offering and consummate the
acquisitions(s).
Post-effective amendment.
Once the agreement(s) governing the acquisition(s) of a business(es)
meeting the above criteria has (have) been executed, Rule 419 requires
The Harbor Group to update the registration statement of which this
prospectus is apart with a post-effective amendment. The post-effective
amendment must contain information about: the proposed acquisition
candidate(s) and its business(es), including audited financial
statements; the results of this
offering; and the use of the funds disbursed from the escrow account.
The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The offer must include
certain prescribed conditions which must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow.
Reconfirmation offering.
The reconfirmation offer must commence within five business days after
the effective date of the post-effective amendment. Pursuant to Rule
419, the terms of the reconfirmation offer must include the following
conditions:
(1) The prospectus contained in the post-effective amendment will be
sent to each investor whose securities are held in the escrow account
within five business days after the effective date of the post-
effective amendment;
2) Each investor will have no fewer than 20, and no more than 45,
business days from the effective date of the post-effective amendment
to notify the Company in writing that the investor elects to remain an
investor;
(3) If The Harbor Group does not receive written notification from any
investor within 45 business days following the effective date, the pro
rata portion of the Deposited Funds (and any related interest or
dividends) held in the escrow account on such investor's behalf will be
returned to the investor within five business days by first class mail
or other equally prompt means;
(4) The acquisition(s) will be consummated only if investors having
contributed 80% of the maximum offering proceeds elect to reconfirm
their investments; and
(5) If a consummated acquisition(s) has not occurred within 18 months
from the date of this prospectus, the Deposited Funds held in the
escrow account shall be returned to all investors on a pro rata basis
within five business days by first class mail or other equally prompt
means.
Release of deposited securities and deposited funds.
The Deposited Funds and Deposited Securities may be released to The
Harbor Group and
the investors, respectively, after:
(1) The Escrow Agent has received written certification from The Harbor
Group and any other evidence acceptable by the Escrow Agent that The
Harbor Group has executed an agreement for the acquisition(s) of a
business(es) the value of which represents at least 80% of the maximum
offering proceeds and has filed the required post-effective amendment,
the post-effective amendment has been declared effective, the mandated
reconfirmation offer having the conditions prescribed by Rule 419 has
been completed, and The Harbor Group has satisfied all of the
prescribed conditions of the reconfirmation offer; and
(2) The acquisition(s) of the business(es) the value of which
represents at least 80% of the maximum offering proceeds is (are)
consummated.
Escrowed funds not to be used for salaries or reimbursable expenses.
No funds (including any interest earned thereon) will be disbursed from
the escrow account for the payment of salaries or reimbursement of
expenses incurred on The Harbor Group's behalf by The Harbor Group's
officers and directors. Other than the foregoing, there is no limit on
the amount of such reimbursable expenses, and there will be no review
of the reasonableness of such expenses by anyone other than The Harbor
Group's board of directors, both of whom are officers. In no event will
the escrowed funds (including any interest earned thereon) be used for
any purpose other than implementation of a business combination. See
"Risk Factors," "Use Of Proceeds" and "Certain Transactions."
Use of Proceeds.
Following the sale of the 2,000,000 Shares Offered by The Harbor Group,
there will be net proceeds of $100,000. The net proceeds are
calculated as $100,000 minus sales commission costs, which are zero.
Net proceeds do not include any legal or accounting fees. These
proceeds will be used to provide start-up and working capital for the
Company.
The following table sets forth the use of proceeds from this offering
(based on the minimum and maximum offering amounts):
Use of Proceeds Minimum Offering Maximum Offering
<TABLE>
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Working Capital $20,000 100 % $100,000 100 %
Total $20,000 100 % $100,000 100 %
</TABLE>
The Harbor Group plans on releasing 10% of the escrow funds in
accordance with Rule 419 and use the funds to pay attorney and
accounting fees so that the company may meet its reporting
requirements.
Management anticipates expending these funds for the purposes indicated
above. To the extent that expenditures are less than projected, the
resulting balances will be retained and used for general working
capital purposes or allocated according to the discretion of the Board
of Directors. Conversely, to the extent that such expenditures require
the utilization of funds in excess of the amounts anticipated,
supplemental amounts may be drawn from other sources, including, but
not limited to, general working capital and/or external financing. The
net proceeds of this offering that are not expended immediately may be
deposited in interest or non-interest bearing accounts, or invested in
government obligations, certificates of deposit, commercial paper,
money market mutual funds, or similar investments.
Management may advance money to the Company or on behalf of the
Company. There are no set limits to the maximum amount that management
will advance or loan to the Company. However, the amount is obviously
limited by the resources of the officers and directors. Management
anticipates that repayment would come from the acquisition of a target
company. The advances would be expected to be in an amount well below
the minimum expected from any viable operating business target.
Determination of offering price.
The offering price is not based upon The Harbor Group's net worth,
total asset value, or any other objective measure of value based upon
accounting measurements. The offering price is determined by the
Board of Directors of The Harbor Group and was determined arbitrarily
based upon the amount of funds needed by The Harbor Group to start-up
the business, and the number of shares that the initial shareholders
were willing to allow to be sold.
