UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
MANGUM ACQUISITION CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
TEXAS 76-0640462
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER)
4214 MANGUM HOUSTON, TEXAS 77024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 957-3100
SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE ACT: NONE
SECURITIES TO BE REGISTERED UNDER SECTION 12(G) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE PER SHARE
(TITLE OR CLASS)
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TABLE OF CONTENTS
PAGE
PART I
ITEM 1. DESCRIPTION OF BUSINESS . . . . . . . . . . 3
Business Development
Business of Issuer
Risk Factors
ITEM 2. PLAN OF OPERATION. . . . . . . . . . . . . . 10
Employees
Indemnification
General Business Plan
Acquisition of Opportunities
Liquidity and Capital Resources
Year 2000 Issues
ITEM 3. DESCRIPTION OF PROPERTY. . . . . . . . . . . 15
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . 15
Principal Stockholders
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS. . . . . . . . . 16
Officers and Directors
Prior Blank Check Offerings
Conflicts of Interest
Investment Company Act of 1940
Investment Advisors Act of 1940
ITEM 6. EXECUTIVE COMPENSATION . . . . . . . . . . . 17
ITEM 7. CERTAIN RELATIONSHIP AND
RELATED TRANSACTIONS . . . . . . . . . . . . . . . 18
ITEM 8. DESCRIPTION OF SECURITIES. . . . . . . . . . 18
Common Stock
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS . . . . . . . . . . . . . .. . . . . 19
Dividend Policy
Penny Stock Regulation
ITEM 2. LEGAL PROCEEDINGS. . . . . . . . . . . . . . 20
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.. . . 20
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES. . . 20
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS. . 20
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS. . . . . . 21
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
This report on Form 10-SB contains forward-looking statements within the
definition of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All forward looking statements are inherently
uncertain as they are based on current expectations and assumptions concerning
future events or future performance of the Company (as defined below under the
caption "Business Development").
Readers are cautioned not to place undue reliance on these forward-looking
statements, which are only predictions and speak only as of the date hereof.
Forward-looking statements usually contain the words "estimate", "anticipate",
"believe", "expect", or similar expressions, and are subject to numerous known
and unknown risks and uncertainties. In evaluating such statements, readers
should carefully review risks and uncertainties identified in this Form 10-SB,
including the matters set forth under the caption "Risk Factors" below. These
risks and uncertainties could cause the Company's actual results to differ
materially from those indicated in the forward-looking statements. The Company
undertakes no obligation to update or publicly announce revisions to any
forward-looking statements to reflect future events or developments.
BUSINESS DEVELOPMENT
Mangum Acquisition Corporation (the "Company") is a corporation and it was
incorporated on April 24, 2000 in the State of Texas, to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. Pursuant to the Articles of Incorporation, the Company is
authorized to issue 20,000,000 shares of Common Stock at $.001 par value. Each
holder of the Common Stock shall be entitled to one vote for each share of
Common Stock held. As of April 29, 2000, there are 700,000 shares of Common
Stock outstanding.
The Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its shareholders, the Company
has not commenced any operational activities. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Company intends to
effect a merger, exchange of capital stock, asset acquisition or other similar
Business Combination or acquisition (a "Business Combination") with, most
likely, a private entity. The Board of Directors of the Company, which is
comprised of a single director, has elected to commence implementation of the
Company's principal business purpose, described below under "ITEM 2 - PLAN OF
OPERATION".
There have been no bankruptcy, receivership or similar proceedings against
the Company. There has been no material reclassification, merger, consolidation
or purchase or sale of a significant amount of assets not in the ordinary course
of business of the Company.
It is likely that the Company will have the ability to effect only a single
Business Combination.
Merger or acquisition may be made by purchase, exchange of stock or
otherwise, and may encompass assets or a business entity such as a corporation,
joint venture or partnership. In connection with a merger or acquisition, it is
likely that the Company would issue an amount of stock constituting control of
the Company to the merger or acquisition candidate. Depending upon the nature of
the merger or acquisition transaction, the current officer and director of the
Company may resign these management positions with the Company in connection
with the Company's merger or acquisition of a business opportunity. In the event
of such resignation(s), the Company's current management would not have any
control over the conduct of the Company's business following the Company's
combination with a business opportunity.
Management anticipates that the merger or acquisition opportunity decision
may be made with little or no assessment of the other company's management, the
anticipated acceptability of its planned or existing products or marketing
concepts, the impact of technological changes and the benefits derived from
becoming a publicly held entity.
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a reporting public company. Any Business
Combination or transaction may potentially result in a significant issuance of
shares and substantial dilution to present stockholders of the Company.
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The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not anticipate any offering of the Company's
securities, either debt or equity, until such time as the Company has
successfully implemented its business plan described herein. Relevant thereto,
Mangum Corporation, the primary shareholder of the Company, has represented to
the Company that it has no plan to sell its shares of the Company's common stock
until such time as the Company has successfully consummated a merger or
acquisition and the Company is no longer classified as a "blank check" company,
and it has also expressed its intention not to sell its shares unless the shares
are subsequently registered or if an exemption from registration is available.
BUSINESS OF ISSUER
PRINCIPAL PRODUCTS OR SERVICES. The Company has no principal products or
services or markets.
DISTRIBUTION METHODS. The Company has no distribution methods of any
products or services
NEW PRODUCTS OR SERVICES. The Company has no publicly announced new product
or service.
COMPETITION. The Company will remain an insignificant participant among the
firms which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's extremely limited financial resources and
limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
RAW MATERIALS. The Company does not intend to use raw materials in its
business and the Company has no source or availability of raw materials or any
principal suppliers of any raw materials.
MAJOR CUSTOMERS. The Company has no customers for any goods or services and
therefore there is no dependence on one or a few major customers.
