U.S. Securities and Exchange Commission
Washington, D.C. 20549
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
Savoy Capital Investments, Inc.
-----------------------------------------
(Name of Small Business Issuer in its charter)
Colorado 84-1522003
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4096 West Union Avenue
Denver, Colorado 80236
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 798-0472
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
--------------------------- ------------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------
(Title of class)
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Item 1. Description of Business.
========================
(a) Business Development.
---------------------
Savoy Capital Investments, Inc. ("Savoy"), is a development-stage company
that was organized under the laws of the State of Colorado on March 6, 1997. We
propose to engage in the residential and commercial mortgage brokerage business,
including the origination of new, refinance and second mortgage loans via our
web site on the Internet located at http://www.savoyloans.com. We will
concentrate our marketing efforts in the area of residential mortgage loans. Our
executive offices are located at 4096 West Union Avenue, Denver, Colorado 80236,
and our telephone and facsimile numbers are (303) 798-0472 and (720) 283-9860,
respectively.
We received gross proceeds in the sum of $25,700 from the sale of a total
of 257,000 shares of common stock, representing approximately 5% of our
outstanding shares of common stock as of the date hereof, to forty-five persons
in an offering conducted during the period from June 26 through August 18, 2000,
pursuant to the exemption from registration with the U.S. Securities and
Exchange Commission (the "Commission") provided under Section 3(b) of the
Securities Act of 1933, as amended (the "1933 Act"), and Regulation A
promulgated thereunder, and the exemption with the Colorado Division of
Securities (the "Division") afforded under Section 11-51-308(1)(p) of the
Colorado Securities Act, as amended (the "Colorado Act").
On January 10, 2000, Savoy raised gross proceeds in the amount of $5,000
from the sale of an aggregate of 200,000 shares of preferred stock, representing
all of our outstanding shares of preferred stock as of the date hereof, to Mr.
Andrew N. Peterie, Sr., our sole executive officer and director, and Patricia
Cudd, Esq., sole proprietor of Cudd & Associates, our legal counsel. Mr. Peterie
and Ms. Cudd paid cash in the amounts of $4,760 and $240 ($.025 per share),
respectively, for the purchase of the shares. The sales of preferred stock to
these two individuals were made in reliance upon the exemption from registration
with the Commission provided by Section 4(2) of the 1933 Act.
See (b) "Business of Issuer" immediately below for a description of our
current operations and future proposed activities.
(b) Business of Issuer.
-------------------
General
-------
We propose to engage in the residential and commercial mortgage brokerage
business, including the origination of new, refinance and second mortgage loans;
concentrating our marketing efforts in the area of residential mortgage loans.
Our offices are located at 4096 West Union Avenue, Denver, Colorado 80236, and
the telephone and facsimile numbers are (303) 798-0472 and (720) 283-9860,
respectively. Our web site address is http://www.savoyloans.com. To date, we
have devoted substantially all of our time and effort to organizational matters,
developing a business plan, obtaining financing and establishing a web site.
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We will limit the scope of our business to the United States. However,
because we will market our services on the Internet, the properties financed may
be located anywhere in the United States. We anticipate the origination of loans
with national wholesale lenders, primarily. We do not expect to be dependent on
one or a few national wholesale lenders for the closing of our loans. We expect
that the steps that we take in processing residential and commercial loans will
be identical to those taken by the many lending institutions with which we will
compete, except that we will not initially close any loans in-house. Further,
many of our competitors employ sizeable staffs of loan officers, administrative
personnel and others to gather the required information; complete the requisite
forms and other documents; and close the mortgage lending transactions.
We do not anticipate that it will be possible for us to originate or
refinance any loans prior to the close of the fiscal year ended December 31,
2000. Further, because we have not yet commenced operations, we are unable to
anticipate the number of loans that may be originated and/or refinanced or the
aggregate principal amount of any such loans during the year ended December 31,
2001. We may employ agents in the future if a sufficient level of revenue is
derived from operations; however, management intends to employ an administrative
employee, whose salary is expected to be approximately $25,000, before
considering the employment of any agents.
Our proposed mortgage brokerage business is substantially impacted by the
ongoing fluctuation in mortgage interest rates. During the periods from 1994 to
1996 and 1996 to 1998, the mortgage brokerage business in which Savoy proposes
to engage decreased and increased, respectively, in response to rising and
falling mortgage interest rates, respectively. From 1996 to 1998, residential
interest rates commenced falling and continued their downward movement. While
residential interest rates began climbing in 1999 to the current rate of eight
per cent, we cannot be certain that interest rates will continue at their
present level or will not continue to rise. Any increase in residential or
commercial interest rates could be expected to have a substantial negative
impact upon our ability to generate revenue.
Mr. Andrew N. Peterie, Sr., our sole executive officer and director, has
extensive banking experience and, during the period from 1984 through 1987,
experience as a self-employed mortgage broker or as a mortgage broker employed
by National Western Mortgage. Mr. Peterie's prior activities in the mortgage
brokerage business involved the employment of traditional marketing methods,
including newspaper advertising, direct mail and telemarketing. Accordingly, Mr.
Peterie has no previous experience in employing the Internet as the primary
marketing tool to originate commercial and residential loans.
We will commence the loan origination process by collecting consumer
information, transmitting the data to a prospective mortgage lender and
beginning a comprehensive, automated follow-up sales process. Through automating
the loan generation and processing procedure, we expect to have available
instant information concerning the status of each prospective new, refinance or
second mortgage loan and the remaining steps necessary to be taken in order to
accomplish loan approval. We intend to communicate with the loan prospect and
track the loan with the personnel of the prospective lender on a continuous
basis.
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Our customized web site is located at http://www.savoyloans.com on the
Internet. We intend to continuously enhance and improve the functionality and
features of our web site based upon our experience in operating the site,
depending upon the revenue that may be available from time-to-time for this
purpose, and take steps to determine the best and most cost-effective means of
advertising the site.
