U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FREELANCE COM, INC.
(Name of Small Business Issuer in its charter)
Nevada 6700 88-0458875
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Classified Code Number) Identified No.)
Organization)
3360 West Sahara Avenue, Suite 200, Las Vegas, Nevada 89102; (702) 732 2253.
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Adam U.Shaikh, Esq., 3360 West Sahara Avenue, Suite 200, Las Vegas,
Nevada 89102; (702) 732-2253, fax: (702) 732-2253
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If this Form is filed to
register additional
securities for an offering
pursuant to Rule 462(b)
under the Securities Act,
please check the following
box and list the
Securities Act
registration number of the
earlier effective
registration statement for
the same offering.
*
If this Form is a post-
effective amendment filed
pursuant to Rule 462(c)
under the Securities Act,
check the following box
and list the Securities
Act registration statement
number of the earlier
effective registration
statement for the same
offering.
*
If this Form is a post-
effective amendment filed
pursuant to Rule 462(d)
under the Securities Act,
check the following box
and list the Securities
Act registration statement
number of the earlier
effective registration
statement for the same
offering.
*
If the delivery of the
prospectus is expected to
be made pursuant to Rule
434, check the following
box.
*
CALCULATION OF REGISTRATION FEE
Title of each
class of
securities to
be registered Common shares
Amount to be
registered 2,000,000
Proposed
maximum
offering
price per
unit $0.05
Proposed
maximum
aggregate
offering
price $100,000.00
Amount of
registration
fee $26.40
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Initial Public Offering
Prospectus
FREELANCE.COM
2,000,000 shares of Common Stock
$0.05 per share
Registrant
Freelance.com
3651 N. Rancho Dr., Apt 163
Las Vegas, NV 89130
(702) 732-2253
The Offering
_____________________________________________________________________________
Per Unit total, Underwriting Proceeds to issuer
total minimum, discounts and or other
total maximum Price to Public commissions persons
400,000 $.05 $2,000 $18,000
2,000,000 $.05 $10,000 $100,000
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
________________________
The title of each class of securities to be registered is Common Shares.
The amount to be registered is 2,000,000 shares.
This investment involves a high degree of Risk. You should purchase shares
only if you can afford a complete loss. Please consider carefully the risk
factors contained in this prospectus.
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.
Freelance is conducting a "Blank Check" offering subject to Rule 419 of
Regulation C as promulgated by the U.S. Securities and Exchange Commission
under the securities act of 1933, as amended. The net offering proceeds, after
deduction for offering expenses (estimated at $20,000) and sales commissions,
and the securities to be issued to investors must be deposited in an escrow
account . While held in the escrow account, the deposited securities may not
be traded or transferred. Except for an amount up to 10% of the deposited
funds otherwise releasable under rule 419, the deposited funds and the
deposited securities may not be released until an acquisition meeting certain
specified criteria has been consummated and a sufficient number of investors
reconfirm their investment in accordance with the procedures set forth in rule
419.
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTORS RIGHTS AND SUBSTANTIVE
PROTECTION UNDER RULE 419. . . . . . . . . . . . . . . . . . . . . . . . 8
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . . . . . 11
DILUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DIRECTOR, EXECUTIVE OFFICER, PROMOTERS
AND CONTROL PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . . .16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . .17
INTEREST OF NAMED EXPERTS AND COUNSEL. . . . . . . . . . . . . . . . . ..19
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES. . . . . . . . . . . . . . . . . . . . . 20
ORGANIZATION WITHIN LAST FIVE YEARS. . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . .21
PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . 27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . .28
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . .28
EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . .28
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . .29-37
Dealer Prospectus Delivery Obligation
Until 90 days following the release of Freelance's securities from the escrow
account, all dealers that effect transactions in these securities, whether or
not participating in this offering, will be required to deliver a prospectus.
This is in addition to the dealers obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
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Prospectus summary
Corporate information
Freelance Com, Inc. was incorporated under the laws of Nevada on June 19th,
2000. Freelance currently does not have an office. Freelance uses its
attorney's office for correspondence. Their address is 3651 North Rancho Drive,
Apt 163, Las Vegas, Nevada 89130. Their telephone number is (702) 732-2253.
Business.
Freelance is a blank check company subject to Rule 419.Freelance was organized
as a vehicle to acquire or merge with another business or company. Freelance
has no present plans, proposals, agreements, arrangements or understandings to
acquire or merge with any specific business or company. Management, however,
is always looking for potential merger candidates.
Freelance has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders,
Freelance never commenced any operational activities. Freelance would be
defined as a blank check "shell" company.
The Offering.
Freelance is conducting a blank check offering pursuant to Rule 419.
A maximum of 2,000,000 shares may be sold on a direct participation offering
basis. All of the proceeds from the sale of shares will be placed in an
interest-bearing escrow account by 12 o'clock noon of the fifth business day
after receipt thereof, until the sum of the minimum offering is received. If
less than $20,000, is received from the sale of the shares within 240 days of
the date of this prospectus, all proceeds will be refunded promptly to
purchasers with interest and without deduction for commission or other
expenses. Subscribers will not be able to obtain return of their funds while
in escrow. There will be a minimum purchase of 5000 shares at $250.00.
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RISK FACTORS
The securities offered are highly speculative in nature and involve a
high degree of risk. They should be purchased only by persons who can afford
to lose their entire investment. Therefore, each prospective investor should,
prior to purchase, consider very carefully the following risk factors among
other things, as well as all other information set forth in this prospectus.
Due to a lack of financing and a lack of experience in the management
positions, Freelance will be at a competitive disadvantage.
Freelance is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of
small private entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies that may be desirable target candidates for
Freelance. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than Freelance.
Consequently, Freelance will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, Freelance will compete in seeking merger or
acquisition candidates with numerous other small public companies.
While seeking a business combination, management anticipates devoting up to
twenty hours per month to the business of Freelance. Notwithstanding the
limited experience and time commitment of Management, loss of Management'
services would adversely affect development of Freelance' business and its
likelihood of continuing operations. Furthermore, none of the officers are
professional business analysts. Lack of experience will be a detriment to
Freelance' efforts.
Freelance has not identified a potential merger candidate as of yet. Investors
in Freelance's securities will not be able to evaluate the merits or risks of
a potential merger candidate before they invest, nor can they be certain that
a merger candidate will be found.
Freelance has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a private
entity. Freelance may not be successful in identifying and evaluating
suitable business opportunities or in concluding a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluations. Ultimately, Management will have broad
discretion in determining the specific business combination that will take
place. Freelance has been in the developmental stage since inception and has
no operations to date. Other than issuing shares to its original shareholders,
Freelance never commenced any operational activities. Freelance may not be
able to negotiate a business combination on terms favorable to Freelance.