PATENTS, TRADEMARKS, ETC. The Company has no patents, trademarks, licenses,
franchises, concessions, royalty agreements or labor contracts.
NEED FOR GOVERNMENT APPROVAL. The Company has no principal products or
services which require any government approval.
RESEARCH AND DEVELOPMENT ACTIVITIES. The Company was incorporated on April
24, 2000 and therefore the Company has spent no time on research and development
activities since inception.
ENVIRONMENTAL LAWS. The Company does not anticipate that its business plan
will require it to comply with environmental laws (federal, state or local) and
the Company does not anticipate that it will incur any costs to comply with any
environmental laws.
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RISK FACTORS
The Company was only recently organized and has no operating history. The
Company, therefore, must be considered promotional and in its early formative
and development stage. The Company has limited resources and has not generated
any revenues. The Company does not expect to realize any cash proceeds from its
business, whether or not its business is profitable, until it consummates a
Business Combination.
Accordingly, an investment in the securities of the Company is highly
speculative. A purchase of the shares of Common Stock of the Company invovles
extremely high risks and potential investors should carefully review the entire
Form 10-SB and, particularly, this "RISK FACTORS" section.
NO OPERATING HISTORY, REVENUE AND ASSETS. The Company has had no operating
history nor any revenues or earnings from operations. The Company has little or
no tangible assets or financial resources. The Company will, in all likelihood,
continue to sustain operating expenses without corresponding revenues, at least
until the consummation of a Business Combination. This may result in the Company
incurring a net operating loss which will increase continuously until the
Company can consummate a Business Combination with a profitable business
opportunity. There is no assurance that the Company can identify such a business
opportunity and consummate such a Business Combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS - NO ASSURANCE OF
SUCCESS OR PROFITABILITY. The success of the Company's proposed plan of
operation will depend to a great extent on the operations, financial condition
and management of the identified business opportunity. While management intends
to seek Business Combination(s) with entities having established operating
histories, there can be no assurance that the Company will be successful in
locating candidates meeting such criteria. In the event the Company completes a
Business Combination, of which there can be no assurance, the success of the
Company's operations may be dependent upon management of the acquisition
candidate and numerous other factors beyond the Company's control.
A shareholder can expect a potential business opportunity to be risky. The
Company's acquisition of or participation in a business opportunity will likely
be highly illiquid and could result in a total loss to the Company and its
shareholders if the business opportunity proves to be unsuccessful.
The Company is not limited in the scope of its Business Combination search.
Therefore, to the extent that the Business Combination is effectuated with a
business outside the United States, the Company's operations may be adversely
affected by unstable economic, social and/or political conditions in such
foreign regions and countries.
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES.
Transferability of the shares of Common Stock of the Company is very limited
because a significant number of states have enacted regulations pursuant to
their securities or so-called "blue sky" laws restricting or, in many instances,
prohibiting, the initial sale and subsequent resale of securities of "blank
check" companies such as the Company within that state. In addition, many
states, while not specifically prohibiting or restricting "blank check"
companies, would not register the securities of the Company for sale or resale
in their states. Because of these regulations, the Company currently has no plan
to register any securities of the Company with any state. To ensure that any
state laws are not violated through the resale of the securities of the Company,
the Company will refuse to register the transfer of any securities of the
Company, to residents of any state, which prohibit such resale or if no
exemption is available for such resale. It is not anticipated that a secondary
trading market for the Company's securities will develop in any state until
subsequent to consummation of a Business Combination, if at all.
NO ASSURANCE OF A PUBLIC MARKET. There is no current trading market for the
Common Stock and there can be no assurance that a trading market will develop,
or, if such a trading market does develop, that it will be sustained. The Common
Stock, to the extent that a market develops for the Common Stock at all, will
likely appear in the NASD Over the Counter Bulletin Board, which may limit the
marketability and liquidity of the Common Stock.
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COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS. The Company is and
will continue to be an insignificant participant in the business of seeking
mergers with, joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed entities, including
business development companies, venture capital firms, large industrial and
financial companies and wealthy individuals are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a Business
Combination.
The Company will also compete in seeking merger or acquisition candidates
with numerous other small public companies and/or from other public "blank
check" companies, many of which may have more funds available than does the
Company.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO STANDARDS
FOR BUSINESS COMBINATION. The Company has no agreement or definitive
understanding with respect to engaging in a merger with, joint venture with or
acquisition of, a private or public entity. There can be no assurance the
Company will be successful in identifying and evaluating suitable business
opportunities or in concluding a Business Combination. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be able to
negotiate a Business Combination on terms favorable to the Company.
The Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it will
require a target business opportunity to have achieved, and without which the
Company would not consider a Business Combination in any form with such business
opportunity. Accordingly, the Company may enter into a Business Combination with
a business opportunity having no significant operating history, losses, limited
or no potential for earnings, limited assets, negative net worth or other
negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
Business Combination, David A. Collins, President of the Company, and the sole
member of Management, anticipates devoting up to ten hours per month to the
business of the Company. David A. Collins will be the only person responsible in
conducting the day to day operations of the company including searches,
evaluations, and negotiations with potential merger or acquisition candidates.
The Company has not entered into any written employment agreement with David A.
Collins and is not expected to do so in the foreseeable future. The Company has
not obtained key man life insurance on David A. Collins. The loss of the
services of David A. Collins would adversely affect development of the Company's
business and its likelihood of continuing operations. See "ITEM 5 - DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
CONFLICTS OF INTEREST - GENERAL. David A. Collins may in the future
participate in business ventures which could be deemed to compete directly with
the Company. David A. Collins is serving as officer and director of a number of
other companies and may, in the future, serve as an officer and director of a
number of blank check companies. Additional conflicts of interest and non-arms
length transactions may also arise in the future in the event the Company's
current and future officers or directors are involved in the management of any
firm with which the Company transacts business.
