UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
XENICENT, INC.
(NAME OF SMALL BUSINESS ISSUER IN OUR CHARTER)
North Carolina
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
---- 36-4349865
(PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
10712 Old Wayside Rd., Charlotte, North Carolina 28277
(704) 341-4444
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
Duane Bennett
10712 Old Wayside Rd.
Charlotte, North Carolina 28277
(704) 341-4444
(NAME, ADDRESS AND TELEPHONE OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this registration statement.
If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
f 1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE (1)
l Registration Fee $
Proposed Maximum Aggregate Offering Price (1) $6,249
Total Registration Fee $1.65
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Selling Shareholders hold all of the shares, which we are registering.
These shares will be sold at prevailing market prices.
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we shall file a further amendment
which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933
or until this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 15, 2000
XENICENT, INC.
832,000 shares of Common Stock
Our current shareholders are offering 832,000 shares of our common stock.
Our common stock is not listed on any national securities exchange or the NASDAQ
stock market.
The selling security holders may offer their shares at any price. We will pay
all expenses of registering the securities.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 8.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. OUR
SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
The date of this preliminary prospectus is December 15, 2000
TABLE OF CONTENTS
Part I - Prospectus Information Page
----
1. Front Cover Page of Prospectus 1
2. Inside Front and Outside Back Cover Pages of Prospectus 3
3. Summary Information 6
Risk Factors 8
- Because We Have Only A Limited Operating History, Your Ability To Evaluate
Our Business Prospects And Strategies Is Limited
- If We Are Unsuccessful In Obtaining Material Contracts We Will Not Be Able
To Develop Our Operations And Our Financial Condition Will Be Negatively
Impacted
- If We Fail To Create A Well-Developed Business Plan, We May Deplete The
Little Remaining Capital That We Presently Have And Our Operations Will Be
Negatively Impacted
- Because Our Financial Condition Is Poor We May Be Unable To Adequately
Develop Our Operations, Resulting In A Worsening Financial Position.
- Because Our Operating Results Will Vary Depending Upon Many Factors, We
May Not Be Able To Control Or Accurately Predict The Success Of Our Future
Operations.
- Our Reliance Upon Third Parties To Execute Our Business Plan May Lead To
Conflicts Of Interest And/Or Negatively Impact Upon Our Operations
- We Lack Of An Established Brand Name, Which Could Negatively, Impact Our
Ability To Effectively Compete In The Real Estate Market.
- We Have Substantial Near-Term Capital Needs; We May Be Unable To Obtain
The Additional Funding Needed To Enable Us To Operate Profitably In The Future.
- Our Real Estate Land Development Business May Incur A High Level Of Debt;
We May Be Unable Financially To Service Our Debt
- Because Our Management Has Limited Experience In Selecting Real Estate For
Development And Resale, We May Purchase A Property That Is Economically
Unsuitable And/Or Requires Extensive Environmental Preparation For Resale.
- Our Principal Stockholders Control Our Business Affairs In Which Case You
Will Have Little Or No Participation In Our Business Affairs
- If We Lost Any Of Our Key Personnel Our Business Would Be Impaired.
- Our Operations Are Subject To Possible Conflicts Of Interest That May
Negatively Impact Upon Your Ability To Make A Profit From This Investment.
- We Face Intense Competition Which Puts Us At A Competitive Disadvantage;
If We Are Unable To Overcome These Competitive Disadvantages We May Never Become
Profitable
- We Have Never Paid Dividends And You May Never Receive Dividends
4. Use of Proceeds 13
5. Determination of Offering Price 13
6. Dilution 13
7. Selling Security Holders 13
8. Plan of Distribution 15
9. Legal Proceedings 17
10. Directors, Executive Officers, Promoters and Control Management 17
11. Security Ownership of Certain Beneficial Owners and Management 18
12. Description of Securities 19
13. Experts 20
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities 20
15. Organization Within Last Five Years 21
16. Description of Business 21
17. Management's Discussion and Analysis or Plan of Operation 32
18. Description of Property 36
19. Certain Relationships and Related Transactions 36
20. Market for Common Equity and Related Stockholder Matters 37
21. Executive Compensation 39
22. Financial Statements 39-53
23. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 53
Part II - Information Not Required in Prospectus
24. Indemnification 55
25. Other Expenses of Issuance and Distribution 55
26. Recent Sales of Unregistered Securities 55
27. Exhibits 56
28. Undertakings 56-57
<PAGE>
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
THIS PROSPECTUS CONTAINS STATEMENTS ABOUT OUR FUTURE BUSINESS OPERATIONS THAT
INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY
FROM OUR ANTICIPATED FUTURE OPERATIONS, AS A RESULT OF MANY FACTORS, INCLUDING
THOSE IDENTIFIED IN THE "RISK FACTORS" BEGINNING ON PAGE 10. BECAUSE THIS IS A
SUMMARY AND THE INFORMATION IS SELECTIVE, IT DOES NOT CONTAIN ALL INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ ALL INFORMATION IN THE
PROSPECTUS, INCLUDING THE FINANCIAL STATEMENTS AND THEIR EXPLANATORY NOTES,
PRIOR TO MAKING AN INVESTMENT DECISION.
OUR COMPANY.
We were incorporated in North Carolina on July 20, 1996 to engage in the
business of real estate development. We are currently engaged and plan to
continue in the real estate development and consulting business. Our executive
offices are currently located at the residence of our President, Mr. Duane
Bennett, at 10712 Old Wayside Rd. Charlotte, North Carolina 28277. Our
telephone number is (704) 341-4444. We are authorized to issue common and
preferred stock. Our total authorized common stock consists of 50,000,000
shares, with a par value of $.001 per share, of which 8,832,000 shares are
issued and outstanding. Our total authorized preferred stock consists of
5,000,000 shares, with a par value of $.001 per share, of which no shares are
issued and outstanding.
OUR BUSINESS.
