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
Seneca Acquisition Corporation
__________________________
[ Name of Small Business Issuer in its Charter ]
Nevada 91-2048016
________________________________________ _________________________
[State or other jurisdiction of incorp.] [I.R.S. Emp. Ident. No.]
200 Fisher Road, Jenkintown PA 19046
________________________________________ _________________________
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number ( 918 ) 336 - 1773
________________
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
Seneca Acquisition Corporation ("Seneca") was incorporated on
June 30, 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. Seneca has been in the
developmental stage since inception and has no operations to date
other than issuing shares to its original shareholder.
Seneca will attempt to locate and negotiate with a business
entity for the combination of that target company with Seneca. 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 Seneca will be successful in locating
or negotiating with any target company.
Seneca 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 Seneca 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 Seneca, and the substitution
by the target company of its own management and board of directors.
No assurances can be given that Seneca 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
Seneca 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. Seneca will not issue or sell additional shares or take
any efforts to cause a market to develop in Seneca's securities
until such time as Seneca has successfully implemented its business
plan and it is no longer classified as a blank check company.
The sole shareholder of Seneca 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.
Seneca 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. Seneca 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
Seneca. Since a benefit of a business combination with Seneca would
normally be considered its status as a reporting company, it is
anticipated that Seneca 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.
Kevin McBride is the sole officer and director of Seneca.
Seneca has no employees nor are there any other persons than Mr.
McBride who devote any of their time to its affairs. Mr. McBride
will not begin any services on behalf of Seneca until after the
effective date of the Registration Statement. All references herein
to management of Seneca are to Mr. McBride. The inability at any
time of Mr. McBride to devote sufficient attention to Seneca 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.
Seneca 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
Seneca's business is subject to numerous risk factors,
including the following:
SENECA HAS NO OPERATING HISTORY NOR REVENUE AND MINIMAL
ASSETS AND OPERATES AT A LOSS. Seneca has had no operating history
nor any revenues or earnings from operations. Seneca has no
significant assets or financial resources. Seneca 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. McBride, individually, has agreed to pay all
expenses incurred by Seneca until a business combination without
repayment by Seneca. Mr. McBride is the sole shareholder of Seneca.
There is no assurance that Seneca will ever be profitable.
COMPANY HAS ONLY ONE DIRECTOR AND ONE OFFICER. Seneca's
president, its sole officer, is Kevin McBride who is also its sole
director and the controlling shareholder of its sole shareholder.
Because management consists of only one person, Seneca does not
benefit from multiple judgments that a greater number of directors
or officers would provide and Seneca will rely completely on the
judgment of its sole officer and director when selecting a target
company. Mr. McBride anticipates devoting only a limited amount of
time per month to the business of Seneca and does not anticipate
commencing any services until after the effective date of the
Registration Statement. Seneca has not obtained key man life
insurance on Mr. McBride. The loss of the services of Mr. McBride
would adversely affect development of Seneca's business and its
likelihood of continuing operations.
CONFLICTS OF INTEREST. Mr. McBride, Seneca's president,
participates in other business ventures which may compete directly
with Seneca. Additional conflicts of interest and non-arms length
transactions may also arise in the future. Seneca 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. McBride remaining
a director, officer or employee of Seneca. The terms of a business
combination may provide for a payment by cash or otherwise to Mr.
McBride for the purchase or retirement of all or part of his common
stock of Seneca by a target company or for services rendered
incident to or following a business combination. Mr. McBride would
directly benefit from such employment or payment. Such benefits may
influence Mr. McBride' choice of a target company. The Certificate
of Incorporation of Seneca provides that Seneca may indemnify
officers and/or directors of Seneca for liabilities, which can
include liabilities arising under the securities laws. Therefore,
assets of Seneca 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 SENECA ARE SPECULATIVE. The
success of Seneca'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 Seneca 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 Seneca had more funds available to it, would
be desirable. In the event Seneca completes a business combination
the success of Seneca's operations will be dependent upon management
of the target company and numerous other factors beyond Seneca's
control. There is no assurance that Seneca 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 Seneca'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 Seneca, 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. Seneca 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 Seneca. Nearly all
such entities have significantly greater financial resources,
technical expertise and managerial capabilities than Seneca and,
consequently, Seneca will be at a competitive disadvantage in
identifying possible business opportunities and successfully
completing a business combination. Moreover, Seneca 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. Seneca 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 Seneca 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. Seneca
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 Seneca would not consider a business combination with such
business entity. Accordingly, Seneca 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 Seneca will be able to
negotiate a business combination on terms favorable to Seneca.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934 (the "Exchange Act"), Seneca 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 Seneca. 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 Seneca at the time of effecting a
business combination. In cases where audited financials are
unavailable, Seneca 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 Seneca.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. Seneca
has neither conducted, nor have others made available to it, market
research indicating that demand exists for the transactions
contemplated by Seneca. Even in the event demand exists for a
transaction of the type contemplated by Seneca, there is no
assurance Seneca will be successful in completing any such business
combination.