Dilution.
"Net tangible book value" is the amount that results from subtracting
the total liabilities and intangible assets of an entity from its total
assets. "Dilution" is the difference between the public offering price
of a security and its net tangible book value per Share immediately
after the Offering, giving effect to the receipt of net proceeds in the
Offering. As of February 15, 2000 the net tangible book value of The
Harbor Group was $3000 or $.001 per Share. Giving effect to the sale by
The Harbor Group of all offered Shares at the public offering price,
the pro forma net tangible book value of The Harbor Group would be
$100,000 or $.02 per Share, which would represent an immediate increase
of $.02 in net tangible book value per Share and $.03 per Share
dilution per share to new investors. Dilution of the book value of the
Shares may result from future share offerings by The Harbor Group.
The following table illustrates the pro forma per Share dilution:
<TABLE>
Assuming Maximum Assuming Minimum
Shares Sold Shares Sold
<S> <C> <C>
Offering Price (1) $.05 $0.05
Net tangible book value per
share before Offering (2) $.001 $0.001
Net tangible book value per
Share after offering (3) $.03 $0.007
Increase Attributable to purchase
of stock by new investors (4) $.029 $0.006
Dilution to new investors (5) $.02 $0.043
Percent Dilution to new
investors (6) 40% 86%
</TABLE>
(1) Offering price before deduction of offering expenses, calculated
on a "Common Share Equivalent" basis.
(2) The net tangible book value per share before the offering ($0.001)
is determined by dividing the number of Shares outstanding prior to
this offering into the net tangible book value of The Harbor Group.
(3) The net tangible book value after the offering is determined by
adding the net tangible book value before the offering to the estimated
proceeds to the Corporation from
the current offering (assuming all the Shares are subscribed), and
dividing by the number of common shares outstanding.
(4) The net tangible book value per share after the offering
($103,000) is determined by dividing the number of Shares that will be
outstanding, assuming sale of all the Shares offered, after the
offering into the net tangible book value after the offering as
determined in note 3 above.
(5) The Increase Attributable to purchase of stock by new investors is
derived by taking the net tangible book value per share after the
offering ($.02) and subtracting from it the net tangible book value per
share before the offering ($.001) for an increase of $.02.
(6) The dilution to new investors is determined by subtracting the net
tangible book value per share after the offering ($.02) from the
offering price of the Shares in this offering ($.05), giving a dilution
value of ($.03).
(7) The Percent Dilution to new investors is determined by dividing
the Dilution to new investors ($.03) by the offering price per Share
($.05) giving a dilution to new investors of 60%.
Plan of distribution.
The Harbor Group will sell a maximum of 2,000,000 shares of its common
stock, par value $.001 per Share to the public on a "best efforts"
basis. The minimum purchase required of an investor is $250.00. There
can be no assurance that any of these shares will be sold.
The net proceeds to The Harbor Group will be $100,000, minus associated
costs, if all the shares offered are sold. No commissions or other
fees will be paid, directly or indirectly, by The Harbor Group, or any
of its principals, to any person or firm in connection with
solicitation of sales of the shares, certain costs are to be paid in
connection with the offering (see "Use of Proceeds").
The public offering price of the shares will be modified, from time to
time, by amendment to this prospectus, in accordance with changes in
the market price of The Harbor Group's common stock. These securities
are offered by The Harbor Group subject to prior sale and to approval
of certain legal matters by counsel.
The officers and directors of The Harbor Group will be offering and
selling shares on behalf of The Harbor Group. President and director
Ken Heim and secretary and director Rose Heim will be offering and
selling shares on behalf of The Harbor Group.
Those officers and directors offering the securities on behalf of The
Harbor Group will be relying on the safe harbor from broker-dealer
registration rule set out in Rule 3a4-1.
We have been informed by these officers and directors that:
- they are not subject to statutory disqualification as defined
in Section 3(a)(39) of the Securities Exchange Act of 1934,
- these officers and directors are not compensated in connection
with their participation by the payment of commissions or other
remuneration based either directly or indirectly on transactions
in securities, and,
- these officers and directors are not an associated person of a
broker or dealer.
Additionally, the officers and directors offering and selling
securities in The Harbor Group meet the conditions of part (a)(4)(iii)
where participation will be restricted to:
(A) Preparing any written communication or delivering such
communication through the mails or other means that does
not involve oral solicitation by the associated person of a
potential purchaser; provided, however, that the content of
such communication is approved by a partner, officer or
director of the issuer;
(B) Responding to inquiries of a potential purchaser in a
communication initiated by the potential purchaser;
provided, however, that the content of such responses are
limited to information contained in a registration
statement filed under the Securities Act of 1933 or other
offering document; or
(C) Performing ministerial and clerical work involved in
effecting any transaction.
Limited State Registration.
The Harbor Groupanticipates that there will be no State registration of
its securities. Any sale of its securities will depend on exemptions
under the Blue Sky laws of states in which the securities are sold.