Since our inception, we have been in the business of real estate
development. We have also attempted to provide consulting services to
construction contractors and real estate investors in and around the Charlotte,
North Carolina area; however, to date, we have entered into only one consulting
agreement, in which we rendered consulting services for $125,000. Currently, we
have no consulting contracts. Our current business plan also includes the
purchase of tracts of land suitable for residential or commercial development
and then subdividing those land tracts and attempting to resell them at a
profit. To date, we have acquired only one tract of land totaling approximately
88 acres, which we subdivided into three parcels and sold at a gross profit of
$382,171. We have no remaining land inventory to sell and we have not
identified any tracts of land for potential acquisition and sub-development.
There are no assurances that we will be able to obtain applicable zoning and/or
environmental permits necessary to make such development possible or
economically feasible. In addition, there are no assurances that we will have
sufficient funds available to purchase any such tracts of land or to otherwise
implement our business plan. We have not developed any marketing plans
pertaining to our land development or consulting business.
THE OFFERING.
As of December 15, 2000, we had 8,832,000 shares of our common stock
outstanding and no shares of our preferred stock outstanding. This offering is
comprised of securities offered by selling security holders only. Although we
have agreed to pay all offering expenses, we will not receive any proceeds from
the sale of the securities. We anticipate offering expenses of approximately
$40,000. We will pay all offering expenses.
FINANCIAL SUMMARY INFORMATION.
Because this is only a financial summary, it does not contain all the financial
information that may be important to you. You should also read carefully all
the information in this prospectus, including the financial statements and their
explanatory notes.
<TABLE>
<CAPTION>
<S> <C>
For the period ended
Statement of Operations . . . . . . . . . November 30, 2000
----------------------------------------- ---------------------
Revenues. . . . . . . . . . . . . . . . . $ 322,974
----------------------------------------- ---------------------
Cost of Sales . . . . . . . . . . . . . . $ 217,653
----------------------------------------- ---------------------
Gross profit. . . . . . . . . . . . . . . $ 105,321
----------------------------------------- ---------------------
Operating expenses. . . . . . . . . . . . $ 251,302
----------------------------------------- ---------------------
Income (loss) from operations . . . . . . $ 145,981
----------------------------------------- ---------------------
Other expense, net. . . . . . . . . . . . $ 69
----------------------------------------- ---------------------
Net income (loss) . . . . . . . . . . . . $ 146,050
----------------------------------------- ---------------------
Net income per common share . . . . . . . $ .017
----------------------------------------- ---------------------
For the period ended
Balance Sheet . . . . . . . . . . . . . . November 30, 2000
----------------------------------------- ---------------------
Total current assets. . . . . . . . . . . $ 68,601
----------------------------------------- ---------------------
Other assets. . . . . . . . . . . . . . . $ 3,630
----------------------------------------- ---------------------
Total Assets. . . . . . . . . . . . . . . $ 72,231
----------------------------------------- ---------------------
Current liabilities . . . . . . . . . . . $ 0
----------------------------------------- ---------------------
Due to stockholder/officer. . . . . . . . $ 5,900
----------------------------------------- ---------------------
Total liabilities . . . . . . . . . . . . $ 5,900
----------------------------------------- ---------------------
Stockholders equity (deficiency). . . . . $ 66,331
----------------------------------------- ---------------------
Total liabilities and stockholder equity. $ 72,231
----------------------------------------- ---------------------
</TABLE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED IN THIS PROSPECTUS INVOLVES
A HIGH DEGREE OF RISK. WE CANNOT ASSURE THAT WE WILL EVER GENERATE REVENUES,
DEVELOP OPERATIONS, OR MAKE A PROFIT.
BECAUSE WE HAVE ONLY A LIMITED OPERATING HISTORY, YOUR ABILITY TO EVALUATE OUR
BUSINESS PROSPECTS AND STRATEGIES IS LIMITED.
Although we have been in existence since July 1996, we have a limited
history of actually conducting real estate acquisition and development
activities or providing real estate consulting services. To date, we have
acquired only one tract of land, totaling approximately 88 acres, which we
sub-divided into three parcels and then resold at a gross profit of $382,171.
Our consulting services have consisted of only one consulting agreement with a
company, in which we rendered consulting services for $125,000. As such, we
have a limited operating history upon which you can evaluate our business. You
must consider the risks and difficulties frequently encountered by companies
such as ours that have limited operating histories, including:
- Whether we will be able to grow our business, and if so, whether we can
manage that growth;
- Whether we are able to anticipate and adapt to a developing local real
estate market;
- Whether the public will accept our real estate sales and consulting
services business;
- Whether we are able to commercially acquire, subdivide, develop and/or
resell residential or commercial real estate;
- Whether we will be able to secure financing to execute our business plan;
and
- Whether we are able to compete against real estate competitors with
greater financial resources and an established network of developers and sales
contacts.
There can be no assurance that we will be successful in addressing these
and other risks. We now have insufficient resources to successfully execute our
business plan. We have only limited revenues and no other established funding
sources. We will require significant expenses to develop our real estate
business and future losses are likely before our operations become profitable.
There can be no assurance given that we will be able to generate revenues or
otherwise obtain funds to adequately conduct our operations. Accordingly, you
have no basis upon which to judge our ability to develop our business and you
will be unable to forecast our future growth.
IF WE ARE UNSUCCESSFUL IN OBTAINING MATERIAL CONTRACTS WE WILL NOT BE ABLE TO
DEVELOP OUR OPERATIONS AND OUR FINANCIAL CONDITION WILL BE NEGATIVELY IMPACTED.