We expect our proposed business to be favorably impacted by the following,
among other, factors: (i) increased consumer usage of the Internet; (ii) the
burgeoning of the real estate market; (iii) low interest rates; (iv) high
consumer confidence and (v) the impact of baby boomers on purchasing trends.
Over the past four years approximately, the use of the Internet in the
origination of loans has increased dramatically. This development is due in part
to the relaxation of traditional underwriting criteria that has facilitated the
origination of new, refinance and second mortgage loans that previously relied
on a slow and laborious process of acquiring underwriting information.
Employment of the Internet in the origination of refinance loans involves, as
the initial step, borrowers seeking financing through the vehicle of the
Internet. The borrower would likely compare information available on web sites
established by lenders, brokers or service providers offering refinance mortgage
loans in order to determine whether to further pursue the origination of a loan
with a particular lender or broker. The origination of a loan could be initiated
by the borrower's downloading documentation pertaining to the loan, such as loan
application forms, credit authorizations and disclosure statements. We believe
that the Internet is useful as a tool in originating residential and commercial
mortgage loans, but could not be utilized to close loans. However, there is
limited statistical and other information available to us regarding the use of
the Internet to originate and/or close new, refinance and second residential or
commercial mortgage loans.
Marketing
---------
While we expect the bulk of Savoy's business to be derived from marketing
on the Internet, mortgage loans are also expected to be generated by
"word-of-mouth," realtors, attorneys and other traditional sources. The
principal sources of loans originated by management through word-of-mouth are
expected to be business associates, friends and other acquaintances. We may also
advertise in newspapers and via direct mail and telemarketing, but have no
present plans to employ any of these methods of marketing at the present time.
Since we have no prior experience in the employment of the Internet to originate
residential or commercial mortgage loans, it is not feasible for us to predict
the timing or size of the results of our proposed marketing efforts that will be
necessary in order for us to become profitable. We have no customers as of the
date hereof.
Competition
-----------
Competition in the residential and commercial mortgage brokerage business
is intense, with hundreds of lending institutions and brokers operating in the
Denver metropolitan area alone. Many of these lenders enjoy name recognition
within the Denver metropolitan area and/or nationally and have financial,
personnel, technical and other resources far exceeding our resources.
Additionally, many of such organizations with which we will be in competition
are established and most have far greater financial resources, substantially
greater experience and larger staffs than we do. For these reasons, we are
certain that we will be incapable of competing with any of these companies in
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the foreseeable future except, however, to the extent to which any such lenders
and/or brokers operate marketing campaigns on the Internet. Although we believe
that Savoy will have a distinct advantage in operating on the Internet, we also
believe that there will be an increasing number of lenders and/or brokers
seeking to originate new, refinance and second mortgage loans via the Internet.
We hope, to the extent practicable, to minimize our weaknesses, including, among
others, our undercapitalization, cash shortage, limitations with respect to
personnel, technological, financial and other resources and lack of a customer
base and market recognition, through our focus on the Internet; which eliminates
the need for a sizeable facility and marketing staff. We expect to face strong
competition from both well-established companies and small independent companies
like ourselves. In addition, our business may be subject to decline because of
generally increasing costs and expenses of doing business, thus further
increasing anticipated competition. Additionally, it is anticipated that there
may be significant technological advances in the future and we may not have
adequate creative management and resources to enable us to take advantage of
such advances. The effect of any such technological advances on Savoy,
therefore, cannot be presently determined.
There is limited statistical information available to us regarding the
number of lenders with which we will be competing on the Internet or the volume
of loans processed by these institutions. Further, while management believes
that the impact of the Internet on the mortgage lending business will be
significant, verifiable, quantifiable statistical and other information to
support this supposition is not presently available to the best of our
knowledge.
Intellectual Property
---------------------
We intend to rely on a combination of trademark, trade secret and copyright
laws to protect our intellectual property, although we know that these laws
afford only limited protection. Despite our efforts to protect our proprietary
rights, unauthorized persons may attempt to copy aspects of our web site,
including organization, information and sales mechanics, or to obtain and use
information that we regard as proprietary, such as the technology used to
operate our web site and our content. We have not filed an application to secure
registration for our trademark, "savoyloans.com," in the United States or any
other country. Any encroachment upon our proprietary information, the
unauthorized use of our trademark, the use of a similar name by a competing
company or a lawsuit initiated against us for our infringement upon another
company's proprietary information or improper use of their trademark, may affect
our ability to create brand name recognition, cause customer confusion and/or
have a detrimental effect on our business. Litigation or proceedings before the
U.S. Patent and Trademark Office may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets and domain name and
to determine the validity and scope of the proprietary rights of others. Any
litigation or adverse proceeding could result in substantial costs and diversion
of resources and could seriously harm our business and operating results.
Finally, if we operate internationally, the laws of many countries do not
protect our proprietary rights to as great an extent as do the laws of the
United States.
5
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Government Regulation
---------------------
We are not currently subject to direct federal, state or local governmental
regulation other than regulations applicable to businesses generally or directly
applicable to electronic commerce. We do not anticipate that we will be subject
to federal, state or local regulations governing the mortgage industry until
such time as we engage in the closing of mortgage loans. However, as the
Internet becomes increasingly popular, it is possible that a number of laws and
regulations may be adopted with respect to the Internet. These laws may cover
issues such as user privacy, freedom of expression, pricing, content and quality
of products and services, taxation, advertising, intellectual property rights
and security of information. Furthermore, the growth of electronic commerce may
prompt demand for more stringent consumer protection laws. Several states have
proposed legislation to limit the uses of personal user information gathered
online or require online services to establish privacy policies. The Federal
Trade Commission has also initiated action against at least one online service
regarding the manner in which personal information is collected from users and
provided to third persons and has proposed regulations restricting the
collection and use of information from minors online. We do not currently
provide individual personal information regarding our users to third persons and
we currently do not identify users by age. However, the adoption of additional
privacy or consumer protection laws could create uncertainty in usage of the
Internet and reduce the demand for our services or require us to redesign our
web site.
