UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
Kaw Acquisition Corporation
[ Name of Small Business Issuer in its Charter ]
Nevada 91-2048016
[ State or other jurisdiction of incorporation ] [I.R.S. Emp.Ident. No.]
1800 North Hill Avenue, Willow Grove PA 19090
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number ( 215 ) 658 - 0131
Securities to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
None
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock, $.001 Par Value
[ Title of Class ]
__________________________________________
[ Title of Class ]
PART I
ITEM 1. BUSINESS
Kaw Acquisition Corporation ("Kaw") was incorporated on May
3rd, 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. Kaw has been in the
developmental stage since inception and has no operations to date
other than issuing shares to its original shareholder.
Kaw will attempt to locate and negotiate with a business
entity for the combination of that target company with Kaw. The
combination will normally take the form of a merger, stock-for-stock
exchange, or stock-for assets exchange. In most instances the
target company will wish to structure the business combination to be
within the definition of a tax-free reorganization under Section 351
or Section 368 of the Internal Revenue Code of 1986, as amended. No
assurances can be given that Kaw will be successful in locating or
negotiating with any target company.
Kaw has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company
with a class of registered securities.
ASPECTS OF A REPORTING COMPANY
There are certain perceived benefits to being a reporting
company. These are commonly thought to include the following:
* increased visibility in the financial community;
* provision of information required under Rule 144 for
trading of eligible securities;
* compliance with a requirement for admission to
quotation on the OTC Bulletin Board maintained by
Nasdaq or on the Nasdaq SmallCap Market;
* the facilitation of borrowing from financial
institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising of capital;
* compensation of key employees through stock options
for which there may be a market valuation;
* enhanced corporate image.
There are also certain perceived disadvantages to being a
reporting company. These are commonly thought to include the
following:
* requirement for audited financial statements;
* required publication of corporate information;
* required filings of periodic and episodic reports
with the Securities and Exchange Commission;
* increased rules and regulations governing management,
corporate activities and shareholder relations.
COMPARISON WITH INITIAL PUBLIC OFFERING
Certain private companies may find a business combination
more attractive than an initial public offering of their securities.
Reasons for this may include the following:
* inability to obtain underwriter;
* possible larger costs, fees and expenses;
* possible delays in the public offering process;
* greater dilution of their outstanding securities.
Certain private companies may find a business combination
less attractive than an initial public offering of their securities.
Reasons for this may include the following:
* no investment capital raised through a business
combination;
* no underwriter support of after-market trading.
POTENTIAL TARGET COMPANIES
A business entity, if any, which may be interested in a
business combination with Kaw may include the following:
* a company for which a primary purpose of becoming
public is the use of its securities for the
acquisition of assets or businesses;
* a company which is unable to find an underwriter of
its securities or is unable to find an underwriter of
securities on terms acceptable to it;
* a company which wishes to become public with less
dilution of its common stock than would occur upon an
underwriting;
* a company which believes that it will be able to
obtain investment capital on more favorable terms
after it has become public;
* a foreign company which may wish an initial entry
into the United States securities market;
* a special situation company, such as a company
seeking a public market to satisfy redemption
requirements under a qualified Employee Stock Option
Plan;
* a company seeking one or more of the other perceived
benefits of becoming a public company.
A business combination with a target company will normally
involve the transfer to the target company of the majority of the
issued and outstanding common stock of Kaw, and the substitution by
the target company of its own management and board of directors.
No assurances can be given that Kaw will be able to enter
into a business combination, as to the terms of a business
combination, or as to the nature of the target company.
The proposed business activities described herein classify
Kaw as a "blank check" company. The Securities and Exchange
Commission and certain states have enacted statutes, rules and
regulations limiting the sale of securities of blank check
companies. Kaw will not issue or sell additional shares or take any
efforts to cause a market to develop in Kaw's securities until such
time as Kaw has successfully implemented its business plan and it is
no longer classified as a blank check company.
The sole shareholder of Kaw has executed and delivered an
agreement affirming that it will not sell or otherwise transfer its
shares except in connection with or following a business combination.
Kaw is voluntarily filing this Registration Statement with
the Securities and Exchange Commission and is under no obligation to
do so under the Securities Exchange Act of 1934. Kaw will continue
to file all reports required of it under the Exchange Act until a
business combination has occurred. A business combination will
normally result in a change in control and management of Kaw. Since
a benefit of a business combination with Kaw would normally be
considered its status as a reporting company, it is anticipated that
Kaw will continue to file reports under the Exchange Act following a
business combination. No assurance can be given that this will
occur or, if it does, for how long.