We have no contracts or prospective contracts that will assist us in
obtaining, developing and/or reselling any residential or commercial real
estate. We have not identified any properties that may be suitable for
acquisition, sub-development and resale. We have no contracts pending for the
acquisition, development or resale of any specific property. We have not placed
any funds on deposit to purchase any property, or develop or subdivide any
property. Accordingly, we must rely solely upon our own efforts to resell any
residential or commercial real estate. Because we currently rely upon our
president to conduct all aspects of our business, including resale of
residential or commercial real estate, if our resources are insufficient and we
do not secure outside contracts to assist us in our operations, our operations
and financial condition will be negatively impacted.
IF WE FAIL TO CREATE A WELL-DEVELOPED BUSINESS PLAN, WE MAY DEPLETE THE LITTLE
REMAINING CAPITAL THAT WE PRESENTLY HAVE AND OUR OPERATIONS WILL BE NEGATIVELY
IMPACTED.
We currently do not have a well-developed business plan. As a result, we
may spend an excessive amount of our financial and operational resources
developing our business plan. For example, we may spend an excessive amount of
our financial and operational resources in attempting to locate potentially
suitable properties. If we fail to allocate our financial resources in an
efficient manner to implement our business plan or our business plan requires
additional financial resources that are not available, our operations and
financial condition will be negatively impacted.
BECAUSE OUR FINANCIAL CONDITION IS POOR WE MAY BE UNABLE TO ADEQUATELY DEVELOP
OUR OPERATIONS, RESULTING IN A WORSENING FINANCIAL POSITION.
Because we have only a limited operating history, assets, and revenue
sources, we may not adequately develop our operations. Although we generated
revenues and a profit during our last two fiscal years, we have generated losses
totaling approximately $133,350 this year through the eleven months ended
November 2000. These losses were primarily due to the consulting fees paid to
ABC Realty Company, a private company that is wholly owned by Duane Bennett, our
President. As a result of these losses, as of November 11, 2000, we had an
accumulated deficit in retained earnings of approximately $71,507 and total
assets of only $68,601 with which to operate. We anticipate that we will
experience continued financial difficulties without an immediate infusion of
capital. Moreover, we may be unable to operate profitably, even if we obtain
immediate funding or further develop our operations or increase our revenues.
Our poor financial condition could adversely affect our ability to acquire,
develop, sub-divide and resell residential and/or commercial properties in a
timely fashion. Accordingly, we may experience future losses if we are unable
to adequately develop our operations.
BECAUSE OUR OPERATING RESULTS WILL VARY DEPENDING UPON MANY FACTORS, WE MAY NOT
BE ABLE TO CONTROL OR ACCURATELY PREDICT THE SUCCESS OF OUR FUTURE OPERATIONS.
Our operating results will depend on various factors, many of which are
outside of our control, including:
- Our ability to obtain inventory for development and resale;
- Our ability to manage our properties and maintain gross profit margins;
- Our ability to attract customers to purchase our inventory;
- Our ability to locate and hire subcontractors, brokers and developers;
- Availability and price of real estate inventory;
- Property tax increases;
- Changes in zoning and environmental regulations;
- Increasing interest rates;
- Changes in general or local economic conditions;
- Changes in the supply and demand of single family housing units;
- Changes in zoning, environmental protection laws, tax, or real estate laws
that may lead to our incurring high transaction costs or the prohibition of
certain real estate development;
- General economic conditions; and
- Economic conditions specific to the real estate industry.
If any of these events negatively impact the real estate market, we will be
unable to implement our business plan and our operations will be negatively
impacted.
OUR RELIANCE UPON THIRD PARTIES TO EXECUTE OUR BUSINESS PLAN MAY LEAD TO
CONFLICTS OF INTEREST AND/OR NEGATIVELY IMPACT UPON OUR OPERATIONS.
Duane Bennett, our only full time employee, has limited expertise in
evaluating the potential use and value of real estate. Accordingly, we intend
to rely on other third parties, including subcontractors, engineers, real estate
brokers and other developers to evaluate the investment utility and use of
subdivided parcels of land. Our current and future success depends on our
ability to identify highly skilled personnel and secure contracts for their
services. Competition for such employees is intense. There are no assurances
that we will be able to locate such available subcontractors, engineers, real
estate brokers and/or developers, or that we will be able to hire them at
favorable rates. In addition, the individuals we hire may have a conflict of
interest with us, or compete with us for the same properties we seek to acquire
and develop. There are no assurances that these conflicts will be resolved in
our favor. If we are unable to resolve such conflicts or otherwise hire third
parties to assist in our operations, our financial condition and operations may
be negatively impacted.
OUR LACK OF AN ESTABLISHED BRAND NAME COULD NEGATIVELY IMPACT OUR ABILITY TO
EFFECTIVELY COMPETE IN THE REAL ESTATE MARKET.
We do not have an established brand name or reputation to successfully
develop real estate projects. Thus, we may have difficulty effectively
competing with companies that have greater resources and name recognition than
we do. Presently, we have no patents, copyrights, trademarks and/or service
marks that would protect our brand name or our proprietary information, nor do
we have any current plans to file applications for such rights. Our inability
to promote and/or protect our brand name may have an adverse effect on our
ability to compete effectively in the real estate development and resale
industry.
WE HAVE SUBSTANTIAL NEAR-TERM CAPITAL NEEDS; WE MAY BE UNABLE TO OBTAIN THE
ADDITIONAL FUNDING NEEDED TO ENABLE US TO OPERATE PROFITABLY IN THE FUTURE.
We will require additional funding over the next twelve months to develop
our business. Our capital requirements will depend on many factors including,
but not limited to, the timely location of suitable properties to acquire and
sub-divide, the willingness of sellers to assist us with financing, and the
timing and amount of our marketing expenditures. Presently, we have only
limited amounts of liquid assets with which to pay our expenses. We do not have
sufficient liquid assets to purchase any properties. Accordingly, we will seek
outside sources of capital such as conventional bank financing; however, there
can be no assurance that additional capital will be available on favorable terms
to us. If adequate funds are not available, we may be required to curtail
operations or to obtain funds by entering into collaboration agreements on
unattractive terms.