Investors will, however, have a chance to evaluate a merger candidate before
a proposed merger occurs pursuant to Rule 419. At this time, investors will
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determine whether they wish to leave their investment or receive their
investment back. If they choose not to invest, they may still loose ten
percent of their initial investment.
Freelance lacks any market research or marketing organization. Freelance may
find it difficult to complete its business plan of acquiring or merging with a
target company.
Freelance has neither conducted, nor have others made available to it, results
of market research indicating that market demand exists for the transactions
contemplated by Freelance. Moreover, Freelance does not have, and does not
plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by Freelance, there is no
assurance Freelance will be successful in completing any such business
combination.
Potential determination by the SEC that Freelance is an investment company
could cause significant registration and compliance costs under the Securities
Exchange Act of 1933.
In the event Freelance engages in business combinations which result in
Freelance holding passive investment interests in a number of entities, the
Freelance could be under regulation of the Investment Company Act of 1940.
In such event, Freelance would be required to register as an investment
company and could be expected to incur significant registration and compliance
costs Freelance has obtained no formal determination from the Securities and
Exchange Commission as to the status of Freelance under the Investment Company
Act of 1940 and, consequently, any violation of such Act would subject
Freelance to material adverse consequences.
A successful merger or acquisition of Freelance with another business entity
will, in all likelihood, result in a significant shift in control from
Freelance's management to the merging company's management.
A business combination involving the issuance of Freelance' common stock will,
in all likelihood, result in shareholders of a private company obtaining a
controlling interest in Freelance. Any such business combination may require
Management of Freelance to sell or transfer all or a portion of Freelance'
common stock held by him, or resign as a member of the board of director of
Freelance. The resulting change in control Freelance could result in removal
of Management and a corresponding reduction in or elimination of their
participation in the future affairs of Freelance.
A successful merger or acquisition of Freelance with another business entity
will, in all likelihood, result in a significant shift in control from
Freelance's shareholders to the merging company's shareholders.
A business combination involving Freelance and another business entity will,
in all likelihood, result in Freelance issuing securities to shareholders of
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the merging entity. The issuance of previously authorized and unissued common
stock of Freelance would result in a reduction in percentage of shares owned
by the present and prospective shareholders of Freelance. This would result in
a shift in control from Freelance's shareholders to the merging company's
shareholders.
Many business decisions made by Freelance can have major tax consequences and
associated risks that could hurt the value of an investment in Freelance.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination Freelance may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions.
Freelance intends to structure any business combination so as to minimize the
federal and state tax consequences to both Freelance and the target entity.
However, there can be no assurance that such business combination will meet
the statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization could result in the imposition of both federal
and state taxes which may have an adverse effect on both parties to the
transaction.
Freelance's securities may be limited to only a few markets because of blue
sky laws.
Because the securities registered hereunder have not been registered for
resale under the blue sky laws of any state, and Freelance has no current
plans to register or qualify its shares in any state, the holders of such
shares and persons who desire to purchase them in any trading market that
might develop in the future, should be aware that there may be significant
state blue sky restrictions upon the ability of new investors to purchase the
securities which could reduce the size of the potential market. As a result
of recent changes in federal law, non-issuer trading or resale of Freelance'
securities is exempt from state registration or qualification requirements in
most states. However, some states may continue to attempt to restrict the
trading or resale of blind-pool or blank-check securities. Accordingly,
investors should consider any potential secondary market for Freelance'
securities to be a limited one.
Freelance' offering price is arbitrary and the value of Freelance securities
may never actually reach the offering price.
The offering price of the shares bears no relation to book value, assets,
earnings, or any other objective criteria of value. They have been arbitrarily
determined by Freelance. There can be no assurance that, even if a public
trading market develops for Freelance' securities, the shares will attain
market values commensurate with the offering price.
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Freelance may not be able to raise the minimum $20,000 dollars in this
offering, resulting in the nullification of this offering.
The shares are offered by Freelance on a direct participation offering basis.
No individual, firm or corporation has agreed to purchase or take down any of
the offered shares. Freelance cannot and does not make any statement
guaranteeing that shares will be sold. If the minimum number of shares are not
sold, Freelance's offering will be nullified resulting in the return of the
investors money.
Investors' rights and substantive protection under rule 419.
Deposit of offering proceeds and securities.
Rule 419 requires that the net offering proceeds, after deduction for
underwriting compensation and offering costs, and all securities to be issued
be deposited into an escrow or trust account (the "Deposited Funds" and
"Deposited Securities," respectively) governed by an agreement which contains
certain terms and provisions specified by the rule. Under Rule 419, the
Deposited Funds and Deposited Securities will be released to Freelance and to
investors, respectively, only after the Company has met the following three
conditions: First, Freelance must execute an agreement for an acquisition(s)
meeting certain prescribed criteria; second, Freelance must successfully
complete a reconfirmation offering which includes certain prescribed terms and
conditions; and third, the acquisition(s) meeting the prescribed criteria must
be consummated.
Prescribed acquisition criteria.
Rule 419 requires that before the Deposited Funds and the Deposited Securities
can be released, Freelance must first execute an agreement(s) to acquire an
acquisition candidate(s) meeting certain specified criteria. The agreement
must provide for the acquisition of a business(es) or assets valued at not
less than 80% of the maximum offering proceeds, but excluding underwriting
commissions, underwriting expenses and dealer allowances payable to non-
affiliates. Once the acquisition agreements meeting the above criteria have
been executed, Freelance must successfully complete the mandated recon-
firmation offering and consummate the acquisitions(s).
Post-effective amendment.
Once the agreement(s) governing the acquisition(s) of a business(es) meeting
the above criteria has (have) been executed, Rule 419 requires Freelance to
update the registration statement of which this prospectus is a part with a
post-effective amendment. The post-effective amendment must contain infor-
mation about: the proposed acquisition candidate(s) and its business(es),
including audited financial statements; the results of this offering; and the
use of the funds disbursed from the escrow account. The post-effective
amendment must also include the terms of the reconfirmation offer mandated by
Rule 419. The offer must include certain prescribed conditions which must be
satisfied before the Deposited Funds and Deposited Securities can be released
from escrow.
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Reconfirmation offering.
The reconfirmation offer must commence within five business days after the
effective date of the post-effective amendment. Pursuant to Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be sent to
each investor whose securities are held in the escrow account within five
business days after the effective date of the post-effective amendment;
2) Each investor will have no fewer than 20, and no more than 45, business
days from the effective date of the post-effective amendment to notify the
Company in writing that the investor elects to remain an investor;
(3) If Freelance does not receive written notification from any investor
within 45 business days following the effective date, the pro rata portion of
the Deposited Funds (and any related interest or dividends) held in the escrow
account on such investor's behalf will be returned to the investor within five
business days by first class mail or other equally prompt means;
(4) The acquisition(s) will be consummated only if investors having contributed
80% of the maximum offering proceeds elect to reconfirm their investments; and
(5) If a consummated acquisition(s) has not occurred within 18 months from the
date of this prospectus, the Deposited Funds held in the escrow account shall
be returned to all investors on a pro rata basis within five business days by
first class mail or other equally prompt means.