The securities will be sold under the Nevada state exemption and
therefore will not be registered even in Nevada. The exemption used is
Section 90.530 (11).
Except as otherwise provided in this subsection, a transaction pursuant
to offer to sell securities of an issuer if:
a) The transaction is part of an issue in which there are no more than
25 purchasers in this state, other than those designated in
subsection 10, during any 12 consecutive months;
b) No general solicitation or general advertising is used in connection
with the offer to sell or sale of the securities;
c) No commission or other similar compensation is paid or given,
directly or indirectly, to a person, other than a broker-dealer
licensed or not required to be purchased under this chapter, for
soliciting a prospective purchaser in this state; and
d) One of the following conditions is satisfied:
1) The seller reasonably believes that all the purchasers in this
state, other than those designated in subsection 10, are
purchasing for investment; or
2) Immediately before an immediately after the transaction, the
issuer reasonably believes that the securities of the issuer are
held by 50 or fewer beneficial owners, other than those
designated in subsection 10, and the transaction is part of an
aggregate offering that does not exceed $500,000 during any 12
consecutive months.
The administrator by rule or order as to a security or
transaction or a type of security or transaction, may withdraw or
further condition the exemption set forth in this subsection or
waive one or more of the conditions of the exemption.
The Harbor Group, Inc. does not make any guarantee that shares will be
sold. Even if shares are sold, the amount raised must meet the minimum
offering levels set in this filing. Should the minimum offering levels
not be met, all proceeds will be returned
Opportunity To Make Inquires.
The Harbor Group will make available to each Offeree, prior to any sale
of the Shares, the opportunity to ask questions and receive answers
from The Harbor Group concerning any aspect of the investment and to
obtain any additional information contained in this Memorandum, to the
extent that The Harbor Group possesses such information or can acquire
it without unreasonable effort or expense.
Execution of Documents.
Each person desiring to subscribe to the Shares must complete, execute,
acknowledge, and delivered to The Harbor Group a Subscription
Agreement, which will contain, among other provisions, representations
as to the investor's qualifications to purchase the common stock and
his ability to evaluate and bear the risk of an investment in the
Company.
By executing the subscription agreement, the subscriber is agreeing
that if the Subscription Agreement it is excepted by The Harbor Group,
such a subscriber will be, a
shareholder in The Harbor Group and will be otherwise bound the
articles of incorporation and the bylaws of The Harbor Group in the
form attached to this Prospectus.
Promptly, upon receipt of subscription documents by the Company, it
will make a determination as to whether a prospective investor will be
accepted as a shareholder in
The Harbor Group. The Harbor Group may reject a subscriber's
Subscription Agreement for any reason. Subscriptions will be rejected
for failure to conform to the requirements of this Prospectus (such as
failure to follow the proper subscription procedure), insufficient
documentation, over subscription to The Harbor Group, or such other
reasons other as The Harbor Group determines to be in the best interest
of the Company.
If a subscription is rejected, in whole or in part, the subscription
funds, or portion thereof, will be promptly returned to the prospective
investor without interest by depositing a check (payable to said
investor) in the amount of said funds in the United States mail,
certified returned-receipt requested. Subscriptions may not be
revoked, cancelled, or terminated by the subscriber, except as provided
herein.
Legal Proceedings
The Harbor Group is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by or
against The Harbor Group has been threatened.
Directors, Executive Officers, Promoters,
and Control Persons
The names, ages, and respective positions of the directors, officers,
and significant employees of the Company are set forth below. All
these persons have held their positions since February 15, 2000. Each
director and officer shall serve for a term ending on the date of the
third Annual Meeting. There are no other persons which can be
classified as a promoter or controlling person of The Harbor Group.
Ken Heim. President/Treasurer/Director
Rose Heim, Secretary/Vice President/Director
None of the Officers and Directors have been involved in legal
proceedings that impair their ability to perform their duties as
Officers and Directors.
Rose and Ken Heim are husband and wife.
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth, as of the date of this Prospectus, the
outstanding Shares of common stock of the Company owned of record or
beneficially by each person who
owned of record, or was known by The Harbor Group to own beneficially,
more than 5% of The Harbor Group's Common Stock, and the name and share
holdings of each officer and director and all officers and directors as
a group.
<TABLE>
<S> <S> <S> <S>
Title of Class Name of Beneficial Amount and Nature Percent
Owner (1) of Beneficial Of Class
Owner (2)
<C> <C>
Common Stock Ken Heim 1,500,000 50%
Common Stock Rose Heim 1,500,000 50%
</TABLE>
None of the Officers, Directors or existing shareholders have the right
to acquire any amount of the Shares within sixty days from options,
warrants, rights, conversion privilege, or similar obligations.
Principal Shareholder(s).
The addresses for the principal shareholders are as follows:
President Ken Heim: 7212 Crown Point Road, Oklahoma City, Oklahoma
73132
Secretary Rose Heim: 7212 Crown Point Road, Oklahoma City, Oklahoma
73132
Both shareholders have sole voting and investment power.
Description of securities.
General description.