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LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has neither
conducted, nor have others made available to it, results of market research
indicating that market demand exists for the transactions contemplated by the
Company. David A. Collins has done certain reviews of various web sites and
public filings relating to "blank check" companies. David A. Collins has
discussed certain issues relating to both the possibility and the reasonableness
of forming one or more "blank check" companies with knowledgeable or
professionally licensed persons such as attorneys, accountants, securities
broker-dealers and possibly other members of the investment community. The
Company currently has no agreements, commitments or definitive understandings
with any individual for such person to act as a finder of opportunities for the
Company. The Company does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger or acquisition
contemplated by the Company, there is no assurance the Company will be
successful in completing any such Business Combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a Business
Combination with a business opportunity. Consequently, the Company's activities
may be limited to those engaged in by business opportunities which the Company
merges with or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
LITTLE OR NO INVESTIGATION OF MERGER OR ACQUISITION CANDIDATE - DEPENDENCE
UPON OUTSIDE ADVISORS. The Company's limited resources and the lack of full-time
management will likely make it impracticable to conduct a complete and/or
exhaustive investigation and/or analysis of a business opportunity before the
Company commits to a merger or acquisition. Therefore, management decisions will
likely be made without detailed feasibility studies, independent analysis,
market surveys and the like, which, if the Company had more funds available to
it, might be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owners, sponsors or others
associated with the business opportunity seeking the Company's participation.
All or a significant portion of the Company's available resources may be
expended for whatever investigative or review processes might occur.
To supplement the business experience of its officer and director, the
Company may be required to employ attorneys, accountants, licensed
broker-dealers or other consultants and/or advisors or promoters. The Company's
President will make the selection of these outside advisors without any input
from shareholders. Management anticipates that such outside advisors may be
engaged on an "as needed" basis without continuing fiduciary or other
obligations to the Company. These outside advisors may be affiliates of the
Company.
GOVERNMENT REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes the Company will
not be subject to regulation under the Investment Company Act of 1940, insofar
as the Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in Business Combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences.
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"Investment Company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
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Section 3(a) of the Investment Act contains the definition of an
"investment company", and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities". The Company intends to implement its business in a manner, which
will result in the availability of this exception from the definition of
"investment company". Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's business may involve changes in its capital structure,
management, control and business, especially if the Company completes a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, shareholders will
not be afforded these protections. In the event the Company engages in Business
Combinations which result in the Company holding passive investment interests in
a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
Any securities, which the Company might acquire in exchange for its Common
Stock, are expected to be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to resell
such securities, such sale cannot proceed unless the Securities and Exchange
Commission has declared a registration statement effective or an exemption from
registration is available. Section 4(1) of the Act, which exempts sales of
securities not involving a distribution, would in all likelihood be available to
permit a private sale. Although the plan of operation does not contemplate
resale of securities acquired, if such a sale were to be necessary, the Company
would be required to comply with the provisions of the Act to effect such
resale.
An acquisition by the Company may be in an industry, which is regulated or
licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a time-consuming and expensive process.
The Securities and Exchange Commission has adopted a number of rules to
regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,
15g-4, 15g-5, 15g-6, 15g-8, 15g-9 and 15g-10 under the Securities Exchange Act
of 1934, as amended. It is likely that the Company's Common Stock may constitute
"penny stocks" within the meaning of the rules. Therefore, the rules would apply
to the Company and to its securities. These rules impose special sales practice
requirements upon broker-dealers who sell such securties to persons other than
established customers or accredited investors. The rules may affect a
broker-dealer's ability to sell the Company's Common Stock and the ability of
the owners of Common Stock to sell the securities of the Company in any market
that might develop for them. The effect of these would be to limit the liquidity
of the Company's Common Stock.
Shareholders should be aware that, according to the Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Management does not expect to be in a position to
dictate either the behavior of the market or of the broker-dealers who
participate in the market.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A Business Combination involving
the issuance of the Company's Common Shares will, in all likelihood, result in
shareholders of a private company obtaining a controlling interest in the
Company. Any such Business Combination may require management of the Company to
sell or transfer all or a portion of the Company's Common Shares held by them,
or resign as members of the Board of Directors of the Company. The resulting
change in control of the Company could result, and would most likely result, in
the removal of David A. Collins and a corresponding reduction in or elimination
of his participation in the future affairs of the Company.
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POTENTIAL REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION - DILUTION. The Company's primary plan of operation is based upon a
Business Combination with a private concern which, depending on the terms of
merger or acquisition, may result in the Company issuing securities to
shareholders of any such private company. The issuance of previously authorized
and unissued Common Shares of the Company would result in reduction in
percentage of shares owned by present and prospective shareholders of the
Company and may result in a change in control or management of the Company.
It is likely that the Company's current shareholders would retain in the
aggregate less than 20% of the total issued and outstanding shares of Common
Stock after the completion of the merger or acquisition. Therefore, it is
anticipated that substantial dilution in each current shareholders percentage
equity interest will occur. Management believes that additional dilution might
also occur if, after completion of the merger or acquisition, the new
controlling members of management, the Board of Directors and/or the new
controlling shareholders authorize and issue additional shares.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a
Business Combination with an entity that desires to establish a public trading
market for its shares. Such an entity may attempt to avoid what it deems
to be adverse consequences of undertaking its own public offering by seeking a
Business Combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process, significant expenses to
be incurred in such an offering, loss of voting control to public shareholders
and the inability or unwillingness to comply with various federal and state laws
enacted for the protection of investors.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any Business Combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any Business Combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such Business Combination
will meet the statutory requirements of a tax- free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non- qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of such transaction cannot be predicted, it should
be noted that in certain circumstances the criteria for determining whether or
not an acquisition is a so-called "tax-free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders of the
merged or acquired company of a controlling interest (i.e. 80% or more) of the
common stock of the combined entities immediately following the reorganization.