Release of deposited securities and deposited funds.
The Deposited Funds and Deposited Securities may be released to Freelance and
the investors, respectively, after:
(1) The Escrow Agent has received written certification from Freelance and any
other evidence acceptable by the Escrow Agent that Freelance has executed an
agreement for the acquisition(s) of a business(es) the value of which
represents at least 80% of the maximum offering proceeds and has filed the
required post-effective amendment, the post-effective amendment has been
declared effective, the mandated reconfirmation offer having the conditions
prescribed by Rule 419 has been completed, and Freelance has satisfied all of
the prescribed conditions of the reconfirmation offer; and
(2) The acquisition(s) of the business(es) the value of which represents at
least 80% of the maximum offering proceeds is (are) consummated.
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Escrowed funds not to be used for salaries or reimbursable expenses.
No funds (including any interest earned thereon) will be disbursed from the
escrow account for the payment of salaries or reimbursement of expenses
incurred on Freelance's behalf by Freelance's officers and directors. Other
than the foregoing, there is no limit on the amount of such reimbursable
expenses, and there will be no review of the reasonableness of such expenses
by anyone other than Freelance's board of directors, both of whom are officers.
In no event will the escrowed funds (including any interest earned thereon) be
used for any purpose other than implementation of a business combination.
Use of Proceeds.
Following the maximum sale of the 2,000,000 Shares offered by Freelance, there
will be gross proceeds of $100,000. If the minimum number of shares are sold
(400,000), the gross proceed will equal $20,000. The net proceeds are
calculated as the gross proceeds raised minus sales commission costs, which
will be equal to 10% of the total raised, and other costs related to the
offering. These proceeds will be used to provide start-up and working capital
for Freelance. Freelance plans to release 10% of the monies raised in the
offering to pay commission and broker fees. Other expenses related to the
offering include printing costs, legal costs, and accounting costs necessary
to maintain Freelance while a merger candidate is sought. Certain fees will
also be required to be paid to the escrow agent. Management will have full
discretion as to how these proceeds will be applied.
Offering Costs
The total estimated costs to conduct the offering is as follows:
Broker Fees $2,000-$10,000 (depending on amount raised)
Legal $10,000
Printing $500
Accounting $2,000
Escrow Agent $750
Offering costs will be paid from proceeds raised from stock offerings. If the
minimum or median amount of the offering is retained, the offering costs will
exceed the 10% of proceeds allowed to cover offering costs. In this event the
offering costs will be covered by Management.
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Use of Proceeds Table
The following table sets forth the expected use of proceeds from this offering
(based on the minimum, median, and maximum net offering amounts after the
release of monies raised to help cover offering costs). The amounts listed
are for net proceeds. Net proceeds are gross proceeds minus offering costs
(net proceeds = gross proceeds - offering costs). Pursuant to rule 419, a
maximum of 10% may be used for offering costs. The maximum of 10% will not
cover all of the offering costs under the minimum or median amounts raised.
In these instances any remaining offering costs will be covered by Management.
All the net proceeds will be used as working capital.
<TABLE>
Use of Proceeds If Minimum Offering If Median Offering If Maximum Offering
Raised ($18,000) Raised ($54,000) Raised ($90,000)
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Working Capital $18,000 90% $54,000 90% $90,000 90%
Total $18,000 90% $54,000 90% $90,000 90%
</TABLE>
Please note that if the minimum or median amount of the offering is retained,
the related offering expenses exceed 10%. In such a case, the additional costs
shall be paid out of Management's pocket.
Management anticipates expending these funds for the purposes indicated above.
To the extent that expenditures are less than projected, the resulting balances
will be retained and used for general working capital purposes or allocated
according to the discretion of Management. Conversely, to the extent that such
expenditures require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other sources, including,
but not limited to, general working capital and/or external financing. The
net proceeds of this offering that are not expended immediately may be
deposited in interest or non-interest bearing accounts, or invested in
government obligations, certificates of deposit, commercial paper, money
market mutual funds, or similar investments.
Management may advance money to Freelance or on behalf of Freelance when the
need arises. There are no set limits to the maximum amount that management
will advance or loan to Freelance. However, the amount is obviously limited by
the resources of Management. Management anticipates that repayment would come
from the acquisition of a target company. The advances would be expected to be
in an amount well below the minimum expected from any viable operating
business target.
Determination of offering price.
The offering price is not based upon Freelance's net worth, total asset value,
or any other objective measure of value based upon accounting measurements.
The offering price is determined by the Board of Directors of Freelance and
was determined arbitrarily based upon the amount of funds needed by Freelance
to start-up the business, and the number of shares that the initial
shareholders were willing to allow to be sold.
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Dilution.
"Net tangible book value" is the amount that results from subtracting the
total liabilities and intangible assets of an entity from its total assets.
"Dilution" is the difference between the public offering price of a security
and its net tangible book value per Share immediately after the Offering,
giving effect to the receipt of net proceeds in the Offering. As of June 19th,
2000, the net tangible book value of Freelance was $3000 or $.001 per share.
Giving effect to the sale by Freelance of all offered shares at the public
offering price, the pro forma net tangible book value of Freelance would be
$100,000 or $0.0186 per share, which would represent an immediate increase of
$0.0176 in net tangible book value per share and $0.0314 per share dilution
per share to new investors. Dilution of the book value of the shares may
result from future share offerings by Freelance.
The following table illustrates the pro forma per Share dilution:
Assuming Maximum Assuming Minimum
Shares Sold Shares Sold
Offering Price (1) $0.05 $0.05
Net tangible book value per
share before Offering (2) $0.001 $0.001
Increase Attributable to purchase
of stock by new investors (3) $0.0176 $0.0166
Net tangible book value per
Share after offering (4) $0.0186 $0.00618
Dilution to new investors (5) $0.0314 $0.0438
Percent Dilution to new investors (6) 63% 88%
(1) Offering price before deduction of offering expenses, calculated on a
"Common Share Equivalent" basis.
(2) The net tangible book value per share before the offering ($0.001) is
determined by dividing the number of Shares outstanding prior to this
offering into the net tangible book value of Freelance.
(3) The Increase Attributable to purchase of stock by new investors is
derived by taking the net tangible book value per share after the offering
($0.0186) and subtracting from it the net tangible book value per share before
the offering ($.001) for an increase of $0.0176.
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(4) The net tangible book value after the offering is determined by adding
the net tangible book value before the offering to the estimated proceeds to
the Corporation from the current offering (assuming all the Shares are
subscribed), and dividing by the number of common shares outstanding.