We are not certain how our business may be affected by the application of
existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, obscenity,
qualification to do business and personal privacy. The vast majority of these
laws were adopted prior to the advent of the Internet. As a result, they do not
contemplate or address the unique issues of the Internet and related
technologies. Changes in laws intended to address these issues could create
uncertainty in the Internet marketplace. This uncertainty could reduce demand
for our services, increase the cost of doing business as a result of litigation
costs and/or increase service delivery costs.
Employees and Consultants
-------------------------
As of the date hereof, we employ one individual, Mr. Andrew N. Peterie,
Sr., our President, Secretary, Treasurer and sole director, on a part-time
basis. Mr. Peterie, who owns of record and beneficially approximately 84% of our
outstanding common stock, has served in those positions without cash
compensation since he became our sole executive officer and director on October
28, 1998. He plans to devote approximately 50% of his time to our business and
affairs. For the foreseeable future, Mr. Peterie will receive no compensation in
any form for his services rendered to Savoy in all capacities. Further, we have
no plans to adopt any supplemental benefits or incentive arrangements at the
present time. The funding totaling $25,700 received from our recently completed
private placement of common stock is insufficient to permit us to employ an
administrative employee in accordance with our plans. Accordingly, we will only
employ such individual if our efforts to raise additional capital in the future
are successful. We have no plans to retain any consultants or pay consulting
fees to any person to perform services for Savoy in any capacity.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
==========================================================
Plan of Operation
-----------------
We propose to engage in the residential and commercial mortgage brokerage
business, including the origination of new, refinance and second mortgage loans;
concentrating our marketing efforts in the area of residential mortgage loans.
We have generated no revenue and a net loss from operations through the date
hereof. For the period from inception (March 6, 1997) to August 31, 2000, the
eight months ended August 31, 2000, and the years ended December 31, 1999 and
1998, Savoy realized no sales and a net loss of $-0- ($-0- per share), $-0-
($-0- per share), $(4,387) (nil per share) and $(8,887) (nil per share),
respectively. The net losses realized by Savoy for the period from inception to
August 31, 2000, and the eight months ended August 31, 2000, were the result of
selling, general and administrative expenses and the lack of revenue from
operations. We are not expected to generate any revenue during our fiscal year
ending December 31, 2000, because, in all likelihood, we will not have commenced
operations by the end of this year. We will not become profitable until we
successfully originate such number of mortgage loans that the revenue generated
is in excess of the amount of expenses incurred by us from operations and
otherwise. Thus, we are expected to continue to realize a loss until revenues
from the origination of mortgage loans exceed operating expenses, if ever.
We intend to generate revenue in the future through the enhancement of the
functionality and features of our web site and the expenditure of funds for
marketing, advertising and/or promotion. We believe that the revenue generated
from our business will not be sufficient to finance these and other future
activities and that it will be necessary to raise additional funds through
equity and/or debt financing in the next twelve months. Further, the
implementation of these plans long term is dependent upon our ability to raise
significant additional capital from equity and/or debt financing and/or achieve
profitable operations. Although we intend to explore all available alternatives
for debt and/or equity financing, including, but not limited to, private and
public securities offerings, there can be no assurance that we will be able to
generate additional capital whatsoever. In the event that only limited
additional financing is received, we expect our opportunities in the mortgage
brokerage business to be limited. Further, even if we succeed in obtaining the
level of funding necessary to generate a commercial level of sales through the
enhancement of our Internet site and the expenditure of additional funds for
marketing, advertising and/or promotion, this will not ensure that operations
will be profitable.
The success of our proposed Internet-based mortgage brokerage business is
dependent upon our ability to originate a significant amount of new, refinance
and second mortgage loans. We cannot be certain that we will achieve commercial
acceptance for any of our services in the future; that future service revenues
will be significant; or that we will have sufficient funds available for
enhancement of the functionality and features of our web site and for marketing,
advertising and/or promotion. The likelihood of our success will also depend
upon our ability to raise additional capital from equity and/or debt financing
to overcome the problems and risks described herein; to absorb the expenses and
delays frequently encountered in the operation of a new business; and to succeed
in the competitive environment in which we will operate. Although we intend to
explore all available alternatives for equity and/or debt financing, including,
but not limited to, private and public securities offerings, there can be no
assurance that we will be able to generate additional capital. Our continuation
as a going concern is dependent on our ability to generate sufficient cash flow
to meet our obligations on a timely basis and ultimately to achieve
profitability.
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Financial Condition, Capital Resources and Liquidity
----------------------------------------------------
As of August 31, 2000, Savoy had total/current assets comprised of cash and
cash equivalents in the amount of $26,997 and total liabilities of $684. Our
assets represent the balance of proceeds received from the sale of a total of
257,000 shares of common stock ($25,700) in an offering conducted under
Regulation A under the 1933 Act and proceeds received from the sale of preferred
stock to our sole executive officer and director and legal counsel. As a result
of our having minimal assets and a deficit accumulated during the development
stage of $(8,887), our total shareholders' equity as of August 31, 2000, was
$26,313. There can be no assurance that our financial condition will improve.
To date, Savoy has been funded through the sale of common and preferred
stock for gross proceeds in the amount of $25,700 and $5,000, respectively. If
we expend significant funds to enhance or web site features and functionality
and for marketing, advertising and/or promotion in accordance with our business
plan, we may experience working capital shortages until such time, if ever, as
we are successful in raising additional capital and/or achieving profitable
operations. Should our efforts to raise additional capital through equity and/or
debt financing fail, management is expected to provide the necessary working
capital so as to permit us to continue as a going concern. Our future success
will be dependent upon our ability to generate and consummate new, refinance and
second mortgage loans; enhance our web site; the continued acceptance of the
Internet for the sale of services and our ability to enhance our web site and
develop and provide new services that meet customers' changing requirements.
Item 3. Description of Property.