REGULATION UNDER INVESTMENT COMPANY ACT. In the event Seneca
engages in business combinations which result in Seneca holding
passive investment interests in a number of entities, Seneca 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, Seneca would be
required to register as an investment company and could be expected
to incur significant registration and compliance costs. Seneca has
obtained no formal determination from the Securities and Exchange
Commission as to the status of Seneca under the Investment Company
Act of 1940. Any violation of such Act could subject Seneca to
material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business
combination involving the issuance of Seneca's common stock will, in
all likelihood, result in shareholders of a target company obtaining
a controlling interest in Seneca. As a condition of the business
combination agreement, Mr. Kevin McBride, the sole shareholder of
Seneca, 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 Seneca will
likely result in removal of the present officer and director of
Seneca and a corresponding reduction in or elimination of his
participation in the future affairs of Seneca.
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 Seneca'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
Seneca 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. Seneca
intends to structure any business combination so as to minimize the
federal and state tax consequences to both Seneca 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
Seneca has entered into an agreement with Kevin McBride, the
sole shareholder of Seneca, to supervise the search for target
companies as potential candidates for a business combination. The
agreement will continue until such time as Seneca has effected a
business combination. Kevin McBride has agreed to pay all expenses
of Seneca without repayment until such time as a business
combination is effected.
Mr. McBride may only locate potential target companies for
Seneca and is not authorized to enter into any agreement with a
potential target company binding Seneca. Seneca's agreement with
Mr. McBride is not exclusive and Mr. McBride has entered into
agreements with other companies similar to Seneca on similar terms.
Mr. McBride may provide assistance to target companies incident to
and following a business combination, and receive payment for such
assistance from target companies.
Mr. McBride owns 500,000 shares of Seneca's common stock for
which he paid $500, or $.001, par value, per share.
Mr. McBride 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 Seneca 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.
McBride may grant or pay to such consultants. Mr. McBride is solely
responsible for the costs and expenses of his activities in seeking
a potential target company, including any agreements with
consultants, and Seneca has no obligation to pay any costs incurred
or negotiated by Mr. McBride.
Mr. McBride 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. McBride engages in solicitation, no estimate can be
made as to the number of persons who may be contacted or solicited.
To date Mr. McBride has not utilized solicitation and expects to
rely on consultants in the business and financial communities for
referrals of potential target companies.
MANAGEMENT OF SENECA
Seneca has no full time employees. Kevin McBride is the sole
officer of Seneca and its sole director. Mr. McBride, as president
of Seneca, has agreed to allocate a limited portion of his time to
the activities of Seneca after the effective date of the
registration statement without compensation. Potential conflicts
may arise with respect to the limited time commitment by Mr. McBride
and the potential demands of Seneca's activities.
The amount of time spent by Mr. McBride on the activities of
Seneca 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. McBride will actually
be required to spend to locate a suitable target company. Mr.
McBride estimates that the business plan of Seneca can be
implemented by devoting approximately 10 to 25 hours per month over
precision. Mr. McBride does not anticipate performing any services
on behalf of Seneca until after the effective of the registration
statement.
GENERAL BUSINESS PLAN
Seneca'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.
Seneca will not restrict its search to any specific business,
industry, or geographical location and Seneca 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 Seneca 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 Seneca because it will not permit Seneca to
offset potential losses from one venture against gains from another.
Seneca 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.
Seneca 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.
Seneca 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 Seneca 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
Seneca, 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 Seneca; 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 Seneca's virtually unlimited discretion to search for and enter
into potential business opportunities.
Seneca is subject to all of the reporting requirements
included in the Exchange Act. Included in these requirements is the
duty of Seneca 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. Seneca 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. Seneca 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.
Seneca 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 Seneca 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 Seneca may offer.
Following a business combination Seneca 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 Seneca 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, Seneca 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 Seneca will
no longer be in control of Seneca. In addition, it is likely that
Seneca'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, Seneca 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 Seneca has entered into an
agreement for a business combination or has consummated a business
combination and Seneca 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 Seneca's
securities may depress the market value of Seneca'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 Seneca 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 Seneca 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, Seneca's
shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in Seneca following any merger or
acquisition. The percentage of ownership may be subject to
significant reduction in the event Seneca acquires a target company
with substantial assets. Any merger or acquisition effected by
Seneca can be expected to have a significant dilutive effect on the
percentage of shares held by Seneca's shareholders at such time.
Seneca 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.
Kevin McBride, individually, will pay all expenses in regard
to his search for a suitable target company. Seneca does not
anticipate expending funds itself for locating a target company.
Kevin McBride, the officer and director of Seneca, will provide his
services without charge or repayment by Seneca after the effective
date of this registration statement. Seneca will not borrow any
funds to make any payments to Seneca's management, its affiliates or
associates. If Kevin McBride stops or becomes unable to continue to
pay Seneca's operating expenses, Seneca 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, Seneca 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 Seneca will not seek a business combination with any
entity in which Seneca'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, Seneca 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 Seneca'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 Seneca within the United States financial community.