If a merger or acquisition transaction were structured to take advantage of
these provisions rather than other "tax free" provisions provided under the
Internal Revenue Code of 1986, the Company's current shareholders would retain
in the aggregate 20% or less of the total issued and outstanding shares of
Common Stock.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Section 13 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), require companies subject thereto to provide certain
information about significant acquisitions, including certified financial
statements for the company acquired, covering one, two or three years, depending
on the relative size of the acquisition. The time and additional costs that may
be incurred by some target entities to prepare such statements may preclude
consummation of an otherwise desirable acquisition by the Company. Acquisition
prospects that do not have or are unable to obtain the required audited
financial statements may not be appropriate for acquisition so long as the
reporting requirements of the 1934 Act are applicable.
NO DIVIDENDS. The Company has not paid dividends on its Common Stock and
does not anticipate paying such dividends in the foreseeable future.
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ITEM 2. PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Company has not entered into any agreements or definitive
negotiations regarding such an acquisition. The Company's officer and director
has not engaged in any agreement or definitive understanding on behalf of the
Company with any representative of any other company regarding the possibility
of an acquisition or merger between the Company and such other company as of the
date of this registration statement. The Company's officer and director has
engaged and is currently engaged in contacting or discussing certain issues
relating to both the possibility and the reasonableness of forming one or more
"blank check" companies with knowledgeable or professionally licensed persons
such as attorneys, accountants, securities broker-dealers and possibly other
members of the investment community.
Management anticipates that any search for a merger or acquisition would,
most likely, be directed toward small or medium-sized companies who are (a)
recently organized with no operating history, or a history of losses, (b)
experiencing financial or operating difficulties, (c) in the process of
developing a new product or service or to expand into new markets, (d) planning
on relying upon an untested product or marketing concept, (e) in need of funds
or (f) any combination of the characteristics mentioned in "(a)" through "(e)".
Given the above factors, the Company's shareholders, or other investors, if any,
can expect that merger or acquisition candidates may have a history of losses,
low profitability or other business problems which might adversely effect their
survivability.
Prior to making a merger or acquisition candidate or other business
opportunity decision, management will generally request that it be provided with
written materials regarding the business opportunity containing such items as a
description of products, services and company history. These requested written
materially may also include certain financial information.
Management believes that various types of potential merger and acquisition
candidates might find a Business Combination with the Company to be attractive.
These might include merger and acquisition candidates (a) desiring to create a
public market for their shares in order to enhance liquidity for current
shareholders, (b) which have long-term plans for raising capital through the
public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial or (c) which plan to
acquire additional assets through the issuance of securities rather than for
cash and believe that the possibility of a public market for their securities
will be of assistance.
EMPLOYEES
The Company has no full time or part time employees. David A. Collins has
agreed to allocate a portion of his time to the activities of the Company,
possibly without compensation. The Company anticipates that the business plan of
the Company can be implemented through the efforts of David A. Collins,
President of the Company, devoting up to 10 hours per month to the business
affairs of the Company, consequently, conflicts of interest may arise with
respect to the limited time commitment by such officer. See "ITEM 5 - DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
David A. Collins, as the sole member of Management and the sole Director of
the Company, has the authority and discretion to complete mergers or
acquisitions without submitting any proposal to the stockholders for their
consideration. David A. Collins's decisions may ultimately adversely impact the
Company's shareholders. Unless required, holders of the Company's securities
should not anticipate that the Company will furnish them, prior to any merger or
acquisition, with financial statements, or any other documentation, concerning a
target company or its business.
David A. Collins may, in the future, become involved with other "blank
check" or other companies which have a business purpose similar to that of the
Company today or at a later point in time. As a result, additional potential
conflicts of interest may arise in the future. If such a conflict does arise and
an officer or director of the Company is presented with business opportunities
under circumstances where there may be a doubt as to whether the opportunity
should belong to the Company or another "blank check" company they are
affiliated with, they will disclose the opportunity to all such companies only
if the shareholder base of these companies is substantially different. If a
situation arises in which more than one company desires to merge with or acquire
that target company and the principals of the proposed target company has no
preference as to which company will merge or acquire such target company, the
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<PAGE>
company which first filed a registration statement with the Securities and
Exchange Commission will be entitled to proceed with the proposed transaction.
See "ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
INDEMNIFICATION
The Company shall indemnify to the fullest extent permitted by, and in the
manner permissible under the laws of the State of Texas, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he/she is or
was a director or officer of the Company, or served any other enterprise as
director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company. See PART II, "ITEM 5 - INDEMNIFICATION OF DIRECTORS AND
OFFICERS."
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See PART F/S,
"FINANCIAL STATEMENTS AND EXHIBITS." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against gains
from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company may advertise and promote the Company in newspaper, magazines
and on the Internet. The Company has not yet prepared any notices or
advertisement.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the 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.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which would make the
task of comparative investigation and analysis of such business opportunities,
regardless to extent to which it might be done, extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. Acquisition candidates will,
however, incur significant legal and accounting costs in connection with
acquisition of a Business Combination, 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 "Exchange 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 Exchange
Act. Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
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The analysis of new business opportunities will be undertaken by, or under
the supervision of, David A. Collins, who may not be considered a professional
business analyst. David A. Collins, President of the Company will be the key
person in the search for, review of, and negotiation with potential acquisition
or merger candidates. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officer and director, or
by the Company's shareholders. In the analysis of prospective business
opportunities, management may consider such matters as the available (a)
technical, financial and managerial resources; (b) working capital and other
financial requirements; (c) history of operations, if any; (d) prospects for the
future; (e) nature of present and expected competition; (f) the quality and
experience of management services which may be available and the depth of that
management; (g) the potential for further research, development, or exploration;
(h) specific risk factors not now foreseeable but which then may be anticipated
to impact the proposed activities of the Company; (i) the potential for growth
or expansion; (j) the potential for profit; (k) the perceived public recognition
of acceptance of products, services, or trades; (l) name identification; and (m)
other relevant factors. Officers and directors of the Company may not meet
personally with management and key personnel of the business opportunity as part
of their investigation due to lack of capital. To the extent possible, the
Company intends to utilize written reports and investigation to evaluate the
above factors. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained within a reasonable period of
time after closing of the proposed transaction.