========================
We own no real or personal property. We maintain our offices rent-free,
pursuant to a verbal arrangement, at the business offices located at 4096 West
Union Avenue, Denver, Colorado 80236, of Mr. Andrew N. Peterie, Sr., the
President, the Secretary, the Treasurer, a director and an approximate 84%
shareholder of Savoy. We have made arrangements with Mr. Peterie to use his
offices free of charge for the foreseeable future. We anticipate the continued
utilization of these offices on a rent-free basis until such time, if ever, as
we obtain sufficient funding from debt and/or equity financing and/or generate a
level of earnings sufficient to enable us to rent office space from an
independent third party. The space that we currently occupy is expected to be
adequate to meet our foreseeable future needs so long as we are in the
development stage. Our telephone and facsimile numbers are (303) 798-0472 and
(720) 283-9860, respectively.
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Item 4. Security Ownership of Certain Beneficial Owners and Management.
===============================================================
The following table sets forth certain information regarding the ownership
of Savoy's common stock as of December 1, 2000, by each shareholder known by us
to be the beneficial owner of more than five per cent of our outstanding shares
of common stock, each executive officer and director and all executive officers
and directors as a group. Under the General Rules and Regulations of the
Commission, a person is deemed to be the beneficial owner of a security if such
person has or shares the power to vote or direct the voting, or dispose or
direct the disposition, of such security. Each of the shareholders named in the
table has sole voting and investment power with respect to the shares of common
stock beneficially owned.
Common
Shares Percentage
Beneficially of
Beneficial Owner Owned (1) Class (1)
------------------------------------ --------------------- -----------
Andrew N. Peterie, Sr. (2) 3,998,000 (3) (5) 84.04%
4096 West Union Avenue
Denver, Colorado 80236
Patricia Cudd 331,000 (4) (6) 6.96%
1120 Lincoln Street, Suite #1507
Denver, Colorado 80203
All executive officers and directors 3,998,000 (3) (5) 84.04%
as a group (one person)
----------------------------
(1) Represents the number of shares of common stock owned of record and
beneficially by each named person or group, expressed as a percentage of
4,757,000 shares of Savoy's common stock outstanding as of December 1, 2000.
(2) Executive officer and member of the Board of Directors of Savoy.
(3) Includes 2,000 shares of common stock owned of record by Ms. Patricia
E. Peterie, Mr. Peterie's spouse, and does not include 31,250 shares of common
stock owned of record by each of Mr. Andrew N. Peterie, Jr., and Ms. Deseri
Peterie, Mr. Peterie's adult son and daughter-in-law (a total of 62,500 shares).
(4) Includes 125,000 shares of common stock owned of record by Patricia
Cudd, Esq., as custodian for Mr. Ryan P. Cudd, her minor child.
(5) Does not include 190,400 shares of preferred stock owned of record and
beneficially by Mr. Peterie.
(6) Does not include 9,600 shares of preferred stock owned of record and
beneficially by Ms. Cudd.
----------------------------
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
=============================================================
Executive Officers and Directors
--------------------------------
Set forth below is the name, age, position with Savoy and business
experience of Mr. Andrew N. Peterie, the sole executive officer and director of
Savoy.
Name Age Position with Savoy
----------------------- --- --------------------------------------------
Andrew N. Peterie, Sr.* 57 President, Secretary, Treasurer and Director
------------------
* May be deemed to be a "parent" and "promoter" of Savoy, as those terms are
defined under the General Rules and Regulations promulgated under the
Securities Act of 1933, as amended.
General
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Directors hold office until the next annual meeting of Savoy's shareholders
and until their successors have been elected and qualify. Officers serve at the
pleasure of the Board of Directors. Mr. Peterie is expected to devote
approximately 50% of his time to the business and affairs of Savoy. Set forth
below under "Business Experience" is a description of Mr. Peterie's business
experience.
Business Experience
-------------------
Mr. Andrew N. Peterie, Sr., the sole executive officer and director of
Savoy, has served as the President, the Secretary, the Treasurer and a director
of Savoy since October 28, 1998. Mr. Peterie, since February 1997, has served as
the President and Chief Executive Officer of A.P. Investments, Inc., Denver,
Colorado, a consulting firm owned by him and Ms. Patricia E. Peterie, his
spouse, that provides assistance to private and public corporations in
connection with mergers, acquisitions and other business combinations. He served
as the President, the Chief Executive Officer, the Chief Financial Officer, the
Secretary and a director of HomeSmart.com, Inc. (formerly "CPC Office Systems,
Inc."), Cameron Park, California, a publicly-held operator of an Internet real
estate portal, from the date of the inception of HomeSmart.com, Inc., on July
14, 1995, through the date of resignation in July 1999. From November 1995 until
his resignation in February 1999, Mr. Peterie served as the sole executive
officer and director of Fisher Television Company (formerly "Storage Systems,
Inc."), a publicly-held company. He served, from November 1995 through July
1998, as the Secretary and a director of Quest Net Corp. (formerly "A.P. Sales,
Inc."), a publicly-held, Ft. Lauderdale, Florida-based Internet service
provider. From June 1990 through January 1998, he served as the President and
Chief Executive Officer of A.P.
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Contracting, Inc., Denver, Colorado, a closely-held corporation engaged in the
marketing, installation and servicing of filing and office equipment. Mr.
Peterie, from July 1994 through August 1996, served as the President and a
director of A.P. Office Equipment, Inc., a publicly-held office and filing
equipment distribution company with offices in Denver, Colorado. From May 1994
through May 1996, he was the President and a director of R.P.H. Financial, Inc.,
a publicly-held corporation located in Denver, Colorado, with which he has no
further association. Mr. Peterie served as an officer and director of Liberty
Services Corp., Denver, Colorado, during the period from January 1994 until his
voluntary resignation in May 1994. He served as the Treasurer and a director of
SureWest Management, Inc., a privately-held, Denver, Colorado, company with
plans to engage in the insurance business, from April through August 1994, when
he voluntarily resigned. Mr. Peterie served in the position of
Secretary/Treasurer of Gaensel Gold Mines, Inc., a publicly-held, Denver,
Colorado-based corporation, from July 1988 through May 1994. From 1988 through
1991, Mr. Peterie served as the President of O.P. Investments, Inc., a
closely-held, Denver, Colorado-based consulting firm specialized in the area of
mergers, acquisitions and business combinations. He was employed as the
President of Chavez Industrial Bank, Denver, Colorado, from 1987 through 1988.