Peter Goss is the sole officer and director of Kaw. Kaw has
no employees nor are there any other persons than Mr. Goss who
devote any of their time to its affairs. Mr. Goss will not begin
any services on behalf of Kaw until after the effective date of the
Registration Statement. All references herein to management of Kaw
are to Mr. Goss. The inability at any time of Mr. Goss to devote
sufficient attention to Kaw could have a material adverse impact on
its operations.
GLOSSARY
"Blank Check" Company As used herein, a "blank check"
company is a development stage
company that has no specific
business plan or purpose or has
indicated that its business
plan is to engage in a merger
or acquisition with an
unidentified company or companies.
Business Combination Normally a merger, stock-for-stock
exchange or stock-for-assets exchange
between a target company and the
Registrant or the shareholders of the
Registrant.
Kaw or the Registrant The corporation whose common
stock is the subject of this
Registration Statement.
Exchange Act The Securities Exchange Act of
1934, as amended.
Securities Act The Securities Act of 1933, as
amended.
RISK FACTORS
Kaw's business is subject to numerous risk factors, including
the following:
KAW HAS NO OPERATING HISTORY NOR REVENUE AND MINIMAL ASSETS
AND OPERATES AT A LOSS. Kaw has had no operating history nor any
revenues or earnings from operations. Kaw has no significant assets
or financial resources. Kaw has operated at a loss to date and
will, in all likelihood, continue to sustain operating expenses
without corresponding revenues, at least until the consummation of a
business combination. See PART F/S "FINANCIAL STATEMENTS". Mr.
Goss, individually, has agreed to pay all expenses incurred by Kaw
until a business combination without repayment by Kaw. Mr. Goss is
the sole shareholder of Kaw. There is no assurance that Kaw will
ever be profitable.
COMPANY HAS ONLY ONE DIRECTOR AND ONE OFFICER. Kaw's
president, its sole officer, is Peter Goss who is also its sole
director and the controlling shareholder of its sole shareholder.
Because management consists of only one person, Kaw does not benefit
from multiple judgments that a greater number of directors or
officers would provide and Kaw will rely completely on the judgment
of its sole officer and director when selecting a target company.
Mr. Goss anticipates devoting only a limited amount of time per
month to the business of Kaw and does not anticipate commencing any
services until after the effective date of the Registration
Statement. Kaw has not obtained key man life insurance on Mr. Goss.
The loss of the services of Mr. Goss would adversely affect
development of Kaw's business and its likelihood of continuing
operations.
CONFLICTS OF INTEREST. Mr. Goss, Kaw's president,
participates in other business ventures which may compete directly
with Kaw. Additional conflicts of interest and non-arms length
transactions may also arise in the future. Kaw has adopted a policy
that it will not enter into a business combination with any entity
in which any member of management serves as an officer, director or
partner, or in which such person or such person's affiliates or
associates hold any ownership interest. The terms of business
combination may include such terms as Mr. Goss remaining a director,
officer or employee of Kaw. The terms of a business combination may
provide for a payment by cash or otherwise to Mr. Goss for the
purchase or retirement of all or part of his common stock of Kaw by
a target company or for services rendered incident to or following a
business combination. Mr. Goss would directly benefit from such
employment or payment. Such benefits may influence Mr. Goss' choice
of a target company. The Certificate of Incorporation of Kaw
provides that Kaw may indemnify officers and/or directors of Kaw for
liabilities, which can include liabilities arising under the
securities laws. Therefore, assets of Kaw could be used or attached
to satisfy any liabilities subject to such indemnification. See
"ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS Conflicts of Interest."
THE PROPOSED OPERATIONS OF KAW ARE SPECULATIVE. The success
of Kaw's proposed plan of operation will depend to a great extent on
the operations, financial condition and management of the identified
target company. While business combinations with entities having
established operating histories are preferred, there can be no
assurance that Kaw will be successful in locating candidates meeting
such criteria. The decision to enter into a business combination
will likely be made without detailed feasibility studies,
independent analysis, market surveys or similar information which,
if Kaw had more funds available to it, would be desirable. In the
event Kaw completes a business combination the success of Kaw's
operations will be dependent upon management of the target company
and numerous other factors beyond Kaw's control. There is no
assurance that Kaw can identify a target company and consummate a
business combination.