(5) The dilution to new investors is determined by subtracting the net
tangible book value per share after the offering ($0.0186) from the offering
price of the Shares in this offering ($.05), giving a dilution value of
($0.0314).
(6) The Percent Dilution to new investors is determined by dividing the
Dilution to new investors ($0.0314) by the offering price per share ($0.05)
giving a dilution to new investors of 63%.
Plan of distribution.
Freelance will sell a maximum of 2,000,000 shares of its common stock, par
value $.001 per Share to the public on a "best efforts" basis. The stock will
be sold at $.05 per share the minimum purchase required of an investor is
$250.00. There can be no assurance that any of these shares will be sold.
The net proceeds to Freelance will be $100,000, minus associated costs, if all
the shares offered are sold. Commissions of 10% of the monies raised will be
paid by Freelance to a broker to sell these shares. As of yet, no broker has
been chosen.
The public offering price of the shares will be modified, from time to time,
by amendment to this prospectus, in accordance with changes in the market
price of Freelance's common stock. These securities are offered by Freelance
subject to prior sale and to approval of certain legal matters by counsel.
The officers and directors of Freelance will not be allowed to purchase
shares in this offering.
Limited State Registration.
Freelance anticipates that there will be no State registration of its
securities. Any sale of its securities will depend on exemptions under the
Blue Sky laws of states in which the securities are sold. Securities are
planed to be sold in Nevada.
Securities will be sold in Nevada under Rule NRS 90.530 (11). This allows
exempted transactions pursuant to an offer to sell securities of an issuer if:
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(a) The transaction is part of of an issue in which there are no more than
25 purchasers in this state, other than those designated in subsection
10, during any 12 consecutive months;
(b) No general soliciation or general advertising is used in connection with
the offer to sell or sale of securities;
(c) No commission or other similar compensation is paid or given, directly or
indirectly, to a person, other than a broker-dealer licensed or not
required to be licensed under this chapter, for soliciting a prospective
purchaser in this state; and licensed under this chapter, for soliciting
a prospective purchaser in this state;
and
(d) One of the following conditions is satisfied:
(1) The seller reasonably believes that all purchasers in this state,
other than those designated in subsection 10, are purchasing for
investment; or
(2) Immediately before and immediately after the transaction, the issuer
reasonably believes that the securities of the issuer are held by 50
or fewer beneficial owners, other than those designated in subsection
10, and the transaction is part of an aggregate offering that does
not exceed $500,000 during any 12 consecutive months.
The administrator by rule or order as to a security or transaction or a type
of security or transaction, may withdraw or further condition the exemption
set forth in this subsection or waive one or more of the conditions of the
exemption.
Opportunity To Make Inquires.
Freelance will make available to each Offeree, prior to any sale of the Shares,
the opportunity to ask questions and receive answers from Freelance concerning
any aspect of the investment and to obtain any additional information
contained in this Memorandum, to the extent that Freelance possesses such
information or can acquire it without unreasonable effort or expense.
Execution of Documents.
Each person desiring to subscribe to the Shares must complete, execute,
acknowledge, and deliver to Freelance a Subscription Agreement, which will
contain, among other provisions, representations as to the investor's
qualifications to purchase the common stock and his ability to evaluate and
bear the risk of an investment in Freelance.
By executing the subscription agreement, the subscriber is agreeing that if
the Subscription Agreement it is accepted by Freelance, such a subscriber will
be, a shareholder in Freelance and will be otherwise bound by the articles of
incorporation and the bylaws of Freelance in the form attached to this
Prospectus.
Promptly, upon receipt of subscription documents by Freelance, it will make a
determination as to whether a prospective investor will be accepted as a
shareholder in Freelance. Freelance may reject a subscriber's Subscription
Agreement for any reason. Subscriptions will be rejected for failure to
conform to the requirements of this Prospectus (such as failure to follow the
proper subscription procedure), insufficient documentation, over subscription
-14-
to Freelance, or such other reasons other as Freelance determines to be in the
best interest of the Company.
If a subscription is rejected, in whole or in part, the subscription funds, or
portion thereof, will be promptly returned to the prospective investor without
interest by depositing a check (payable to said investor) in the amount of
said funds in the United States mail, certified returned-receipt requested.
Subscriptions may not be revoked, cancelled, or terminated by the subscriber,
except as provided herein.
Legal Proceedings
Freelance is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against Freelance has been
threatened.
Directors, Executive Officers, Promoters,and Control Persons
The names, ages, and respective positions of the directors, officers, and
significant employees of Freelance are set forth below. All these persons
have held their positions since June 2000. Each director and officer shall
serve for a term ending on the date of the third Annual Meeting. There are no
other persons which can be classified as a promoter or controlling person of
Freelance.
Danny J. Lovell. President/Director, Age 27.
Mr. Lovell graduated with B.A. in Education from Illinois State University in
1998. Mr. Lovell was an educator in the Peoria, Illinois School System during
the 1999-2000 school year. Mr. Lovell is currently an office manager in a Las
Vegas law firm.
Eliot J. Thomas. Treasurer/Director, Age 30.
Mr. Thomas graduated with B.S. in Accounting from the University of Nebraska
at Omaha in 1996. Mr. Thomas received his J.D. from Drake University Law
School in 1999 and is currently employed as a law clerk in a Las Vegas law
firm.
Adam U. Shaikh. Secretary/Director, Age 27.
Mr. Shaikh graduated with a B.A. in Political Science/History from Iowa State
University in 1996. Mr. Shaikh received a J.D. from Drake University Law
School in 1999 and received his license to practice law in 1999 in Nevada. He
is currently employed as an attorney in a Las Vegas law firm.
None of the Officers and Directors have been involved in legal proceedings
that impair their ability to perform their duties as Officers and Directors.
There is no family relationship between any of the officers or directors.
-15-
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth, as of the date of this Prospectus, the
outstanding Shares of common stock of the Company owned of record or
beneficially by each person who owned of record, or was known by Freelance to
own beneficially, more than 5% of Freelance's Common Stock, and the name and
share holdings of each officer and director and all officers and directors as
a group.
<TABLE>
Title of Class Name of Beneficial Amount and Nature Percent
Owner (1) of Beneficial Of Class
Owner(2)
<S> <C> <C> <C>
Common Stock Adam U. Shaikh 1,000,000 33%
Common Stock Danny J. Lovell 1,000,000 33%
Common Stock Eliot J. Thomas 1,000,000 33%
Common Stock Officers and Directors 3,000,000 100%
</TABLE>
None of the Officers, Directors or existing shareholders have the right to
acquire any amount of the Shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.
Principal Shareholder(s).