During 1987, Mr. Peterie was employed by National Western Mortgage, Denver,
Colorado, as a commercial and resident loan broker. During the period from 1984
through 1986, he was self-employed as a commercial and residential loan broker
operating in the Denver, Colorado, area. He was employed in the banking industry
in various capacities including, among others, bank and loan officer and loan
collector, from July 1965 through February 1984. The highest positions held by
Mr. Peterie during this period were President, Chief Executive Officer and
director of First National Bank of Aurora, N.A., Omnibank Banks (now KeyBank,
N.A.) and an officer of AVCO Financial Services. He attended the University of
Southern Colorado, Pueblo, Colorado, from 1962 to 1963.
Item 6. Executive Compensation
======================
No cash compensation has been awarded to, earned by or paid to Mr. Andrew
N. Peterie, Sr., the President, the Secretary, the Treasurer and a director of
Savoy, for all services rendered in all capacities since he became an executive
officer and director of Savoy on October 28, 1998. For the foreseeable future,
Mr. Peterie will receive no compensation in any form for his services performed
in all capacities for us. We issued and sold 4,294,000 shares of common, and
190,400 shares of preferred, stock to Mr. Peterie on July 19, 1999, and January
10, 2000, respectively, in consideration for services performed by him in
organizing Savoy valued at $3,998 and $4,760 in cash, respectively. Mr. Peterie
holds no option to purchase any of Savoy's securities. He plans to devote
approximately 50% of his time to the business and affairs of Savoy.
We do not provide our officers or employees with pension, stock
appreciation rights, long-term incentive or other plans and have no intention of
implementing any such plans for the foreseeable future. In the future, we may
offer stock options to prospective employees and/or consultants; however, no
such options have been granted as of the date hereof. It is possible that in the
future we may establish various executive incentive programs and other benefits,
including reimbursement for expenses incurred in connection with our operations,
company automobiles and life and health insurance, for our executive officers
and directors, but none has yet been granted. The provisions of such plans and
benefits will be at the discretion of our Board of Directors.
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Under Colorado law and pursuant to our Amended and Restated Articles of
Incorporation, our officers and directors may be indemnified for various
expenses and damages resulting from their acting in such capacity. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "1933 Act"), may be permitted to our officers or directors pursuant
to those provisions, we have been informed by our counsel that, in the opinion
of the U.S. Securities and Exchange Commission (the "Commission"), such
indemnification is against public policy as expressed in the 1933 Act and is
therefore unenforceable.
Compensation of Directors
--------------------------
We have no standard arrangements for compensating our directors.
Item 7. Certain Relationships and Related Transactions.
===============================================
On October 28, 1998, we issued and sold 4,294,000 shares, and 206,000
shares, of common stock (a total of 4,500,000 shares), to Mr. Andrew N. Peterie,
Sr., and Patricia Cudd, Esq., respectively, in consideration for services
performed by each individual in connection with our organization valued at
$4,294 and $206, respectively (a total of $4,500 at the rate of $.001 per
share). On January 10, 2000, we issued and sold 190,400 shares, and 9,600
shares, of preferred stock (a total of 200,000 shares) to Mr. Peterie and Ms.
Cudd, respectively, in consideration for $4,760 in cash, in Mr. Peterie's case,
and $240 in cash, in the case of Ms. Cudd (a total of $5,000 at the rate of
$.025 per share). Mr. Peterie serves as our sole executive officer and director
and he and Ms. Cudd, owner of Cudd & Associates, our legal counsel, together own
of record and beneficially 4,329,000 shares, representing approximately 94.4% of
the total number of issued and outstanding shares, of our outstanding common
stock as of the date hereof. The shares of preferred stock owned of record and
beneficially by Mr. Peterie and Ms. Cudd constitute all of the outstanding
shares of preferred stock of Savoy.
We maintain our offices rent-free pursuant to a verbal arrangement with Mr.
Andrew N. Peterie, Sr., the sole executive officer and director and an
approximate 84% shareholder of Savoy, at his business offices located at 4096
West Union Avenue, Denver, Colorado 80236. Our present office arrangement has
been valued by us at a nominal value and, accordingly, does not impact the
accompanying Financial Statements of Savoy.
Because of his present management positions with, organizational efforts on
behalf of and percentage share ownership in, Savoy, Mr. Peterie may be deemed to
be our "parent" and "promoter," as those terms are defined in the Securities Act
of 1933, as amended, and the applicable Rules and Regulations thereunder.
Because of the above-described relationships, transactions between and among
Savoy and Mr. Peterie, such as our sale of common and preferred stock to him as
described hereinabove, should not be considered to have occurred at
arm's-length.
12
<PAGE>
Item 8. Description of Securities.
==========================
Description of Capital Stock
----------------------------
Savoy's authorized capital stock consists of 100,000,000 shares of common
stock, $.001 par value per share, and 10,000,000 shares of preferred stock, $.01
par value per share.
Description of Common Stock
----------------------------
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of common stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of common
stock will not be able to elect any directors. In the event of liquidation of
Savoy, each shareholder is entitled to receive a proportionate share of Savoy's
assets available for distribution to shareholders after the payment of
liabilities and after distribution in full of preferential amounts, if any, to
be distributed to holders of the preferred stock. All shares of Savoy's common
stock issued and outstanding are fully-paid and nonassessable.
Dividend Policy
----------------
Holders of shares of common stock are entitled to share pro rata in
dividends and distributions with respect to the common stock when, as and if
declared by the Board of Directors out of funds legally available therefor,
after requirements with respect to preferential dividends on, and other matters
relating to, the preferred stock, if any, have been met. Savoy has not paid any
dividends on its Common Stock and intends to retain earnings, if any, to finance
the development and expansion of its business. Future dividend policy is subject
to the discretion of the Board of Directors and will depend upon a number of
factors, including future earnings, capital requirements and the financial
condition of Savoy.