David A. Collins has limited experience in managing companies similar to
the Company and shall primarily rely upon his own efforts in accomplishing the
business purposes of the Company. Certain attorneys, accountants and/or
professionally licensed persons as well as certain outside consultants or
advisors may be utilized by the Company to effectuate its business purposes
described herein. If the Company does retain such third-parties, any cash fee
earned by such party will most likely be paid by the prospective
merger/acquisition candidate, because the Company has no cash assets with which
to pay such obligation. The Company may compensate certain attorneys, and/or
professionally licensed persons, outside consultants, or advisors by issuing to
them shares of common stock of the Company in exchange for services to be
rendered by them to the Company upon completion of an acquisition or merger.
There have been no contracts or definitive agreements with any outside
consultants. However, it is likely that one or more contract or agreements may
arise in the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, David A. Collins has
agreed, to the extent he is capable, to pay these charges with his personal
funds as interest free loans to the Company. David A. Collins may be unable to
provide the Company these funds or may decide not to do so at his sole
discretion. Opportunities may occur in which David A. Collins can obtain the
repayment of these loans, or any other form of compensation, from a prospective
merger or acquisition candidate and/or certain merger or acquisition related
consultants. David A. Collins has agreed that the repayment of any loans made on
behalf of the Company will not impede, or be made conditional in any manner, to
consummation of a proposed transaction.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
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be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms of sale of the shares presently held
by officers and/or directors of the Company will not be afforded to all other
shareholders of the Company. Any and all such sales will only be made in
compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities simultaneously with or immediately after the
transaction is consummated or at specified times thereafter. If such
registration occurs, of which there can be no assurance, it will be undertaken
by the surviving entity after the Company has successfully consummated a merger
or acquisition and the Company is no longer considered a "shell" company. The
issuance of substantial additional securities and their potential sale into any
trading market which may develop in the Company's securities may have a
depressive effect on the value of the Company's securities in the future, if
such a market develops, of which there is no assurance.
As part of the Company's investigation, regardless of the extent it may be
done, officers and directors of the Company may personally meet with management
and key personnel, may visit and inspect material facilities, obtain analysis or
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise. The
manner in which the Company participates in an opportunity will depend on the
nature of the opportunity, the respective needs and desires of the Company and
other parties, the management of the opportunity and the relative negotiation
strength of the Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company intends not to acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 1934 Act.
Included in these requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial statements included in
its annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of the 1934
Act, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents may provide that the proposed transaction will be
voidable, at the discretion of the present management of the Company. If such
transaction is voided, the agreement may also contain a provision providing for
the acquisition entity to reimburse the Company for all costs associated with
the proposed transaction.
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The Company does not intend to make any loans to any prospective
acquisition or merger candidates or to unaffiliated third parties. The Company
may make loans only to prospective acquisition or merger candidates only when
such funds are available, the Company has entered into an acquisition or merger
agreement and making a loan to the acquisition or merger candidate is beneficial
to the Company. The criteria that will be used in determining whether to make
loans is the availability and the need of cash by the acquisition or merger
candidate in order to complete the acquisition or merger. The loan may be either
secured or non-secured depending on the result of negotiation and there is no
limitation as to the amounts that may be loaned.
The Company does not intend to provide the Company's security holders with
any complete disclosure documents, including audited financial statements,
concerning an acquisition or merger candidate and its business prior to the
consummation of any acquisition or merger transaction, unless required by
applicable law.
LIQUIDITY AND CAPITAL RESOURCES. The Company's cash or other capital
resources are limited. The Company has received only the US$ 1,000 from the sale
of its securities at inception to its former parent corporation: Mangum
Corporation. These securities were 700,000 Common Shares of the Company's
authorized stock, a significant portion of which are to be distributed to
shareholders of its parent corporation. However, Mangum Corporation did retain a
majority control in the Company. Mangum Corporation is controlled by David A.
Collins and does not anticipate providing any significant amount of cash or
other capital resources to the Company in the future.
Currently, the Company has no capital resources other than its Common
Stock, for which Management believes there is no market value.
The Company does not have the cash or other capital sufficient to meet the
Company's cash needs, including the cost of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934. The Company will
have to seek loans or equity placements to cover such cash needs. In the event
the Company is able to complete a Business Combination during this period, lack
of its existing capital may be a sufficient impediment to prevent it from
accomplishing the goal of completing a Business Combination.
There is no assurance, however, that the available funds will ultimately
prove to be adequate to allow it to complete a Business Combination. And once a
Business Combination is completed, the Company's needs for additional financing
might increase substantially.
YEAR 2000 ISSUES. Year 2000 problems result primarily from the ability of
some computer software to properly store, recall or use data after December 31,
1999. These problems may affect many computers and other devices that contain
embedded computer chips. The Company's operations, however, do not rely on
information technology systems. Accordingly, the Company does not believe it is
or will be materially affected by year 2000 problems.
Currently, the Company does not own computer equipment nor does it rely on
any computer programs that will materially impact the operations of the Company
in the event of a Year 2000 disruption. However, advances and changes in
available technology can significantly impact its business and operations.
Consequently, although the Company has not identified any specific Year 2000
issues for itself at this time, the Year 2000 problems may create risk for the
Company from unforeseen problems in any computer systems (a) acquired by the
Company in the future and (b) of third parties including, but not limited to,
financial institutions or vendors with whom the Company may transact business.