PURCHASE OF PENNY STOCKS CAN BE RISKY. In the event that a
public market develops for Kaw's securities following a business
combination, such securities may be classified as a penny stock
depending upon their market price and the manner in which they are
traded. The Securities and Exchange Commission has adopted Rule
15g-9 which establishes the definition of "penny stock", for
purposes relevant to Kaw, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of less
than $5.00 per share whose securities are admitted to quotation but
do not trade on the Nasdaq SmallCap Market or on a national
securities exchange. For any transaction involving a penny stock,
unless exempt, the rules require delivery by the broker of a
document to investors stating the risks of investment in penny
stocks, the possible lack of liquidity, commissions to be paid,
current quotation and investors' rights and remedies, a special
suitability inquiry, regular reporting to the investor and other
requirements. Prices for penny stocks are often not available and
investors are often unable to sell such stock. Thus an investor may
lose his investment in a penny stock and consequently should be
cautious of any purchase of penny stocks.
THERE IS A SCARCITY OF AND COMPETITION FOR BUSINESS
OPPORTUNITIES AND COMBINATIONS. Kaw is and will continue to be an
insignificant participant in the business of seeking mergers with
and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital
firms, are active in mergers and acquisitions of companies which may
be merger or acquisition target candidates for Kaw. Nearly all such
entities have significantly greater financial resources, technical
expertise and managerial capabilities than Kaw and, consequently,
Kaw will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business
combination. Moreover, Kaw will also compete with numerous other
small public companies in seeking merger or acquisition candidates.
THERE IS NO AGREEMENT FOR A BUSINESS COMBINATION AND NO
MINIMUM REQUIREMENTS FOR BUSINESS COMBINATION. Kaw has no current
arrangement, agreement or understanding with respect to engaging in
a business combination with a specific entity. There can be no
assurance that Kaw will be successful in identifying and evaluating
suitable business opportunities or in concluding a business
combination. No particular industry or specific business within an
industry has been selected for a target company. Kaw has not
established a specific length of operating history of a specified
level of earnings, assets, net worth or other criteria which it will
require a target company to have achieved, or without which Kaw
would not consider a business combination with such business entity.
Accordingly, Kaw may enter into a business combination with a
business entity having no significant operating history, losses,
limited or no potential for immediate earnings, limited assets,
negative net worth or other negative characteristics. There is no
assurance that Kaw will be able to negotiate a business combination
on terms favorable to Kaw.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934 (the "Exchange Act"), Kaw is required to
provide certain information about significant acquisitions including
audited financial statements of the acquired company. These audited
financial statements must be furnished within 75 days following the
effective date of a business combination. Obtaining audited
financial statements are the economic responsibility of the target
company. The additional time and costs that may be incurred by some
potential target companies to prepare such financial statements may
significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by Kaw. Acquisition prospects that
do not have or are unable to obtain the required audited statements
may not be appropriate for acquisition so long as the reporting
requirements of the exchange act or applicable. Notwithstanding a
target company's agreement to obtain audited financial statements
within the required time frame, such audited financials may not be
available to Kaw at the time of effecting a business combination.
In cases where audited financials are unavailable, Kaw will have to
rely upon unaudited information that has not been verified by
outside auditors in making its decision to engage in a transaction
with the business entity. This risk increases the prospect that a
business combination with such a business entity might prove to be
an unfavorable one for Kaw.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. Kaw has
neither conducted, nor have others made available to it, market
research indicating that demand exists for the transactions
contemplated by Kaw. Even in the event demand exists for a
transaction of the type contemplated by Kaw, there is no assurance
Kaw will be successful in completing any such business combination.
REGULATION UNDER INVESTMENT COMPANY ACT. In the event Kaw
engages in business combinations which result in Kaw holding passive
investment interests in a number of entities, Kaw could be subject
to regulation under the Investment Company Act of 1940. Passive
investment interest, as used in the Investment Company Act,
essentially means investments held by entities which do not provide
management or consulting services or are not involved in the
business whose securities are held. In such event, Kaw would be
required to register as an investment company and could be expected
to incur significant registration and compliance costs. Kaw has
obtained no formal determination from the Securities and Exchange
Commission as to the status of Kaw under the Investment Company Act
of 1940. Any violation of such Act could subject Kaw to material
adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business
combination involving the issuance of Kaw's common stock will, in
all likelihood, result in shareholders of a target company obtaining
a controlling interest in Kaw. As a condition of the business
combination agreement, Mr. Peter Goss, the sole shareholder of Kaw,
may agree to sell or transfer all or a portion of his company's
common stock so to provide the target company with all or majority
control. The resulting change in control of Kaw will likely result
in removal of the present officer and director of Kaw and a
corresponding reduction in or elimination of his participation in
the future affairs of Kaw.
POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS
COMBINATION. A business combination normally will involve the
issuance of a significant number of additional shares. Depending
upon the value of the assets acquired in such business combination,
the per share value of Kaw's common stock may increase or decrease,
perhaps significantly.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination Kaw
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. Kaw intends to structure
any business combination so as to minimize the federal and state tax
consequences to both Kaw and the target company; 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.