The addresses for the principal shareholders are as follows:
President Danny Lovell: 3651 N. Rancho Dr., Apt. 163, Las Vegas, NV 89130
Secretary Adam Shaikh: 5850 Sky Pointe Dr., Apt. 2102A, Las Vegas, NV 89130
Treasurer Eliot Thomas: 2673 S. Decatur #2122, Las Vegas, NV 89102
All shareholders have sole voting and investment power.
Description of securities.
Shares sold in the future may have to comply with Rule 144.
All of the 3,000,000 shares, which are held by management, have been issued in
reliance on the private placement exemption under the amended Securities Act
of 1933. Such shares will not be available for sale in the open market
without separate registration except in reliance upon Rule 144 under the Act.
In general, under Rule 144 a person (or persons whose shares are aggregated)
who has beneficially owned shares acquired in a non-public transaction for at
least one year, including persons who may be deemed affiliates of Freelance
(as that term is defined under the Act) would be entitled to sell within any
-16-
three-month period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of common stock, or the average weekly reported
trading volume on all national securities exchanges and through NASDAQ during
the four calendar weeks preceding such sale, provided that certain current
public information is then available. If a substantial number of the shares
owned by management were sold pursuant to Rule 144 or a registered offering,
the market price of the common stock could be adversely affected.
General description.
The securities being offered are shares of common stock. The Articles of
Incorporation authorize the issuance of 25,000,000 shares of common stock,
with a par value of $.001. The holders of the Shares: (a) have equal ratable
rights to dividends from funds legally available therefore, when, as, and if
declared by the Board of Directors of Freelance; (b) are entitled to share
ratably in all of the assets of Freelance available for distribution upon
winding up of the affairs of Freelance; (c) do not have preemptive
subscription or conversion rights and there are no redemption or sinking fund
applicable thereto; and (d) are entitled to one non-cumulative vote per share
on all matters on which shareholders may vote at all meetings of shareholders.
These securities do not have any of the following rights: (a) cumulative or
special voting rights; (b) preemptive rights to purchase in new issues of
Shares; (c) preference as to dividends or interest; (d) preference upon
liquidation; or (e) any other special rights or preferences. In addition, the
Shares are not convertible into any other security. There are no restrictions
on dividends under any loan other financing arrangements or otherwise. See
a copy of the Articles of Incorporation, and amendments thereto, and Bylaws of
Freelance, attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Form
SB- 2/A. As of the date of this Form SB-2/A, Freelance has 3,000,000 Shares
of common stock outstanding.
Non-cumulative voting.
The holders of shares of Common Stock of Freelance do not have cumulative
voting rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all of the
directors to be elected, if they so choose. In such event, the holders of the
remaining shares will not be able to elect any of Freelances directors.
Dividends.
Freelance does not currently intend to pay cash dividends. Freelance's
proposed dividend policy is to make distributions of its revenues to its
stockholders when Freelances Board of Directors deems such distributions
appropriate. Because Freelance does not intend to make cash distributions,
potential shareholders would need to sell their shares to realize a return on
their investment.
There can be no assurances of the projected values of the shares, nor can
there be any guarantees of the success of Freelance.
-17-
A distribution of revenues will be made only when, in the judgment of
Freelance's Board of Directors, it is in the best interest of Freelance's
stockholders to do so. The Board of Directors will review, among other things,
the investment quality and marketability of the securities considered for
distribution; the impact of a distribution of the investee's securities on its
customers, joint venture associates, management contracts, other investors,
financial institutions, and Freelance's internal management, plus the tax
consequences and the market effects of an initial or broader distribution of
such securities.
Possible anti-takeover effects of authorized but unissued stock.
Upon the completion of this offering, Freelance's authorized but unissued
capital stock will consist of 20,000,000 shares (assuming the entire offering
is sold) of common stock. One effect of the existence of authorized but
unissued capital stock may be to enable the Board of Directors to render more
difficult or to discourage an attempt to obtain control of Freelance by means
of a merger, tender offer, proxy contest, or otherwise, and thereby to protect
the continuity of Freelance's management.
If, in the due exercise of its fiduciary obligations, for example, the Board
of Directors were to determine that a takeover proposal was not in
Freelance's best interests, such shares could be issued by the Board
of Directors without stockholder approval in one or more private placements or
other transactions that might prevent, or render more difficult or costly,
completion of the takeover transaction by diluting the voting or other rights
of the proposed acquirer or insurgent stockholder or stockholder group, by
creating a substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the takeover, or
otherwise.
Shares Eligible For Future Sale
On January 21, 2000, Mr. Richard K. Wulff, Chief of Office of Small Business
for the SEC, issued an interpretative letter to Mr. Ken Worm, Assistant
Director of the OTC Compliance Unit of the NASD Regulation, concerning the
tradability of stock issued in limited operation companies. Mr. Wulff's
interpretation was that stock issued or gifted under an exemption under the
1933 Act would not be considered free trading. Therefore, the 3,000,000 shares
of stock issued to the officers and directors, and any further issuances of
stock that is not registered with the SEC, shall not be deemed free trading.
Transfer Agent
Freelance intends to engage the services of Pacific Stock Transfer Company,
P.O. Box 93385 Las Vegas, Nevada 89193 (702) 361-3033 Fax (702) 732-7890.
Interest of named experts and counsel.
No named expert or counsel was hired on a contingent basis. No named expert
or counsel will receive a direct or indirect interest in the small business
-18-
issuer. No named expert or counsel was a promoter, underwriter, voting
trustee, director, officer, or employee of the small business issuer.
Disclosure of commission position on indemnification for securities act
liabilities.
No director of Freelance will have personal liability to Freelance or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director involving any act or omission of any such director since provisions
have been made in the Articles of Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to Freelance or
its stockholders, (ii) for acts or omissions not in good faith or, which
involve intentional misconduct or a knowing violation of law, (iii) under
applicable Sections of the Nevada Revised Statutes, (iv) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes or,
(v) for any transaction from which the director derived an improper personal
benefit.
The By-laws provide for indemnification of the directors, officers, and
employees of Freelance in most cases for any liability suffered by them or
arising out of their activities as directors, officers, and employees of the
Company if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a settlement
the indemnification will apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the
Corporation. The Bylaws, therefore, limit the liability of directors to the
maximum extent permitted by Nevada law (Section 78.751).
The officers and directors of Freelance are accountable to Freelance as
fiduciaries, which means they are required to exercise good faith and fairness
in all dealings affecting Freelance. In the event that a shareholder believes
the officers and/or directors have violated their fiduciary duties to
Freelance, the shareholder may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce the shareholder's
rights, including rights under certain federal and state securities laws and
regulations to recover damages from and require an accounting by management.
Shareholders who have suffered losses in connection with the purchase or sale
of their interest in Freelance in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from the
Freelance.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
-19-
policy as expressed in the Act and is, therefore, unenforceable.