In addition, we have no credit facility or other committed sources of
capital. We may be unable to establish credit arrangements on satisfactory
terms. If capital resources are insufficient to meet our future capital
requirements, we may have to raise funds to continue development of our
operations. To the extent that additional capital is raised through the sale of
equity and/or convertible debt securities, the issuance of such securities could
result in dilution to our shareholders and/or increased debt service
commitments. If adequate funds are not available, we may be unable to
sufficiently develop our operations to become profitable.
OUR REAL ESTATE LAND DEVELOPMENT BUSINESS MAY INCUR A HIGH LEVEL OF DEBT; WE MAY
BE UNABLE FINANCIALLY TO SERVICE OUR DEBT.
We may incur a high level of debt from our acquisition of land parcels.
Although we plan to sell the parcels to builders within several months after our
purchase of the properties, there are no assurances that we will be successful
in doing so. Accordingly, we may incur a monthly debt service that
substantially exceeds our revenues. Any such occurrence may lead to further
indebtedness if we refinance or seek other debt to cover our monthly debt
service. In addition, if we are unable to continually service our debt, we face
the risks of forfeiting our properties or other assets and/or filing for
bankruptcy protection.
In the past our properties secured our mortgage debt and we may continue to
do so in the future. If we are unable to repay the indebtedness on these
properties as payments become due or at the maturity of the loan, our operations
and financial condition may be negatively impacted, including premature sale of
the properties to repay our debt or foreclosure upon our properties.
BECAUSE OUR MANAGEMENT HAS LIMITED EXPERIENCE IN SELECTING REAL ESTATE FOR
DEVELOPMENT AND RESALE, WE MAY PURCHASE A PROPERTY THAT IS ECONOMICALLY
UNSUITABLE AND/OR REQUIRES EXTENSIVE ENVIRONMENTAL PREPARATION FOR RESALE.
Our management has only successfully purchased one tract of land that was
subdivided into three tracts of land and then resold. As a result, we do not
have substantial experience in selecting properties for acquisition, development
and resale. Because of our limited experience, we may unknowingly and
unintentionally purchase a tract of land that cannot be economically developed
for resale. For example, we may unknowingly purchase a property that contains
hazardous waste materials that must be properly disposed of, and which will
require compliance with environmental or other government regulations before the
property may be developed and resold. The cost involved with preparing such a
property for resale may make the overall project unprofitable, which would
negatively impact on our operations and financial condition.
OUR PRINCIPAL STOCKHOLDERS CONTROL OUR BUSINESS AFFAIRS IN WHICH CASE YOU WILL
HAVE LITTLE OR NO PARTICIPATION IN OUR BUSINESS AFFAIRS.
Currently, our principal stockholders, Duane Bennett, Sharon Bennett and
their minor children, collectively own approximately 91% of our common stock.
As a result, they will have significant influence over all matters requiring
approval by our stockholders without the approval of minority stockholders. In
addition, they will be able to elect all of the members of our Board of
Directors, which will allow them to significantly control our affairs and
management. They will also be able to affect most corporate matters requiring
stockholder approval by written consent, without the need for a duly noticed and
duly-held meeting of stockholders. Such control could adversely affect the
market value of our common stock or delay or prevent a change in our control.
IF WE LOST ANY OF OUR KEY PERSONNEL, OUR BUSINESS WOULD BE IMPAIRED.
Our success is heavily dependent upon the continued active participation of
our president, Duane Bennett. Mr. Bennett has twenty years of experience in the
real estate business. The loss of Mr. Bennett's services could have a material
adverse effect upon the development of our business. We do not maintain "key
person" life insurance on any of our executive officers. We do not have a
written employment agreement with any of our executive officers. There can be
no assurance that we will be able to recruit or retain other qualified
personnel, should it be necessary to do so.
OUR OPERATIONS ARE SUBJECT TO POSSIBLE CONFLICTS OF INTEREST THAT MAY NEGATIVELY
IMPACT UPON YOUR ABILITY TO MAKE A PROFIT FROM THIS INVESTMENT.
Our officers and directors are involved in other business activities and
may, in the future become involved in other business opportunities that may
affect our potential profitability. If a business opportunity becomes
available, our officers and directors may face a conflict in selecting between
us and their other business interests. We have not formulated a policy for the
resolution of such conflicts. We have previously entered into transactions and
may do so in the future with our officers, directors, and shareholders, or
companies under their control. For example, our president, Mr. Duane Bennett,
owns 100% of the common stock of ABC Realty, Co., a licensed real estate broker
that provides management/consulting services to us. As of March 20, 2000, we
paid a total of approximately $102,000.00 to ABC Realty, Co., for
management/consulting services. We do not currently have an agreement with ABC
Realty, Co. to provide any future services to us. However, future transactions
or arrangements between or among our officers, directors and shareholders, and
companies they control, may result in conflicts of interest, which may have an
adverse effect on our operations and financial condition.
WE FACE INTENSE COMPETITION WHICH PUTS US AT A COMPETITIVE DISADVANTAGE; IF WE
ARE UNABLE TO OVERCOME THESE COMPETITIVE DISADVANTAGES WE MAY NEVER BECOME
PROFITABLE.
We will face intense competition from companies engaged in similar
businesses. We will compete with numerous companies that seek to acquire and
resell real estate both over the Internet and via traditional forms of business.
We anticipate that competition will intensify within Internet distribution
channels, which we do not utilize. Many of our competitors have significantly
greater customer bases, operating histories, financial, technical, personnel and
other resources than we do, and may have established reputations for success in
the real estate industry. Our ability to compete will depend on our ability to
continually locate and develop suitable real estate projects. There can be no
assurance that we will be able to compete effectively in the highly competitive
real estate industry. As a response to changes in the competitive environment,
we may from time to time make certain service, marketing or supply decisions or
acquisitions that could negatively impact our operations and financial
condition.