The securities being offered are shares of common stock. The Articles
of Incorporation authorize the issuance of 50,000,000 shares of common
stock, with a par value of $.001. The holders of the Shares: (a) have
equal ratable rights to dividends from funds legally available
therefore, when, as, and if declared by the Board of Directors of the
Company; (b) are entitled to share ratably in all of the assets of The
Harbor Group available for distribution upon winding up of the affairs
of The Harbor Group; (c) do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund
applicable thereto; and (d) are entitled to one non-cumulative vote per
share on all matters on which shareholders may vote at all meetings of
shareholders. These securities do not have any of the following rights:
(a) cumulative or special voting rights; (b) preemptive rights to
purchase in new issues of Shares; (c) preference as to dividends or
interest; (d) preference
upon liquidation; or (e) any other special rights or preferences. In
addition, the Shares are not convertible into any other security.
There are no restrictions on dividends under any loan other financing
arrangements or otherwise. See a copy of the Articles of Incorporation,
and amendments thereto, and Bylaws of The Harbor Group.Net Co.,
attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Form SB-
2. As of the date of this Form SB-2, The Harbor Group has 3,000,000
Shares of common stock outstanding.
Non-cumulative voting.
The holders of Shares of Common Stock of The Harbor Group do not have
cumulative voting rights, which means that the holders of more than 50%
of such outstanding Shares, voting for the election of directors, can
elect all of the directors to be elected, if they so choose. In such
event, the holders of the remaining Shares will not be able to elect
any of the Company's directors.
Dividends.
The Harbor Group does not currently intend to pay cash dividends. The
Harbor Group's proposed dividend policy is to make distributions of its
revenues to its stockholders when the Company's Board of Directors
deems such distributions appropriate. Because The Harbor Group does not
intend to make cash distributions, potential shareholders would need to
sell their shares to realize a return on their investment. There can
be no assurances of the projected values of the shares, nor can there
be any guarantees of the success of The Harbor Group.
A distribution of revenues will be made only when, in the judgment of
The Harbor Group's Board of Directors, it is in the best interest of
The Harbor Group's stockholders to do so. The Board of Directors will
review, among other things, the investment quality and marketability of
the securities considered for distribution; the impact of a
distribution of the investee's securities on its customers, joint
venture associates, management contracts, other investors, financial
institutions, and The Harbor Group's internal management, plus the tax
consequences and the market effects of an initial or broader
distribution of such securities.
Possible anti-takeover effects of authorized but unissued stock.
Upon the completion of this Offering, The Harbor Group's authorized but
unissued capital stock will consist of 50,000,000 shares (assuming the
entire offering is sold) of common stock. One effect of the existence
of authorized but unissued capital stock may be to enable the Board of
Directors to render more difficult or to discourage an attempt to
obtain control of The Harbor Group by means of a merger, tender offer,
proxy contest, or otherwise, and thereby to protect the continuity of
The Harbor Group's management.
If, in the due exercise of its fiduciary obligations, for example, the
Board of Directors were to determine that a takeover proposal was not
in The Harbor Group's best interests, such shares could be issued by
the Board of Directors without stockholder approval in one or more
private placements or other transactions that might prevent, or render
more difficult or costly, completion of the takeover transaction by
diluting the voting or other rights of the proposed acquirer or
insurgent stockholder or stockholder group, by creating a substantial
voting block in institutional or other hands that might undertake to
support the position of the incumbent Board of Directors, by effecting
an acquisition that might complicate or preclude the takeover, or
otherwise.
Transfer Agent
The Harbor Group intends to engage the services of Pacific Stock
Transfer Company, P.O. Box 93385 Las Vegas, Nevada 89193
(702) 361-3033 Fax (702) 732-7890.
Interest of named experts and counsel.
No named expert or counsel was hired on a contingent basis. No named
expert or counsel will receive a direct or indirect interest in the
small business issuer. No named
expert or counsel was a promoter, underwriter, voting trustee,
director, officer, or employee of the small business issuer.
Disclosure of commission position on indemnification for securities act
liabilities.
No director of The Harbor Group will have personal liability to The
Harbor Group or any of its stockholders for monetary damages for breach
of fiduciary duty as a director involving any act or omission of any
such director since provisions have been made in the Articles of
Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit the liability of
a director (i) for any breach of the director's duty of loyalty to The
Harbor Group or its stockholders, (ii) for acts or omissions not in
good faith or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the Nevada Revised
Statutes, (iv) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes or, (v) for any transaction from which
the director derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers, and
employees of The Harbor Group in most cases for any liability suffered
by them or arising out of their
activities as directors, officers, and employees of the Company if they
were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a
settlement the indemnification will apply only when the Board of
Directors approves such settlement and reimbursement as being for the
best interests of the Corporation. The Bylaws, therefore, limit the
liability of directors to the maximum extent permitted by Nevada law
(Section 78.751).
The officers and directors of The Harbor Group are accountable to The
Harbor Group as fiduciaries, which means they are required to exercise
good faith and fairness in all dealings affecting
The Harbor Group. In the event that a shareholder believes the
officers and/or directors have violated their fiduciary duties to The
Harbor Group, the shareholder may, subject to applicable rules of
civil procedure, be able to bring a class action or derivative suit to
enforce the shareholder's rights, including rights under certain
federal and state securities laws and regulations to recover damages
from and require an accounting by management.
