As filed with the Securities and Exchange Commission on July 26, 2000
Registration No. ____
----------------------------------------------------------------------
U.S. SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FORE, INC.
----------------------------------------------
(Name of small business issuer in its charter)
Nevada 6770 76-0639847
---------------- --------------------------- --------------
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
Incorporation or Code Number) Number)
Organization)
Fore, Inc.
Attention: Chris L. Patterson
14601 Bellaire Blvd, Suite 338
Houston, TX 77083
(281) 564-6418
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(Address and telephone number of principal executive offices and principal
place of business; and name, address and telephone number of agent for service)
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Copies to:
Thomas C. Cook, Esq.
Thomas C. Cook & Associates, Ltd.
3110 S. Valley View Suite #106
Las Vegas, Nevada 89102
(702) 876-5941
Approximate date of commencement of proposed sale to public:
As soon as practicable after the registration statement becomes effective
If this Form is filed to register additional securities for an offering
according to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___X___
If this Form is a post-effective amendment filed according to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. / /_______
If this Form is a post-effective amendment filed according to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. / /_______
If delivery of the prospectus is expected to be made according to Rule 434,
please check the following box. / /_______
-------------------------------
We may amend this registration statement on such date or dates as may be
necessary to delay its effective date until we file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on a date as the SEC,
acting pursuant to said Section 8(A), may determine.
---------------------------------------------------------
The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the Registration statement
filed with the SEC is effective. This preliminary prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer of sale is not permitted.
Prospectus (Subject to completion)
Dated *****
=============================================================================
TITLE OF EACH PROPOSED
CLASS OF PROPOSED MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED RESISTERED SHARE(1) PRICE(1) FEE
[S] [C] [C] [C] [C]
Common Stock
$0.001 par value 3,000,000 $0.025 -
TOTAL 3,000,000 N/A $75,000 $19.80
=============================================================================
Estimated solely for the purpose of calculating the registration fee and
pursuant to Rule 457.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(A) of The Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the commission, acting
pursuant to said Section 8(A),may determine.
<PAGE>
PART I - INFORMATION REQUIRED IN PROSPECTUS
Cross Reference Sheet Showing the Location in Prospectus of Information
Required by Items of Form SB-2
Item No. Required Item Location of Caption in Prospectus
-------- ------------- ---------------------------
1. Forepart of the Registration Cover Page; Outside
Statement and Outside Front Front Page of
Cover of Prospectus Prospectus
2. Inside Front and Outside Back Inside Front and
Cover Pages of Prospectus Outside Back Cover
Pages of Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Prospectus Summary -
Determination of Offering
Price; Risk Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Director, Executive Officer, Management
Management and
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and Management
12. Description of Securities Description of
Securities
13. Interest of Named Experts and Legal Matters; Experts
Counsel
14. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities Statement as to
Indemnification
15. Organization within Last Five Management, Certain
Years Transactions
16. Description of Business Proposed Business
17. Management's Discussion and
Analysis or Plan of Operation Plan of Operation
18. Description of Property Proposed Business
19. Certain Relationships and Certain Transactions
Related Transactions
20. Market for Common Equity and Prospectus Summary, Market for
Related Stockholder Matters Registrant's Common Stock and
Related Stockholders' Matters;
Shares Eligible for Future
Sale
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
PART II
24. Indemnification of Director Indemnification of
and Officer Director and Officer
25. Other Expenses of Issuance and Other Expenses of
Distribution Issuance and Distribution
26. Recent Sales of Unregistered Recent Sales of Unregistered
Securities Securities
27. Exhibits Exhibits
28. Undertakings Undertakings
Subject To Completion, Dated July 26, 2000
<PAGE>
INITIAL PUBLIC OFFERING
PROSPECTUS
<PAGE>
Fore, Inc.
3,000,000 Shares of Common stock
Offered at $0.025 Per Share
Fore, Inc., is a startup company organized in the State of Nevada to pursue a
future business combination.
We are offering these shares through our president, Mr. Chris Patterson,
without the use of a professional underwriter. We will not pay commissions on
stock sales.
This offering will expire 90 days from the date of this prospectus. The
offering may be extended for an additional 90 days at our sole election.
This is our initial public offering, and no public market currently
exists for our shares. The offering price may not reflect the market price of
our shares after the offering.
-------------------
This investment involves a high degree of risk. You should
purchase shares only if you can afford a complete
loss. See "Risk Factors" beginning on page 8.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------------
Offering Information
--------------------
<TABLE>
<CAPTION>
=========================================================================
SHARES PRICE TO SELLING PROCEEDS TO
OFFERED PUBLIC(1) COMMISSIONS(2) COMPANY(3)
<S> <C> <C> <C> <C>
Per share
Min. Share Amount 1,600,000 $0.025 $ 0.00 $40,000
Max. Share Amount 3,000,000 $0.025 $ 0.00 $75,000
=========================================================================
</TABLE>
(1) Does not include offering costs, including filing, printing, legal,
accounting, transfer agent and escrow agent fees estimated at
$4,000.
1
<PAGE>
(2) We are offering for sale 3,000,000 shares of common stock, at a purchase
price of $0.025 per share. The shares shall be sold exclusively by us on a
best-efforts for a period of ninety days, which may be extended an
additional ninety days. This offering will be conducted directly by us
through our officer(s) or director(s) according to the safe harbor
provisions of Rule 3a4(1) of the Securities Exchange Act of 1934.
(3) The minimum offering or proceeds to be raised is $40,000. The maximum
offering or proceeds to be raised is $75,000.
Our offering is being made in compliance with Rule 419 of SEC Regulation C,
under which the offering proceeds and the securities to be issued to
purchasers will be placed in an escrow account until the offering has been
reconfirmed by our shareholders and a business has been acquired in
accordance with the provisions of such rule. Under SEC Rule 3a51-1(d) under
the Exchange Act, the securities we are offering constitute penny stocks, and
as such, certain sales restrictions apply to these securities. Up to 80% of
the offering may be purchased by officers, directors, our current shareholder
and any of their affiliates or associates. No public market currently exists
for our common stock. No public market may ever develop. Even if a market
develops, you may not be able to sell your shares.
The date of this prospectus is July 26, 2000
2
<PAGE>
TABLE OF CONTENTS
-----------------
PROSPECTUS SUMMARY............................................5
LIMITED STATE REGISTRATION....................................6
SUMMARY FINANCIAL INFORMATION.................................6
RISK FACTORS..................................................8
No Operating History........................................8
Potential Profit to be Received by Management...............9
Arbitrarily determined offering price.......................9
Extremely limited capitalization...........................10
Change in control and management...........................10
No identified acquisition candidate........................10
No professional consultants or experienced management......10
No Current Negotiations Regarding an Acquisition or Merger.11
Failure of Sufficient Number of Investors to
Reconfirm Investment......11
Inability to transfer escrowed securities..................11
No Assurance of Profitability..............................12
No Assurance of Conventional Financing for Business
Acquired or Merged........12
Time to Be Devoted by Management...........................12
Dependency on Outside Advisors.............................12
Inability to Evaluate Investments..........................12
Possible Consequences of Business Reorganization...........13
Limited Rights of Shareholders in an Acquisition...........13
Limitation on Acquisitions.................................13
Leverage...................................................14
Competing companies with more experience. .................14
Conflict of Interest - Management's Fiduciary Duties.......14
Disadvantages associated with a blank check offering. .....15
Lack of diversification....................................15
Tax consequences...........................................15
Control held by present management and shareholders........16
Dilution...................................................16
Unexpected year 2000 risks.................................16
Penny stock................................................17
There may not a public market for the shares. .............17
Risks associated with operations in foreign countries. ....17
No Underwriter.............................................18
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419........19
DILUTION.....................................................21
USE OF PROCEEDS..............................................22
CAPITALIZATION...............................................26
PROPOSED BUSINESS............................................26
PLAN OF OPERATION............................................39
RELATED PARTY TRANSACTIONS...................................40
DESCRIPTION OF CAPITAL STOCK.................................41
SHARES ELIGIBLE FOR FUTURE SALE..............................44
MANAGEMENT...................................................45
PRINCIPAL SHAREHOLDERS.......................................51
CERTAIN TRANSACTIONS.........................................52
WHERE CAN YOU FIND MORE INFORMATION?.........................52
MARKET FOR OUR COMMON STOCK..................................53
REPORTS TO STOCKHOLDERS......................................54
PLAN OF DISTRIBUTION.........................................54
LEGAL PROCEEDINGS............................................57
LEGAL MATTERS................................................57
EXPERTS......................................................57
FINANCIAL STATEMENTS.........................................F-1
INDEMNIFICATION OF DIRECTORS AND OFFICERS....................61
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION..................62
RECENT SALES OF UNREGISTERED SECURITIES......................62
EXHIBITS.....................................................63
UNDERTAKINGS.................................................63
Signatures...................................................65
Index to Exhibits............................................66
3
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and if given or made, such information or representations must
not be relied upon as having been authorized by us. This prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any
securities in any jurisdiction in which such offer or solicitation would be
unlawful. The delivery of this prospectus shall not under any circumstances
create any implication that there has not been any change in our affairs
since the date hereof; however, any changes that may have occurred are not
material to an investment decision. In the event there have been any material
changes in our affairs, a post-effective amendment will be filed. We reserve
the right to reject any order, in whole or in part, for the purchase of any
of the shares offered.
Until 90 days after the date when the funds and securities are released
from the escrow account, all dealers effecting transactions in the shares,
whether or not participating in this distribution, may be required to deliver
a prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters to their unsold allotments or
subscriptions.
Subject to Completion, dated [Blank]
4
<PAGE>
PROSPECTUS SUMMARY
FORE, INC.
1,600,000 Minimum Shares
3,000,000 Maximum Shares
COMMON STOCK
This summary highlights information contained elsewhere in this
prospectus. Because this is a summary, it may not contain all of the
information that you should consider before receiving a distribution of our
common stock. You should read this entire prospectus carefully.
Fore, Inc.
We are a blank check company subject to Rule 419. We were organized as
a vehicle to acquire or merge with a business or company operating in the
Internet industry. We have no present plans, proposals, agreements,
arrangements or understandings to acquire or merge with any specific business
or company no have we identified any specific business or company for
investigation and evaluation for a merger with us.
We were organized under the laws of the State of Nevada on March 29, 2000,
under the name Fore, Inc., for the purpose of acquiring or merging with an
unspecified and unidentified operating business. We are a recently organized
corporation, formed for this specific purpose. A company with this a purpose
and structure is referred to as a "blank check company" as defined in Rule
419 of Regulation C ("Rule 419") as promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933 (the "Act").
This prospectus relates to the offer and sale by us of a maximum of 3,000,000
and a minimum of 1,600,000 shares (the "shares") of common stock, $.001 par
value ("common stock"). See "Description of Securities."
This offering is being conducted according to Rule 419. You have certain
rights and will receive the substantive protection provided by this rule. See
"Your Rights under Rule 419."
The Offering
------------
Securities offered 3,000,000 shares of common stock, $0.001
par value, Maximum Offering
1,600,000 shares of common stock, $0.001
par value, Minimum Offering
being offered at $0.25 per
share. (See "Description of Capital
Stock".)
Common stock outstanding 2,000,000 shares
prior to the offering
Common stock to be 5,000,000 shares (Maximum Offering)
outstanding after the offering 3,600,000 shares (Minimum Offering)
5
<PAGE>
LIMITED STATE REGISTRATION
--------------------------
Initially, our securities may be sold in Texas and Nevada only (although we
are considering registering the shares in other states) pursuant to filings
in the States of Texas and Nevada. See "Risk Factors" for a discussion of
the resale limitations that result from this limited state registration.
SUMMARY FINANCIAL INFORMATION
-----------------------------
The table below contains certain summary historical financial data for
the Company. The historical financial data for the period ended June 30,
2000 has been derived from our audited financial statements appearing
elsewhere in this prospectus and should be read in conjunction with those
financial statements and notes thereto.
<TABLE>
CAPTION>
June 30, 2000
------------
<S> <C>
INCOME STATEMENT:
Net Sales $ 0
Net Income ($ 0)
BALANCE SHEET (at end of period):
Working Capital $ 2,000
Total Assets $ 2,000
Total Indebtedness $ 0
Total Shareholders Equity
(Net Assets) $ 2,000
PER SHARE(1):
Income per common share $ 0
Net Income per common share (at end of period) $ (0.00)
Net Income per share on a fully dilated basis $ (0.00)
</TABLE>
(1) Number of shares of common stock outstanding during period was
2,000,000.
This offering will expire 90 days from the date of this prospectus. The
offering may be extended for an additional 90 days at our sole election.
6
<PAGE>
Prescribed Acquisition Criteria
-------------------------------
Rule 419 requires that, before the funds and the securities can be released,
we must first execute an agreement to acquire a candidate meeting certain
specified criteria. The agreement must provide for the acquisition of a
business or assets for which the fair value of the business represents at
least 80% of the maximum offering proceeds. The agreement must include, as a
precondition to its closing, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm
their investment. For purposes of the offering, the fair value of the
business or assets to be acquired must be at least $60,000 (80% of $75,000),
with the maximum offering and at least $32,000 (80% of $40,000) minimum
offering.
Post-Effective Amendment
------------------------
Once the agreement governing the acquisition of a business meeting the
required criteria has been executed, Rule 419 requires us to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information about the proposed acquisition candidate
and their business, including audited financial statements, the results of
this offering and the use of the funds disbursed from the escrow account.
The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer must
include certain prescribed conditions which must be satisfied before the
funds and securities can be released from escrow.
Reconfirmation Offering
-----------------------
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Under Rule 419, the terms of the reconfirmation offer
must include the following conditions:
o The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account
within 5 business days after the effective date of the post-effective
amendment.
o Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to
notify us in writing that the investor elects to remain an investor.
o If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion
of the funds and any related interest or dividends held in the escrow
account on such investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt
means.
o The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $75,000
elect to reconfirm their investment.
7
<PAGE>
o If a closed acquisition has not occurred by January 26, 2002 (18
months from the date of this prospectus), the funds held in the
escrow account shall be returned to all investors on a proportionate
basis within 5 business days by first class mail or other equally
prompt means.
Release of Securities and Funds
-------------------------------
The funds will be released to us, and the securities will be released
to you, only after:
o The escrow agent has received a signed representation from us
and any other evidence acceptable by the escrow agent that:
o We have executed an agreement for the acquisition of
an acquisition candidate for which the fair market
value of the business represents at least 80% of the
maximum offering proceeds and has filed the required
post-effective amendment.
o The post-effective amendment has been declared
effective.
o We have satisfied all of the prescribed conditions of
the reconfirmation offer.
o The closing of the acquisition of the business with a
fair value of at least 80% of the maximum proceeds.
RISK FACTORS
------------
There is a high degree of risk associated with an investment in our common
stock. You should know that our business, financial condition or results of
operations, and, more importantly, that of any business we acquire, could be
materially and adversely affected by any of the following risks. You should
carefully consider the following factors in addition to the other information
in this prospectus before considering the purchase of shares.