ITEM 2. PLAN OF OPERATION
SEARCH FOR TARGET COMPANY
Kaw has entered into an agreement with Peter Goss, the sole
shareholder of Kaw, to supervise the search for target companies as
potential candidates for a business combination. The agreement will
continue until such time as Kaw has effected a business combination.
Peter Goss has agreed to pay all expenses of Kaw without repayment
until such time as a business combination is effected.
Mr. Goss may only locate potential target companies for Kaw
and is not authorized to enter into any agreement with a potential
target company binding Kaw. Kaw's agreement with Mr. Goss is not
exclusive and Mr. Goss has entered into agreements with other
companies similar to Kaw on similar terms. Mr. Goss may provide
assistance to target companies incident to and following a business
combination, and receive payment for such assistance from target
companies.
Mr. Goss owns 500,000 shares of Kaw's common stock for which
he paid $500, or $.001, par value, per share.
Mr. Goss has entered, and anticipates that he will enter,
into agreements with other consultants to assist him in locating a
target company and may share his stock in Kaw with or grant options
on such stock to such referring consultants and may make payments to
such consultants from his own resources. There is not minimum or
maximum amount of stock, options, or cash that Mr. Goss may grant or
pay to such consultants. Mr. Goss is solely responsible for the
costs and expenses of his activities in seeking a potential target
company, including any agreements with consultants, and Kaw has no
obligation to pay any costs incurred or negotiated by Mr. Goss.
Mr. Goss may seek to locate a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms,
accounting firms, investment bankers, financial advisors and similar
persons, the use of one or more World Wide Web sites and similar
methods. If Mr. Goss engages in solicitation, no estimate can be
made as to the number of persons who may be contacted or solicited.
To date Mr. Goss has not utilized solicitation and expects to rely
on consultants in the business and financial communities for
referrals of potential target companies.
MANAGEMENT OF KAW
Kaw has no full time employees. Peter Goss is the sole
officer of Kaw and its sole director. Mr. Goss, as president of
Kaw, has agreed to allocate a limited portion of his time to the
activities of Kaw after the effective date of the registration
statement without compensation. Potential conflicts may arise with
respect to the limited time commitment by Mr. Goss and the potential
demands of Kaw's activities.
The amount of time spent by Mr. Goss on the activities of Kaw
is not predictable. Such time may vary widely from an extensive
amount when reviewing a target company and effecting a business
combination to an essentially quiet time when activities of
management focus elsewhere, or some amount in between. It is
impossible to predict the amount of time Mr. Goss will actually be
required to spend to locate a suitable target company. Mr. Goss
estimates that the business plan of Kaw can be implemented by
devoting approximately 10 to 25 hours per month over precision. Mr.
Goss does not anticipate performing any services on behalf of Kaw
until after the effective of the registration statement.
GENERAL BUSINESS PLAN
Kaw's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in a business entity
which desires to seek the perceived advantages of a corporation
which has a class of securities registered under the Exchange Act.
Kaw will not restrict its search to any specific business, industry,
or geographical location and Kaw may participate in a business
venture of virtually any kind or nature. Management anticipates
that it will be able to participate in only one potential business
venture because Kaw has nominal assets and limited financial
resources. See PART F/S, "FINANCIAL STATEMENTS." This lack of
diversification should be considered a substantial risk to the
shareholders of Kaw because it will not permit Kaw to offset
potential losses from one venture against gains from another.
Kaw 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.
Kaw anticipates that the selection of a business opportunity
in which to participate will be complex and extremely risky.
Management believes (but has not conducted any research to confirm)
that there are business entities seeking the perceived benefits of a
reporting 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, increasing the
opportunity to use securities for acquisitions, providing liquidity
for 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 difficult
and complex.
Kaw has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other
assets. However, management believes Kaw will be able to offer
owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in a reporting company without
incurring the cost and time required to become a reporting company
by other means. Management has not conducted market research and is
not aware of statistical data to support the perceived benefits of a
business combination for the owners of a target company.
The analysis of new business opportunities will be undertaken
by, or under the supervision, of, the officer and director of Kaw,
who is not a professional business analyst. In analyzing
prospective business opportunities, management may consider such
matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history
of operations, if any; prospects for the future nature of present
and expected competition; the quality and experience of management
services which may be available and the depth of that management;
the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of Kaw; 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. This discussion of
the proposed criteria is not meant to be restrictive of Kaw's
virtually unlimited discretion to search for and enter into
potential business opportunities.