Organization within last five years.
The names of the promoters of the registrant are the officers and directors as
disclosed elsewhere in this Form SB-2/A. None of the promoters have received
anything of value from the registrant.
Description of Business.
1. Company/Business Summary.
Freelance.com, Inc.. was incorporated on June 19, 2000, under the laws of the
State of Nevada, to engage in any lawful corporate undertaking, including, but
not limited to, selected mergers and acquisitions. The company has been in
the developmental stage since inception and has no operations date. Other
than issuing shares to its original shareholders, Freelance never commenced
any operational activities.
Freelance was formed by Danny Lovell, Adam Shaikh, and Eliot Thomas the
initial directors. The initial directors were immediately appointed as
Officers and Directors of Freelance. Freelance was formed for the purpose of
consummating a merger or acquisition. Mr. Lovell serves as President and
Director. Mr. Lovell determined next to proceed with filing a Form SB-2.
Mr. Lovell, the President and Director, elected to commence implementation of
Freelance's principal business purpose, described below under Plan of
Operation. As such, Freelance can be defined as a "shell" company, whose sole
purpose at this time is to locate and consummate a merger or acquisition with
a private entity.
The proposed business activities described herein classify Freelance as a
"blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Freelances securities until such
time as Freelance has successfully implemented its business plan described
herein.
Accordingly, each shareholder of Freelance will execute and deliver a "lock-
up" letter agreement, affirming that he/she will not sell his/her respective
shares of Freelance's common stock until such time as Freelance has
successfully consummated a merger or acquisition and Freelance is no longer
classified as a "blank check" company.
In order to provide further assurances that no trading will occur in
Freelance's securities until a merger or acquisition has been consummated,
each shareholder have agreed to place his/her respective stock certificate
with Freelance's legal counsel, who will not release these respective
certificates until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated.
-20-
Item 2. Plan of Operation.
Freelance intends to seek to acquire assets or shares of an entity actively
engaged in business which generates revenues, in exchange for its securities.
The Registrant has no particular acquisitions in mind and has not entered into
any negotiations regarding such an acquisition. None of Freelance's officers,
directors, promoters or affiliates have engaged in any preliminary contact or
discussions with any representative of any other company regarding the
possibility of an acquisition or merger between Freelance and such other
company as of the date of this registration statement.
Freelance has no full time employees. Freelance 's officers have agreed to
allocate a portion of their time to the activities of the Registrant, without
compensation. Management anticipates that the business plan of Freelance can
be implemented by each officer devoting approximately 10 hours per month to
the business affairs of Freelance and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officers.
Freelance is filing this registration statement on a voluntary basis because
the primary attraction of the Registrant as a merger partner or acquisition
vehicle will be its status as an SEC reporting company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present stockholders of the Registrant.
General Business Plan.
Freelance's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. Freelance will not restrict its search
to any specific business, industry, or geographical location and Freelance may
participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of Freelance's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it will be able to participate in only one potential business
venture because Freelance has nominal assets and limited financial resources.
This lack of diversification should be considered a substantial risk to
shareholders of Freelance because it will not permit Freelance to offset
potential losses from one venture against gains from another.
Freelance may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets,
to develop a new product or service, or for other corporate purposes.
Freelance may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
-21-
Freelance anticipates that the selection of a business opportunity in which
to participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of apublicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity
(subject to restrictions of applicable statutes) for all shareholders and
other factors. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
Freelance has, and will continue to have, no capital with which to provide the
owners of business opportunities with any significant cash or other assets.
However, management believes Freelance will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant
legal and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-QSB's or 10-KSB's,
agreements and related reports and documents. The Securities Exchange Act of
1934 (the "34 Act"), specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which include
providing audited financial statements to be included within the numerous
filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of Freelance have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of Freelance, none of whom is a
professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be
brought to its attention through present associations of Freelance's officers,
or by Freelance's shareholders.
In analyzing prospective business opportunities, management will consider
such matters as:
- the available technical, financial and managerial resources,
- working capital and other financial requirements,
- history of operations, if any,
- prospects for the future,
- nature of present and expected competition;,
-22-
- the quality and experience of management services which may be available
and the depth of that management,
- the potential for further research, development, or exploration,
- specific risk factors not now foreseeable but which may be anticipated to
impact the proposed activities of Freelance;
- the potential for growth or expansion; the potential for profit;
- the perceived public, recognition or acceptance of products, services, or
trades;
- name identification; and other relevant factors.
Management will meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible,
Freelance intends to utilize written reports and personal investigation to
evaluate the above factors. Freelance will not acquire or merger with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of Freelance, while not especially experienced in matters relating
to the new business of Freelance, will rely upon their own efforts and, to a
much lesser extent, the efforts of Freelance's shareholders, in accomplishing
the business purposes of Freelance. It is not anticipated that any outside
consultants or advisors will be utilized by Freelance to effectuate its
business purposes described herein.
However, if Freelance does retain such an outside consultant or advisor, any
cash fee earned by such party will need to be paid by the prospective merger/
acquisition candidate, as Freelance has no cash assets with which to pay such
obligation. There have been no discussions, understandings, contracts or
agreements with any outside consultants and none are anticipated in the future.
In the past, the company's management has never used outside consultants or
advisors in connection with a merger or acquisition.
Freelance will not restrict its search for any specific kind of firms, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It
is impossible to predict at this time the status of any business in which
Freelance may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may
seek other perceived advantages which Freelance may offer.
However, Freelance does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business opportunity until
such time as Freelance has successfully consummated such a merger or
acquisition. Freelance also has no plans to conduct any offerings under
Regulation S.
-23-
Acquisition of opportunities.
In implementing a structure for a particular business acquisition, Freelance
may become a party to a merger, consolidation, reorganization, joint venture,
or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of
Freelance will no longer be in control of Freelance. In addition, Freelances
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of Freelance's shareholders.
The policy set forth in the preceding sentence is based on an understanding
between the members of management, and these persons are not aware of any
circumstances under which this policy would change while they are still
officers and directors of Freelance. Any and all such sales will only be made
in compliance with the securities laws of the United States and any applicable
state.
It is anticipated that any securities issued in any such reorganization would
be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, Freelance may agree to register all or
a part of such securities immediately after the transaction is consummated or
at specified times thereafter.
If such registration occurs, of which there can be no assurance, it will be
undertaken by the surviving entity after Freelance has successfully
consummated a merger or acquisition and Freelance is no longer considered a
"shell" company. Until such time as this occurs, Freelance will not attempt
to register any additional securities. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in Freelance's securities may have a depressive effect on the
value of Freelance's securities in the future, if such a market develops, of
which there is no assurance.