No Operating History
--------------------
The Company was organized under the laws of the State of Nevada on March 29,
2000, and has no revenues from operations or meaningful assets. The Company
has not as yet identified any business or product for possible acquisition.
The Company faces all of the risks inherent in a new business and those risks
specifically inherent in the type of business in which the Company proposes
to engage, namely, the investigation and acquisition of an interest in a
business. The purchase of the securities offered hereby must be regarded as
the placing of funds at a high risk in a new or "start-up" venture with all
of the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject. (See "USE OF PROCEEDS" and "BUSINESS.")
8
<PAGE>
Potential Profit to be Received by Management
---------------------------------------------
The officers and directors of the Company currently own 100% of the Common
Stock presently issued and outstanding. The officers and directors paid an
aggregate price of $2,000 for these shares (See "CERTAIN TRANSACTIONS:
Purchase of Stock at Organization"). The officers and directors of the
Company may actively negotiate or otherwise consent to the purchase of any
portion of their common stock as a condition to or in connection with a
proposed merger or acquisition transaction. The proceeds of this offering
will not be used to purchase, either directly or indirectly, any securities
held by officers and directors. A premium may be paid on this stock in
connection with any such stock purchase transactions and public investors
will not receive any portion of the premium that may be paid. Furthermore,
the Company's shareholders may not be afforded an opportunity to approve or
consent to any particular stock buy-out transaction. (See "BUSINESS:
Acquisition of Business"). Due to the fact that such officers and directors
may negotiate to receive such a premium means that there is a potential for
members of management to consider their own personal pecuniary benefit rather
than the best interests of the Company's other stockholders. Such conduct
may present management with conflicts of interest and, as a result of such
conflicts, may possibly compromise management's state law fiduciary duties to
the Company's shareholders. The Company has not adopted any policy for
resolving such conflicts.
We have arbitrarily determined the offering price of the shares.
----------------------------------------------------------------
The offering price of $0.025 per share has been arbitrarily determined by us.
This price bears no relation to our assets, book value, or any other
customary investment criteria, including our prior operating history. Among
factors considered by us in determining the offering price were:
o Estimates of our business potential
o Our limited financial resources
o The amount of equity desired to be retained by present shareholders
o The amount of dilution to the public
o The general condition of the securities markets
o We have some discretion in the use of proceeds.
9
<PAGE>
Of the $40,000-75,000 offering proceeds deposited into the escrow account,
10% or $4,000-7,500 may be released to us prior to a confirmation offering in
which you reconfirm your investment in accordance with procedures required by
Rule 419. We do not intend to request release of the 10% ($4,000-$7,500) funds.
(See "Use of Proceeds") Accordingly, we will receive all of the escrowed funds
in the event a business combination is closed under the provisions of Rule 419.
We will use these proceeds as indicated in this document under the section
entitled "Use of Proceeds" but have considerable discretion in deciding how to
allocate funds.
We have extremely limited capitalization.
-----------------------------------------
The offering is a best efforts offering in which we intend to raise only a
minimum of $40,000. The management team faces the challenge of successfully
implementing our business strategy and plan. We may not be able to
successfully manage our business to achieve our goals especially in light of
the fact the minimum we seek to raise is not a substantial amount. Investors
could suffer a loss if as a consequence the amount raised is not enough to
fully implement the intended business strategy. Even if we are successful in
raising up to the maximum amount we seek, $75,000, this might not be enough
to successfully identify a merger candidate and consummate an acquisition.
We anticipate a change in control and management.
We anticipate a change in control and management.
-------------------------------------------------
We anticipate we will experience a change of control upon the closing of a
business combination. In addition, our current managers and directors will
resign. We cannot assure you of the experience or qualification of new
management either in the operation of our activities or in the operation of
the business, assets or property being acquired.
No acquisition candidate has been identified by us.
---------------------------------------------------
As of the date of this prospectus, we have not entered into or negotiated any
arrangements for a business combination with an acquisition candidate. Since
we have not yet attempted to seek a business combination, and due to our lack
of experience, there is only a limited basis upon which to evaluate our
prospectus for achieving our intended business objectives.
We are not using professional consultants or experienced management.
--------------------------------------------------------------------
Because management has little experience in managing companies similar to us,
the fact that we are not using outside consultants may increase our
difficulties in finding an acquisition candidate.
10
<PAGE>
While it is not presently anticipated the Company will engage unaffiliated
professional firms specializing in business acquisitions on reorganizations,
such firms may be retained if management deems it in the best interest of the
Company. Compensation to a finder or business acquisition firm may take
various forms, including one-time cash payments, payments based on a
percentage of revenues or product sales volume, payments involving issuance
of equity securities (including those of the Company), or any combination of
these or other compensation arrangements. The Company estimates that any fees
for such services will not exceed 10% of the amount of the securities issued
or cash paid by the Company to acquire a business. The Company will not have
funds to pay a retainer in connection with any consulting arrangement, and no
fee will be paid unless and until an acquisition is completed in accordance
with Rule 419. (See "USE OF PROCEEDS," and "BUSINESS").
No Current Negotiations Regarding an Acquisition or Merger
-----------------------------------------------------------
None of the Company's officers, directors, or promoters, or their
affiliates and associates, have had any preliminary contact or discussion,
and there are no present plans, proposals, arrangements or understanding,
with any representatives of the owners of any business or company regarding
the possibility of an acquisition or merger transaction contemplated in the
Prospectus. (See "BUSINESS: General").
Failure of Sufficient Number of Investors to Reconfirm Investment.
------------------------------------------------------------------
A business combination with an acquisition candidate cannot be closed unless,
for the reconfirmation offering required by Rule 419, we can successfully
convince you and a sufficient number of investors representing 80% of the
offering proceeds raised to elect to reconfirm your investments. If, after
completion of the reconfirmation offering, a sufficient number of investors do
not reconfirm their investment, the business combination will not be closed.
Given this scenario, none of the securities held in escrow will be issued and
the funds will be returned to you on a proportionate basis. Up to 80% of the
shares may be purchased by our officers, directors, current shareholders and
any of their affiliates or associates. It is likely that these insiders will
elect to reconfirm a proposed business combination reducing or eliminating your
effect on the outcome of the 80% required reconfirmation.
If you invest, you will not be able to transfer your escrowed securities.
-------------------------------------------------------------------------
No transfer or other disposition of the escrowed securities is permitted
other than by will or the laws of descent and distribution, or under a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, or Title 7 of the Employee Retirement Income Security Act, or the
related rules. Under Rule 15g-8, it is unlawful for any person to sell or
offer to sell the securities or any interest in or related to the securities
held in the Rule 419 escrow account other than under a qualified domestic
relations order in divorce proceedings. Therefore, any and all contracts for
sale to be satisfied by delivery of the securities and sales of derivative
securities to be settled by delivery of the securities are prohibited. You
are further prohibited from selling any interest in the securities or any
derivative securities whether or not physical delivery is required.
11
<PAGE>
No Assurance of Profitability.
------------------------------
There can be no assurance the Company will be able to acquire a favorable
business. In addition, even if the Company becomes engaged in a new
business, there can be no assurance it will be able to generate revenues or
profits therefrom.
No Assurance of Conventional Financing for Business Acquired or Merged.
-----------------------------------------------------------------------
Although there are no specific business combinations or other transactions
contemplated by management, it may be expected any such target business
will present such a level of risk that conventional private or public
offerings of securities or conventional bank financing would not be available
to the Company once it acquires said business.
Time to Be Devoted by Management.
---------------------------------
The officer and director of the Company currently is employed or engaged
full time in other positions or activities and will devote only that amount
of time to the affairs of the Company which they deem appropriate. The
amount of time devoted by management to the affairs of the Company will
depend on the number and type of businesses under consideration at any given
time. In light of the competing demands for their time, it should be
anticipated that the officer and director will grant priority to their full-
time positions rather than the business affairs of the Company. (See
"MANAGEMENT").
Dependent on Outside Advisors
-----------------------------
In connection with its investigation of a possible business and in order to
supplement the business experience of management, the Company may employ
accountants, technical experts, appraisers, attorneys, or other consultants
or advisors. The selection of any such advisors will be made by management
without any input from controlling shareholders. Furthermore, it is
anticipated such persons may be engaged by the Company on an independent
basis without a continuing fiduciary or other obligation to the Company. The
Company has no arrangement to employ any of its officers or directors as
outside advisors. (See "BUSINESS").
Inability to Evaluate Investments
---------------------------------
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exclusive
investigation and analysis of a business. Therefore, management decisions
will likely be made without detailed feasibility studies, independent
12
<PAGE>
analysis, market surveys, and the like which, if the Company had more funds
available, would be desirable. The Company will be particularly dependent in
making decisions on information provided by the promoter, owner, sponsor, or
others associated with the businesses seeking the Company's participation,
and which will have a direct economic interest in completing a transaction
with the Company. (See "BUSINESS").
Possible Consequences of Business Reorganization
------------------------------------------------
It is likely the Company will issue additional shares of Common Stock
or preferred stock in connection with its potential merger, consolidation, or
other business reorganization, and that the proceeds of the offering will be
used in the business of the acquisition or merger candidate (the Company will
not make loans of the net proceeds of the offering). The consequences may be a
change of control of the Company; significant dilution to the public
shareholders' investment; and, a material decrease in the public
shareholders' equity interest in the Company. Since the Company has not made
any determination with respect to the acquisition of any specific business,
it cannot speculate on the form of any potential business reorganization or
the amount of securities which the Company may issue in connection therewith.
The board of directors may issue additional securities of the Company on
terms and conditions which the board of directors, in its sole discretion,
determines to be in the best interest of the Company and without seeking
shareholder approval. (See "BUSINESS").
Limited Rights of Shareholders in an Acquisition
------------------------------------------------
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by Rule 419, the
Company's shareholders may not be afforded an opportunity specifically to
approve or disapprove any particular business reorganization or acquisition.
Except under certain circumstances, the directors of the Company will be able
to consummate an acquisition by or of the Company without the approval of the
shareholders of the company. Under applicable corporate law, only in the
event of a merger, consolidation, or sale of all or substantially all of the
assets of the Company (but not a target company), will a shareholder of this
Company have the right to object to the merger, consolidation, or sale and
assert his or her dissenter's right to appraisal of his or her shares. If an
acquisition is consummated in the form of an exchange of securities, no
shareholder of the Company will have the right to object thereto and claim
dissenter's rights.
Limitation on Acquisitions
--------------------------
The Company is subject to Rule 419 and certain reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
will be required to furnish certain information about significant
13
<PAGE>
acquisitions, including audited financial statements for the company(s)
acquired for one, two, or three years, depending on the relative size of the
acquisition. Consequently, the acquisition prospects available to the
Company would be limited to those that can provide the required audited
financial statements. (See "BUSINESS: Selection of a Business").
Leverage
--------
A business acquired through a leveraged buy-out, i.e., financing the
acquisition of the business by borrowing on the assets of the business to be
acquired, will be profitable only if it generates enough revenues to cover
the related debt and expenses. This practice could increase the Company's
exposure to larger losses. There can be no assurance any business acquired
through a leveraged buy-out will generate sufficient revenues to cover the
related debt and expenses. The use of leverage to consummate a business
combination may reduce the ability of the Company to incur additional debt,
make other acquisitions, or declare dividends, and may subject the Company's
operations to strict financial controls and significant interest expense. It
may be expected the Company will have few, if any, opportunities to utilize
leverage in an acquisition. Even if the Company is able to identify a
business where leverage may be used, there is no assurance financing will be
available, or if available, on terms acceptable to the Company. (See
"BUSINESS: Leverage")
We face many competing companies with more experience than us.
--------------------------------------------------------------
In relation to our competitors, we are and will continue to be an
insignificant participant in the business of seeking business combinations.
A large number of established and well-financed entities, including venture
capital firms, have recently increased their merger and acquisition
activities. Most of these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we and,
consequently, we will be at a competitive disadvantage in identifying
suitable merger or acquisition candidates and successfully consummating a
proposed merger or acquisition. Also, we will be competing with a large
number of other small blank check companies.
There may be a conflict of interest risk associated with management.
--------------------------------------------------------------------
A conflict of interest may arise between management's personal financial benefit
and management's fiduciary duty to you. You should note that management will
retain substantial control even after the offering is completed. Our
management would have continuing control. Further, management's interest in
their own financial benefit may at some point compromise their fiduciary duty
to you. No proceeds from this offering will be used to purchase directly or
indirectly any shares of the common stock owned by management or any present
shareholder, director or promoter. Our directors and officers are or may
14
<PAGE>
become, in their individual capacities, an officer, director, controlling
shareholder and/or partner of other entities engaged in a variety of
businesses. Our directors and officers engaged in business activities
outside of this Company, and the amount of time they will devote to our
business will only be about five (5) to ten (10) hours each month. There
exist potential conflicts of interest including allocation of time between
us and these other business entities. We will not purchase the assets of any
company which is beneficially owned by any of our officers, directors,
affiliates or associates.
There are possible disadvantages associated with a blank check offering.
------------------------------------------------------------------------
Our business will most likely involve the acquisition of or merger with a
company which does not need substantial additional capital but which desires to
establish a public trading market for our shares. A company which seeks our
participation in attempting to consolidate our operations through a merger,
reorganization, asset acquisition, or some other form of combination may desire
to do so to avoid what they may deem to be adverse consequences of themselves
undertaking a public offering. Factors considered may include:
o Time delays
o Significant expense
o Loss of voting control
o The inability or unwillingness to comply with various federal and state
laws enacted for your protection
In making an investment in us, you may be doing so under terms which may
ultimately be less favorable than making an investment directly in a company
with a specific business. You may not be afforded an opportunity to
specifically approve or consent to any particular stock buy-out transaction.
Shareholders are subject to lack of diversification in their investment in us.
----------------------------------------------------------------------------
In the event we are successful in identifying and evaluating a suitable
business combination, we will, in all likelihood, be required to issue our
common stock in an acquisition or merger transaction. Inasmuch as our
capitalization is limited and the issuance of additional common stock will
result in a dilution of interest for present and prospective shareholders, we
will only negotiate one acquisition or merger.
There may be tax consequences to our activities which may adversely effect the
company or our investors.
--------------------------------------------------------------------------
In the course of any acquisition or merger we may undertake, a substantial
amount of attention will be focused upon federal and state tax consequences
to both us and the acquisition candidate. Presently, under the provisions of
15
<PAGE>
federal and various state tax laws, a qualified reorganization between
business entities will generally result in tax-free treatment to the parties
to the reorganization. While we expect to undertake any merger or acquisition
so as to minimize federal and state tax consequences to both us and the
acquisition candidate, such business combination might not meet the statutory
requirements of a reorganization or the parties might not 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
that may have a substantial adverse effect on us.
A substantial amount of control is held by present management and shareholders.
-----------------------------------------------------------------
Assuming the sale of all the shares offered, the shares of common stock
purchased by the public will represent 54.55% of our outstanding common stock
after the completion of this offering. Therefore, our present stockholders
will own a 45.45% interest in us and will not continue to be able to elect
our directors, appoint our officers, and control our affairs and operations.