WE HAVE NEVER PAID DIVIDENDS AND YOU MAY NEVER RECEIVE DIVIDENDS.
We have never paid dividends nor do we anticipate the declaration or
payments of any dividends in the foreseeable future. We intend to retain
earnings, if any, to finance the development and expansion of our business.
Future dividend policy will be at the discretion of the Board of Directors and
will be contingent upon future earnings, if any, our financial condition,
capital requirements, general business conditions and other factors. Future
dividends may also be affected by covenants contained in loan or other financing
documents, which may be executed by us in the future. Therefore, there can be no
assurance that cash dividends of any kind will ever be paid.
ITEM 4. USE OF PROCEEDS
Not Applicable. We will not receive any proceeds from the sale of the
securities by the selling security holders.
ITEM 5. DETERMINATION OF OFFERING PRICE
Not Applicable. The selling security holders will be able to determine the
price at which they sell their securities.
ITEM 6. DILUTION
Not Applicable. We are not registering any shares in this registration
statement. All shares are being registered by selling security holders.
ITEM 7. SELLING SECURITY HOLDERS
The selling security holders named below are selling the securities covered
by this prospectus. The table indicates that all the securities will be
available for resale after the offering. However, any or all of the securities
listed below may be retained by any of the selling security holders, and
therefore, no accurate forecast can be made as to the number of securities that
will be held by the selling security holders upon termination of this offering.
We believe that the selling security holders listed in the table have sole
voting and investment powers with respect to the securities indicated. We will
not receive any proceeds from the sale of the securities covered by this
prospectus.
<TABLE>
<CAPTION>
Amount Owned Amount
Name Relationship Prior to To Be Amount Owned Percent Owned
With Issuer Offering Registered After Offering After Offering
---------- ------------------------ ---------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
Abraham, Benjamin . . . . . . . . None 50,000 50,000 0
--------------------------------- ------------- ------- ------- -
Beeman, Judith. . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Berger, John. . . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Carabase, George Jr.. . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
Carabase, George Sr.. . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
Robert C. Cottone . . . . . . . . Consultant(1) 512,500 512,500 0 5.8%
--------------------------------- ------------- ------- ------- - ----
Craver, James H.. . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Davis, Robert . . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Friedman, B. Michael. . . . . . . None 500 500 0
--------------------------------- ------------- ------- ------- -
Brenda Hamilton . . . . . . . . . Legal Counsel 75,000 75,000 0
--------------------------------- ------------- ------- ------- -
Hazel, Jill . . . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Kapino, Karol M.. . . . . . . . . None 8,000 8,000 0
--------------------------------- ------------- ------- ------- -
Lagrotteria, Ann Marie. . . . . . None 2,000 2,000 0
--------------------------------- ------------- ------- ------- -
Langer, Jean. . . . . . . . . . . None 4,000 4,000 0
--------------------------------- ------------- ------- ------- -
Langer, Michael . . . . . . . . . None 4,000 4,000 0
--------------------------------- ------------- ------- ------- -
LeBlanc, Mark A.. . . . . . . . . None 4,000 4,000 0
--------------------------------- ------------- ------- ------- -
Lessard, James R. . . . . . . . . None 2,000 2,000 0
--------------------------------- ------------- ------- ------- -
Lessard, Lucile . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Lessard, Mark . . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Lessard, Paul D.. . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Lessard, Thomas J.. . . . . . . . None 500 500 0
--------------------------------- ------------- ------- ------- -
Litton, Robert B. Jr. . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
McCarron, Daniel. . . . . . . . . None 2,000 2,000 0
--------------------------------- ------------- ------- ------- -
Medlin, Cecil R.. . . . . . . . . None 50,000 50,000 0
--------------------------------- ------------- ------- ------- -
Miller, Stephanie A.. . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Motaleb, Mosen. . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Nadolny, Edward W. & Elizabeth A. None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Nadolny, Stanley. . . . . . . . . None 12,000 12,000 0
--------------------------------- ------------- ------- ------- -
Nadolny, Stephen A & Sherryll R . None 5,000 5,000 0
--------------------------------- ------------- ------- ------- -
Polci, Keith. . . . . . . . . . . None 4,000 4,000 0
--------------------------------- ------------- ------- ------- -
Rigsby, Jerry . . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Rovegno, Robert G.. . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Samiy, Nasrollah. . . . . . . . . None 500 500 0
--------------------------------- ------------- ------- ------- -
Sawka, Alex . . . . . . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
Sawka, Alex K.. . . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Sawka, Michael S. . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Sochacki, Paul J. . . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Stellhorn, James H. . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Stevenson, Jonathan . . . . . . . None 2,000 2,000 0
--------------------------------- ------------- ------- ------- -
Tamaren, Michael D. . . . . . . . None 4,000 4,000 0
--------------------------------- ------------- ------- ------- -
Tammaro, Angelo . . . . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
Tennyson, Jeffrey G . . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
Toomey, William D.. . . . . . . . None 11,000 11,000 0
--------------------------------- ------------- ------- ------- -
Williams, Steven M. . . . . . . . None 10,000 10,000 0
--------------------------------- ------------- ------- ------- -
Wisneski, Mary Ellen. . . . . . . None 1,000 1,000 0
--------------------------------- ------------- ------- ------- -
TOTALS. . . . . . . . . . . . . . 832,000 832,000 0
--------------------------------- ------------- ------- -------
</TABLE>
[FN]
(1) Robert C. Cottone and Michael Bongiovanni are the owners of Greentree
Financial Services, Inc. Mr. Cottone is the son of Mr. Bongiovanni. Greentree
Financial Services, Inc. received the 512,500 shares of our common stock being
registered in the name of Robert C. Cottone for these consulting services.
We intend to seek qualification for sale of the securities in those states
where the securities will be offered. That qualification is necessary to resell
the securities in the public market and only if the securities are qualified for
sale or are exempt from qualification in the states in which the selling
shareholders or proposed purchasers reside. There is no assurance that the
states in which we seek qualification will approve of the security resales.