Kaw is subject to all of the reporting requirements included
in the Exchange Act. Included in these requirements is the duty of
Kaw to file audited financial statements as part of or within 60
days following the due date for filing its Current Report on Form
8-K which is required to be filed with the Securities and Exchange
Commission within 15 days following the completion of a business
combination. Kaw intends to acquire or merge with a company for
which audited financial statements are available or for which it
believes audited financial statements can be obtained within the
required period of time. Kaw may reserve the right in the documents
for the business combination to void the transaction if the audited
financial statements are not timely available or if the audited
financial statements provided do not confirm to the representations
made by the target company.
Kaw will not restrict its search for any specific kind of
business entities, 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 business life. It is impossible to
predict at this time the status of any business in which Kaw 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 Kaw may offer.
Following a business combination Kaw may benefit from the
services of others in regard to accounting, legal services,
underwritings and corporate public relations. If requested by a
target company, management may recommend one or more underwriters,
financial advisors, accountants, public relations firms or other
consultants to provide such services.
A potential target company may have an agreement with a
consultant or advisor providing that services of the consultant or
advisor be continued after any business combination. Additionally,
a target company may be presented to Kaw only on the condition that
the services of a consultant or advisor be continued after a merger
or acquisition. Such preexisting agreements of target companies for
the continuation of the services of attorneys, accountants, advisors
or consultants could be a factor in the selection of target company.
TERMS OF A BUSINESS COMBINATION
In implementing a structure for a particular business
acquisition, Kaw may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another
corporation or entity. On the consummation of a transaction, it is
likely that the present management and shareholders of Kaw will no
longer be in control of Kaw. In addition, it is likely that Kaw's
officer and director will, as part of the terms of the business
combination, resign and be replaced by one or more new officers and
directors.
It is anticipated that any securities issued in any such
business combination 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, Kaw may agree to register all or part of such
securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, it will be
undertaken by the surviving entity after Kaw has entered into an
agreement for a business combination or has consummated a business
combination and Kaw is no longer considered a blank check company.
The issuance of additional securities and their potential sale into
any trading market which may develop in Kaw's securities may depress
the market value of Kaw's securities in the future if such a market
develops, of which there is no assurance.
While the terms of a business transaction to which Kaw may be
a party cannot be predicted, it is expected that the parties to the
business transaction will desire to avoid the creation of a taxable
event and thereby structure the acquisition in a tax-free
reorganization under Sections 351 or 368 of the Internal Revenue
Code of 1986, as amended.
With respect to negotiations with a target company,
management expects to focus on the percentage of Kaw which target
company shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other
things, the target company's assets and liabilities, Kaw's
shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in Kaw following any merger or
acquisition. The percentage of ownership may be subject to
significant reduction in the event Kaw acquires a target company
with substantial assets. Any merger or acquisition effected by Kaw
can be expected to have a significant dilutive effect on the
percentage of shares held by Kaw's shareholders at such time.
Kaw will participate in a business combination only after the
negotiation and execution of appropriate agreements. Although the
terms of such agreements cannot be predicted, generally such
agreements will require certain representations and warranties of
the parties thereto, will specify certain events of default, will
detail the terms of closing and the conditions which must be
satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.
Peter Goss, individually, will pay all expenses in regard to
his search for a suitable target company. Kaw does not anticipate
expending funds itself for locating a target company. Peter Goss,
the officer and director of Kaw, will provide his services without
charge or repayment by Kaw after the effective date of this
registration statement. Kaw will not borrow any funds to make any
payments to Kaw's management, its affiliates or associates. If
Peter Goss stops or becomes unable to continue to pay Kaw's
operating expenses, Kaw may not be able to timely make its periodic
reports required under the Securities Exchange Act of 1934 nor to
continue to search for an acquisition target. In such event, Kaw
would seek alternative sources of funds or services, primarily
through the issuance of its securities.
The Board of Directors has passed a resolution which contains
a policy that Kaw will not seek a business combination with any
entity in which Kaw's officer, director, shareholders or any
affiliate or associate serves as an officer or director of holds any
ownership interest.
UNDERTAKINGS AND UNDERSTANDINGS REQUIRED OF TARGET COMPANIES
As part of a business combination agreement, Kaw intends to
obtain certain representations and warranties from a target company
as to its conduct following the business combination. Such
representations and warranties may include (i) the agreement of the
target company to make all necessary filings and to take all other
steps necessary to remain a reporting company under the Exchange Act
(ii) imposing certain restrictions on the timing and amount of the
issuance of additional free-trading stock, including stock
registered on Form S-8 or issued pursuant to Regulation S and (iii)
giving assurances of ongoing compliance with the Securities Act, the
Exchange Act, the General Rules and Regulations of the Securities
and Exchange Commission, and other applicable laws, rules and
regulations.