Our articles of incorporation do not provide for cumulative voting.
You are subject to dilution.
----------------------------
The difference between the initial public offering price per share of common
stock and the net tangible book value per share after this offering constitutes
the dilution to investors in this offering. Net tangible book value per share
of common stock is determined by dividing our net tangible book value (total
tangible assets less total liabilities) by the number of shares of common stock
outstanding.
Assuming the sale of the maximum number of shares (based on our financial
statements as of June 30, 2000), new investors will incur an immediate dilution
of approximately $0.0205 per share after the offering of the maximum number of
shares is consummated. The existing stockholder of our company acquired his
shares of common stock at a price of $.001 per share which is $.049 per share
lower than the offering price of the shares. Accordingly, new investors will
bear virtually all of the risks inherent in an investment in this company. See
"Dilution." No resale of the shares can be effected until the same are released
from the Rule 419 escrow.
There may be unexpected year 2000 risks.
----------------------------------------
Currently, we do not rely on any computer or computer programs that will
materially impact our operations in the event of a Year 2000 disruption.
However, like any other company, advances and changes in available technology
can significantly impact our business and operation. Although we have not
identified any specific year 2000 issues, the "Year 2000" problem creates risk
for us from unforeseen problems in computer systems which we may acquire in the
future or the computer systems of third parties, including but not limited to
any acquisition candidate and/or financial institutions, with whom we transact
business. Our failures and/or third parties' computer systems could have a
material impact on our ability to conduct our business. Prior to effecting a
business combination, we intend to assess the Year 2000 Risks associated with
the acquired business. See "Plan of Operation".
16
<PAGE>
The common stock you buy is considered penny stock.
---------------------------------------------------
It is likely that our common stock will be subject to the regulations on penny
stocks; consequently, the market liquidity for our common stock may be
adversely affected by regulations limiting the ability of broker/dealers to
sell our common stock and the ability of purchasers in this offering to sell
their securities in the secondary market (following termination of the Rule 419
Escrow).
The SEC adopted regulations that generally define penny stocks to be any equity
security other than a security excluded from such definition by Rule 3a51-1.
These exemptions include, but are not limited to (a) an equity security issued
by an issuer that has (i) net tangible assets of at least $2,000,000, if an
issuer has been in continuous operations for at least three years; (ii) net
tangible assets of at least $5,000,000, if an issuer has been in continuous
operation for less than three years; or (iii) average revenue of at least
$6,000,000 for the preceding three years; (b) except for purposes of Section
7(b) of the Exchange Act and Rule 419, any security that has a price of $5.00
or more; and (c) a security that is authorized or approved for authorization
upon notice of issuance for quotation on the National Association of Securities
Dealers Automated Quotation System (NASDAQ).
There may not a public market for the shares you buy.
-----------------------------------------------------
There is no current trading market for the shares and there can be no assurance
that a trading market will develop, or, if a trading market does develop, that
it will be sustained even after we identify a merger candidate and consummate a
business combination. The shares, to the extent that a market develops for the
shares at all, will likely appear in what is customarily known as the "pink
sheets" or on the NASD's Over-the-Counter Bulletin Board, which may limit the
marketability and liquidity of the shares. According to Rule 419, all shares
issued by a blank check company, must be placed in the Rule 419 Escrow account.
These shares will not be released from the Rule 419 Escrow until (i) the
consummation of a merger or acquisition as provided for in Rule 419 or (ii) the
expiration of 18 months from the date of this Prospectus. There is no present
market for our common stock and there is no likelihood of any active and liquid
public trading market developing following the release of securities from the
Rule 419 Escrow. Thus, stockholders may find it difficult to sell their shares.
You may be exposed to risks associated with operations in foreign countries.
---------------------------------------------------------------------------
Our business plan is to seek to acquire or merge with potential businesses that
may, in the opinion of management, warrant our involvement. Management's
discretion is unrestricted, and we may participate in any business whatsoever
that may in our opinion meet the business objectives we
17
<PAGE>
have addressed. Indeed, we may effectuate a business combination with another
business outside the United States. We have not limited the scope of our search
to a particular region or country. To the extent that the acquired business may
be located or operate in a foreign jurisdiction, our operations may be
adversely affected to the extent of the existence of unstable economic, social
or political conditions in these particular foreign regions and countries.
No Underwriter
--------------
We are selling the shares through our president without the use of a
professional securities underwriting firm. Consequently, there may be less
due diligence performed in conjunction with this offering than would be
performed in an underwritten offering.
Use of Proceeds
---------------
Of the $75,000 offering proceeds deposited into the escrow account,
10% or $7,500 may be released to us prior to a confirmation offering in which
you reconfirm your investment in accordance with procedures required by Rule
419. However, we do no intend to request release of these funds from the
escrow account. Accordingly, we will receive all of the escrowed funds in
the event a business combination is closed under the provisions of Rule 419.
We have not incurred and do not intend to incur in the future any debt
from anyone other than management for our organizational activities. Debt to
management will not be repaid. Management is not aware of any circumstances
under which this policy, through its own initiative, may be changed.
Accordingly, no portion of the proceeds are being used to repay debt.
FORWARD-LOOKING STATEMENTS
--------------------------
This prospectus contains forward-looking statements. We intend to identify
forward-looking statements in this prospectus using words such as "believes,"
"intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are
based on our beliefs as well as assumptions we made using information
currently available to us. Because these statements reflect our current views
concerning future events, these statements involve risks, uncertainties and
assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements. Some, but not all, of the
factors that may cause these differences include those discussed in the Risk
Factors section. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus.
18
<PAGE>
YOUR RIGHTS UNDER RULE 419
--------------------------
It is important that you know that we have had absolutely no preliminary
contact or discussion with any representatives of any business regarding the
possibility or potential for any acquisition or merger. This offering is
being conducted according to Rule 419. You have certain rights and will
receive the substantive protection provided by this Rule. To that end:
The securities purchased by you and other investors and the funds received in
the offering will be deposited and held in the escrow account until an
acquisition meeting specific criteria is completed.
Before the acquisition can be completed and before the funds can be released
to us and securities can be released to you, we are required to update the
registration statement with a post-effective amendment which indicates
specific details regarding the proposed merger or business combination.
Within the five days after the effective date, we are required to furnish you
with the prospectus containing the terms of a reconfirmation offer and
information regarding the proposed acquisition candidate and our business,
including audited financial statements.
Acquisition criteria
--------------------
Rule 419 requires that, before the funds and the securities can be released,
we must first execute an agreement to acquire a candidate meeting certain
specified criteria. The agreement must provide for the acquisition of a
business or assets for which the fair value of the business represents at
least 80% of the maximum offering proceeds. The agreement must include, as a
precondition to its closing, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm
their investment. For purposes of the offering, the fair value of the
business or assets to be acquired must be at least $60,000 (80% of $75,000)
if the maximum amount is raised, and $32,000 (80% of $40,000) if the minimum
amount is raised. We will not acquire or merge with any business or company
in which any of our officers or directors or associated persons have any
relationship. Any merger or acquisition will be strictly at arms length.
While we do not anticipate seeking an independent appraisal of any proposed
merger or acquisition, we do intend to fully disclose the nature and terms of
any business combination in a post-effective amendment.
Post-effective amendment
------------------------
Once the agreement governing the acquisition of a business meeting the
required criteria has been executed, Rule 419 requires us to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information about the proposed acquisition candidate
and their business, including audited financial statements, the results of
this offering and the use of the funds disbursed from the escrow account.
The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer must
include certain prescribed conditions which must be satisfied before the
funds and securities can be released from escrow.
19
<PAGE>
Reconfirmation of offering
---------------------------
The reconfirmation offer must commence after the effective date of the post-
effective amendment. Under Rule 419, the terms of the reconfirmation offer must
include the following conditions:
o The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account within
5 business days after the effective date of the post-effective amendment.
o Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to notify
us in writing that the investor elects to remain an investor.
o If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion
of the funds and any related interest or dividends held in the escrow
account on the respective investor's behalf will be returned to the
investor within 5 business days by first class mail or other equally
prompt means.
o The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $60,000;,
and 80% of the minimum offering proceeds equaling $32,000 elect to
reconfirm their investment.
o If a closed acquisition has not occurred within 18 months from the date
of this prospectus, the funds held in the escrow account shall be
returned to all investors on a proportionate or pro-rata basis within 5
business days by first class mail or other equally prompt means.
-?-
Release of securities and funds.
--------------------------------
The funds will be released to us, and the securities will be released to you,
only after:
o The escrow agent has received a signed representation from us and any
other evidence acceptable by the escrow agent.
o We have executed an agreement for the acquisition of an acquisition
candidate for which the fair market value of the business represents at
least 80% of the minimum offering proceeds and has filed the required
post-effective amendment.
o The post-effective amendment has been declared effective.
20
<PAGE>
o We have satisfied all of the prescribed conditions of the
reconfirmation offer.
o The closing of the acquisition of the business with a fair value of at
least 80% of the maximum proceeds.
DILUTION
--------
The difference between the public offering price per share and the pro forma
net tangible book value per share of common stock of the company after this
offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the company (total tangible assets less total liabilities) by the
number of outstanding shares of common stock. Dilution arises mainly from
the arbitrary decision by us as to the offering price per share. Dilution of
the value of the shares purchased by the public in this offering will also be
due, in part, to the lower book value of the shares presently outstanding,
and in part, to expenses incurred in connection with the public offering.
Net tangible book value is the net tangible assets of the company (total
assets less total liabilities and intangible assets; see "Financial
Statements"). As of June 30, 2000, the Company had an unaudited net tangible
book value deficit (total tangible assets less total liabilities) of $2,000
or a net tangible book value deficit per share of common stock of
approximately $0. (see "CERTAIN TRANSACTIONS"). The information below sets
forth the dilution to persons purchasing shares in this offering without
taking into account any changes in the net tangible book value of the Company
after June 30, 2000, except the sale of the minimum and maximum number of
Units offered at the public offering price and receipt of the net proceeds
therefrom.
<TABLE>
<CAPTION>
DILUTION
Minimum Maximum
------- -------
<S> <C> <C>
Public Offering Price Per Share $0.025 $0.025
Net Tangible Book Value Per Share $0.001 $0.001
Before Offering
Net Tangible Book Value Per Share
After Offering $0.011 $0.015
Increase Per Share Attributable to
Payment by Public Investors $0.010 $0.014
Dilution Per Share to Public Investors 53.3% 38.4%
</TABLE>
21
<PAGE>
USE OF PROCEEDS
---------------
The gross proceeds of this offering will be $75,000. While Rule 419,
prior to the reconfirmation of the offering permits, 10% of the funds ($7,500)
to be released from escrow to us. We do not intend to request release of these
funds. This offering is contingent on the entire offering being sold and will
be sold on a first come, first served basis. If subscriptions exceed the amount
being offered, these excess subscriptions will be promptly refunded without
deductions for commissions or expenses. Accordingly, we will receive these
funds in the event a business combination is closed in accordance with Rule 419.
Under Rule 419, after the reconfirmation offering and the closing of
the business combination, and assuming the successful completion of this
offering, $75,000, plus any dividends received, but less any amount returned to
investors who did not reconfirm their investment under Rule 419, will be
released to us.
We have considerable discretion over how to use a significant portion of
the net proceeds of this offering. We cannot assure investors that our use
of the net proceeds will not vary substantially due to unforeseen factors.
The proceeds if and when made available to use will be used to pay the
following expenses in order stated:
<TABLE>
<CAPTION>
USE OF PROCEEDS
MINIMUM MAXIMUM
------- -------
<S> <C> <C>
Offering Expenses(1) 3,500 3,500
Escrow Fees(2) 500 500
TOTAL EXPENSES 4,000 4,000
Working Capital 36,000 71,000
TOTAL EXPENSES+WORKNG CAPITAL(3) 40,000 75,000
</TABLE>
(1) Offering costs include filing, printing, legal, accounting, transfer
agent and escrow agent fees.
(2) The proceeds received in this offering will be put into the escrow
account pending closing of a business combination and
reconfirmation. (See Exhibit 2.1 Escrow Agreement.)
22
<PAGE>
(3) All offering proceeds will be held in escrow pending a business
combination. We will not request a release of 10% of these funds
under Rule 419.
There will be no compensation paid or due or owing to any officer or director.
Upon the consummation of a business combination and the reconfirmation of the
investors' purchase of the shares, the balance upon the deposited funds will
be released to use and may be used to offset the expenses of consummating a
business legal fees will not be a criteria for the consummation of a business
combination including the preparation and filing of a post-effective
amendment to the registration statement.
We will use the business office of its President, rent free, until such time
as we consummate a business combination of the Rule 419 Escrow is otherwise
terminated.
No portion of the proceeds of the offering will be paid to officers,
directors and/or their affiliates or associates. Expenses will be paid from
(I) our working capital and (II) the 10% of the proceeds of the offering to
be distributed to use pursuant to Rule 419. If this capital is insufficient,
the company may seek to obtain additional financing through offerings of
equity and/or debt securities or borrowings if in fact we are able. It is
unlikely that we will seek loan financing as the costs of our operations are
negligible and we do not expect to incur any significant additional costs.
This loan is available at our discretion but we cannot guarantee that it will
be available. If we are only able to raise the minimum amount of $40,000 and
no additional funds are secured, then we face the risk that our company might
be under-funded and your investment in our might be substantially at risk.
Any loan undertaken by us will be repaid in lump sum from the proceed we
except to derive from the sale of the company to a merger candidate upon
receipt of final payment.
Working Capital
---------------
Upon consummation of the offering, we believe that we will have sufficient
working capital to pay expenses related to (1) to the offering, (2) the
effectuation of a business combination and (3) general administrative
expenses over the next 18 month period. We believe this is the case because
of our minimal operating expenses and the fact that no officers and directors
will receive any compensation in the form of income, salary wages
commissions, etc., in connection with any services rendered for the benefit
of our company.
Working capital is expected to include incidental expenses related to the
marketing of our company as a vehicle for a merger candidate seeking to
become fully reporting as well as for incidental operation expenses to
include basic office supplies. To the extent that these funds are not used,
they will be deposited in an interest bearing money market account and would
be available to the merger candidate upon consummation of a merger or
acquisition.
23
<PAGE>
Other Arrangements
------------------
The Company has no agreement or understanding, express or implied, with
any officer, director, or promoter, or their affiliates or associates,
regarding employment with the Company or compensation for services. The
Company has no plan, agreement, or understanding, express or implied, with
any officer, director, or promoter, or their affiliates or associates,
regarding the issuance to such persons of any shares of the Company's
authorized and unissued Common Stock. The existing officers and directors
reserve the right to acquire Units in this offering. There is no
understanding between the Company and any of its present shareholders
regarding the sale of a portion or all of the Common Stock currently held by
them in connection with any future participation by the Company is a business.