Seneca 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 Seneca'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 Seneca's securities, which may result in a significant
pressure on their market price. Seneca may consider the ability and
commitment of a target company to actively encourage interest in
Seneca's securities following a business combination in deciding
whether to enter into a transaction with such company.
A business combination with Seneca 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. Seneca 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, Seneca 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
Seneca 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 Seneca. In view of Seneca's combined
extremely limited financial resources and limited management
availability, Seneca will continue to be at a significant
competitive disadvantage compared to Seneca's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
Seneca has no properties and at this time has no agreements
to acquire any properties. Seneca currently uses the office of
Kevin McBride at no cost to Seneca. Kevin McBride has agreed to
continue this arrangement until Seneca completes a business
combination.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth each person known by Seneca to
be the beneficial owner of five percent or more of Seneca's Common
Stock, all directors individually and all directors and officers of
Seneca 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
Kevin McBride 500,000 100%
200 Fisher Road
Jenkintown PA 19046
All Executive Officers and
Directors as a Group (1 Person) 500,000 100%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Seneca has one Director and Officer as follows:
Positions and
Name Age Offices Held
Kevin McBride 50 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
Seneca, all positions and offices held with Seneca, the period
during which Kevin McBride has served as such, and his business
experience during at least the last five years:
Kevin McBride graduated from Ohio University with a B.S.
Degree in Communications in 1979. From 1979 to 1983, Mr. McBride
was employed as a Manager of Northwest Corporation, a
Telecommunications Systems Corporation. From 1983 through 1987, he
was Vice President of Gracies Inc., a restaurant and tavern
business. Currently, Mr. McBride is an independent contractor for
Diamond Courier Services in Philadelphia, Pennsylvania.
CONFLICTS OF INTEREST
Mr. McBride has other ongoing business concerns. As such,
demands may be placed on the time of Mr. McBride which will detract
from the amount of time he is able to devote to Seneca. Mr. McBride
intends to devote as much time to the activities of Seneca as
required. However, should such a conflict arise, there is no
assurance that Mr. McBride would not attend to other matters prior
to those of Seneca. Mr. McBride estimates that the business plan of
Seneca 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. McBride remaining a director, officer or employee of Seneca.
The terms of a business combination may provide for a payment by
cash or otherwise to Kevin McBride for the purchase or retirement of
all or part of his common stock of Seneca by a target company or for
services rendered incident to or following a business combination.
Kevin McBride would directly benefit from such employment or
payment. Such benefits may influence Mr. McBride' choice of a
target company.
Seneca will not enter into a business combination, or acquire
any assets of any kind for its securities, in which management of
Seneca 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 Seneca could result in liability
of management to Seneca.
INVESTMENT COMPANY ACT OF 1940
Although Seneca will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes Seneca will not be subject to regulation under
the Investment Company Act of 1940 insofar as Seneca will not be
engaged in the business of investing or trading in securities. In
the event Seneca engages in business combinations which result in
Seneca holding passive investment interests in a number of entities
Seneca could be subject to regulation under the Investment Company
Act of 1940. In such event, Seneca would be required to register as
an investment company and could be expected to incur significant
registration and compliance costs. Seneca has obtained no formal
determination from the Securities and Exchange Commission as to the
status of Seneca under the Investment Company Act of 1940. Any
violation of such Act would subject Seneca to material adverse
consequences.
ITEM 6. EXECUTIVE COMPENSATION
Seneca's officer and director does not receive any
compensation for his services rendered to Seneca, has not received
such compensation in the past, and is not accruing any compensation
pursuant to any agreement with Seneca. However, the officer and
director of Seneca anticipates receiving benefits as a beneficial
shareholder of Seneca, 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
Seneca for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Seneca 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
_________________ ___________________ ___________
Kevin McBride 500,000 $500
With respect to the sales made to Kevin McBride, Seneca
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 Seneca 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 Seneca'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 Seneca,
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
Seneca' 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 Seneca's revenues
and earnings, if any, capital requirements and financial conditions.
The payment of dividends, if any, will be within the discretion of
Seneca's Board of Directors. Seneca 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, Seneca will be required to, and will, file reports under
Section 13 of the Exchange Act. As a result, sale of Seneca'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 Seneca'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, Seneca does not meet the
qualifications for listing on the Nasdaq SmallCap Market, Seneca may
apply for quotation of its securities on the NASD OTC Bulletin
Board. In certain cases Seneca 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 Seneca 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
Seneca'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 Seneca, 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 Seneca's Common
Stock. The issued and outstanding shares of Seneca'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. Seneca 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
Seneca.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Seneca 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, Seneca has sold securities which
were not registered as follows:
Date Name Number of Shares Consideration
______________ _________________ _________________ ______________
August 14, 2000 Kevin McBride 500,000 $500
With respect to the sales made to Kevin McBride, Seneca
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 Seneca 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.