Such failures by (a) the merged or acquired business's or (b) the third parties'
computer systems may have a material impact on the Company's ability to conduct
its business.
The Company is unable to predict the ultimate effect that the Year 2000
problem may have upon the Company, the nation or the world. In addition, the
Company cannot predict the nature of its potential merger or acquisition target
candidate's computer systems or others' computer systems who may transact
business with such candidate.
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ITEM 3. DESCRIPTION OF PROPERTY.
The Company currently maintains a mailing address at 4214 Mangum Road,
Houston, Texas 77092, which is the address of its former parent company, Mangum
Corporation. The Company pays no rent for the use of this mailing address. The
Company does not believe that it will need to maintain an office at any time in
the foreseeable future in order to carry out its plan of operations described
herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of April 29, 2000
regarding the beneficial ownership of the Company's Common Stock by (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) by each Director and Executive officer of the
Company and (iii) by all executive officer and Directors of the Company as a
group. Each of the persons named in the table has sole voting and investment
power with respect to Common Stock beneficially owned.
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Owned Shares owned
---------------- ------------ ------------
<S> <C> <C>
Mangum Corporation (1) 500,000 71.43%
4214 Mangum Road
Houston, Texas 77092
David A. Collins (2) 92,280 13.18%
c/o Mangum Corporation
4214 Mangum Road
Houston, Texas 77024
All Directors & Officers 92,280 13.18%
as a group (1 person)
</TABLE>
------------------------
(1) The Company was incorporated as a 100% owned subsidiary of Mangum
Corporation. Mangum Corporation is subsequently distributing a
significant portion of the Common Stock of the Company it purchased at
inception to Mangum Corporation shareholders. Therefore, Mangum
Corporation is the former parent corporation of the Company. Mangum
Corporation is a private company with approximately 2,000
shareholders.
(2) David A. Collins is an officer, director and controlling person of
Mangum Corporation, the former parent company of the Company. David A.
Collins owns 85.7143% of Mangum Corporation.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
OFFICERS AND DIRECTORS
The following table sets forth certain information concerning each of the
Company's directors and executive officers:
Name Age Position
---- --- --------
David A. Collins 47 Chairman of the Board and President
David A. Collins has served as President and the sole Director of the
Company since the Company's inception: April 24, 2000. David A. Collins was
Chief Executive Officer between 1992 and 1999 and a director since 1996 of
Striker Industries, Inc. and of its subsidiaries: West Oxford Industries, Inc.,
STDF Corporation, Striker Holdings, Inc. and Striker Paper Corporation. David A.
Collins was Chief Executive Officer, President and/or a Director in Striker
Industries, Inc.'s subsidiary Striker Holdings Canada, Inc. and Striker Holdings
Canada, Inc.'s 75%-owned subsidiary: Striker Paper Canada, Inc. from their
inception until 1999. Striker Industries, Inc. and its subsidiary companies were
in the asphalt roofing products industry and are no longer in business.
David A. Collins is President and sole Director of Area 4200, Inc. which
owns certain real property in Texas, Mangum Corporation, a Texas holding company
and the Company.
Currently, this is the only proposed or existing SEC reporting blank check
company that David A. Collins served or is serving as President and Director.
PRIOR BLANK CHECK OFFERINGS
Mr. David A. Collins has not been involved, but may be involved in the
future, in other blank check offerings to the public.
CONFLICTS OF INTEREST
Management is associated with other firms. Consequently, there may be
potential inherent conflicts of interest in David A. Collins acting as officer
and director of the Company. Insofar as the officer and director is engaged in
other business activities, management anticipates it will devote only a minor
amount of time to the Company's affairs.
The officer and director of the Company is and may in the future become
shareholder, officer or director of other companies which may be formed for the
purpose of engaging in business activities similar to those conducted by the
Company. Accordingly, additional direct conflicts of interest may arise in the
future with respect to such individual acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individual in the performance
of his duties or otherwise. The Company does not currently have a right of first
refusal pertaining to opportunities that come to management's attention insofar
as such opportunities may relate to the Company's proposed business operations.
The officer and director is, so long as he is officer or director of the
Company, subject to the restriction that all opportunities contemplated by the
Company's plan of operation which come to his attention, either in the
performance of his duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that he
is affiliated with on an equal basis. A breach of this requirement will be a
breach of the fiduciary duties of the officer or director. If the Company or the
companies in which the officer and director is affiliated with both desire to
take advantage of an opportunity, then said officer and director would abstain
from negotiating and voting upon the opportunity. However, the officer and
director may still take advantage of opportunities if the Company should decline
to do so. Except as set forth above, the Company has not adopted any other
conflict of interest policy with respect to such transactions.
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David A. Collins, President of the Company is likely to be compensated
individually in form of cash or shares of common stock of the Company upon
completion of an acquisition or merger. It is possible that such compensation
may become a factor in negotiations and present conflict of interest. David A.
Collins will, at his sole discretion, use reasonable efforts to resolve
equitably any conflicts that might result during negotiations for an acquisition
or merger.
There are no agreements or understandings for David A. Collins to resign at
the request of another person and that David A. Collins is not acting on behalf
of or will act at the direction of any other person except at the time of the
acquisition or merger and at the request of the controlling persons of the
acquisition or merger candidate. The Company expects that the controlling
persons of the acquisition or merger candidate will ask all of the current
Officers and Directors to resign at the time of the acquisition or merger
because they will become controlling persons of the Company.
ITEM 6. EXECUTIVE COMPENSATION.
The Company has not issued any of its shares of Common Stock as
compensation. The Company's current officer and/or director has not received any
compensation for his respective services rendered unto the Company. David A.
Collins has agreed to act without compensation until authorized by the Board of
Directors, which is not expected to occur, although as noted above, Mr. Collins
may be paid in his individual capacity for successfully finding and consummating
a Business Combination. As of the date of this registration statement, the
Company has no funds available to pay David A. Collins. Further, David A.