There are no other plans, understandings, or arrangements whereby any of the
Company's officers, directors, principal shareholders, or promoters, or any of
their affiliates or associates, would receive funds, stock, or other assets in
connection with the Company's participation in a business. No advances have
been made or contemplated by the Company to any of its officers, directors,
principal shareholders, or promoters, or any of their affiliates or associates.
After the Company reaches an agreement for acquisition of a business,
it is required by Rule 419 to prepare and disseminate the Amendment to
all investors, which will describe the business to be acquired and
provide more specific information on the use of the net proceeds of the
offering in such business. The Amendment will also provide information on
the proposed use of any proceeds obtained from the exercise of warrants in
the business acquired by the Company.
Except for reimbursement of offering costs and expenses incurred by
officers and directors on Company matters described above, no portion of the
net proceeds of the offering may be paid to officers, directors, promoters,
or their affiliates or associates, directly or indirectly, as consultant
fees, officer salaries, director fees, purchase of their shares, or other
payments. No portion of the net proceeds will be used to make loans to any
person. The Company will not borrow funds and use the proceeds therefrom to
make payments to the Company's officers, directors, or promoters, or their
affiliates or associates.
The Company has no agreement or understanding with any consultant or
advisor to provide services in connection with any future business
acquisition. The Company does not anticipate it will engage consultants or
advisors specializing in business acquisitions or reorganizations, although
the possibility exists management may find it to be beneficial to the Company
to retain the services of such a consultant. In no circumstances will the
Company retain the services of any consultant who is also an officer,
director, or promoter, of the Company, or their affiliates and associates.
Compensation to a consultant may take various forms, including one time cash
payments, payments based on a percentage of revenues or product sales
24
<PAGE>
volume, payments involving issuance of securities (including those of the
Company) or any combination of these or other compensation arrangements.
The Company estimates any fees for such services paid in cash will not
exceed 10% of the amount of the securities issued by the Company to
acquire a business. The Company will not have funds to pay a retainer in
connection with any consulting arrangement, and no fee will be paid unless
and until an acquisition is completed in accordance with Rule 419. None of
the Company's officers, directors, or promoters have, in the past, used any
particular consultant or advisor on a regular basis.
The following table(s) set forth the percentage of equity to be purchased by
public investors in the offering compared to the percentage equity to be
owned by the present stockholders, and the comparative amounts paid for the
shares by the public investors as compared to the total consideration paid by
the present stock holders of the company.
<TABLE>
<CAPTION>
Assuming the Minimum Number of Shares Sold
------------------------------------------
Shares Approx Percent Total Approx. Percent
Purchased of Total Shares Dollars of Total Dollars
<S> <C> <C> <C> <C>
Public
Stockholders 1,600,000 44.4% 40,000 95.2%
Present
Stockholders 2,000,000 55.6% 2,000 4.8%
Total 3,600,000 100.0% 43,000 100.0%
Assuming the Maximum Number of Shares Sold
------------------------------------------
Public
Stockholders 3,000,000 60.0% 75,000 97.4%
Present
Stockholders 2,000,000 40.0% 2,000 2.6%
Total 5,000,000 100.0% 77,000 100.0%
</TABLE>
25
<PAGE>
CAPITALIZATION
--------------
The following table sets forth our capitalization as of June 30, 2000, and
pro-forma as adjusted to give close to the sale of 3,000,000 shares
offered by us.
<TABLE>
<CAPTION>
Capitalization
Actual As Adjusted
------ -----------
<S> <C> <C>
Long-term debt
Stockholders' equity:
Common stock, $.001 par value; - -
authorized 20,000,000 shares,
issued and outstanding
2,000,000 shares 2,000 5,000
Additional paid-in capital 0 72,000
Deficit accumulated during the
development period ( 0) ( 0)
Total stockholders equity 2,000 77,000
Total Capitalization 2,000 77,000
</TABLE>
PROPOSED BUSINESS
-----------------
History and Organization
We are a Nevada corporation incorporated on March 29, 2000 for the purpose of
acquiring or merging with an unspecified operating business. We are a "blank
check company" as defined in Rule 419. The Company was organized for the
purpose of seeking, investigating, and ultimately acquiring an interest in
business with long-term growth potential. Persons should not purchase
shares in the offering if they expect short-term earnings or appreciation in
the value of the Company. The Company currently has no commitment or
arrangement to participate in a business and cannot now predict what type of
business it may enter into or acquire. It is emphasized that the business
objectives discussed herein are extremely general and are not intended to be
restrictive on the discretion of the Company's management.
Persons purchasing shares in the offering will be entrusting their funds
to the Company's management, subject to the requirements of Rule 419. The
net proceeds of the offering are not specifically allocated to identified
purposes or allocated to the acquisition of any specific type of business
venture. Decisions concerning these matters may be made by management
without shareholder action, except for the right of each investor to recover
his pro rata portion of the Deposited Funds in accordance with Rule 419. (See
"USE OF PROCEEDS.")
Management anticipates that it may be able to participate in only one
potential business venture, due primarily to the Company's limited financing.
This lack of diversification should be considered a substantial risk of
investing in the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
Selection of a Business
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The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors,
professional advisors, securities broker-dealers, venture capitalists,
members of the financial community, and others who may present unsolicited
proposals. The Company will seek businesses from all known sources, but will
rely principally on personal contacts of its officers and directors and their
affiliates, as well as indirect associations between them and other business
and professional people. While it is not presently anticipated that the
Company will engage unaffiliated professional firms specializing in business
acquisitions on reorganizations, such firms may be retained if management
deems it in the best interest of the Company.
Compensation to a finder or business acquisition firm may take various
forms, including one-time cash payments, payments based on a percentage of
revenues or product sales volume, payments involving issuance of securities
(including those of the Company), or any combination of these or other
compensation arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services, but estimates that any fees for
such services paid in cash will not exceed 10% of the gross proceeds of this
offering and/or equity securities (not debt) equal to 10% of the amount of
the securities issued by the Company to acquire a business. If a finder or
business acquisition firm is utilized by the Company, the cost may be paid
out of the net proceeds of this offering. (See "USE OF PROCEEDS.")
The board of directors has adopted a policy, which may be rescinded or
amended only by majority vote of the Company's stockholders who do not hold
any common stock presently outstanding (whether now held or hereafter
acquired) and will expire by its terms on the date an acquisition of a
business venture is consummated, prohibiting the payment, either directly or
indirectly, of any finder's fee or similar compensation to any person who has
served as an officer or director of the Company prior to the acquisition, or
who is a promoter. While the board of directors may seek a change in this
policy prior to an acquisition, no change may be made except by the vote
specified.
The Company will not restrict its search to any particular business,
industry, or geographical location, and management reserves the right to
evaluate and enter into any type of business in any location. The Company
may participate in newly organized business venture or a more established
company entering a new phase of growth or in need of additional capital to
overcome existing financial problems. Participation in a new business
venture entails greater risks since in many instances management of such a
venture will not have proved its ability, the eventual market of such
venture's product or services will likely not be established, and the
profitability of the venture will be unproven and cannot be predicted
accurately. If the Company participates in a more established firm with
existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or
reverse the circumstances leading to such financial problems.
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In seeking a business venture, the decision of management will not be
controlled by an attempt to take advantage of any anticipated or perceived
appeal of a specific industry, management group, product, or industry, but
will be based on the business objective of seeking long-term capital
appreciation in the real value of the Company. The Company will not acquire
or merge with a business or corporation in which the Company's officers,
directors, or promoters, or their affiliates or associates, have any direct
or indirect ownership interest.
The analysis of new businesses will be undertaken by or under the
supervision of the officers and directors (See "MANAGEMENT"). In analyzing
prospective businesses, management will consider, to the extent applicable,
the available technical, financial, and managerial resources, working capital
and other prospects for the future, the nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further
research, development, or exploration; the potential for growth and
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trade or service marks; name
identification; and other relevant factors.
It is possible that the Company may propose to acquire a business in the
development stage. A business is in the development stage if it is devoting
substantially all of its efforts to establishing a new business, and either
planned principal operations have not commenced or planned principal
operations have commenced but there has been not significant revenue
therefrom. Under Rule 419 the Company must acquire a business or assets for
which the fair value of the business represents at least 80% of the offering
proceeds, including funds received or to be received from the exercise of
warrants, less certain underwriting expenses. Accordingly, the Company's
ability to acquire a business in the development stage may be limited to the
extent it cannot locate such businesses with fair value high enough to
satisfy the requirements of Rule 419.
The Company will be subject to requirements of Rule 419 and certain
reporting requirements under the Exchange Act and will, therefore, be
required to furnish certain information about significant acquisitions,
including audited financial statements for the company(s) acquired, covering
one, two, or three years, depending on the relative size of the acquisition.
Consequently, acquisition prospects that do not have or are unable to obtain
the required audited statements which meet the requirements of Rule 419 and
the Exchange Act will not be appropriate for acquisition. The Company
anticipates that it will voluntarily prepare and file periodic reports under
the Exchange Act, notwithstanding the fact that such obligation may be
suspended under sections 15(d) of the Exchange Act.
The decision to participate in a specific business may be based on
management's analysis of the quality of the other firm's management and
personnel, the anticipated acceptability of new products or marketing
concepts, the merit of technological changes, and other factors which are
difficult, if not impossible, to analyze through any objective criteria. It
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is anticipated that the results of operations of a specific firm may not
necessarily be indicative of the potential for the future because of the
requirement to substantially shift marketing approaches, expand
significantly, change product emphasis, change or substantially augment
management, and other factors.
The Company will analyze all available factors and make a determination
based on a composite of available facts, without reliance on any single
factor. The period within which the Company may participate in a business
on completion of this offering cannot be predicted and will depend on
circumstances beyond the Company's control, including the availability of
businesses, the time required for the Company to complete its investigation
and analysis of prospective businesses, the time required to prepare
appropriate documents and agreements providing for the Company's
participation, and other circumstances. It is anticipated that the analysis
of specific proposals and the selection of a business will take several
months. Even after the Company has located a prospective acquisition
target, it will still have to comply with the reconfirmation mandate of Rule
419, which may take months. Persons should not purchase Units in this
offering if they expect a short-term appreciation in the value of the Company
or its securities.
Acquisition of Business
-----------------------
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, or other
reorganization with another corporation or entity; joint venture; license;
purchase and sale of assets; or purchase and sale of stock, the exact nature
of which cannot now be predicted. Notwithstanding the above, the Company
does not intend to participate in a business through the purchase of minority
stock positions. On the consummation of a transaction, it is likely that the
present management and shareholders of the Company will not be in control of
the Company. In addition, majority or all of the Company's directors may, as
part of the terms of the acquisition transaction, resign and be replaced by
new directors without vote of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the
entity participating in the business reorganization with the Company would
acquire a higher percentage of equity ownership in the Company. Although the
Company's present shareholders did not acquire their shares of Common Stock
with a view towards any subsequent sale in connection with a business
reorganization, it is not unusual for affiliates of the entity participating
in the reorganization to negotiate to purchase shares held by the present
shareholders in order to reduce the number of "restricted securities" held by
persons no longer affiliated with the Company and thereby reduce the
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potential adverse impact on the public market in the Company's Common Stock
that could result from substantial sales of such shares after the
restrictions no longer apply. Public investors will not receive any portion
of the premium that may be paid in the foregoing circumstances. Furthermore,
the Company's shareholders may not be afforded an opportunity to approve or
consent to any particular stock buy-out transaction. (See MANAGEMENT:
Conflicts of Interest.")
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms of such
registration rights and the number of securities, if any, which may be
registered cannot be predicted, it may be expected that registration of
securities by the Company in these circumstances would entail substantial
expense to the 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 such market.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to structure the acquisition as
a so-called "tax-free" event under sections 351 or 368(a) of the Internal
Revenue Code of 1986, (the "Code"). In order to obtain tax-free treatment
under section 351 of the Code, it would be necessary for the owners of the
acquired business to own 80% or more of the stock of the surviving entity.
In such event, the shareholders of the Company, including investors in this
offering, would retain less than XX% of the issued and outstanding shares of
the surviving entity. Section 368(a)(1) of the Code provides for tax-free
treatment of certain business reorganization between corporate entities where
on corporation is merged with or acquires the securities or assets of
another corporation. Generally, the Company will be the acquiring
corporation in such a business reorganization, and the tax-free status of the
transaction will not depend on the issuance of any specific amount of the
Company's voting securities. It is not uncommon, however, that as a
negotiated element of a transaction completed in reliance on section 368,
the acquiring corporation issue securities in such an amount that the
shareholders of the acquired corporation will hold XX% or more of the voting
stock of the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately prior
to the transaction would retain less than 50% of the issued and outstanding
shares of the surviving entity. Therefore, regardless of the form of the
business acquisition, it may be anticipated that the investors in this
offering will experience a significant reduction in their percentage of
ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring
entity in the foregoing circumstances, generally accepted accounting principles
will ordinarily require that such transaction be accounted for as
if the Company had been acquired by the other entity owning the business and,
therefore, will not permit a write-up in the carrying value of the assets of
the other company.
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The manner in which the Company participates in a business will depend
on the nature of the business, the respective needs and desires of the
Company and other parties, the management of the business, and the relative
negotiating strength of the Company and such other management.
It is possible that the Company will not have sufficient funds from the
proceeds of this offering to fully undertake such development, marketing, and
manufacturing of products which may be acquired. Accordingly, following the
acquisition of any such product rights, the Company may be required to either
seek additional debt or equity financing or obtain funding from third
parties, in exchange for which the Company would probably be required to give
up a portion of its interest in any acquired product. There is no assurance
that the Company will be able either to obtain additional financing or
interest third parties in providing funding for the further development,
marketing, and manufacturing of any products acquired.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require
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 such
closing, will outline the manner of bearing costs if the transaction is not
closed, will set forth remedies on default, and will include miscellaneous
other terms. It should be expected that one of the conditions will be
compliance with Rule 419, and reconfirmation by investors representing at
least 80% of the gross proceeds of the offering, after giving effect to the
exercise of all Warrants included in the Units sold in the offering.
It is anticipated that the investigation of specific businesses and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business, the costs
theretofore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business, the failure to consummate that transaction may result in
the loss to the Company of the related costs incurred which could materially
adversely affect subsequent attempts to locate and participate in additional
businesses.
Evaluation Criteria
-------------------
The analysis of potential business endeavors will be undertaken by or under
the supervision of Management, no member of which is professional business
analyst. Management is comprised of individuals of varying business
experiences, and Management will rely on its won business judgment in
formulating decisions as to the types of businesses that the company may
acquire or in which the company may participate. It is quite possible that
Management will not have any business experience or expertise in the type of
business engaged in by us ultimately acquired. Management will seek to
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examine those factors we have discussed when making a business decision;
however, the mention of such factors to be examined by Management with regard
to its determining the potential of a business endeavor should not be read as
implying any types of factors that Management may consider in evaluating a
potential acquisition.