Shareholders, who have suffered losses in connection with the purchase
or sale of their interest in The Harbor Group 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.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
Organization within last five years.
The names of the promoters of the registrant are the officers and
directors as disclosed elsewhere in this Form SB-2. None of the
promoters have received anything of value from the registrant.
Description of Business.
1. Company/Business Summary.
The Harbor Group, Co. was incorporated on February 15, 2000, under the
laws of the State of Nevada, to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since
inception and has no operations date. Other than issuing shares to its
original shareholders, The Harbor Group never commenced any operational
activities.
The Harbor Group was formed by Shawn F. Hackman, the initial director.
This was done for administrative purposes only. Mr. Hackman no longer
holds any position in the company. Ken and Rose Heim were immediately
appointed as Officers and Directors of Harbor Group. The Harbor Group
was formed for the purpose of consummating a merger or acquisition.
Mr. Heim serves as President and Director. Mr. Heim determined next to
proceed with filing a Form SB-2.
Mr. Heim, the President and Director, elected to commence
implementation of The Harbor Group's principal business purpose,
described below under "Item 2, Plan of Operation". As such, The Harbor
Group 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 Harbor
Group 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 Harbor Group has successfully
implemented its business plan described herein.
Accordingly, each shareholder of The Harbor Group has executed and
delivered a "lock-up" letter agreement, affirming that he/she will not
sell his/her respective shares of the
Company's common stock until such time as The Harbor Group has
successfully consummated a merger or acquisition and the Company is no
longer classified as a "blank check" company.
In order to provide further assurances that no trading will occur in
The Harbor Group's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place his/her respective stock
certificate with The Harbor Group's legal counsel, who will not release these
respective certificates until such time as legal counsel has confirmed that a
merger or acquisition has been successfully consummated.
However, while management believes that the procedures established to
preclude any sale of The Harbor Group's securities prior to closing of
a merger or acquisition will be sufficient, there can be no assurances
that the procedures established herein will unequivocally limit any
shareholder's ability to sell their respective securities before such
closing.
Item 2. Plan of Operation.
The Registrant intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for
its securities. The Registrant has no particular acquisitions in mind
and has not entered into any negotiations regarding such an
acquisition. None of The Harbor Group's officers, directors, promoters
or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility
of an acquisition or merger between The Harbor Group and such other
company as of the date of this registration statement.
While The Harbor Group will attempt to obtain audited financial
statements of a target entity, there is no assurance that such audited
financial statements will be available. The Board of Directors does
intend to obtain certain assurances of value of the target entity's
assets prior to consummating such a transaction, with further
assurances that an audited statement would be provided within seventy-
five days after closing of such a transaction. Closing documents
relative thereto will include representations that the value of the
assets conveyed to or otherwise so transferred will not materially
differ from the representations included in such closing documents.
The Registrant has no full time employees. The Registrant's two
officers have agreed to allocate a portion of their time to the
activities of the Registrant, without compensation. Management
anticipates that the business plan of The Harbor Group can be
implemented by each officer devoting approximately 10 hours per month
to the business affairs of The Harbor Group and, consequently,
conflicts of interest may arise with respect to the limited time
commitment by such officers. See "Item 5. Directors, Executive
Officers, Promoters, and Control Persons."
The Harbor Group is filing this registration statement on a voluntary
basis because the primary attraction of the Registrant as a merger
partner or acquisition vehicle will be its status as an SEC reporting
company. Any business combination or transaction will likely result in
a significant issuance of shares and substantial dilution to present
stockholders of the Registrant.
The Articles of Incorporation of The Harbor Group provides that The
Harbor Group may indemnify officers and/or directors of The Harbor
Group for liabilities, which can include liabilities arising under the
securities laws. Therefore, assets of The Harbor Group could be used
or attached to satisfy any liabilities subject to such indemnification.
See "Item 12, Indemnification of directors and officers."
General Business Plan.
The Harbor Group's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities
presented to it by persons or firms who or which desire to seek the
perceived advantages of an Exchange Act registered corporation. The
Harbor Group will not restrict its search to any specific business,
industry, or geographical location and The Harbor Group may participate
in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is
not meant to be restrictive of The Harbor Group's virtually unlimited
discretion to search for and enter into potential business
opportunities. Management anticipates that it will be able to
participate in only one potential business venture because The Harbor
Group has nominal assets and limited financial resources. See Item
F/S, "Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders of The Harbor Group
because it will not permit The Harbor Group to offset potential losses
from one venture against gains from another.
The Harbor Group may seek a business opportunity with entities which
have recently commenced operations, or which wish to utilize the public
marketplace in order to raise
additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The
Harbor Group may acquire assets and establish wholly-owned subsidiaries
in various businesses or acquire existing businesses as subsidiaries.
The primary method The Harbor Group will use to find potential merger
or acquisition candidates will be to run classified ads in the Wall
Street Journal periodically seeking companies which are looking to
merge with a public shell.