Collins is not accruing any compensation pursuant to any agreement with the
Company.
It is possible that, before, during or after the Company successfully
consummates a merger or acquisition with an unaffiliated entity, that entity, or
consultants related to that entity, may desire to employ or retain the sole
member of the Company's Management for the purposes of providing services to
that entity, the surviving entity, or otherwise provide other compensation to
such persons. However, the Company has adopted a policy whereby the offer of any
post-transaction remuneration to its sole member of management may not be a
consideration in the Company's decision to undertake any proposed transaction.
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It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction and/or will be in the form of cash
consideration. The amount of such finder's fee cannot be determined as of the
date of this registration statement, but is expected to be comparable to
consideration normally paid in like transactions. David A. Collins may receive a
finders and/or other fees or other cash compensation, either directly or
indirectly, as a result of his efforts to implement the Company's business plan
outlined herein.
The Company may also compensate David A. Collins, President of the Company
with shares of Common Stock of the Company for his services in connection with
completion of an acquisition or merger. The Company may compensate other
Officers and/or Directors of the Company in connection with completion of an
acquisition or merger. The Company may compensate certain attorneys, and/or
professionally licensed persons, outside consultants, or advisors by issuing to
them shares of common stock of the Company in exchange for services to be
rendered by them to the Company upon completion of an acquisition or merger.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B
not described elsewhere in this registration statement.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Articles of Incorporation currently authorizes the Company to issue
Twenty Million (20,000,000) shares of Common Stock at $.001 par value. Each
holder of the Common Stock shall be entitled to one vote for each share of
Common Stock held. As of April 29, 2000 there are 700,000 shares of Common Stock
outstanding.
Upon liquidation of the Company, each shareholder is entitled to receive a
proportionate share of the Company's assets available for distribution to
shareholders after the payment of liabilities and after distribution in full of
preferential amounts, if any. All shares of the Company's Common Stock issued
and outstanding are fully-paid and nonassessable. Holders of the Common Stock
are entitled to share pro rata in dividends and distributions with respect to
the Common Stock, as may be declared by the Board of Directors out of funds
legally available therefore.
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PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no public trading market for the Company's Common Stock. The
Company plans to apply to have its Common Stock traded on the over-the-counter
market in connection with consummation of a Business Combination and listed on
the OTC Bulletin Board. There is no assurance that a trading market will ever
develop or, if such a market does develop, that it will continue.
As of the effective date of this registration statement, the number of
holders of the Company's Common Stock will be 1,952.
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock and
presently intends to continue a policy of retaining earnings, if any, for
reinvestment in its business.
PENNY STOCK REGULATION
Until the Company's shares qualify for inclusion in the NASDAQ system, the
trading of the Company's securities, if any, will be in the over-the-counter
markets which are commonly referred to as the "pink sheets" or on the OTC
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission adopted
Rule 15g-9, which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers NASDAQ, has recently made changes in the criteria for continued
NASDAQ eligibility. In order to continue to be included on NASDAQ, a company
must maintain $2,000,000 in net tangible assets or $35,000,000 in market
capitalization or $500,000 net income in the latest fiscal year or 2 of the last
3 fiscal years, a $1,000,000 market value of its publicly-traded securities and
500,000 shares in public float. In addition, continued inclusion requires two
market-makers and a minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in
trading, if any, in the Company's securities taking place in the
over-the-counter market. As a result, a shareholder may find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, the
Company's securities. It is unlikely that initially the Company will qualify for
trading on NASDAQ, and consequently any trading is likely to be in the
over-the-counter market.
19
<PAGE>
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OR DISTRIBUTIONS OF UNREGISTERED SECURITIES.
On April 26, 2000, the Company issued 700,000 shares of Common Stock to
Mangum Corporation, the former parent of the Company for $1,000, which is equal
to the par value of $.001 per common share plus US$ 300. The Company relied on
exemption provided by Section 4(2) of the Securities Act of 1933, as amended,
for the issuance of 700,000 shares of Common Stock to Mangum Corporation at the
Company's inception.
On the effective date of this registration statement, the parent of the
Company will have distributed 107,720 shares of the 700,000 shares of Mangum
Acquisition Corporation Common Stock, that were purchased at the inception of
the Company, to its shareholders without payment of any consideration.
All of these shares are "restricted" shares as defined in Rule 144 under
the Securities Act of 1933, as amended (the "Act"). These shares may not be
offered for public sale except under Rule 144, or otherwise, pursuant to the
Act.
In general, under Rule 144, a person whho is not an affiliate of a company
(or persons whose shares are aggregated) who has satisfied a one year holding
period, under certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume during the four
calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a two-year holding period and who is not, and has not been for
the preceding three months, an affiliate of the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company shall indemnify to the fullest extent permitted by, and in the
manner permissible under the laws of the State of Texas, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he is or was
a director or officer of the Company, or served any other enterprise as
director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY FOR LIABILITIES
ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY
THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE.