ITEM 8. PLAN OF DISTRIBUTION
Our selling shareholders are offering 832,000 shares of our common stock.
We will not receive any proceeds from the sale of the shares by the selling
shareholders. The securities offered by this prospectus may be sold by the
selling security holders or by those to whom such shares are transfered. We are
not aware of any underwriting arrangements that have been entered into by the
selling security holders. The distribution of the securities by the selling
security holders may be effected in one or more transactions that may take place
in the over-the-counter market, including broker's transactions, privately
negotiated transactions or through sales to one or more dealers acting as
principals in the resale of these securities.
Any of the selling security holders, acting alone or in concert with one
another, may be considered statutory underwriters under the Securities Act of
1933, if they are directly or indirectly conducting an illegal distribution of
the securities on our behalf. For instance, an illegal distribution may occur
if any of the selling security holders provide us with cash proceeds from their
sales of the securities. If any of the selling shareholders are determined to
be underwriters, they may be liable for securities violations in connection with
any material misrepresentations or omissions made in this prospectus.
In addition, the selling security holders and any brokers and dealers
through whom sales of the securities are made may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and the commissions or
discounts and other compensation paid to such persons may be regarded as
underwriters' compensation.
The selling security holders may pledge all or a portion of the securities
owned as collateral for margin accounts or in loan transactions, and the
securities may be resold pursuant to the terms of such pledges, accounts or loan
transactions. Upon default by such selling security holders, the pledgee in such
loan transaction would have the same rights of sale as the selling security
holders under this prospectus. The selling security holders also may enter into
exchange traded listed option transactions which require the delivery of the
securities listed under this prospectus. The selling security holders may also
transfer securities owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such selling security holders under this
prospectus.
In addition to, and without limiting, the foregoing, each of the selling
security holders and any other person participating in a distribution will be
affected by the applicable provisions of the Securities and Exchange Act of
1934, including, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the securities by the selling security holders or
any such other person.
There can be no assurances that the selling security holders will sell any
or all of the securities. In order to comply with state securities laws, if
applicable, the securities will be sold in jurisdictions only through registered
or licensed brokers or dealers. In various states, the securities may not be
sold unless these securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with. Under applicable rules and regulations of the Securities and
Exchange Act of 1934, as amended, any person engaged in a distribution of the
securities may not simultaneously engage in market-making activities in these
securities for a period of one or five business days prior to the commencement
of such distribution.
All of the foregoing may affect the marketability of the securities.
Pursuant to the various agreements we have with the selling security holders, we
will pay all the fees and expenses incident to the registration of the
securities, other than the selling security holders' pro rata share of
underwriting discounts and commissions, if any, which is to be paid by the
selling security holders.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings, in which
we are involved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Directors and Executive Officers.
Our Bylaws provide that we must have at least 1 director. Each director
will serve until our next annual shareholder meeting, to be held sixty days
after the close of the fiscal year, or until a successor is elected who accepts
the position. Directors are elected for one-year terms. Our officers may be
elected by our Board of Directors at any regular or special meeting of the Board
of Directors.
Vacancies may be filled by a majority vote of the remaining directors then in
office. Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name . . . . . Age Position
-------------- --- ---------------------------
Duane Bennett. 42 President and Director
-------------- --- ---------------------------
Sharon Bennett 43 Vice President and Director
-------------- --- ---------------------------
</TABLE>
Duane Bennett, has been our President and a Director since our inception in
July 1996. Mr. Bennett will serve as a director until our next annual
shareholder meeting, or until a successor is elected who accepts the position.
Since September 1999, Mr. Bennett has also been the Chief Executive Officer and
President of Internet Funding Corporation, a private company incorporated in
North Carolina in September 1999 that seeks to provide capital for early seed
stage businesses and entrepreneurs in the North Carolina area. Since December
1996, Mr. Bennett has been the sole owner and president of ABC Realty Co., a
private company located in Charlotte, North Carolina that provides management
and consulting services to us. From 1991 until 1995, Mr. Bennett was the Chief
Executive Officer and President of Bennett International Businesses, a private
company that explored investment opportunities in China, Mexico, South Africa
and Chile.
Sharon Bennett, has been our Vice President and a director since our
inception in 1996. Ms. Bennett will serve as a director until our next annual
shareholder meeting, or until a successor is elected who accepts the position.
Ms. Bennett has no prior business experience. Ms. Bennett is the wife of our
President, Duane Bennett.
Significant Employees.
Other than those persons mentioned above, we have no significant employees.
Family Relationships.
Duane Bennett, our President, and Sharon Bennett, our Vice President, are
husband and wife.
Legal Proceedings.
No officer, director, or persons nominated for such positions and no
promoter or significant employee of our Company has been involved in legal
proceedings that would be material to an evaluation of our management.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of December 15, 2000, of
our common stock (a) by each person known by us to be the beneficial owner of
more than 5% of our outstanding common stock, and (b) by each of our directors,
by all executive officers and our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted.
Security Ownership of Certain Beneficial Owners(1)(2) .
<TABLE>
<CAPTION>
Title of Class Name and Address # of Shares Nature of Ownership Current % Owned
-------------- ---------------- ----------- ------------------- ---------------
<S> <C> <C> <C> <C>
Duane Bennett
10712 Old Wayside Rd.,
Common . . . . . . . . . . . . . . . Charlotte, N.C. 28277 2,000,000 Direct 22.6%
------------------------------------ ----------------------------- --------- -------- -----
Duane Bennett
10712 Old Wayside Rd.,
Common . . . . . . . . . . . . . . . Charlotte, N.C. 28277 4,000,000 Indirect 45.3%
------------------------------------ ----------------------------- --------- -------- -----
Sharon Bennett
10712 Old Wayside Rd.,
Common . . . . . . . . . . . . . . . Charlotte, N.C. 28277 2,000,000 Direct 22.6%
------------------------------------ ----------------------------- --------- -------- -----
Greentree Financial Services Corp.(3)
1000 West McNab Road, Ste 107
Common . . . . . . . . . . . . . . . Pompano Beach, Florida 33069 512,500 Direct 5.8%
------------------------------------ ----------------------------- --------- -------- -----
</TABLE>
Security Ownership of Officers and Directors (2).