The Harbor Group anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions,
rapid technological advances being made in some industries and
shortages of available capital, management believes that there are
numerous firms seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions of
applicable statutes) for all shareholders and other factors. Business
opportunities may be available in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Harbor Group has, and will continue to have, no capital with which
to provide the owners of business opportunities with any significant
cash or other assets. However, management believes The Harbor Group
will be able to offer owners of acquisition candidates the opportunity
to acquire a controlling ownership interest in a publicly registered
company without incurring the cost and time required to conduct an
initial public offering.
The owners of the business opportunities will, however, incur
significant legal and accounting costs in connection with the
acquisition of a business opportunity, including the costs of preparing
Form 8-K's, 10-K's or 10-KSB's, agreements and related reports and
documents. The Securities Exchange Act of 1934 (the "34 Act"),
specifically requires that any merger or acquisition candidate comply
with all applicable reporting requirements, which include providing
audited financial statements to be included within the numerous filings
relevant to complying with the 34 Act.
Nevertheless, the officers and directors of The Harbor Group 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 business
opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of The Harbor
Group, none of who is a professional business analyst. Management
intends to concentrate on identifying preliminary prospective business
opportunities that may be brought to its attention through present
associations of The Harbor Group's two officers, or by the Company's
shareholders.
In analyzing prospective business opportunities, management will
consider such matters as:
- the available technical, financial and managerial resources,
- working capital and other financial requirements,
- history of operations, if any,
- prospects for the future,
- nature of present and expected competition;,
- the quality and experience of management services which may be
available and
- the depth of that management,
- the potential for further research, development, or
exploration,
- specific risk factors not now foreseeable but which may be
anticipated to impact the proposed activities of The Harbor Group;
- the potential for growth or expansion; the potential for
profit;
- the perceived public, recognition or acceptance of products,
services, or trades;
- name identification; and other relevant factors.
Management will meet personally with management and key personnel of
the business opportunity as part of their investigation. To the extent
possible, The Harbor Group intends to utilize written reports and
personal investigation to evaluate the above factors. The Harbor Group
will not acquire or merger with any company for which audited financial
statements cannot be obtained within a reasonable period of time after
closing of the proposed transaction.
Management of The Harbor Group, 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
Harbor Group's shareholders, in accomplishing the business purposes of
The Harbor Group. It is not anticipated that any outside consultants
or advisors will be utilized by The Harbor Group to effectuate its
business purposes described herein.
However, if The Harbor Group 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 Harbor Group 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.
The Harbor Group 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 Harbor Group 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 Harbor Group may offer.
However, The Harbor Group 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 Harbor Group has
successfully consummated such a merger or acquisition. The Harbor
Group also has no plans to conduct any offerings under Regulation S.
Acquisition of opportunities.
In implementing a structure for a particular business acquisition, The
Harbor Group may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another
corporation or entity. It may also acquire stock or assets of an
existing business. On the consummation of a transaction, it is
probable that the present management and shareholders of The Harbor
Group will no longer be in control of The Harbor Group. In addition,
the Company's directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of
The Harbor Group's shareholders.
It is anticipated that The Harbor Group's principal shareholders may
actively negotiate or otherwise consent to the purchase of a portion of
their common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. Any terms of sale of the shares
presently held by officers and/or directors of The Harbor Group will be
also afforded to all other shareholders of the Company on similar terms
and conditions.
The policy set forth in the preceding sentence is based on an
Understanding between the two members of management, and these two
persons are not aware of any circumstances under which this policy
would change while they are still officers and directors of The Harbor
Group. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under
applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of its transaction, The Harbor Group
may agree to register all or a part of such securities immediately
after the transaction is consummated or at specified times thereafter.
If such registration occurs, of which there can be no assurance, it
will be undertaken by the surviving entity after The Harbor Group has
successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until such time as this occurs,
The Harbor Group will not attempt to register any additional
securities. The issuance of substantial additional securities and
their potential sale into any trading market which may develop in The
Harbor Group's securities may have a depressive effect on the value of
The Harbor Group's securities in the future, if such a market develops,
of which there is no assurance.
While the actual terms of a transaction to which The Harbor Group 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 368a or 351 of the Internal
Revenue Code (the "Code").
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of The Harbor
Group which target company shareholders would acquire in exchange for
all of their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, The
Harbor Group's shareholders will in all likelihood hold a substantially
lesser percentage ownership interest in the Company following any
merger or acquisition.
The percentage ownership may be subject to significant reduction in the
event The Harbor Group acquires a target company with substantial
assets. Any merger or acquisition effected by The Harbor Group can be
expected to have a significant dilative effect on the percentage of
shares held by The Harbor Group's then shareholders.
The Harbor Group will participate in a business opportunity only after
the negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted, generally
such agreements will require some specific representations and
warranties by all of the parties thereto, will specify certain events
of default, will detail the terms of closing and the conditions which
must be satisfied by each of the parties prior to and after such
closing, will outline the manner of bearing costs, including costs
associated with The Harbor Group's attorneys and accountants, will set
forth remedies on default and will include miscellaneous other terms.