20
<PAGE>
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following financial statements of the Company are filed as part of this
Report:
(1) Financial Statements Page
Report of Independent Auditors F-1
Balance Sheet as of April 26, 2000 F-2
Statement of Operations, For the
Period From Inception (April 24, 2000)
to April 26, 2000 F-3
Statement of Changes in Stockholders' Equity
For the Period From Inception (April 24,
2000), through April 26, 2000 F-4
Statement of Cash Flows, For the
the Period From Inception (April 24, 2000)
to April 26, 2000 F-5
Notes to Financial Statements as of
April 26, 2000 F-6
(2) Exhibits:
(1) Not Applicable
(2) Not Applicable
(3.1) Articles of Incorporation
(3.2) By-laws
(4.0) Not Applicable
(5) Not Applicable
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Consent of Thomas Leger & Co., L.L.P., Certified Public
Accountants
(24) Not Applicable
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule
(28) Not Applicable
21
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
MANGUM ACQUISITION CORPORATION
Date: June 28, 2000 By: /s/ David A. Collins
----------------------------------
David A. Collins
President and Director
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Mangum Acquisition Corporation
We have audited the accompanying balance sheet of Mangum Acquisition
Corporation (a development stage Company) as of April 26, 2000, and the related
statement of operations, changes in stockholders' equity, and cash flows for the
period from April 24, 2000 (date of inception) to April 26, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mangum Acquisition
Corporation (a development stage Company) as of April 26, 2000, and the results
of its operations, and its cash flows for the period from April 24, 2000 (date
of inception) to April 26, 2000 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4, the Company
has been in the development stage since inception. Realization of the Company's
assets is dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
THOMAS LEGER & CO., L.L.P.
Houston, Texas
April 28, 2000
F-1
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Balance Sheet
As of April 26, 2000
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Current assets:
Cash $ 585
--------
Total current assets 585
Other assets:
Organization costs net of 3 days amortization of $0 415
--------
Total assets $ 1,000
========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Total current liabilities $ --
Stockholders' equity:
Common stock, $.001 par value,
20,000,000 shares authorized,
700,000 shares issued and outstanding 700
Additional paid-in-capital 300
Retained earnings (deficit) accumulated during the
development stage --
--------
Total liabilities and stockholders' equity $ 1,000
========
</TABLE>
See accountants report and the accompanying notes to the financial statements.
F-2
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Statement of Operations
For the Period From Inception (April 24, 2000) to April 26, 2000
Inception
to
April 26,
2000
----------
Revenue $ --
Costs and expenses:
General and Administrative --
----------
Net income (loss) $ --
==========
Per share information:
Weighted average number
of common shares
outstanding - basic and fully diluted 700,000
==========
Net Income(loss)per share-basic and fully diluted $ 0
==========
See accountants report and the accompanying notes to the financial statements.
F-3
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (April 24, 2000), through April 26, 2000
<TABLE>
<CAPTION>
Retained Earnings
(Deficit) Accumulated
During the
Common Stock Development Stage Total
---------------- ------------------- -----
Shares Amount
------ ------
<S> <C> <C> <C> <C>
Shares issued at inception
(April 24, 2000)for $1,000 700,000 $ 1,000 $ -- $ 1,000
Net Income(loss)for the year -- -- -- --
-------- ------- --------- -------
Balance April 26, 2000 700,000 $ 1,000 -- $ 1,000
======== ======= ========= =======
</TABLE>
See accountants report and the accompanying notes to the financial statements.
F-4
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Statement of Cash Flows
For the Period From Inception (April 24, 2000) to April 26, 2000
Inception
to
April 26,
2000
----------
Cash Flows From Operating Activities:
Net Income (loss) $ --
Adjustments to reconcile Net Income(loss)to net cash
provided by (used in)operating activities: --
----------
Net cash provided by (used in)
operations --
----------
Cash flows from investing activities:
Organizational Costs 415
----------
Net cash provided by (used in)
investing activities (415)
----------
Cash flows from financing activities:
Sale of Stock 1,000
----------
Net cash provided by (used in)
financing activities 1,000
----------
Net increase (decrease) in cash and
cash equivalents 585
----------
Beginning cash and cash equivalents --
----------
Ending cash and cash equivalents $ 585
==========
Supplemental disclosure of cash flow information:
Cash paid for: Income taxes $ --
Interest $ --
See accountants report and the accompanying notes to the financial statements.
F-5
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
As of April 26, 2000
Note 1. SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The Company was incorporated on April 24, 2000, in the State of Texas.
The Company is in the development stage and its intent is to locate
suitable business ventures to acquire. The Company has had no
significant business activity to date and has chosen December 31, as a
year end.
B. Cash and cash equivalents
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of less than three months.
C. Intangible assets
The cost of intangible assets is amortized using the straight line
method over the estimated useful economic life (five years for
organization costs). They are stated at cost less accumulated
amortization. Since only three (3) days has transpired, the Company has
not calculated the accumulated amortization of organizational costs.
The Company reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable.
An impairment loss would be recognized when estimated future cash flows
expected to result from the use of the asset and its eventual
disposition is less than its carrying amount. No such impairment losses
have been identified in the periods presented.
D. Net income (loss) per share
Net income (loss) per share is computed by dividing the net income
(loss) for the period by the weighted average number of common shares
outstanding for the period.
E. Use of estimates
The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
Note 2. STOCKHOLDERS' EQUITY
The Company issued 700,000 shares of its $.001 par value common stock
to its 100% parent company: Mangum Corporation at the time of the
Company's inception. Mangum Corporation paid par value ($ 700) plus $
300 for a total of $ 1,000 for the stock.
F-6
<PAGE>
Mangum Acquisition Corporation
(A Development Stage Company)
Notes to Financial Statements
As of April 26, 2000
(Continued)
Note 3. INCOME TAXES
Deferred income taxes may arise from temporary differences resulting
from income and expense items reported for financial accounting and tax
purposes in different periods. Deferred taxes are classified as current
or non-current, depending on the classifications of the assets and
liabilities to which they relate. Deferred taxes arising from temporary
differences that are not related to an asset or liability are
classified as current or non-current depending on the periods in which
the temporary differences are expected to reverse. The deferred tax
asset related to the operating loss carryforward has been fully
reserved.
Note 4. GOING CONCERN CONSIDERATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates the
continuation of the Company as a going concern.
As discussed in Note 1 the Company is in the development stage and the
realization of its assets is dependent upon its ability to meet its
future financing requirements, and the success of its future
operations.
Management plans include obtaining additional equity financing and the
acquisition of a suitable business venture to provide the opportunity
for the Company to continue as a going concern.
F-7