<TABLE>
<CAPTION>
Title of Class Name and Address # of Shares Nature of Ownership Current % Owned
-------------- ---------------- ----------- ------------------- ---------------
<S> <C> <C> <C> <C>
Common Duane Bennett 2,000,000 Direct 22.6 %
------ ----------------------------------------- --------- -------- ------
Common Duane Bennett 4,000,000 Indirect 45.3%
------ ----------------------------------------- --------- -------- ------
Common Sharon Bennett 2,000,000 Direct 22.6%
------ ----------------------------------------- --------- -------- ------
Common All Officers and Directors as a Group (2) 8,000,000 Direct 90.5%
------ ----------------------------------------- --------- -------- ------
</TABLE>
[FN]
(1) Pursuant to Rule 13-d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct the disposition) with
respect to a security whether through a contract, arrangement, understanding,
relationship or otherwise. In addition to the 2,000,000 shares which Duane
Bennett owns in his own name, Mr. Bennett also has the voting power over the
shares of stock issued in the names of his children as follows: Adam Bennett,
1,000,000 shares; Emily Bennett, 1,000,000 shares; Nellie Bennett, 1,000,000
shares; and Mary Bennett, 1,000,000 shares. Unless otherwise indicated, each
person indicated above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned. We are unaware of any
shareholders whose voting rights would be affected by unity property laws.
(2) This table is based upon information obtained from our stock records.
Unless otherwise indicated in the footnotes to the above tables and subject to
community property laws where applicable, we believe that each shareholder named
in the above table has sole or shared voting and investment power with respect
to the shares indicated as beneficially owned.
(3) Greentree Financial Services Corp., a privately held Florida Corporation, is
owned by Robert C. Cottone and Michael Bongiovanni. Mr. Cottone is the son of
Mr. Bongiovanni.
Changes in Control.
There are currently no arrangements, which would result in a change in our
control.
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety by
the provisions of our Articles of Incorporation and Bylaws, copies of which have
been filed as exhibits to the registration statement of which this prospectus is
a part.
COMMON STOCK.
We are authorized to issue 50,000,000 shares of common stock, with a par
value of $.001 per share. As of December 15, 2000, there were 8,832,000 common
shares issued and outstanding. All shares of common stock outstanding are
validly issued, fully paid and non-assessable.
VOTING RIGHTS.
Each share of common stock entitles the holder to one vote at meetings of
shareholders. The holders are not permitted to vote their shares cumulatively.
Accordingly, the holders of common stock holding, in the aggregate, more than
fifty percent of the total voting rights can elect all of our directors and, in
such event, the holders of the remaining minority shares will not be able to
elect any of such directors. The vote of the holders of a majority of the issued
and outstanding shares of common stock entitled to vote thereon is sufficient to
authorize, affirm, ratify or consent to such act or action, except as otherwise
provided by law.
MISCELLANEOUS RIGHTS AND PROVISIONS.
Holders of common stock have no preemptive or other subscription rights,
conversion rights, or redemption provisions. In the event of our dissolution,
whether voluntary or involuntary, each share of common stock is entitled to
share proportionally in any assets available for distribution to holders of our
equity after satisfaction of all liabilities and payment of the applicable
liquidation preference of any outstanding shares of preferred stock.
PREFERRED STOCK.
We are authorized to issue 5,000,000 shares of Preferred Stock, with a par
value of $.001 per share. As of December 15, 2000, there were no shares of
preferred stock issued and outstanding. The preferences, limitations and
relative rights of the preferred shares are to be determined by our Board of
Directors prior to issuance of any shares of preferred stock.
There is no other material rights of the common or preferred shareholders
not included herein. There is no provision in our charter or by-laws that would
delay, defer or prevent a change in our control.
DEBT SECURITIES.
We have not issued any debt securities.
ITEM 13. INTEREST OF EXPERTS AND COUNSEL
Our Financial Statements for the year ended December 31, 1999, have been
included in this prospectus in reliance upon Perrella & Associates, P.A.,
independent Certified Public Accountants, as experts in accounting and auditing.
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons, we
have been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by us of
expenses incurred or paid by our directors, officers or controlling persons in
the successful defense of any action, suit or proceedings, is asserted by such
director, officer, or controlling person in connection with any securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issues.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
On July 30, 1996 we issued 100 shares of our common stock to Duane Bennett,
our president, in connection with his services connected to our formation. On
June 30, 2000, we declared a forward stock split in the form of a stock dividend
in the ratio of 80,000 for 1 of our common shares. As a result, Mr. Bennett's
100 shares were exchanged for 8,000,000 of our common shares.
On about February 15, 1998, we borrowed a total of $191,449 from Mr.
Bennett in order to purchase a parcel of property in North Carolina from a third
party. The promissory note was unsecured, due on demand and carried an interest
rate of 6% per annum. On February 10, 2000, we repaid Mr. Bennett a total of
$127,976 reflecting the unpaid principal balance of the loan plus accrued
interest. The loan was repaid using the proceeds of a sale of the underlying
property.
On about February 10, 2000, we borrowed $10,000 from Mr. Bennett for
working capital. The promissory note is unsecured, due on demand and carries an
interest rate of 6% per annum. On or about August 10, 2000, we repaid Mr.
Bennett a total of $4,100.
On June 7, 2000, we entered into a Consulting Services Agreement with
Greentree Financial Services, Corp. Under the terms of the agreement, Greentree
Financial Services, Corp. has agreed to use its best efforts to assist us in
having our common stock publicly traded. In exchange for its services, we have
agreed to pay Greentree Financial Services Corp., $36,475 and 512,500 shares of
our common stock.