Management anticipates the selection of an acquired business will be
complex and risky because of the competition for such business opportunities
among all segments of the financial community. The nature of the company's
search for the acquisition of an acquired business requires maximum
flexibility inasmuch as the company will be required to consider various
factors and divergent circumstances which my preclude meaningful direct
comparison among the various business enterprises, products or services
investigated. Investors should recognize that the possible lack of
diversification among our acquisition may not permit the company to offset
potential losses from on venture against profits from another. This should
be considered a negative factor affecting any decision to purchase the
shares. Management of the company will have virtually unrestricted
flexibility in identifying and selecting a prospective acquired business.
Management will consider, among other factors in evaluating a prospective
acquired business and determining the "fair market value" thereof, the
following:
o the acquired business' net worth;
o the acquired business' total assets;
o the acquired business' cash flow;
o costs associated with effecting the business combination;
o equity interest in and possible management participation in the
acquired business;
o earnings and financial condition of the acquired business;
o growth potential of the acquired business and the industry in which it
operates;
o experience and skill of management and availability of additional
personnel of the acquired business;
o capital requirements of acquired business;
o competitive position of acquired business;
o stage development of the product, process or service of the acquired
business;
o degree of current or potential market acceptance of the product,
process or service of the acquired businesses; and
o regulatory environment of the industry in which the acquired business
operates.
The foregoing criteria is not intended to be exhaustive; any evaluation
relating to the merits of a particular business combination will be based, to
the extent relevant, on the above factors as well as other considerations
deemed relevant by Management in connection with effecting a business
combination consistent with our business objectives. No particular
consideration may be given to any particular factor.
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Although we believe that locating and investigating specific business
proposals will take at least several months, the time this process will take
is difficult to predict. However, we cannot exceed the 18 month time
schedule set forth in Rule 419. See "Investors' Rights and Substantive
Protection Under Rule 419." The time and costs required to select and
evaluate an acquired business candidate (including conducting a due diligence
review) and to structure and consummate the business acquired business
candidate (including conducting a due diligence review) and to structure and
consummate the business combination (including negotiating relevant
agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state corporate laws) cannot presently be
ascertained with any degree of certainty.
We believe that we will make contact with business prospects primarily
through the efforts of our directors, officers and stockholders, who will
meet personally with existing management and key personnel, visit and inspect
material facilities, assets, and products and services belonging to such
prospects, and undertake such a further reasonable investigation as
management deems appropriate, to the extent of its limited financial
resources. Some acquired business candidates may be brought to our attention
from various unaffiliated sources, including securities broker/dealers,
investment bankers, venture capitalists, bankers, other members of the
financial community, and affiliated sources. While we do not presently
anticipate engaging the services of professional firms that specialize in
business acquisitions on any formal basis, we may engage such firms in the
future, in which event we may pay a finder's fee or other compensation. See
"Directors, Executive Officers, Promoters and Control Persons - - Finders'
Fees and Other Compensation."
To date, we have no selected any particular industry or any acquired business
in which to our business combination efforts. See "Risk Factors."
Operation of Business After Acquisition
---------------------------------------
The Company's operation following its acquisition of a business will be
dependent on the nature of the Business and the interest acquired. The
Company is unable to predict whether the Company will be in control of the
business or whether present management will be in control of the Company
following the acquisition. It may be expected that the business will present
various risks to investors herein, certain of which have been generally
summarized in the "RISK FACTORS" portion of this prospectus. The specific
risks of a given business cannot be predicted at the present time.
Leverage
--------
The Company may be able to participate in a business involving the use
of leverage. Leveraging a transaction involves the acquisition of a business
through incurring indebtedness for a portion of the purchase price of that
business, which is secured by the assets of the business acquired.
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One method by which leverage may be used is that the Company would
locate an operating business available for sale and arrange for the financing
necessary to purchase such business. Acquisition of a business in this
fashion would enable the Company to participate in a larger venture that its
limited funds would permit, or use less of its funds to acquire a business
and thereby commit its remaining funds to the operations of the business
acquired.
Leveraging a transaction would involve significant risks due to the
fact that the borrowing involved in a leveraged transaction will ordinarily
be secured by the combined assets of the Company and the business to be
acquired. If the combined enterprises are not able to generate sufficient
revenues to make payments on the debt incurred to acquire the business, the
lender would be able to exercise the remedies provided by law or by contract
and foreclose on substantially all of the assets of the Company.
Consequently, the Company's participation in a leveraged transaction may
significantly increase the risk of loss to the Company. During periods when
interest rates are relatively high, the benefits of leveraging are not as
great as during periods of lower interest rates because the investment in
the business held on a leveraged basis will only be profitable if it
generates sufficient revenues to cover the related debt and other costs of
the financing.
The likelihood of the Company obtaining a conventional bank loan for a
leveraged transaction would depend largely on the business being acquired and
its perceived ability to generate sufficient revenues to repay the debt.
Generally, businesses suitable for leveraging are limited to those with
income-producing assets that are either in operation or can be placed in
operation relatively quickly. The Company cannot predict whether it will be
able to locate any such business. As a general matter it may be expected
that the Company will have few, if any, opportunities to examine businesses
where leveraging would be appropriate.
Even if the Company is able to locate a business where leveraging
techniques may be used, there is no assurance that financing for the
acquisition will be available or, if available, on terms acceptable to the
Company. Lenders from which the Company may obtain funds for purposes of a
leveraged buy-out may impose restrictions of the future borrowing, dividend,
and operating policies of the Company. It is not possible at this time to
predict the restrictions, if any which lenders may impose or the impact
thereof on the Company.
Governmental Regulation
-----------------------
It is impossible to predict the government regulation, if any, to which
the Company may be subject until it has acquired an interest in a business.
The use of assets and/or conduct of businesses which the Company may acquire
could subject it to environmental, public health and safety, land use, trade,
or other governmental regulations and state or local taxation. In selecting a
business in which to acquire an interest, management will endeavor to
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ascertain, to the extent of the limited resources of the Company, the effects
of such government regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an interest in a
new or start-up business activity, it may not be possible to predict with any
degree of accuracy the impact of government regulation. The inability to
ascertain the effect of government regulation on a prospective business
activity will make the acquisition of an interest in such business a higher
risk.
Tax Considerations
------------------
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The
company will evaluate the possible tax consequences of any prospective
business combination and will endeavor to structure the business combination
so as to achieve the most favorable tax treatment to the company, the
Acquired Business and their respective stockholders. The IRS or other
appropriate state tax authorities may attempt to recharacterize the tax
treatment of a particular business combination; and, as a result there may be
adverse tax consequences to the company, the acquired business and their
respective stockholders.
Form and Structure of Acquisition
---------------------------------
Of the various methods and forms by which we may structure a transaction
acquiring another business management is likely to use, without limitation,
one of the following forms: (I) a leveraged buyout transaction in which most
of the purchase price is provided by borrowings (typically secured by assets
of the acquired business and intended to be repaid out of the cash flow of
the business) from one or more lenders or from the sellers in the form of a
deferred purchase price; (II) a merger or consolidation of the acquired
corporation into or with the company; (III) a merger or consolidation of the
acquired business corporation into or with a subsidiary of the company
organized to facilitate the acquisition (a "subsidiary merger"), or a merger
or consolidation of such a subsidiary into or with the acquired corporation
(a "reverse subsidiary merger"); (IV) an acquisition of all or a controlling
amount of the stock of the acquired corporation followed by a merger of the
acquired business into us; (V) an acquisition of the assets of a business by
use or a subsidiary organized for such a purpose; (VI) a merger or
consolidation of the company with or into the acquired Business or subsidiary
thereof; or (VII) a combination of any of the foregoing. The actual form and
structure for a business combination may also dependent upon numerous other
factors pertaining to the acquired business and its stockholders as well as
potential tax accounting treatments afforded the business combination.
The company may utilize cash (derived from the proceeds of this offering),
equity, debt or a combination of these as consideration in effecting a
business combination. Although the company has no commitments as of the date
of this prospectus to issue any shares of common stock other than a described
in the this Prospectus, the company will, in all likelihood, issue a
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substantial number of additional shares are issued, dilution to the interest
of the company's stockholders may occur. Additionally, if a substantial
number of shares of common stock are issued in connection with a business
combination, a change in control of the company may occur.
If securities of the company are issued as part of an acquisition, it cannot
be predicted whether they will be issued in reliance upon exemptions from
registration under applicable federal or state securities laws or will be
registered for public distribution. When registration of securities us
required, substantial cost may be incurred ant time delays encountered. In
addition, the issuance of additional securities and their potential sale in
any trading market which may develop in our common stock, of which there is
no assurance, may depress the price of the company's common stock in such a
market. Additionally, such issuance of addition securities by us would
result in a decrease in the percentage of the company's issued and
outstanding shares of common stock by the purchasers of the common stock
being offered hereby.
The Investment Company Act of 1940 may not limit the company's operations.
While the company will attempt to conduct its operations so as not to require
registration under the Investment Company Act of 1940, there can be no
assurance that the company will not be deemed to be subject to the Investment
Company Act of 1940.
There are currently no limitations relating to our ability to borrow funds to
increase the amount of capital available to us to effect a business
combination or otherwise finance the operations of the acquired business.
The amount and nature of any borrowings by us will depends on numerous
considerations, including our capital requirements, our perceived ability to
meet debt service on such borrowings and then prevailing conditions in the
financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or otherwise sought, would be
available on low terms deemed to the commercially acceptable and in the best
interest of the company. The inability of the company to borrow funds for an
addition infusion of capital into an acquired business may have material
adverse effects on the company's funds for an additional infusion of capital
into an acquired business may have material adverse effects on the company's
financial condition and future prospects. To the extent that debt financing
ultimately proves to be available, any borrowings rate fluctuations and
insufficiency of cash flow to pay principal and interest. Furthermore, and
acquired business may have already incurred debt financing and therefore, all
the risks inherent thereto. We do not believe that we will borrow funds in
any event so it is unlikely that we will face these issues.
Because of our small size, investors should carefully consider the business
constraints on our ability to raise additional capital when needed. Until
such time as any enterprise, product or service that we acquire generates
revenues sufficient to cover operating costs, it is conceivable that we could
find ourselves in a situation where we need additional finds in order to
continue our operations. This need could arise at a time when we are unable
to borrow funds and/or market acceptance for the sale of addition shares of
our common stock does not exist.
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The company's stockholders are relying upon the business judgment of
Management in connection with the proper expenditure of the funds raised in
this offering and in the future operations of the company. It is not
expected that stockholders of the company will be consulted with respect to
the expenditure of the proceeds of this offering or in connection with any
acquisition engaged in by us, unless required by law.
Daily Operations
----------------
We expect to use attorneys and accountants as necessary, and do not
anticipate a need to engage any full-time employees so long as we are seeking
and evaluating business opportunities. The need for employees and their
availability will be addressed in condition with the decision of whether or
not to acquire or participate in a specific business opportunity. We have
allocated a portion of the offering proceeds for general overhead. Although
there is no current plan to hire employees on a full-time or part-time basis,
some portion of working capital may be used to pay any part-time employees
hired.
Until an active business is commenced or acquired, we will have no employees
or day-to-day operations. We are unable to make any estimate as to the
future number of employees, which may be necessary, if any, to work for the
company though we doubt any employees will be hired at any time before
combination. If an existing business is acquired it is possible that its
existing staff would be hired by us. At the present time, it is our
intention to meet or be in telephone contact at least once a week and more
frequently if needed to review business opportunities, evaluate potential
acquisitions and otherwise operate the affairs of the company. Except for
reimbursement of reasonable expenses incurred on behalf of the company,
Management will not be compensated for these services rendered on behalf of
the company.
Competition
-----------
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by
virtue of their more substantial financial resources and prior experience in
business. There is no assurance that the Company will be successful in
obtaining suitable investments.
Offices
-------
The Company utilizes office space at 14601 Bellaire Blvd, Suite 338, Houston,
Texas 77083, provided by an officer, director, and principal shareholder of
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the Company at no cost to the Company. The Company will not pay rent for
this office space. The Company will reimburse clerical and office expenses,
such as telephone charges, copy charges, overnight courier service, travel
expenses, and similar costs incurred by Chris L. Patterson on Company
matters, which is estimated will not exceed, on average, $500.00 per month.
Employees
---------
The Company is a development stage company and currently has no employees.
Executive officers, who are not compensated for their time contributed to the
Company, will devote only such time to the affairs of the Company as they
deem appropriate. (See MANAGEMENT.") Management of the Company expects to
use consultants, attorneys, and accountants as necessary, and does not
anticipate a need to engage any full-time employees so long as it is seeking
and evaluating businesses. The need for employees and their availability will
be addressed in connection with a decision whether or not to acquire or
participate in a specific business industry.
Upon completion of this offering the company intends to effect a business
combination with an acquired business which the company believes has
significant growth company has no play, proposal, agreement, understanding,
understanding or arrangement to acquire or merge with any specific business
or company and we have not identified any specific business or company for
investigation and evaluation. The company intends to utilize either cash (to
be derived from the proceeds of this offering), equity, debt or a combination
thereof in effecting a business combination. It is likely that the company
will have to ability to effect only a single business combination.
Since its organization, our activities have been limited to the sale of
initial shares in connection with its organization, general corporate matters
and its preparation of the registration statement and prospectus for its
initial public offering. See "Plan of Operation." We do not intend to
engage in the business of investing, reinvesting or trading in securities as
a primary business or pursue of any which would render us an "investment
company" pursuant to the investment Company Act. See "Risk Factors."
Year 2000 Issues
----------------
The "Y2K" problem, as it has come to be known, refers to the fact that many
computer programs use only the last two digits to refer to a year and
therefore does not recognize a change in the first two digits. For example,
the year 2000 would be read as being the year 1900. If not corrected, this
problem could cause many computer applications to fail or create erroneous
results.
Currently we do not own computer equipment nor do we rely on any computer
programs that will materially impact the operations of the company in the
even of a Y2k disruption. However, like any other company advances and
changes any specific impact our business and operation. Consequently,
although we have not identified any specific Y2K issues, the "Y2K" problems
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create risk for the company from unforeseen problems in any computer systems
acquired in the future by the company or the computer systems of third
parties, including but not limited to financial institutions or vendors with
whom it transacts business and of any company which the company may acquire
or merge with in the future. Such failures of the company and/or third
parties' computer systems could have a material impact on our ability to
conduct its business as there can be no assurance that any of the parties
with whom the company transacts business including a potential target
candidate will be Y2K compliant prior to such date. We are unable to predict
the ultimate effect that the Y2K problem may have upon the company, in that
there is no way to predict the impact that the problem will have nation-wide
or world-wide and how the company will in turn be affected. In addition, the
company cannot predict the nature of its potential target candidate or others
with whom it will transact business who will fail to become Y2K compliant
prior to January 1, 2000. Significant Y2K difficulties on the part of
parties with whom the company transacts business could have a material
adverse impact upon the company. The company has not to date formulated a
contingency plan to deal with the potential non-compliance of vendors,
customers and others with whom it transacts business, including a potential
target company, but will be considering whether such a plan would be
feasible.
Prior to effecting a business combination, the company will evaluate and
assess the potential impact of the Y2K problem on the acquired business.