While the actual terms of a transaction to which Freelance may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-free" reorganization
under Sections 368a or 351 of the Internal Revenue Code.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of Freelance which target
company shareholders would acquire in exchange for all of their shareholdings
in the target company. Depending upon, among other things, the target
company's assets and liabilities, Freelance's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in
Freelance following any merger or acquisition.
The percentage ownership may be subject to significant reduction in the event
Freelance acquires a target company with substantial assets. Any merger or
acquisition effected by Freelance can be expected to have a significant
dilutive effect on the percentage of shares held by Freelance's then
shareholders.
-24-
Freelance will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing costs,
including costs associated with Freelance's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
If an outside person or entity is responsible for finding a merger candidate
for Freelance, a finders fee will most likely be paid. This fee will, in all
likelihood, be paid by the merging company due to Freelance's lack of
financial standing. The maximum amount of finders fee paid to any one person
would probably be $25,000. Freelance will not be issuing stock to be used as
a finders fee.
Management will, in all likelihood, actively negotiate or consent to the
purchase of their stock by the merging company. Freelance's shareholders will
not have an opportunity to approve or consent to such a buy-out.
Management has no plans or proposals to sell or issue additional securities
prior to the location of an acquisition or merger candidate. Management does
not foresee any such events that would facilitate a sale or issuance of
additional securities.
As stated here-in-above, Freelance will not acquire or merge with any entity
which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. Freelance
is subject to all of the reporting requirements included in the 34 Act.
Included in these requirements is the affirmative duty of Freelance to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as Freelance's audited financial statements included in
its annual report on Form 10-K (or 10-KSB, as applicable).
If such audited financial statements are not available at closing, or within
time parameters necessary to insure Freelance's compliance with the
requirements of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents may provide that the proposed
transaction will be voidable, at the discretion of the present management of
Freelance.
The Board of Directors have passed a resolution which prohibits Freelance from
completing an acquisition or merger with any entity in which any of Freelance's
Officers, Directors, principal shareholders or their affiliates or associates
serve as officer or director or hold any ownership interest. Management is
not aware of any circumstances under which this policy, through their own
initiative may be changed.
-25-
There are no arrangements, agreements or understandings between non-management
shareholders and management under which non-management management of the
Freelances affairs. There is no agreement that non-management shareholders
will exercise their voting rights to continue to re-elect the current
directors, however, it is expected that they will do so based on the existing
friendship among such persons.
Management's Plan With Respect To Other Blank Check Entities.
Currently, President Danny Lovell, Secretary Adam Shaikh, and Treasure Eliot
Thomas are officers and directors for one other blank check company,
Freelance.com, Inc. Currently, this company has not been cleared by the SEC.
Therefore, there has been no public offering as of yet.
Other Blank Check Companies
Name of Company Registration Form Date Filed Status
Loanspaid.com, Inc. SB-2 July 7, 2000 Pending
Divia.com, Inc. 10SB12G Aug. 4, 2000 Effective 10/3/2000
Axis.com, Inc. 10SB12G Sept. 8,2000 Pending
It is the intent of management to consummate a merger or acquisition with both
Freelance.com, Inc., Loanspaid.com, Inc., Divia.com, Inc., and Axis.com,Inc.
However, there is an inherent conflict of interest with respect to both
companies that Mr. Lovell, Mr. Shaikh and Mr. Thomas are affiliated with
Management, therefore, has agreed that the companies will be given priority
based upon the time of clearance of the SB-2 or Form10 registration statements.
The first SB-2 or Form 10 cleared will be given priority and so on. If, by
happenstance, one or more of the company's registration statements clear at
the same time, the company will give priority to the company whose name is
first in alphabetical order.
Competition.
Freelance will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than
Freelance. In view of the Company's combined extremely limited financial
resources and limited management availability, Freelance will continue to be
at a significant competitive disadvantage compared to the Company's competitors.
Description of property.
Freelance has retained Adam U. Shaikh, as a resident agent. The address is
3360 W. Sahara, Suite 200 Las Vegas, NV 89102. Mr. Shaikh acts as Secretary
and Director to Freelance. A copy of the resident agent agreement is attached.
-26-
Freelance currently owns no property. . President Danny Lovell's residence,
3651 N. Rancho Dr., Apt. # 163, Las Vegas, NV 89102, serves as Freelance's
executive office. Mr. Lovell's home is adequate space for Freelance's office
due to the limited operations of the company. Mr. Lovell provides this space
free of charge.
Certain relationships and related transactions.
There are no relationships, transactions, or proposed transactions to which
the registrant was or is to be a party, in which any of the named persons set
forth in Item 404 of Regulation SB had or is to have a direct or indirect
material interest.
Adam U. Shaikh., the Company's resident agent currently holds the position of
Secretary and director in the Company.
Market for common equity and related stockholder matters.
The Shares have not previously been traded on any securities exchange. At the
present time, there are no assets available for the payment of dividends on
the Shares.
Executive compensation.
(a) No officer or director of Freelance is receiving any remuneration at this
time.
(b) There are no annuity, pension or retirement benefits proposed to be paid
to officers, directors, or employees of the corporation in the event of
retirement at normal retirement date pursuant to any presently existing plan
provided or contributed to by the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be in the future directly or indirectly by
the corporation to any officer or director under any plan which is presently
existing.
Financial statements.
-27-
Freelance.com, Inc
(A Development Stage Company)
Financial Statements
June 30, 2000
TABLE OF CONTENTS PAGE #
INDEPENDENT AUDITOR'S REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
BARRY L. FRIEDMAN, P.C.
CERTIFIED PUBLIC ACCOUNTANT
1582 TULITA DRIVE
LAS VEGAS, NV 89123
BOARD OF DIRECTORS
FREELANCE.COM, INC.
LAS VEGAS, NV
JULY 3, 2000
I have audited the accoumpanying Balance Sheets of FREELANCE.COM, INC. (A
Development Stage Company), as of June 30,2000 and the related statements of
operations, stockholders' equity and cash flows for the period June 19, 2000
(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 we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FREELANCE.COM, Inc. (A
Development Stage Company), as of June 30 2000, and the results of its
operations and cash flows for the period June 19, 2000 (inception) to
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 no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters is described in Note #5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Barry L. Friedman
Certified Public Accountant
<TABLE>
<CAPTION>
FREELANCE.COM, Inc.