A prospective target company should be aware that the market
price and trading volume of Kaw's securities, when and if listed for
secondary trading, may depend in great measure upon the willingness
and efforts of successor management to encourage interest in Kaw
within the United States financial community. Kaw does not have the
market support of an underwriter that would normally follow a public
offering of its securities. Initial market makers are likely to
simply post bid and asked prices and are unlikely to take positions
in Kaw's securities for their own account or customers without
active encouragement and a basis for doing so. In addition, certain
market makers may take short positions in Kaw's securities, which
may result in a significant pressure on their market price. Kaw may
consider the ability and commitment of a target company to actively
encourage interest in Kaw's securities following a business
combination in deciding whether to enter into a transaction with
such company.
A business combination with Kaw separates the process of
becoming a public company from the raising of investment capital.
As a result, a business combination with the Company normally will
not be a beneficial transaction for a target company whose primary
reason for becoming a public company is the immediate infusion of
capital. Kaw may require assurances from the target company that it
has or that it has a reasonable belief that it will have sufficient
sources of capital to continue operations following the business
combination. However, it is possible that a target company may give
such assurances in error, or that the basis for such belief may
change as a result of circumstances beyond the control of the target
company.
Prior to completion of a business combination, Kaw may
require that it be provided with written materials regarding the
target company containing such items as a description of products,
services and company history; management resumes; financial
information; available projections, with related assumptions upon
which they are based; an explanation of proprietary products and
services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation
to management; a description of transactions between such company
and its affiliates during relevant periods; a description of present
and required facilities; an analysis of risks and competitive
conditions; a financial plan of operation and estimated capital
requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable
assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 75 days
following completion of a business combination; and other
information deemed relevant.
COMPETITION
Kaw 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 Kaw. In view of Kaw's combined extremely
limited financial resources and limited management availability, Kaw
will continue to be at a significant competitive disadvantage
compared to Kaw's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
Kaw has no properties and at this time has no agreements to
acquire any properties. Kaw currently uses the office of Peter Goss
at no cost to Kaw. Peter Goss has agreed to continue this
arrangement until Kaw completes a business combination.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth each person known by Kaw to be
the beneficial owner of five percent or more of Kaw's Common Stock,
all directors individually and all directors and officers of Kaw as
a group. Except as noted, each person has sole voting and
investment power with respect to the shares shown.
Name and Address Amount of Beneficial Percentage
of Beneficial Owner Ownership Of Class
Peter Goss 500,000 100%
1800 North Hill Ave.
Willow Grove PA 19090
All Executive Officers and
Directors as a Group (1 Person) 500,000 100%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Kaw has one Director and Officer as follows:
Name Age Positions and Offices Held
Peter Goss 64 President, Secretary, Director
There are no agreements or understandings for the officer or
director to resign at the request of another person and the
above-named officer and director is not acting on behalf of nor will
act at the direction of any other person.
Set forth below is the name of the director and officer of
Kaw, all positions and offices held with Kaw, the period during
which Peter Goss has served as such, and his business experience
during at least the last five years:
Peter Goss graduated in 1959 from Temple University with a
B.S. Degree in Business Administration. In 1967, Mr. Goss received
his M.B.A. in Industrial Relations from Temple University through
the Graduate School. Over the course of his career, Mr. Goss has
worked for the U.S. Government as a Management Analyst from 1961 to
1967, and for the Radio Corporation of America as a Senior System
Analyst from 1967 to 1969. Currently, Mr. Goss serves as President
of Village Mortgage Corporation and as Trustee of his land
development and property management for his family. Village
Mortgage Corporation is involved with the placement of residential
and commercial loans, development of .com companies, acquisition of
venture capital, and land development and home building. Mr. Goss
has served as President for Village Mortgage Corporation since 1987.
OTHER PUBLIC SHELL ACTIVITIES
Kaw's President, Mr. Goss, has also recently formed two other
shell companies, Osage Acquisition Corporation and Ponca Acquisition
Corporation. Mr. Goss is currently a shareholder in Kaw and is also
a shareholder in these other two shell companies.
Osage Acquisition Corporation and Ponca Acquisition
Corporation were formed on May 3rd, 2000, and will file a
registration statement on Form 10-SB at the same time Kaw's Form
10-SB is filed. Said companies were structured substantially
identically to Kaw. There is currently no market for the resale of
the outstanding shares of Osage Acquisition Corporation and Ponca
Acquisition Corporation.