As stated here-in-above, The Harbor Group will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Harbor Group is subject to all of the
reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of The Harbor Group to file
independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of
a merger or acquisition, as well as The Harbor Group's audited
financial statements included in its annual report on Form 10-K (or 10-
KSB, as applicable).
If such audited financial statements are not available at closing, or
within time parameters necessary to insure The Harbor Group's
compliance with the requirements of the 34 Act, or if the audited
financial statements provided do not conform to the representations
made by the candidate to be acquired in the closing documents, the
closing documents may provide that the proposed transaction will be
voidable, at the discretion of the present management of The Harbor
Group.
The Harbor Group's officers and shareholders have verbally agreed that
they will advance to The Harbor Group any additional funds which The
Harbor Group needs for operating capital and for costs in connection
with searching for or completing an acquisition or merger. These
persons have further agreed that such advances will be made in
proportion to each person's percentage ownership of The Harbor Group.
These persons have also agreed that such advances will be made interest
free without expectation of repayment unless the owners of the business
which The Harbor Group acquires or merges with agree to repay all or a
portion of such advances.
There is no dollar cap on the amount of money, which such persons will
advance to The Harbor Group. The Harbor Group will not borrow any
funds from anyone other than its current shareholders for the purpose
of repaying advances made by the shareholders, and The Harbor Group
will not borrow any funds to make any payments to The Harbor Group's
promoters, management or their affiliates or associates.
The Board of Directors has passed a resolution, which prohibits The
Harbor Group from completing an acquisition or merger with any entity
in which any of The Harbor Group'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,
through their own initiative may be changed.
There are no arrangements, agreements or understandings between non-
management shareholders and management under which non-management
management of the Company's affairs. There is no agreement that non-
management shareholders will exercise their voting rights to continue
to re-elect the current directors, however, it is expected that they
will do so based on the existing friendship among such persons.
Competition.
The Harbor Group will remain an insignificant participant among the
firms, which engage in the acquisition of business opportunities.
There are many established venture capital and financial concerns which
have significantly greater financial and personnel resources and
technical expertise than The Harbor Group. In view of the Company's
combined extremely limited financial resources and limited management
availability, The Harbor Group will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
Year 2000 compliance.
The Harbor Group is aware of the issues associated with the programming
code in existing computer systems through the year 2000. The Harbor
Group has assessed these issues as they relate to The Harbor Group,
and since The Harbor Group 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.
Description of property.
The Harbor Group has retained Shawn F. Hackman, a P.C., as a resident
agent. The address is 3360 W. Sahara, Suite 200 Las Vegas, NV 89102.
Mr. Hackman has no involvement with the day-to-day activities of The
Harbor Group. A copy of the resident agent agreement is attached.
The Harbor Group currently owns no property. President Ken Heim shall
provide the space for the Company's meetings at 25022 Hidden Hills Rd.
Apt.K, Laguna Niguel, CA 92677.
Currently, Shawn F. Hackman provides office space for four blank check
company's; Western Sky, Inc, Red Bluff Corporation, Silver Stream
Corp., and Horizon Prime Inc.
Shawn F. Hackman does provide an address as resident agent for the
following blank check companys; Blimah, Inc., Kesser, Inc., and Harbor
Group.Net, Inc., Y2comp.com, Inc., Modem.com, Inc., and Computech Com,
Inc.
Certain relationships and related transactions.
There are no relationships, transactions, or a proposed transaction to
which the registrant was or is to be a party, in which any of the named
persons set forth in Item 404 of Regulation SB had or is to have a
direct or indirect material interest.
Shawn F. Hackman, Esq., the Company's resident agent, incorporated the
Company in an administrative capacity. Mr. Hackman currently holds no
position in the Company.
Market for common equity and related stockholder matters.
The Shares have not previously been traded on any securities exchange.
At the present time, there are no assets available for the payment of
dividends on the Shares.
Executive compensation.
(a) No officer or director of The Harbor Group is receiving any
remuneration at this time.
(b) There are no annuity, pension or retirement benefits proposed to
be paid to officers, directors, or employees of the corporation in the
event of retirement at normal retirement date pursuant to any presently
existing plan provided or contributed to by the corporation or any of
its subsidiaries(c) No remuneration is proposed to be in the future
directly or indirectly by the corporation to any officer or director
under any plan which is presently existing.
Financial statements.