Transfer Agent and Registrar
----------------------------
The Transfer Agent and Registrar for Savoy's common stock is Corporate
Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite #430, Denver,
Colorado 80209.
Description of Preferred Stock
------------------------------
Shares of preferred stock may be issued from time to time in one or more
series as may be determined by the Board of Directors. The voting powers and
preferences, the relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the Board of
Directors, except that no holder of preferred stock shall have preemptive
rights. As of December 1, 2000, Savoy had 200,000 shares of preferred stock
issued and outstanding. Each share is entitled to receive, in the event of
voluntary or involuntary liquidation, dissolution or winding up of Savoy, before
any distribution of assets is made to shareholders of common stock or any other
shares ranking junior to the preferred stock, a liquidating distribution in the
amount of $.025 per share and has all of the preferences, limitations and rights
otherwise provided by law and the Amended and Restated Articles of Incorporation
of Savoy, but is not convertible, redeemable or entitled to voting rights or to
receive dividends. The rights, privileges and preferences with respect to the
preferred stock may be amended or modified with the consent of the holders of at
least two-thirds of the preferred stock then outstanding.
13
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
========================================================================
(a) Market Information.
There has been no established public trading market for the common stock
since Savoy's inception on March 6, 1997.
(b) Holders.
As of December 1, 2000, Savoy had approximately 65 shareholders of record
of our 4,757,000 issued and outstanding shares of common stock.
(c) Dividends.
Savoy has never paid or declared any dividends on its common stock and does
not anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings.
==================
Savoy knows of no legal proceedings to which it is a party or to which any
of its property is the subject, which are pending, threatened or contemplated or
any unsatisfied judgments against Savoy.
Item 3. Changes in and Disagreements with Accountants.
==============================================
Comiskey & Company, Professional Corporation, Certified Public Accountants
& Consultants, 789 Sherman Street, Suite #440, Denver, Colorado 80203, has
reported upon the financial statements of Savoy, including the Balance Sheets as
of August 31, 2000, December 31, 1999, and December 31, 1998, the related
Statements of Operations, Stockholders' Equity and Cash Flows for the period
14
<PAGE>
from inception (March 6, 1997) to August 31, 2000, the period of eight months
ended August 31, 2000, and each of the years ended December 31, 1999, and 1998,
and the related Statements of Shareholders' Equity for the period from inception
(March 6, 1997) to August 31, 2000, and has been appointed as Savoy's
independent accountant for the year ending December 31, 2000. There has been no
change in Savoy's independent accountant during the period commencing with
Savoy's retention of Comiskey & Company, Professional Corporation, through the
date hereof.
Item 4. Recent Sales of Unregistered Securities.
========================================
On October 28, 1998, we issued and sold 4,294,000 shares, and 206,000
shares, of common stock (a total of 4,500,000 shares), to Mr. Andrew N. Peterie,
Sr., and Patricia Cudd, Esq., respectively, in consideration for services
performed by each individual in connection with our organization valued at
$4,294 and $206, respectively (a total of $4,500 at the rate of $.001 per
share). On January 10, 2000, Savoy issued and sold 190,400 shares, and 9,600
shares, of preferred stock (a total of 200,000 shares) to Mr. Peterie and Ms.
Cudd, respectively, in consideration for $4,760 in cash, in Mr. Peterie's case,
and $240 in cash, in the case of Ms. Cudd (a total of $5,000 at the rate of
$.025 per share). Mr. Peterie serves as our sole executive officer and director
and he and Ms. Cudd together own of record and beneficially 4,329,000 shares,
representing approximately 94.4% of the total number of issued and outstanding
shares, of our outstanding common stock as of the date hereof. The shares of
preferred stock owned of record and beneficially by Mr. Peterie and Ms. Cudd
constitute all of the outstanding shares of preferred stock of Savoy. We relied,
in connection with the sales of the shares, upon the exemption from registration
with the Commission afforded by Section 4(2) of the 1933 Act, and the exemption
from registration with the Division promulgated under Section 11-51-308(1)(p) of
the Colorado Act. Savoy relied upon the fact that the issuance and sale of the
shares did not constitute a public securities offering together with the fact
that (a) Mr. Peterie was an executive officer, director and controlling
shareholder of Savoy and (b) Cudd & Associates, a sole proprietorship owned by
Ms. Cudd, was Savoy's legal counsel, at the time of the sales, to make the
exemptions available.
During the period from June 26 through August 18, 2000, Savoy issued and
sold an aggregate of 257,000 shares of common stock to a total of forty-five
persons, all of whom, except for one resident of the Republic of Northern
Ireland, are residents of the State of Colorado, for cash consideration totaling
$25,700. The sales were made by Savoy in reliance upon the exemption from
registration with the Commission provided under Section 3(b) of the 1933 Act and
Regulation A promulgated thereunder and in reliance upon the exemption with the
Division afforded under Section 11-51-308(1)(p) of the Colorado Act. No
underwriter was employed in connection with the offering and sale of the shares.
The facts relied upon by Savoy to make the Federal exemption available include,
among others, the following:
(i) The aggregate offering price for the offering of the shares of common
stock did not exceed $5,000,000, less the aggregate offering price for all
securities sold within the twelve months before the start of and during the
offering in reliance upon exemption Regulation A;
15
<PAGE>
(ii) The required number of manually executed originals and true copies of
Form D were duly and timely filed with the U.S. Securities and Exchange
Commission;
(iii) The fact that Savoy has not been since its inception:
(a) Subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended;
(b) An "investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(c) A development stage company that either has no specific business
plan or purpose or has indicated that its business plan is to engage in a
merger or acquisition with an unidentified company or companies, or other
entity or person; or
(d) Disqualified because of Regulation Section 230.262.
Item 5. Indemnification of Directors and Officers.
==========================================
Article VII of Savoy's Amended and Restated Articles of Incorporation
contains provisions providing for the indemnification of directors and officers
of Savoy as follows:
"(a) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is otherwise serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding, by judgment, order,
settlement, conviction upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that the person did not act in
good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe the action was
unlawful.