CONFLICTS OF INTEREST
Peter Goss, Kaw's sole officer and director, has organized
and expects to organize other companies of a similar nature and with
a similar purpose as Kaw. Consequently, there are potential inherent
conflicts of interest in acting as an officer and director of Kaw.
In addition, insofar as Mr. Goss is engaged in other business
activities, he may devote only a portion of his time to Kaw's affairs.
A conflict may arise in the event that another blank check
company with which Mr. Goss is affiliated also actively seeks a
target company. It is anticipated that target companies will be
located for Kaw and other blank check companies in chronological
order of the date of formation of such blank check companies or, in
the case of blank check companies formed on the same date,
alphabetically. However, other blank check companies may differ
from Kaw in certain items such as place of incorporation, number of
shares and shareholders, working capital, types of authorized
securities, or other items. It may be that a target company may be
more suitable for or may prefer a certain blank check company formed
after Kaw. In such case, a business combination might be negotiated
on behalf of the more suitable or preferred blank check company
regardless of date of formation. However, Mr. Goss' beneficial and
economic interest in all blank check companies with which he is
currently involved is identical.
Mr. Goss has other ongoing business concerns. As such,
demands may be placed on the time of Mr. Goss which will detract
from the amount of time he is able to devote to Kaw. Mr. Goss
intends to devote as much time to the activities of Kaw as required.
However, should such a conflict arise, there is no assurance that
Mr. Goss would not attend to other matters prior to those of Kaw.
Mr. Goss estimates that the business plan of Kaw can be implemented
in theory by devoting approximately 10 to 25 hours per month over
the course of several months but such figure cannot be stated with
precision.
The terms of a business combination may include such terms as
Mr. Goss remaining a director, officer or employee of Kaw. The
terms of a business combination may provide for a payment by cash or
otherwise to Peter Goss for the purchase or retirement of all or
part of his common stock of Kaw by a target company or for services
rendered incident to or following a business combination. Peter
Goss would directly benefit from such employment or payment. Such
benefits may influence Mr. Goss' choice of a target company.
Kaw will not enter into a business combination, or acquire
any assets of any kind for its securities, in which management of
Kaw or any affiliates or associates have any interest, direct or
indirect.
There are no binding guidelines or procedures for resolving
potential conflicts of interest. Failure by management to resolve
conflicts of interest in favor of Kaw could result in liability of
management to Kaw.
INVESTMENT COMPANY ACT OF 1940
Although Kaw will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes Kaw will not be subject to regulation under the
Investment Company Act of 1940 insofar as Kaw will not be engaged in
the business of investing or trading in securities. In the event
Kaw engages in business combinations which result in Kaw holding
passive investment interests in a number of entities Kaw could be
subject to regulation under the Investment Company Act of 1940. In
such event, Kaw would be required to register as an investment
company and could be expected to incur significant registration and
compliance costs. Kaw has obtained no formal determination from the
Securities and Exchange Commission as to the status of Kaw under the
Investment Company Act of 1940. Any violation of such Act would
subject Kaw to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
Kaw's officer and director does not receive any compensation
for his services rendered to Kaw, has not received such compensation
in the past, and is not accruing any compensation pursuant to any
agreement with Kaw. However, the officer and director of Kaw
anticipates receiving benefits as a beneficial shareholder of Kaw,
and as the officer and director. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS Conflicts of Interest".
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by
Kaw for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Kaw has issued a total of 500,000 shares of Common Stock to
the following persons for a total of $500 in cash.
Name Number of Total Shares Consideration
Peter Goss 500,000 $500
With respect to the sales made to Peter Goss, Kaw relied upon
Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of Kaw consists of 100,000,000
shares of common stock, par value $.001 per share, of which there
are 500,000 issued and outstanding. The following statements
relating to the capital stock set forth the material terms of Kaw's
securities; however, reference is made to the more detailed
provisions of, and such statements are qualified in their entirety
by reference to, the Certificate of Incorporation and the Bylaws,
copies of which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote
for each share on all matters to be voted on by the stockholders.
Holders of common stock do not have cumulative voting rights.
Holders of common stock are entitled to share ratably in dividends,
if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefore.
In the event of a liquidation, dissolution or winding up of Kaw, the
holders of common stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. All of the
outstanding shares of common stock are fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase
Kaw' common stock. There are no conversion or redemption rights or
sinking fund provisions with respect to the common stock.
DIVIDENDS
Dividends, if any, will be contingent upon Kaw's revenues and
earnings, if any, capital requirements and financial conditions.
The payment of dividends, if any, will be within the discretion of
Kaw's Board of Directors. Kaw presently intends to retain all
earnings, if any, for use in its business operations and
accordingly, the Board of Directors does not anticipate declaring
any dividends prior to a business combination.