PLAN OF OPERATION
-----------------
We are a development stage entity, and have neither engaged in any
operations nor generated any revenues to date. As of June 30, 2000, we have
no significant expenses, with the exception, of incorporation fees, SEC
filing fees, and escrow establishment fees.
Substantially all of our expenses that will be funded from the money in
our treasury or if additional funds are required that may be funded by
management will be from our efforts to identify a suitable acquisition
candidate and close the acquisition. Management may agree to fund our cash
requirements until an acquisition is closed. So long as management does so,
we will have sufficient funds to satisfy our cash requirements and do not
expect to have to raise additional funds during the entire rule 419 escrow
period of up to 18 months from the date of this prospectus. This is
primarily because we anticipate incurring no significant expenditures.
Before the conclusion of this offering, we anticipate our expenses to be
limited to accounting fees, legal fees, telephone, mailing, filing fees, and
transfer agent fees.
We may seek additional financing. At this time we believe that the
funds to be provided by management will be sufficient for funding our
operations until we find an acquisition and therefore do not expect to issue
any additional securities before the closing of a business combination.
39
<PAGE>
However, we may issue additional securities, incur debt or procure other
types of financing if needed. We have not entered into any agreements, plans
or proposals for such financing and as of present have no plans to do so. We
will not use the offering funds as collateral or security for any loan or
debt incurred. Further, the offering funds will not be used to pay back any
loan or debts incurred by us. If we do require additional financing,
this financing may not be available to us, or if available, it may be on
terms unacceptable to us.
We had no Year 2000 problems, as our business is not dependent upon any
computer. However, the business we acquire could experience interruptions in
its business and significant losses if it or its customers or vendors rely on
computer information systems that were unable to accurately process dates
beginning on January 1, 2000.
RELATED PARTY TRANSACTIONS
--------------------------
A conflict of interest may arise between management's personal financial
benefit and management's fiduciary duty to you. Any remedy available under
the laws of Nevada, if management's fiduciary duties are compromised, will
most likely be prohibitively expensive and time consuming.
Neither our officer, director, promoters and or other affiliates of us,
have had any preliminary contact or discussions with any representative of
any other company or business regarding the possibility of an acquisition or
merger with us.
We have established a policy that prohibits transactions with or payment of
anything of value to any present officer, director, promoter or affiliate or
associate or any company that is in any way or in any amount beneficially
owned by any of our officer, director, promoter or affiliate or associate,
except as follows:
Our director and officer is or may become, in his individual capacity, an
officer, director, controlling shareholder and/or partner of other entities
engaged in a variety of businesses. Chris L. Patterson is engaged in business
activities outside of us, and the amount of time he will devote to our
business will only be about five (5) to twenty (20) hours each per month.
There exists potential conflicts of interest including allocation of time
between us and such other business entities.
Management is not aware of any circumstances under which the policies
described in this section, or any other section, of this prospectus, through
their own initiative, may be changed.
40
<PAGE>
DESCRIPTION OF CAPITAL STOCK
----------------------------
Authorized Capital Stock Under Our Shares of Capital Stock Outstanding
Articles of Incorporation After offering
---------------------------------- -----------------------------------
20,000,000 shares of common stock 5,000,000 shares of common stock-
assuming successful completion of
maximum offering.
3,600,000 shares of common stock-
assuming successful completion of
minimum offering.
All significant provisions of our capital stock are summarized in this
prospectus. However, the following description is not complete and is governed
by applicable Nevada law and our articles of incorporation and bylaws. We have
filed copies of these documents as exhibits to the registration statement
related to this prospectus.
Authorized Stock
----------------
The Company is authorized to issue 25,000,000 shares, consisting of
20,000,000 shares of Common Stock, par value $0.001 per share, of which
2,000,000 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.001 (the "Preferred Stock"), of which no shares have been
issued.
Common Stock
------------
Holders of Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of shareholders. Shares of Common Stock
do not carry cumulative voting rights and, therefore, holders of a majority
of the outstanding shares of Common Stock will be able to elect the entire
board of directors, and, if they do so, minority shareholders would not be
able to elect any members to the board of directors. The Company's board of
directors has authority, without action by the Company's shareholders, to
issue all or any portion of the authorized but unissued shares of Common
Stock, which would reduce the percentage ownership in the Company of its
shareholders and which may dilute the book value of the Common Stock.
Shareholders of the Company have no pre-emptive rights to acquire additional
shares of Common Stock. The Common Stock is not subject to redemption
and carries no subscription or conversion rights. In the event of liquidation
of the Company, the shares of Common Stock are entitled to share equally in
corporate assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable.
41
<PAGE>
Holders of Common Stock are entitled to receive such dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. The Company has not paid dividends on its Common
Stock and does not anticipate that it will pay dividends in the foreseeable
future.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to the ownership thereof. The holders of shares of common stock of
the company do not have cumulative voting rights, which means that the
holders of more than 50% of such outstanding shares, voting for the election
of directors, can elect all directors of the company if they so choose and,
in such an event, the holders of the remaining shares will not be able to
elect any of our directors. At the completion of the offering, our present
officers and directors will own approximately 40% of the then outstanding
shares if the maximum number if shares is sold and 55% of the then
outstanding shares if the minimum number of shares is sold (assuming no
shares are acquired in the offering).
The Common Stock is immediately detachable on delivery from the escrow required
by Rule 419, so that the Common Stock can be separately transferable
on issuance. (See "COMMON STOCK" and "WARRANTS," below.)
You have voting rights for your shares.
---------------------------------------
You and all other common stockholders may cast one vote for each share
held of record on all matters submitted to a vote. You have no cumulative
voting rights in the election of director, this means, for example, that if
there are three directors up for election, you cannot cast 3 votes for one
director and none for the other two director.
You have dividend rights for your shares.
-----------------------------------------
You and all other common stockholders are entitled to receive dividends
and other distributions when declared by our board of director out of the assets
and funds available, based upon your percentage ownership of us.
You should not expect to receive any dividends on shares in the near future,
even after a merger. This investment is inappropriate for you if you need
dividend income from an investment in shares.
Preferred Stock
---------------
Our board of director can issue preferred stock at any time with any legally
permitted rights and preferences without your approval.
Our board of director, without your approval, is authorized to issue
preferred stock. They can issue different classes of preferred stock, with
some or all of the following rights or any other legal rights they think are
appropriate, such as:
42
<PAGE>
o Voting
o Dividend
o Required or optional repurchase by us
o Conversion into common stock, with or
without additional payment
o Payments preferred stockholders will
receive before common stockholders if we go out
of business
The issuance of preferred stock could provide us with flexibility for
possible acquisitions and other corporate purposes, but it also could render
your vote meaningless because preferred stockholders could own shares with a
majority of the votes required on any issue. Someone interested in buying our
company may not follow through with their plans because they could find it
more difficult to acquire, or be discouraged from acquiring, a majority of
our outstanding stock because we issue preferred stock.
Warrants
--------
There have been no warrants issued by the Company.
Transfer Agent
--------------
Upon the closing of this offering, the transfer agent for the Company's
securities will be Shelley Godfrey, Pacific Stock Transfer Company, 5844 S.
Pecos, Suite D, Las Vegas, Nevada 89120, (702)-361-3033.
Reports to Stockholders
-----------------------
The company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable after the end
of each fiscal year. The company's fiscal year ends on December 31. In
addition, we intend to issue unaudited interim reports and financial statements
on a quarterly basis.
Dividends
---------
The company has not declared any dividends since inception, and has no
present intention of paying any cash dividends on its common stock in the
foreseeable future. The payment by us of dividends, if any, in the future,
rests within the discretion of its Board of Directors and will depends, among
other things, upon our earnings, its capital requirements and its financial
condition, as well as other relevant factors.
43
<PAGE>
You have rights if we go out of business.
-----------------------------------------
If we go out of business, you and all other common stockholders will be
entitled to share in the distribution of assets remaining after payment of all
money we owe to others and any priority payment required to be made to our
preferred stockholders. Our director, at his discretion, may borrow funds
without your prior approval, which potentially further reduces the amount you
would receive if we go out of business.
You have no right to acquire shares of stock based upon your percentage
ownership of our shares when we sell more shares of our stock to other people.
We do not provide our stockholders with preemptive rights to subscribe
for or to purchase any additional shares offered by us in the future. The
absence of these rights could, upon our sale of additional shares of common or
preferred stock, result in a decrease in the percentage ownership that you hold
or percentage of total votes you may cast.
SHARES ELIGIBLE FOR FUTURE SALE
-------------------------------
Of the shares outstanding after the offering, the 3,000,000 shares sold
in this offering will have been registered with the SEC and can be freely
resold, except if they are acquired by our director, executive officer or
other persons or entities that they control or who control them. Our
director, executive officer, and persons or entities that they control or
who control them will be able to sell shares of stock so long as they do so
without violating SEC rule 144. The remaining 2,000,000 outstanding shares
have certain piggy back registration rights at our sole option and may only
be sold under the rule 144 until such time as they are registered. We have
made no guarantees to any of our existing shareholders that we will, in fact
register their shares and their shares, nor are their shares being registered
in this offering.
Rule 144 provides that director, executive officer, and persons or
entities that they control or who control them may sell shares of common
stock in any three-month period in an amount limited to the greater of:
o 1% of our outstanding shares of common stock
o The average weekly trading volume in
our common stock during the four calendar weeks preceding a sale
Sales under the rule also must be made without violating:
o Manner-of-sale provisions - in the market through a broker at
current market prices
o Notice requirements - forms must be filed with the SEC
o Requirement of availability of public information about us - current
in filing required SEC reports
44
<PAGE>
We cannot predict the effect that sales of shares or the availability
of shares for sale will have on the any market price that may exist for our
common stock after completion of the offering. It is likely that sales of
substantial amounts of our common stock in the public market could drive our
stock price down.
MANAGEMENT
----------
The following table and subsequent discussion sets forth information
about our director and executive officer, who will serve in the same capacity
with us upon completion of the offering, but will resign upon the closing of
the merger. Mr. Patterson was elected to serve as a director and President on
March 29, 2000.
The following persons are the directors and executive officers of the
company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
<S> <C> <C>
Chris L. Patterson 30 President, CEO, Director, CFO
</TABLE>
All directors and officers of the company are elected annually to serve for one
year until their successors are duly elected an qualified.
The above individuals are the persons responsible for founding and
organizing the business of the Company, and each became an officer and director
of the Company in connection with its organization on March 29,
2000 (date of inception).
Officers and directors will not be compensated for the time they devote
to the Company's affairs. Each officer and director will devote only such time
to the business affairs of the Company as he or she deems appropriate. (See
"Conflicts of Interest" below.)
Biographical Information
------------------------
Set forth below is biographical information for each of the Company's
officers and directors. No person other than the Company's officers and
directors will perform any management functions for the Company.
Consequently, investors will be relying on the general business acumen and
experience of the Company's management and should critically assess the
information set forth below.
45
<PAGE>
Chris L. Patterson
------------------
Born 10-13-69 in Connelsville, PA. He attended Channelview High School,
Channelview, Texas. He attended Houston Community College. He has been
employed by various newspapers in the Houston area in both news and as a
graph artist. Also, has been employed as a document manager for law firms in
the Houston area. Mr. Patterson is unmarried and resides at 6119 Portal,
Houston, Texas, 77096.
The sole officer and director of the Company has other professional and
business interests to which he devotes his primary attention. He may
continue to do so notwithstanding the fact that management time should
be devoted to the business of the Company.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. A conflict of interest is inherent in this situation
since the Company's officers and directors will be negotiating for the
acquisition on behalf of the Company and for sale of their Common Stock for
their own respective accounts. Management has not adopted any policy for
resolving the foregoing potential conflicts, should they arise.
Mr. Patterson, an officer and director of the Company, has served as a
founder, officer, and director of other companies formed with the express
purpose of seeking available businesses. Mr. Patterson is not presently
associated with any "blank check" issuer other than the Company, nor is he
presently seeking acquisition targets but is expected to do so after the
effectiveness of this prospectus. Additionally, this is the first time, that
Mr. Patterson has been involved in a 419 Company. It should be expected that
all of the officers and directors will form and promote other "blank check"
companies in the future. Any such activities by management are not, in the
opinion of management, a part of a single plan of financing, and the board of
directors has adopted a policy, which may be rescinded or amended only by
majority vote of the Company's stockholders who do not hold any common stock
presently outstanding (whether now held or hereafter acquired) and will
expire by its terms on the date an acquisition of a business venture is
consummated, prohibiting the Company from participating in a business
acquisition with any other "blank check" company in which any person who has
served as an officer or director of the Company prior to the acquisition
holds directly, or indirectly, any ownership interest. While the board of
directors may seek a change in this policy prior to any acquisition, no
change may be made except by the vote specified. Certain conflicts of
interest are inherent in the participation of the Company's officers and
directors as shareholders in other "blank check" companies, which may be
difficult, if not impossible, to resolve in all cases in the best interests
of the Company. Failure by management to conduct the Company's business in
its best interests may result in liability of management of the Company to
the shareholders. In order to mitigate any potential conflict, each of the
46
<PAGE>
officers, directors, and promoters of the Company has undertaken in writing
not to participate as an officer or director in any "blank check" company
that files a registration statement under the Securities Act of 1933,
prior to the date the Company identifies a business it proposes to acquire
which meets the acquisition criteria of Rule 419, or the date six months
following the date of this prospectus, whichever occurs first.
There are no agreements or understandings for any officer or director to
resign at the request of another person. However, it is likely that upon the
effecting of a business combination, the officers and directors will resign.
None of the officers or directors are acting on behalf of or will act at the
direction of any other person.
There are no agreements, arrangements or understandings between Management
and anyone else pursuant to which other management is to be selected for a
particular office or position. It is estimated that Management of the
company will devote such time as they deem necessary to the activities of the
company. It is anticipated that Mr. Name may spend a significant amount of
time in the administration of our operations including our efforts in seeking
acquisition candidates and consummating a business combination. Management
will have the authority to and will, engage outside consultants and
professionals on an as needed basis. The company has not entered into any
agreement or contract with any outside consultant or adviser; nor, does it
intend to enter into any such agreements or contracts pending consummation of
a business combination.
Management Has Not Been Involved in any Previous Blank Check Offerings
----------------------------------------------------------------------
There are no agreements, arrangements or understandings between management and
anyone else pursuant to which other management is to be selected for a
particular office or position. It is estimated that management of the company
will devote such time as they deem necessary to the activities of the company.
It is anticipated that Mr. Patterson may spend a significant amount of time in
the administration of our operations including our efforts in seeking
acquisition candidates and consummating a business combination. Management will
have the authority to and will, engage outside consultants and professionals on
a as needed basis. The company has not entered into any agreement or contract
with any outside consultant or advisor; nor, does it intend to enter into any
such agreements or contracts pending consummation of a business combination.
Finders' Fees and Other Compensation
------------------------------------
No Officer or director presently receives a salary. Except as described
here, it is not anticipated that any director or officer will receive any fee
or salary pending consummation of a business combination. However, directors
and/or officers will receive expenses reimbursement for expenses reasonable
incurred on behalf of the company.