16
<PAGE>
(b) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the corporation, to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation, except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation,
unless, and only to the extent that, the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which
such court deems proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the officer, director and employee or agent is proper in the
circumstances, because he has met the applicable standard of conduct set
forth in Section (a) or (b) of this Article. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the affirmative vote of the
holders of a majority of the shares of stock entitled to vote and
represented at a meeting called for such purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding, as
authorized in Section (d) of this Article, upon receipt of an understanding
by or on behalf of the director, officer, employee or agent to repay such
amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the corporation as authorized in this Article.
17
<PAGE>
(f) The Board of Directors may exercise the corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such
liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Articles of Incorporation, the Bylaws, agreements,
vote of the shareholders or disinterested directors, or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit
of the heirs and personal representatives of such a person."
Article XI of Savoy's Bylaws contains provisions providing for the
indemnification of directors and officers of Savoy as follows:
"The Corporation shall have the power to indemnify any director,
officer, employee or agent of the Corporation or any person serving at
the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise to the fullest extent permitted by the laws of the
State of Colorado."
Savoy has no agreement with Mr. Andrew N. Peterie, Sr., our sole director
and executive officer, providing for his indemnification with respect to
liability arising out of his capacity or status as an officer or director.
At present, there is no pending litigation or proceeding involving Mr.
Peterie as to which indemnification is being sought.
PART F/S
--------
The Financial Statements of Savoy Capital Investments, Inc., required by
Regulation SB commence on page F-1 hereof in response to Part F/S of this
Registration Statement on Form 10-SB and are incorporated herein by this
reference.
18
<PAGE>
PART III
--------
Item 1. Index to Exhibits.
==================
Item
Number Description
------ --------------------------------------------------------------
3.1* Articles of Incorporation of Savoy Capital Investments, Inc.,
filed March 6, 1997.
3.2* Amended and Restated Articles of Incorporation of Savoy Capital
Investments, Inc., filed October 26, 1998.
3.3* Bylaws of Savoy Capital Investments, Inc.
------------------
*Filed herewith.
Item 2. Description of Exhibits.
========================
The documents required to be filed as Exhibit Number 2 in Part III of Form
1-A filed as part of this Registration Statement on Form 10-SB are listed in
Item 1 of this Part III above. No documents are required to be filed as Exhibit
Numbers 3, 5, 6 or 7 in Part III of Form 1-A, and the reference to such Exhibit
Numbers is therefore omitted. No additional exhibits are filed hereto.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
SAVOY CAPITAL INVESTMENTS, INC.
(Registrant)
Date: December 4, 2000 By: /s/ Andrew N. Peterie, Sr.
---------------- --------------------------
Andrew N. Peterie, Sr.,
President, Secretary and Treasurer
19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of
Savoy Capital Investments, Inc.
We have audited the accompanying balance sheets of Savoy Capital Investments,
Inc. (a development stage company) as of August 31, 2000, December 31, 1999 and
1998, and the related statements of operations, stockholders' equity, and cash
flows for the initial period from inception (March 6, 1997) to August 31, 2000,
for the eight month period ended August 31, 2000, and for each of the years
ended December 31, 1999 and 1998. 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 audit.
We conducted our 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.
We believe that our audit provides 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 Savoy Capital Investments, Inc.
as of August 31, 2000, December 31, 1999 and 1998, and the results of its
operations and cash flows for the period from inception (March 6, 1997) to
August 31, 2000, for the eight month period ended August 31, 2000 and for the
years ended December 31, 1999 and 1998, in conformity with generally accepted
accounting principles.
Denver, Colorado
September 26, 2000
F-1
<PAGE>
<TABLE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
BALANCE SHEETS
<CAPTION>
ASSETS August 31, December 31, December 31,
2000 1999 1998
------------ ------------ -------------
CURRENT ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 26,997 $ - $ -
------------ ------------ -------------
Total current assets 26,997 - -
------------ ------------ -------------
TOTAL ASSETS $ 26,997 $ - $ -
============ ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related party $ 684 $ - $ -
------------ ------------ -------------
Total current liabilities 684 - -
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 10,000,000
shares authorized; 200,000 shares issued and
outstanding 2,000 - -
Common stock, $0.001 par value; 100,000,000 shares
authorized; 4,757,000 shares issued and outstanding
at August 31, 2000; 4,500,000 shares issued and
outstanding at December 31, 1999 and 1998 4,757 4,500 4,500
Additional paid-in capital 28,443 - -
Deficit accumulated during the development
stage (8,887) (4,500) (4,500)
------------ ------------ -------------
26,313 - -
------------ ------------ -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,997 $ - $ -
============ ============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the initial period from inception (March 6, 1997) to August 31, 2000
<CAPTION>
For the For the For the For the
period from eight months year year
inception to ended ended ended
August 31, August 31, December 31, December 31,
2000 2000 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME $ 7 $ 7 $ - $ -
EXPENSES
Selling, general and administrative 8,894 4,394 - -
------------ ------------ ------------ ------------
Total expenses 8,894 4,394 - -
------------ ------------ ------------ ------------
NET LOSS (8,887) (4,387) - -
Accumulated deficit
Balance, beginning of period - (4,500) (4,500) (4,500)
------------ ------------ ------------ ------------
Balance, end of period $ (8,887) $ (8,887) $ (4,500) $ (4,500)
============ ============ ============ ============
BASIC NET LOSS PER SHARE $ (NIL) $ (NIL) $ - $ -
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 4,505,973 4,531,200 4,500,000 4,500,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
<TABLE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the initial period from inception (March 6, 1997) to August 31, 2000
<CAPTION>
Deficit
Preferred stock Common stock accumulated
------------------- ------------- Additional during the Total
Number of Number of paid-in development stockholders'
shares Amount shares Amount capital stage equity
--------- ------- ---------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock issued for
services, March 6, 1997
at $0.001 per share - $ - 4,500,000 $ 4,500 $ - $ - $ 4,500