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 24, 2000
TABLE OF CONTENTS
PAGE #
INDEPENDENT AUDITORS REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-9
INDEPENDENT AUDITORS' REPORT
Board of Directors March 27, 2000
THE HARBOR GROUP.NET CO.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of THE HARBOR GROUP.NET CO. (A
Development Stage Company), as of March 24, 2000 and the related statements
of operations, stockholders' equity and cash flows for the period February
15, 2000 (inception) to March 24, 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 THE HARBOR GROUP.NET CO. (A
Development Stage Company), as of March 24, 2000, and the results of its
operations and cash flows for the period February 15, 2000 (inception) to
March 24, 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
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
March 24, 2000
BALANCE SHEET
<TABLE>
ASSETS
<CAPTION>
CURRENT ASSETS
<S> <C>
Cash $ 0
TOTAL CURRENT ASSETS $ 0
OTHER ASSET $ 0
TOTAL OTHER ASSETS $ 0
TOTAL ASSETS $ 0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 0
TOTAL CURRENT LIABILITIES $ 0
STOCKHOLDERS' EQUITY (Note #4)
Preferred Stock
Par value $.001
Authorized 10,000,000
Issued and outstanding at
March 24, 2000 - None $ 0
Common stock
Par value $0.001
Authorized 25,000,000 shares
Issued and outstanding at
March 24, 2000 -
3,000,000 shares 3,000
Additional Paid-In Capital 0
Deficit accumulated during
The Development stage -3,000
TOTAL STOCKHOLDERS' EQUITY $ 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
February 15, 2000(inception), to March 24, 2000
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
<S> <C>
INCOME
Revenue $ 0
EXPENSES
General and
Administrative $ 3,000
TOTAL EXPENSES $ 3,000
NET PROFIT/LOSS (-) $ -3,000
Net Profit/Loss(-)
per weighted share
(Note #1) $ -.001
Weighted average
Number of common
shares outstanding 3,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
February 15, 2000
Issued for Services 3,000,000 $3,000 $0
Net loss February 15,
2000 (inception) to
March 24, 2000 -3,000
Balance,
March 24, 2000 3,000,000 $3,000 $0 $-3,000
</TABLE>
The accompanying notes are an integral part of these financial statements
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
February 15, 2000 (inception), to March 24, 2000
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
<S> <C>
Cash Flows from
Operating Activities
Net Loss $ -3,000
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Issue Common Stock
For Services +3,000
Changes in assets and
Liabilities 0
Net cash used in
Operating activities $0
Cash Flows from
Investing Activities 0
Cash Flows from
Financing Activities 0
Net Increase (decrease) 0
Cash,
Beginning of period 0
Cash, End of Period $0
</TABLE>
The accompanying notes are an integral part of these financial statements
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 24, 2000
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized February 15, 2000, under the laws of the State of
Nevada as THE HARBOR GROUP.NET CO. 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 24, 2000.
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 24, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up
Activities" which provides guidance on the financial reporting of start-up
costs and organization costs. It requires most costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of
SOP 98-5, there has been little or no effect on the company's financial
statements.
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
February 11, 2000, the Company had no dilative common stock equivalents
such as stock options.
Year End
The Company has selected December 31st as its fiscal year-end.
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 24, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
The Company's accounting policy for issuing shares in a non-cash transaction
is to issue the equivalent amount of stock equal to the fair market value of
the assets or services received.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended March 24, 2000,
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 March 24, 2000 is as follows:
<TABLE>
<S> <C>
Net operation loss carry forward $ 0
Valuation allowance $ 0
Net deferred tax asset $ 0
</TABLE>
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of 55,000,000 shares
with a par value $.001 per share.
Preferred Stock
The corporation has 10,000,000 shares of its preferred stock.
On February 15, 2000, the Company issued 3,000,000 shares of its $0.001 par
value common stock to its directors for services of $3,000.00.
THE HARBOR GROUP.NET CO.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
March 24, 2000
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. 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 shares
of common stock or preferred stock.
To Whom It May Concern: March 27, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents to
the inclusion of their report of February 14, 2000, on the Financial
Statements of THE HARBOR GROUP.NET CO., as of March 24, 2000, in any filings
that are necessary now or in the near future with the U.S. Securities and
Exchange Commission.
Very truly yours,
/S/__________________________
Barry L. Friedman
Certified Public Accountant
Part II. Information not required in prospectus.
Indemnification of officers and directors.
Information on this item is set forth in Prospectus under the heading
"Disclosure of Commission Position on Indemnification for Securities Act
Liabilities."
Other expenses of issuance and distribution.
Information on this item is set forth in the Prospectus under the heading
"Use of Proceeds."
Recent sales of unregistered securities.
On February 15, 2000, 1,500,000 shares were issued to Ken Heim and 1,500,000
to Rose Heim under Rule 4(2).
Services include general duties as officer and directors of the company.
The officers and directors will also conduct the offering and will be
responsible for any due diligence report when a merger or acquisition is
conducted.
Exhibits.
The Exhibits required by Item 601 of Regulation S-B, and an index thereto, are
attached.
Undertakings.
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and
Notwithstanding the forgoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation From the low or high end of the
estimated maximum offering range may be reflected in the form of prospects
filed with the Commission pursuant to Rule 424.
(b) if, in the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation ofRegistration Fee" table in the effective registration statement.
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
(c) Insofar as Indemnification for liabilities arising under the Securities
Act of 1933 (the pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised "Act") may be permitted to directors, officers
and controlling persons of the small business issuer that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
EXHIBIT LIST
3.1 Articles of Incorporation
3.2 By-Laws
24.1 Power of Attorney
27.1 Acceptance of Resident Agent
27.2 Lock-up agreement