47
<PAGE>
CONFLICTS OF INTEREST
---------------------
The proposed business of the company raises potential conflicts of interest
between the company its officers and directors and its principal stockholders.
The company has been formed for the purpose of locating a suitable business
opportunity in which in participate. The officers and directors of the company
as well as its principal stockholders, are engaged in various other business
activities including, but not limited to, the organization of other companies
or "blank check" companies in the future. Officers and directors of Nevada
corporations are required to bring business opportunities to their corporation
if the corporation could financially undertake the opportunity and the
opportunity is within the corporation's line of business. Because the business
of the company is to locate a suitable business venture, Management may be
required to bring such business opportunities to the Company. Potential
conflicts may arise in the determinations by Management as to whether these
potential business opportunities are within the financial means and proposed
business plans of the company.
Accordingly, Management may have a conflict in the event that another "blank
check" or "blind pool" associated with Management is actively seeking the
acquisition of properties and business that are identical or similar to those
that the company may seek. A conflict will not be present as between the
company and another affiliated "blank check" or "blind pool" if, before the
company begins seeking a potential acquisition, such other "blank check or
"blind pool": (I) enters into any understanding, arrangement or contractual
commitment to participate in, or acquire, any business or property; or (II)
ceases its search for addition properties or businesses identical or similar
to those the company may seek. Conflicts also affiliated "blank check" or
"blind pools" (or vice versa), because of such factors as the difference in
working capital available to the company. If, however, at any time the
company and any other firms affiliated with Management are simultaneously
seeking business opportunities, Management may face the conflict of whether
to submit a potential business acquisition to us or to such other firms. See
"Risk Factors."
In order to resolve conflicts of interest, to the extent possible, arising
from the common share ownership of the company with other blind pool
companies, the company and the related companies have orally established the
following guidelines:
48
<PAGE>
(a) if the business opportunity is identified by an officer or director of
the Company, the business opportunity will be directed to us;
(b) if the business opportunity is identified by a person who is a principal
stockholder of the company but not an officer of the company or of a related
Company, the business opportunity will be directed to either the company or
to a related Company in order of the effective dates of the completion of
their respective Rule 419 offerings; to the extent that the company to whom
the business opportunity was directed declines to accept the business
opportunity, it will be offered to use which next completed its Rule 419
offering; and
(c) if the individual responsible for identifying the business opportunity is
an officer and/or director of more than one related Company, the business
opportunity will be presented to those companies in the order in which their
offerings were completed.
Our director will hold office until the next annual meeting of
shareholders and the election of his successor. Our director receives no
compensation for serving on the board other than reimbursement of reasonable
expenses incurred in attending meetings. Officers are appointed by the board
and serve at their discretion.
Executive Compensation
----------------------
The following table sets forth all compensation awarded to, earned by,
or paid for services rendered to us in all capacities for the period
ended June 30, 2000.
Summary Compensation Table
Long-Term Compensation Awards
<TABLE>
<CAPTION>
Name and Principal Position Annual Compensation -
--------------------------- ---------------------
2000
----
Salary ($) Bonus ($) Number of Shares Underlying
Options (#)
--------- -------- -------------------------
<S> <C> <C> <C>
Chris L. Patterson, President None None None
</TABLE>
49
<PAGE>
Except as described above, we will not pay any of the following types
of compensation or other financial benefit to our management or current
stockholders:
o Consulting Fees
o Finders' Fees
o Sales of insiders' stock positions in
whole or in part to the private company, the blank
check company and/or principals thereof
o Any other methods of payments by which
management or current shareholders receive
funds, stock, other assets or anything of value whether tangible or
intangible
Management is not aware of any circumstances under which this policy, through
their own initiative, may be changed.
Blank Check Companies
---------------------
Our president, treasurer, chief financial and accounting officer and
director, Chris L. Patterson, does not serves in any capacity for any other
blank check offerings:
Management Involvement
----------------------
We have conducted no business as of yet. Mr. Patterson will be the primary
person involved in locating an acquisition candidate by speaking to business
associates and acquaintances and searching the New York Times, the Wall
Street Journal, other business publications and the Internet for acquisition
candidates.
Management Control
------------------
Management may not divest themselves of ownership and control of us prior
to the closing of an acquisition or merger transaction. This policy is based
on an unwritten agreement among management. Management is not aware of any
circumstances under which such policy through their own initiative may be
changed.
Statement Concerning Indemnification
------------------------------------
Our director is bound by the general standards for director provisions in
Nevada law. These provisions allow our director in making decisions to
consider any factors as they deems relevant, including our long-term
prospects and interests and the social, economic, legal or other effects of
any proposed action on the employees, suppliers or our customers, the
community in which the we operate and the economy.
50
<PAGE>
We have agreed to indemnify our director, meaning that we will pay for
damages he incurs for properly acting as director. The SEC believes that this
indemnification may not be given for violations of the Securities Act that
governs the distribution of our securities.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant under the foregoing provisions, the registrant has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against the public policy as expressed in the Securities
Act and is therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth information about our current shareholders.
The person named below has sole voting and investment power with respect
to the shares. The numbers in the table reflect shares of common stock held
as of the date of this prospectus. The numbers in this table assume
5,000,000 shares of common stock outstanding (maximum Offering) and 3,600,000
shares of common stock outstanding (minimum Offering) following the offering:
<TABLE>
<CAPTION>
Name and Address of Shares of Pre Min. Post Max Post
Beneficial Owner Common Stock Offer % Offer % Offer %
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Chris L. Patterson(1) 2,000,000 100% 55% 40%
</TABLE>
(1) Chris L. Patterson, 6119 Portal, Houston, Texas, 77096.
None of these shares will be available for resale unless otherwise provided
by Rule 144 of the Act or other relevant provisions until at least March,
2001.
Except for the securities being registered pursuant hereto, such shares are
"restricted securities", as that term is defined in the rules and regulations
promulgated under the Act, subject to certain restrictions regarding resale.
See "Risk Factors." Certificates evidencing all of the above-referenced
securities being registered pursuant hereto, have been stamped with a
restrictive legend and will be subject to stop transfer orders.
Mr. Patterson may be deemed our promoter, as that term is defined under the
Securities Act.
51
<PAGE>
CERTAIN TRANSACTIONS
--------------------
The following table sets forth information regarding all securities
sold by us since our inception on March 29, 2000.
<TABLE>
<CAPTION>
Name and Address of Shares of Date Amount
Beneficial Owner Common Stock Purchased Paid
---------------------------------------------------------------------------
<S> <C> <C> <C>
Chris L. Patterson(1) 2,000,000 03/29/00 $2,000
</TABLE>
(1) Chris L. Patterson, Founder, 6119 Portal, Houston, Texas, 77096.
All sales were made in reliance on Section 4(2) of the Securities Act.
These sales were made without general solicitation or advertising. Each
purchaser was an accredited investor with access to all relevant information
necessary to evaluate the investment and represented to the Registrant that the
shares were being acquired for investment.
WHERE CAN YOU FIND MORE INFORMATION?
------------------------------------
We have not previously been required to comply with the reporting
requirements of the Exchange Act. We have filed a registration statement
with the SEC on Form SB-2 to register the offer and sale of the shares. This
prospectus is part of that registration statement, and, as permitted by the
SEC's rules, does not contain all of the information in the registration
statement. For further information about us and the shares offered under this
prospectus, you may refer to the registration statement and to the exhibits
and schedules filed as a part of the registration statement. You can review
the registration statement and its exhibits and schedules at the public
reference facility maintained by the SEC at Judiciary Plaza, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
SEC at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The registration statement is also available
electronically on the World Wide Web at http://www.sec.gov. You can also
call or write us at any time with any questions you may have. We would be
pleased to speak with you about any aspect of our business and this offering.
52
<PAGE>
MARKET FOR OUR COMMON STOCK
---------------------------
Prior to the date hereof, there has been no trading market for our common
stock. Under the requirements of Rule 15g-8 of the Exchange Act, a trading
market will not develop prior to or after the effectiveness of this
prospectus or while the common stock under this offering is maintained in
escrow. The common stock under this offering will remain in escrow until our
closing of a business combination under the requirements of Rule 419. There
is currently one holder of our outstanding common stock. The outstanding
common stock was sold in reliance upon an exemption from registration
contained in Section 4(2) of the Securities Act. There can be no assurance
that a trading market will develop upon the closing of a business combination
and the subsequent release of the common stock and other escrowed shares from
escrow. To date, neither we nor anyone acting on our behalf has taken any
affirmative steps to retain or encourage any broker dealer to act as a market
maker for our common stock. Further, there have been no discussions or
understandings, preliminary or otherwise, between us or anyone acting on our
behalf and any market maker regarding the participation of any such market
maker in the future trading market, if any, for our common stock.
Present management does not anticipate that any such negotiations,
discussions or understandings shall take place prior to the execution of an
acquisition agreement. Management expects that discussions in this area will
ultimately be initiated by the party or parties controlling the entity or
assets which we may acquire. Such party or parties may employ consultants or
advisors to obtain such market maker, but our management has no intention of
doing so at the present time.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. The 2,000,000 shares of our common
stock currently outstanding are restricted securities as that term is defined
in the Securities Act. Under Rule 144 of the Securities Act, if all the
shares being offered hereto are sold, the holders of the restricted
securities may each sell a portion of their shares during any three (3) month
period after April 1, 2001. The holders of the restricted securities are
entitled to certain piggyback registration rights which may only be exercised
at our election. The exercise of such rights will enable the holders of the
restricted securities to sell their shares prior to such date. We are
offering 3,000,000 shares (maximum offering); 1,600,000 (minimum offering) of
our common stock at $0.025 per share. Dilution to the investors in this
offering shall be approximately $0.011 (minimum offering per share.
$0.015 (maximum offering).
Special State Law Considerations
--------------------------------
The shares have not been registered in the states of Texas or Nevada, by
reason of specific exemptions thereunder relating to the limited availability
of the offering. The shares cannot be sold, transferred or otherwise disposed
of to any person or entity unless subsequently registered in the states of
Texas and Nevada, if such registration is required.
53
<PAGE>
The shares have not been registered under the Texas Uniform Securities Act,
in reliance upon the exemption contained in Section 581-5(T) and Rule
109.13(K) of such Act. These Securities cannot be sold, transferred or other
disposed of to any person or entity unless subsequently registered under the
Securities Act of 1933, as amended and/or the Texas Securities Act or
exemption therefrom.
The shares have not been registered under the Nevada Uniform Securities Act,
in the event that sales are not made to twenty-five (25) or more persons in
the state of Nevada pursuant to the exemption for limited offers or sales of
securities set forth in Nevada Revised Stature Section 90.530(11) of the
Nevada Uniform Securities Act.
REPORTS TO STOCKHOLDERS
-----------------------
We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practicable at the end of each
fiscal year. Our fiscal year ends on December 31.
PLAN OF DISTRIBUTION
--------------------
General
We are offering a minimum of 1,600,000 and a maximum of 3,000,000 shares at
the purchase price of $0.025 per share on a "best efforts all or none basis"
as to the first 1,600,000 shares and on a "best efforts" basis with regard to
the remaining 1,400,000 shares. If the minimum number of shares is not sold
during the offering Period, the proceeds received will be promptly returned
to investors with interest. The company may allocate among or reject any
offers to purchase, in whole or in part. Moreover, our directors, officers
and principals may purchase shares on the same terms and not with an
intention to resell such shares shortly thereafter.
The shares will be offered and sold only to residents in the states of
Texas and Nevada. The officers and directors, who will not receive any
compensation or commissions with respect to such offers and
sales, shall sell all shares. These officers and directors include:
Chris L. Patterson Director, President, CEO, CFO
They will sell in reliance upon the safe harbor provisions of Rule 3a4(1) of
the Securities Exchange Act of 1934. The Company has no arrangements or
agreements, verbal or written with any underwriters to help underwrite
this Offering.
Our directors, officers and principals of our counsel may purchase shares on
the same terms and conditions as all other investors and any such purchases
will not be included in calculating whether the minimum number of shares have
been sold. Shares purchased by the company's existing stockholders will be
included in determining whether the minimum offering criteria has been
satisfied.
54
<PAGE>
This offering is intended to be made solely by the delivery of this
Prospectus and the accompanying Subscription Application to prospective
investors. None of the Company's officers or directors will participate in
the making of this offering other than by the delivery of this Prospectus
or by responding to inquiries by prospective purchasers. Such responses
shall be limited to the information contained in the Registration Statement
of which this Prospectus is a part.
No commission will be paid with respect to the sale of shares. The
Company will pay its own legal and accounting fees and other expenses
incurred in connection with the offering.
Prior to this offering, there has been no public market for the Common Stock
underlying the Units. The offering price of $0.025 per share was arbitrarily
determined by the Company and bears no relationship to any recognized
criteria of value, nor is it indicative of the market price for the Common
Stock after this offering. The Company makes no representations as to any
objectively determinable value of the shares. The proceeds received under
this Offering will be deposited in an interest bearing escrow account with
Southwest Escrow Company, whose address is 401 North Buffalo Drive, Suite 205,
Las Vegas, Nevada 89128 ("Escrow Agent").
Stock certificates will not be issued until such time as good funds
related to the purchase of the Units by such subscribers are released from
the escrow account to the Company by the Escrow Agent. Until such time as
stock certificates are issued to the subscribers, the subscribers will not be
considered shareholders of the Company.
Subscribers will have no right to a return of their subscription
payments held in the escrow account until the Company decides not to accept
such subscription payment.
Termination of the Offering
---------------------------
The Company has the right to terminate the offering for any reason at any
time. If the Company terminates the offering before the subscription
proceeds for the minimum of 1,600,000 shares have been received by the Escrow
Agent, all subscription proceeds will be promptly returned to the
subscribers without interest or deduction.
Indemnification
----------------
The Company has agreed to indemnify its officers and directors with
respect to certain liabilities including liabilities which may arise under
the Securities Act. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to any charter, provision, by-law, contract,
arrangements, statue or otherwise, the Company has been advised that in the
55
<PAGE>
opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer, or controlling person of the Company in the successful defense of
any such action, suit or proceeding) is asserted by such director, officer
or controlling person of the Company in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication on such issue.
We reserve the right to use broker-dealer(s) in the sale of these securities,
We will amend the registration statement via post-effective amendment in fact
we do require the services of a broker-dealer(s) if or when the broker-dealer
sells a portion of the offering. Prior to the involvement of the broker-
dealer, we will secure a no objection position from the NASD.