TRADING OF SECURITIES IN SECONDARY MARKET.
The National Securities Market Improvement Act of 1996
limited the authority of states to impose restrictions upon sales of
securities made pursuant to Sections 4(1) and 4(3) of the Securities
Act of companies which file reports under Sections 13 or 15(d) of
the Exchange Act. Upon effectiveness of this registration
statement, Kaw will be required to, and will, file reports under
Section 13 of the Exchange Act. As a result, sale of Kaw's common
stock in the secondary market by the holders thereof may then be
made pursuant to Section 4(1) of the Securities Act (sales other
than by an issuer, underwriter or broker) without qualification
under state securities acts.
Following a business combination, a target company will
normally wish to cause Kaw's common stock to trade in one or more
United States securities markets. The target company may elect to
take the steps required for such admission to quotation following
the business combination or at some later time.
In order to qualify for listing on the Nasdaq SmallCap
Market, a company must have at least (i) net tangible assets of
$4,000,000 or market capitalization of $50,000,000 or net income for
two of the last three years of $750,000; (ii) public float of
1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and
(vi) an operating history of one year or, if less than one year,
$50,000,000 in market capitalization. For continued listing on the
Nasdaq SmallCap Market, a company must have at least (i) net
tangible assets of $2,000,000 or market capitalization of
$35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value
of $1,000,000; (iii) a bid price of $1.00; (iv) two market makers;
and (v) 300 shareholders.
If, after a business combination, Kaw does not meet the
qualifications for listing on the Nasdaq SmallCap Market, Kaw may
apply for quotation of its securities on the NASD OTC Bulletin
Board. In certain cases Kaw may elect to have its securities
initially quoted in the "pink sheets" published by the National
Quotation Bureau, Inc.
To have its securities quoted on the NASD OTC Bulletin Board
a company must:
(1) be a company that reports its current financial
information to the Securities and Exchange Commission, banking
regulators or insurance regulators;
(2) has at least one market maker who completes and files
a Form 211 with NASD Regulation, Inc.
The NASD OTC Bulletin Board is a dealer-driven quotation
service. Unlike the Nasdaq Stock Market, companies cannot directly
apply to be quoted on the NASD OTC Bulletin Board, only market
makers can initiate quotes, and quoted companies do not have to meet
any quantitative financial requirements. Any equity security of a
reporting company not listed on the Nasdaq Stock Market or on a
national securities exchange is eligible.
In general there is greatest liquidity for traded securities
on the Nasdaq SmallCap Market, less on the NASD OTC Bulletin Board,
and least through quotation by the National Quotation Bureau, Inc.
on the "pink sheets". It is not possible to predict where, if at
all, the securities of Kaw will be traded following a business
combination.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(A) MARKET PRICE. There is no trading market for Kaw's
Common Stock at present and there has been no trading market to
date. There is no assurance that a trading market will ever develop
or, if such a market does develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9
which establishes the definition of a "penny stock", for purposes
relevant to Kaw, as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction
involving a penny stock, unless exempt, the rules require:
(i) that a broker or dealer approve a person's account
for transactions in penny stocks and
(ii) the broker or dealer receive from the investor a
written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in
penny stocks, they must
(i) obtain financial information and investment
experience and objectives of the person; and
(ii) make a reasonable determination that the transactions
in penny stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any
transaction in a penny stock a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight
form,
(i) sets forth the basis on which the broker or dealer
made the suitability determination and
(ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure
also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny
stock transactions.
Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and
information on the limited market in penny stocks.
(B) HOLDERS. There is one holder of Kaw's Common Stock.
The issued and outstanding shares of Kaw's Common Stock were issued
in accordance with the exemptions from registration afforded by
Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated
thereunder.
(C) DIVIDENDS. Kaw has not paid any dividends to date,
and has no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against Kaw.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Kaw has not changed accountants since its formation and there
are no disagreements with the findings of its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, Kaw has sold securities which
were not registered as follows:
Date Name Number of Shares Consideration
June 29, 2000 Peter Goss 500,000 $500
With respect to the sales made to Peter Goss, Kaw relied upon
section 4(2) of the Securities Act of 1933, as amended, and Rule 506
promulgated thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and the Bylaws of Kaw do not
provide for indemnification of officers, directors or controlling
persons. The General Corporation Law of the State of Nevada
provides that "to the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding...or in
defense of any claim, issue or matter therein, the corporation shall
indemnify him against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the defense.
KAW ACQUISITION CORPORATION
By: /s/ Peter R. Goss
Peter R. Goss, President
Date: 29 June 2000