(A Development Stage Company)
June 30, 2000
<S> <C>
Balance Sheet
Assets
Current Assests
Total Current Assets $0
Other Assets
Total Other Assets $0
Total Assets $0
Liabilities and Stockholders' Equity
Current Liabilities $0
Total Current Liabilities $0
Stockholders' Equity (Note #4)
Common stock
Par Value $0.001
Authorized 25,000,000 shares
Issued and outstanding at
June 30, 2000
3,000,000 shares $3000
Additional Paid-In Capital 0
Deficit accumulated during
The Development Stage (3000)
------
Total Stockholders' Equity $0
------
Total Liabilities and
Stockholders' Equity $0
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FREELANCE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
JUNE 19, 2000 (INCEPTION) TO JUNE 30,2000
STATEMENT OF OPERATIONS
<S> <C>
INCOME
REVENUE $0
EXPENSES
GENERAL AND
ADMINISTATIVE $3000
-----
TOTAL EXPENSES $3000
-----
NET LOSS $-3000
-----
NET LOSS PER SHARE-
BASIC AND DILUTED
(NOTE #2) $-0.0010
--------
Weighted average
number of common
shares outstanding 3,000,000
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FREELANCE.COM, INC.
(A Development Stage Company)
June 19, 2000 (Inception), to June 30, 2000
Statement of Changes in Stockholders' Equity
<S> <C> <C> <C> <C>
Additional Accum-
Common Stock paid-in lated
Shares Amount Capital Deficit
June 19,2000
Issued for Services 3,000,000 $3000 $0
Net loss,
June 19,2000,
(inception) to
June 30, 2000 $-3000
--------- ----- ---- ------
Balance,
June 30, 2000 3,000,000 $3000 $0 $-3000
--------- ----- ---- ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FREELANCE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
JUNE 19, 2000 (INCEPTION), TO JUNE 30, 2000
STATEMENT OF CASH FLOWS
<S> <C>
Cash Flows from
Operating Activities
Net loss $-3000
Adjustment to
reconcile net loss
to net cash provided
by operating
activities
Issue Common Stock
For Services 3000
Changes in assets and
Liabilities 0
------
Net cash used in
Operating activities $0
Cash Flows from
Investing Activities 0
Cash Flows from
Financing Activities 0
------
Net Increase (decrease) $0
Cash,
Beginning of period 0
------
Cash, End of period $0
------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
FREELANCE.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2000
Note 1- History and Organization of the Company
The Company was organized June 19, 2000, under the laws of the State of Nevada,
as FRRELANCE.COM, INC. The Company currently has no operations and in
accordance with SFAS #7, is considered a developmental company.
Note 2- Summary of Significant Accounting Policies
Accounting Method
-----------------
The Company records income and expenses on the accrual method.
Estimates
---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue an expenses during the reporting period.
Actual results could differ from those estimates.
Cash and equivalents
--------------------
The Company maintains a cash balance in a non-interest-bearing bank that
currently does not exceed federally insured limits. For the purpose of
the statements of cash flows, all highly liquid investments with the maturity
of three months or less are considered to be cash equivalents. There are no
cash equivalents as of June 30, 2000.
Year End
--------
The Company has selected December 31st, as its fiscal year-end.
Income Taxes
------------
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109
(SFAS #109) "Accounting for Income Taxes." A deferred tax asset or liability
is recorded for all temporary difference between financial and tax reporting.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
FREELANCE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUTING POLICIES (CONTINUED)
Reporting on Costs of Start-Up Activities
-----------------------------------------
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up
Activities" which provides guidance on th financial reporting of start-up
costs and organization costs. It requires most costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5
is effective for fiscal years beginning after December 15, 1998. With the
adoption of SOP 98-5, there has been little or no effect on the company's
financial statements.
Loss Per Share
--------------
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss
per share is computed by dividing losses available to common stockholders by
the weighted average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common stock. As of
June 30, 2000, the Company had no dilative common stock equivalents such as
stock options.
Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction
-----------------------------------------------------------------------
The Company's accounting policy for issuing shares in a non-cash transaction
is to issue the equivalent amount of stock equal to the fair market value of
the assets or services received.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended June 30, 2000,
due to the net loss and no state income tax in Nevada, the state of the
Company's domicile and operations. The Company's total deferred tax asset
as of June 30, 2000 is as follows:
Net operation loss carry forward $ 0
Valuation allowance $ 0
Net deferred tax asset $ 0
FREELANCE.COM, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
JUNE 30,2000
NOTE 4- STOCKHOLDERS' EQUITY
Common Stock
------------
The authorized common stock of the corporation consists of 25,000,000 shares
with a par value of $0.001 per share.
Preferred Stock
---------------
The corporation has no preferred stock.
On June 19, 2000, the Company issued 3,000,000 shares of its $0.001 par
value common stock to its directors for services of $3,000.00.
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenue sufficient
to cover its operating costs and to allow it to continue as a going concern.
The stockholders/officers and or directors have committed to advancing the
operating costs of the Company interest free.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer
of the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been
reflected therein. The officers and directors of the Company are involved in
other business 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.
Part II. Information not required in prospectus.
Indemnification of officers and directors.
Information on this item is set forth in Prospectus under the heading
"Disclosure of Commission Position on Indemnification for Securities Act
Liabilities."
Other expenses of issuance and distribution.
The following table sets forth the anticipated costs which will be paid by the
security holders by the release of 10% of the escrowed funds pursuant to Rule
419.
Printing Costs $500.00
Accounting Costs $2,000.00
Legal Costs $3,500.00
Escrow Agent Costs $750.00
Please see the Use of Proceed section.
Recent sales of unregistered securities.
On June 19, 2000, 1,000,000 shares were issued to Adam U. Shaikh, 1,000,000 to
Danny Lovell and 1,000,000 to Eliot Thomas under Rule 4(2). Neither Mr. Shaikh,
Mr. Lovell, or Mr. Thomas are accredited investors, but they are sophisticated
investors by virtue of being officers and directors in the company.
Exhibits.
The Exhibits required by Item 601 of Regulation S-B, and an index thereto, are
attached.
Undertakings.
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and Notwithstanding the forgoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation From the low or
high end of the estimated maximum offering range may be reflected in the form
of prospects filed with the Commission pursuant to Rule 424.
[38]
(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised "Act") may be permitted to directors, officers
and controlling persons of the small business issuer that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
[39]
EXHIBIT LIST
3.1 Articles of Incorporation
Incorporated by reference in the Form SB-2 filing of July 10, 2000
3.2 By-Laws
Incorporated by reference in the Form SB-2 filing of July 10, 2000
5.1 Opinion on Legality
Incorporated by reference in the Form SB-2 filing of July 10, 2000
24.1 Consent of Accountant
24.2 Consent of Attorney (Included in Opinion)
Incorporated by reference in the Form SB-2 filing of July 10, 2000
25.1 Power of Attorney
Incorporated by reference in the Form SB-2 filing of July 10, 2000
27.1 Acceptance of Resident Agent
Incorporated by reference in the Form SB-2 filing of July 10, 2000
27.2 Lock-up agreement
Incorporated by reference in the Form SB-2 filing of July 10, 2000
27.3 Financial Data Schedule
Incorporated by reference in the Form SB-2 filing of July 10, 2000
27.4 Signatures
[40]
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