We are conducting the offering as a blank check offering subject to the
provisions of Rule 419. However, until the earlier to occur of (I) the sale
of at least 1,600,000 shares or (II) the expiration of the offering Period,
the Escrow Agent will maintain all proceeds in an escrow account pursuant to
the requirements of Rule 419. If at least 1,600,000 shares (exclusive of
shares, if any, acquired by the company's officers, directors and principals
of our Counsel), are not sold during the offering Period, the proceeds
therefrom will be returned to the investors with interest. At such time as
at least 1,600,000 shares are sold during the offering period, the proceeds
from such sale, as well as the proceeds from the sale of up to an additional
2,000,000 shares (except as to 10% thereof which will be released to us
pursuant to Rule 419) will then continue to be deposited and held pursuant to
the provisions of Rule 419 Escrow. See "Investor's Rights and Substantive
Protection under Rule 419 Deposited Funds and Deposited Securities."
The funds received by us with respect to the shares that may be sold, less
the amount permitted by Rule 419 (an amount equal to up to 10% of the
proceeds) to be delivered to use, will be deposited and maintained in the
Rule 419 Escrow pursuant to the terms of an escrow agreement entered into
between the company and the Escrow Agent. Shares will be issued to
purchasers only if at least 1,600,000 shares are sold by us; after the sale
of at least 1,600,000 shares, all shares sold pursuant hereto will be held in
escrow in accordance with the provisions of Rule 419.
Method of Subscribing
---------------------
Prospective investors should make their checks payable to Fore, Inc., c/o
Southwest Escrow Company, 401 North Buffalo Drive, Suite 205, Las Vegas,
Nevada 89128 ("Escrow Agent"). and remit the checks and subscription
agreements to Southwest Escrow at their address listed above. Subscriptions
may not be withdrawn once made except in accordance with applicable law. The
company reserves the right to reject any subscription in whole or in part in
its sole discretion for any reason whatsoever notwithstanding tender of
payment and to withdraw this Blank Check offering at any time prior to
acceptance by us for the subscriptions received.
56
<PAGE>
Funds will be held by the escrow agent, as described here. There can be no
assurance that any or all of the shares being offered will be sold.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Certificate of
Incorporation, or bylaws, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
LEGAL PROCEEDINGS
-----------------
The company may from time to time be involved in routine legal matters
incidental to its business; the Company is not a party to any material
pending legal proceedings and no such action by or, to the best of its
knowledge, against the Company has been threatened.
LEGAL MATTERS
-------------
The validity of the issuance of the shares offered hereby will be passed
upon for FORE, INC by Thomas C Cook, attorney for the Issuer.
EXPERTS
-------
The financial statements of FORE, Inc. as of June 30, 2000 are included in
this Prospectus and have been audited by G. Brad Beckstead, CPA, an
independent auditor, as set forth in his report thereon appearing elsewhere
herein and are included in reliance upon such reports given upon the
authority of such individual as an expert in accounting and auditing.
57
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
<TABLE>
PAGE #
<S> <C>
INDEPENDENT AUDITORS REPORT F-1
BALANCE SHEET F-2
INCOME STATEMENT F-3
STATEMENT OF STOCKHOLDERS' EQUITY F-4
STATEMENT OF CASH FLOWS F-5
FOOTNOTES F-6-8
</TABLE>
58
<PAGE>
PART F/S
Financial Statements
59
<PAGE>
Fore, Inc.
(A Development Stage Company)
Balance Sheet
as of
June 30, 2000
And
Statements of Income
Stockholders' Equity, and
Cash Flows
for the period
March 29, 2000 (Inception)
To June 30, 2000
60
<PAGE>
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
INDEPENDENT AUDITOR'S REPORT
July 6, 2000
Board of Directors
Fore, Inc.
Las Vegas, NV
I have audited the Balance Sheet of Fore, Inc.(the "Company") (A Development
Stage Company), as of June 30, 2000, and the related Statements of Operations,
Stockholders' Equity, and Cash Flows for the period March 29, 1999 (Date of
Inception) to June 30, 2000. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion
on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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 statement presentation. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fore, Inc.,
(A Development Stage Company), as of June 30, 2000, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 5 to
the financial statements, the Company has had limited operations and
have not commenced planned principal operations. This raises
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in
Note 5. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ G. Brad Beckstead
----------------------
G. Brad Beckstead, CPA
F-1
<PAGE>
Fore, Inc.
(A Development Stage Company)
Balance Sheet
June 30
<TABLE>
<CAPTION>
BALANCE SHEET
2000
----
<S> <C>
ASSETS $ 2,000
--------
Total Assets $ 2,000
========
Liabilities and Stockholders' Equity
Common stock, $0.001 par value,
20,000,000 shares authorized;
2,000,000 shares issued and
outstanding at 6/30/00 2,000
Deficit accumulated during development stage (0)
--------
Total Stockholders' Equity 2,000
--------
Total Liabilities and Stockholders' Equity $ 2,000
========
</TABLE>
See accompanying "Independent Auditor's Report"
F-2
<PAGE>
Fore, Inc.
(A Development Stage Company)
Income Statement
For the period
March 29, 2000 (Date of Inception) to
June 30, 2000
<TABLE>
<CAPTION>
INCOME STATEMENT
<S> <C>
Revenue $ -0-
General and administrative expenses (0)
__________
Net loss $ (0)
==========
Weighted average number of
common shares outstanding 2,000,000
Net loss per share $ -0-
==========
</TABLE>
See accompanying "Independent Auditor's Report"
F-3
<PAGE>
Fore, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the period
July 1, 1999 (Date of Inception)
to June 30, 2000
<TABLE>
<CAPTION>
CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock During Total
------------ Development Stockholders'
Shares Amount Stage Equity
<S> <C> <C> <C> <C>
June 30, 2000
Issued
for cash 2,000,000 2,000 2,000
Net Loss,
March 29, 2000
(inception) to
June 30, 2000 (0) (0)
________________________________________________________________________
Balance as of
June 30, 2000 2,000,000 $2,000 $ (0) $ 2,000
========== ====== ======== =======
</TABLE>
See accompanying "Independent Auditor's Report"
F-4
<PAGE>
Fore, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the period
July 1, 1999 (Date of Inception)
to June 30, 2000
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
CASH FLOWS USED BY OPERATING ACTIVITIES
<S> <C>
Net loss (0)
_______
Net cash used by operating activities (0)
_______
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by investing activities -0-
_______
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 2,000
Net cash provided by financing activities 2,000
______
Beginning cash and equivalents -0-
______
Ending cash and equivalents 2,000
======
NON-CASH TRANSACTIONS
Interest expense -0-
Income taxes -0-
</TABLE>
See accompanying "Independent Auditor's Report"
F-5
<PAGE>
Fore, Inc.
(A Development Stage Company)
Footnotes
Note 1 - History and organization of the company
The Company was organized March 29, 2000 (Date of Inception) under the
laws of the State of Nevada. The Company has no operations and in
accordance with SFAS #7, the Company is considered a development stage
company. The Company is authorized to issue 20,000,000 shares of
$0.001 par value common stock and 5,000,000 of its $0.001 par value
preferred stock.
Note 2 - Summary of significant accounting policies
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
significantly from those estimates.
3. The Company maintains a cash balance in a non-interest-bearing bank
that currently does not exceed federally insured limits. For the
purpose of the statements of cash flows, all highly liquid investments
with the maturity of three months or less are considered to be cash
equivalents. $30,000 has been deposited to a Money Market Account,
and is considered a cash equivalent as of June 30, 2000.
4. Earnings per share (EPS) is computed using the weighted average
number of shares of common stock outstanding during the period.
Diluted EPS is computed by dividing net income by the weighted average
shares outstanding, assuming all dilutive potential common shares were
issued. Since the Company has no common shares that are potentially
issuable, such as stock options, convertible preferred stock and
warrants, basic and diluted EPS are the same. The Company had no
dilutive common stock equivalents such as stock options as of March
31, 2000.
5. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
6. The Company will review its need for a provision for federal income
tax after each operating quarter and each period for which a statement
of operations is issued.
7. The Company has adopted December 31 as its fiscal year end.
F-6
<PAGE>
Fore, Inc.
(A Development Stage Company)
Footnotes
Note 3 - Income taxes
Income taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109
(SFAS #109) "Accounting for Income Taxes". A deferred tax asset or
liability is recorded for all temporary differences between financial
and tax reporting. Deferred tax expenses (benefit) results from the
net change during the year of deferred tax assets and liabilities.
There is no provision for income taxes for the year ended December 31,
2000, due to the net loss and no state income tax in Nevada.
Note 4 - Stockholders' Equity
The Company is authorized to issue 20,000,000 shares of its $0.001 par
value common stock and 5,000 shares of its $0.001 par value preferred
stock.
On March 29, 2000, the Company issued 2,000,000 shares of its $.001 par
value common stock for cash of $2,000. There have been no other issuances of
common or preferred stock.
Note 5 - Going concern
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company has not
commenced its planned principal operations. Without realization of
additional capital, it would be unlikely for the Company to continue
as a going concern.
Note 6 - Related party transactions
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to
the financial statements and, accordingly, have not been reflected
therein. The officers and directors of the Company are involved in
other business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
Note 7 - Warrants and options
There are no warrants or options outstanding to acquire any additional
shares of common stock.
F-7
<PAGE>
Fore, Inc.
(A Development Stage Company)
Footnotes
Note 7 - Year 2000 issue
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems
may recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in systems which use certain
dates in 1999 to represent something other than a date. The effects of
the Year 2000 issue may be experienced before, on, or after January 1,
2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 issue affecting the entity, including those related to the
efforts of customers, suppliers, or other third parties will be fully
resolved.
F-8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except as set forth in the following part of this document, there is no
charter provision, bylaw, contract, arrangement or statute under which any
officer or director of the registrant is insured or indemnified in any manner
against any liability which he may incur in his capacity as such.
Nevada Law
----------
Pursuant to the provisions of Nevada Revised Statutes 78.751, the Corporation
shall indemnify its directors, officers and employees as follows:
Every director, officer, or employee of the corporation shall be indemnified
by the corporation against all expenses and liabilities, including counsel
fees, reasonably incurred by or imposed upon him/her in connection with any
proceeding to which he/she may be made a party, or in which he/she may become
involved, by reason of being or having been 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 the corporation,
partnership, joint venture, trust or enterprise, or any settlement thereof,
whether or not he/she is a director, officer, employee or agent at the time
such expenses are incurred, except in such cases wherein the director,
officer, employee or agent is adjudged guilty of willful misfeasance or
malfeasance in the performance of his/her duties; provided that in the event
of a settlement the indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interests of the Corporation.
The Corporation shall provide to 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 the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of a suit, litigation or other proceedings which is
specifically permissible under applicable law.
The Securities and Exchange Commission's Policy on Indemnification.
-------------------------------------------------------------------
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Certificate of
Incorporation, or bylaws, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
61
<PAGE>
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as follows:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
------- -------
<S> <C> <C>
Offering Expenses(1) 3,500 3,500
Escrow Fees(2) 500 500
TOTAL EXPENSES 4,000 4,000
Working Capital 36,000 71,000
TOTAL EXPENSES+WORKNG CAPITAL(3) 40,000 75,000
</TABLE>
(1) Offering costs include filing, printing, legal, accounting, transfer
agent and escrow agent fees.
(2) The proceeds received in this offering will be put into the escrow
account pending closing of a business combination and
reconfirmation. (See Exhibit 2.1 Escrow Agreement.)
(3) All offering proceeds will be held in escrow pending a business
combination. We will not request a release of 10% of these funds
under Rule 419.
There will be no compensation paid or due or owing to any officer or director.
The law firm of Thomas C. Cook & Associates has agreed to defer payment in
connection with services rendered on behalf of this offering.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the past year, the registrant has sold securities in the manner set
forth below without registration under the Securities Act of 1933 (the
"Act"). On or about March 29, 2000, the company raised $2,000.00 through the
sale of 2,000,000 shares of common stock at a price of $.001 per share as
follows:
62
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Shares of Date Amount
Beneficial Owner Common Stock Purchased Paid
----------------------------------------------------------------
<S> <C> <C> <C>
Chris L. Patterson(1) 2,000,000 03/29/00 $2,000
</TABLE>
(1) Chris L. Patterson, Founder, 6119 Portal, Houston, Texas, 77096.
These shares are "restricted securities," as that term is defined in the
rules and regulations promulgated under the Securities Act of 1933 and are
subject to certain restrictions regarding resale. Certificates evidencing all
of the above-referenced securities have been stamped with a restrictive
legend and will be subject to stop transfer orders.
ITEM 27. EXHIBITS
The following exhibits are filed with this Registration Statement:
Number Exhibit Name
------ ------------
2.1 Escrow Agreement in Accordance with Rule 419 under the
Securities Act of 1933, as amended
3.1 Articles of Incorporation, as amended
3.2 By-Laws
4.1 Specimen Common Stock Certificate
5.1 Opinion Regarding Legality
23.1 Consent of Counsel (to be included in Opinion Regarding Legality)
23.2 Consent of Expert
27.1 Financial Data Schedule
99.1 Subscription Agreement
All other Exhibits called for by Rule 601 of Regulation S-B are not
applicable to this filing. Information pertaining to our Common Stock is
contained in our Articles of Incorporation and By-Laws.
ITEM 28. UNDERTAKINGS
(1) To file, during any period in which offers and sales of the securities
offered are made, a post-effective amendment to this Registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933 (the "Act"); and
63
<PAGE>
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration statement (or the most recent post-effective
amendment thereof) that, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration statement or any
material change to such information in the Registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered that remain unsold at the termination of the
offering.
(4) That all such post-effective amendments will comply with the applicable
form, rules and regulations of the Securities and Exchange Commission in
effect at the time of the filing.
(5) In the event any material changes or transactions are not mentioned
arise, we have undertaken the responsibility to amend this prospectus and the
registration statement, of which this prospectus is a part, through the
filing of post-effective amendments, indicating the existence of any such
material changes or transactions which are not reflected or contained
previously, if these changes occurs within 90 days of the effective date.
64
<PAGE>
Signatures
According to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this the
Registration statement to be signed on its behalf by the undersigned hereunto
duly authorized in the City of Houston on this day, July 20, 2000.
Fore, Inc
------------
(Registrant)
/s/ Chris L. Paterson
---------------------------
Chris L. Paterson
President, CEO and Director
65
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed as part of this Registration statement with
the Securities and Exchange Commission, following Item 601 of Regulation S-B.
All exhibits refer to Fore, Inc., unless otherwise indicated.
-------------------------------------------------------------------------
EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
-------------------------------------------------------------------------
2.1 Escrow Agreement This filing
page
-------------------------------------------------------------------------
3.1 Articles of Incorporation This filing
page
-------------------------------------------------------------------------
3.2 Bylaws This filing
page
-------------------------------------------------------------------------
5 Consent of Thomas C. Cook, Esq. This filing
page
-------------------------------------------------------------------------
10.1 Form of Employment Agreements Not applicable
-------------------------------------------------------------------------
10.4 Voting Trust Agreement - Not applicable
-------------------------------------------------------------------------
23 Consent of G. Brad Beckstead, CPA This Filing
page
-------------------------------------------------------------------------
24 Consent of Thomas C. Cook, Esq., This filing
page
-------------------------------------------------------------------------
99 Subscription Agreement This filing
page
-------------------------------------------------------------------------
66
<PAGE>