Net loss for the period ended
December 31, 1997 - - - - - (4,500) (4,500)
--------- ------- ---------- ---------- ------------ ------------- -------------
Balance, December 31, 1997 - - 4,500,000 4,500 - (4,500) -
Net loss for the year ended
December 31, 1998 - - - - - - -
--------- ------- ---------- ---------- ------------ ------------- -------------
Balance, December 31, 1998 - - 4,500,000 4,500 - (4,500) -
Net loss for the year ended
December 31, 1999 - - - - - - -
--------- ------- ---------- ---------- ------------ ------------- -------------
Balance, December 31, 1999 - - 4,500,000 4,500 - (4,500) -
Preferred stock issued for
cash, January 14, 2000
at $0.025 per share 200,000 2,000 - - 3,000 - 5,000
Common stock issued for
cash, July & August 2000
at $0.1 per share - - 257,000 257 25,443 - 25,700
Net loss for the period ended
August 31, 2000 - - - - - (4,387) (4,387)
--------- ------- ---------- ---------- ------------ ------------- -------------
Balance, August 31, 2000 200,000 $ 2,000 4,757,000 $ 4,757 $ 28,443 $ (8,887) $ 26,313
========= ======= ========== ========== ============ ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
Savoy Capital Investments
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the initial period from inception (March 6, 1997) to August 31, 2000
<CAPTION>
For the For the For the For the
period from eight months year year
inception to ended ended ended
August 31, August 31, December 31, December 31,
2000 2000 1999 1998
------------ ------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (8,887) $ (4,387) $ - $ -
Adjustments to reconcile
net loss to net cash flows from
operating activities:
Increase in accounts payable 684 684
Common stock issued for services 4,500 - - -
------------ ------------- ------------- ------------
Net cash flows from operating activities (3,703) (3,703) - -
CASH FLOWS FROM INVESTING ACTIVITIES - - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 25,700 25,700 - -
Issuance of preferred stock 5,000 5,000 - -
------------ ------------- ------------- ------------
Net cash flows from financing activities 30,700 30,700 - -
------------ ------------- ------------- ------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 26,997 26,997 - -
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD - - - -
------------ ------------- ------------- ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 26,997 $ 26,997 $ - $ -
============ ============= ============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
1. Summary of Significant Accounting Policies
------------------------------------------
Development Stage Company
-------------------------
Savoy Capital Investments, Inc. (a development stage company) (the
"Company") was incorporated under the laws of the State of Colorado on
March 6, 1997. The principal office of the corporation is 4096 West Union
Avenue, Denver, Colorado 80236.
The Company proposes to engage in the residential and commercial mortgage
brokerage business, including the origination of new, refinance and second
mortgage loans; concentrating its marketing efforts in the area of
residential mortgage loans. The Company is a new enterprise in the
development stage as defined by Statement No. 7 of the Financial Accounting
Standards Board and has not engaged in any business other than
organizational efforts. It has no full-time employees and owns no real
property.
Accounting Method
-----------------
The Company records income and expenses on the accrual method.
Fiscal Year
-----------
The board of directors shall establish the fiscal year of the corporation.
Loss per Share
--------------
Loss per share was computed using the weighted average number of shares
outstanding during the period. Shares issued to insiders in anticipation of
a public offering have been accounted for as outstanding since inception.
Organization Costs
------------------
Costs to incorporate the Company are charged to expense as incurred.
Financial Instruments
---------------------
Unless otherwise indicated, the fair value of all reported assets and
liabilities that represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such amount.
Statements of Cash Flows
------------------------
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Use of Estimates
----------------
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management
to make estimates and assumptions that effect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
from those estimates.
F-6
<PAGE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
1. Summary of Significant Accounting Policies (continued)
------------------------------------------------------
Consideration of Other Comprehensive Income Items
SFAF 130 - Reporting Comprehensive Income, requires companies to present
comprehensive income (consisting primarily of net income plus other direct
equity changes and credits) and its components as part of the basic
financial statements. For the period ended August 31, 2000, the Company's
financial statements do not contain any changes in equity that are required
to be reported separately in comprehensive income.
Stock Basis
-----------
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received in
exchange.
2. Stockholders' Equity
--------------------
Common Stock
As of August 31, 2000, 100,000,000 shares of the Company's $0.001 par value
common stock had been authorized, of which 4,757,000 were issued and
outstanding. Of the common stock, 4,500,000 shares were issued for services
valued at $4,500. The other 257,000 shares were issued for cash totaling
$25,700.
Preferred Stock
---------------
On January 14, 2000, 200,000 shares of the Company's $0.01 par value
preferred stock were issued for $5,000 cash.
The preferred stock is non-voting. The holders of the preferred stock, as a
group, have the right to receive, pro rata, an annual dividend of 10% of
the adjusted gross income from the annual corporate income tax return. The
preferred stock also has a 10% preference in the liquidation of the
Company.
3. Related Party Transactions
--------------------------
One shareholder is acting as officer and director of the Company, and is
the owner of approximately 4,000,000 shares of its issued and outstanding
common stock, constituting approximately 84% of the Company's issued and
outstanding common stock at August 31, 2000.
The sole officer of the Company is also the owner of 190,400 shares of its
issued and outstanding preferred stock, constituting approximately 95% of
the Company's issued and outstanding preferred stock at August 31, 2000.
Officers and directors are reimbursed for all out-of-pocket expenses.
F-7
<PAGE>
Savoy Capital Investments, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2000
4. Income Taxes
------------
The Company has Federal net operating loss carryforwards of approximately
$9,000 expiring between the years 2012 through 2020. The tax benefit of
these net operating losses is approximately $1,700 and has been offset by a
full allowance for realization. This carryforward may be limited upon
consummation of a business combination under IRC Section 381.
5. Presentation as a going concern
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The Company has minimal capital with which to implement its business plan.
It has current assets in the form of cash totaling $26,997. In the event
this is insufficient capital to finance the Company's plans, the Company
will need to seek additional financing.
F-8