We are not a subsidiary of any corporation.
ITEM 16. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT.
We were incorporated in North Carolina on July 26, 1996. We have engaged
in the business of Real Estate consulting and purchasing and reselling vacant
tracts of land, primarily in the North Carolina area. We have never been the
subject of any bankruptcy or receivership. We have had no material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business.
PRINCIPAL PRODUCTS AND SERVICES.
In February1998, we purchased an 88 acre land tract located in Mooresville,
North Carolina, in the County of Iredell. We divided that land into the
following 3 separate land tracts that were sold in February 1998:
67 Acre Land Tract:
We sold this land tract to Landcraft Properties, Inc. of Charlotte, North
Carolina for $865,000. Landcraft Properties then proceeded to perform the work
necessary for the construction of roads and water and sewer lines, including the
clearing of land and trees as well as land surveying. We provided the
following services to Landcraft Properties development of the 67 acre land
tract:
- Environmental approvals;
- Zoning approvals;
- Water and sewer authority approvals;
- Engineering approvals; and
- Lot surveying.
Our contribution in this regard permitted Landcraft Properties to begin
selling approved lots to homeowners and builders in order that they may begin
the construction of single family homes.
19 Acre Land Tract:
We optioned to sell a 19 acre land tract for $322,974. That option was
provided to Landcraft Properties wherein ABC Realty, Inc. agreed to manage and
pay all costs associated with maintaining the property. Landcraft Properties
intends to sell approved lots to homeowners and builders for the construction of
single family homes.
1.5 Acre Land Tract with an Existing 2,200 square foot home:
The original 67 acre land tract included a 2,200 square foot home on a 1.5
acre lot that needed improvements to put in saleable form. Specifically, we
repaired the home's gutters, painted the home's interior, replaced the home's
existing garage door and removed excess trees from the property. We completed
these improvements in approximately three months and sold the home and the 1.5
acre lot through a realtor for $134,500.
We have targeted North Carolina, and to a lesser extent, South Carolina as
our principal markets. The North Carolina economy is currently one of the
fastest growing economies in the country. In Charlotte, North Carolina,
approximately 10,000 single housing units are being built each year. An
additional 5,000 units are being built each year in the counties surrounding
Charlotte. We believe that this market will continue to grow as additional
families and companies relocate to the North Carolina and South Carolina areas.
Our success will be dependent upon implementing our plan of operations and
the risks associated with our business plans. We operate a land development and
resale business in the Charlotte, North Carolina area. We also plan to provide
land development consulting services to various unrelated developers and
builders. We plan to strengthen our position in these markets. We plan to
expand our operations through our acquisition and/or development of land
parcels.
We presently have no land parcels available for resale; nor do we have any
contracts to purchase such land parcels. We hope to acquire additional real
estate parcels this year, and to utilize the proceeds from the resale of those
parcels, along with its revenues from consulting services, to pay our operating
costs for the next twelve months; however, there are no assurances that this
revenue will be sufficient to cover our operating costs. Accordingly, if our
revenues are not sufficient, we will rely upon capital infusions from our
president; however, there are no assurances that our president will have
sufficient funds to provide such capital infusions.
We will locate such areas that we will consider building by using analysis
reports by area that are obtained from a real estate office, such as ABC Realty.
These reports include yearly trends, school building plans, market comparative
reports, and zoning implications. We will locate such properties in such areas
through the following:
1. Direct mailing to landowners of record.
2. Direct mailing and telephone communication with local real estate
offices.
3. Reviewing tax documents and liens and distressed properties such as
foreclosures by obtaining copies of county records.
We intend to buy existing tracts of land with a minimum size of 1 acre.
Our intention is to improve whatever we agree to buy and increase the value of
that specific tract of land through our above-defined development process.
In order to determine and evaluate the fastest growing areas, we will
obtain reports from report surveys and reporting companies. These reports will
provide detailed information that we will then study to determine where the next
area of growth will occur.
We will also rely on general building permit records to ascertain totals of
number of new buildings built in a new area. We will also rely on information
provided by the U.S. Census Bureau to obtain information pertaining to
population shifts and number of total people in a specific area. We plan also
to compare the population figures from the 1990 census with those of the 2000
census.
We will perform detailed market and financial analysis regarding each
property we decide to review for purchase so as to determine whether the
specific location is appropriate for acquisition and development. That detailed
information will include the following:
- Number of parcels on the market.
- Number of parcels sold in the past 12 months.
- Sales prices asked per parcel.
- Sales price sold per each parcel.
- Total square footage and acreage per land parcel
- Total number of units allowed per acreage plot.
- Total number of pending closings per land parcel.
- Total number of acres impacted by wet lands
- Total number acres impacted by endangered species
- Total number of acres with lakes or waterways on them
There are no assurances that our procedures will result in an accurate
evaluation of the merits of purchasing these various properties or that our
final purchasing decisions will adequately reflect the marketability of such
properties.
PURCHASE PROCEDURES:
Once we have located a property that we may want to purchase, we will
ascertain whether the landowner is willing to sell the property. We then
negotiate a purchase price and ask the following questions of the prospective
seller and/or obtain answers to the following questions from third parties:
- When does the landowner want to sell?
- When does the landowner want to close?
- How much of the land will the landowner sell?
- How much will the landowner sell the land for?
- What is the current zoning on the land?
- Can the zoning on the land be changed to accommodate another use?
- Are there any title defects on the title?
- Does the landowner have title insurance on the property?
We provide the answers to these questions to trained professionals who are
trained in the area of verifying the information.
We then obtain the following documents from the seller during our due
diligence on the property:
- General maps;
- Topographical maps;
- Environmental reports
- Copies of existing zoning maps and regulations;
- Conduct land inspection procedures;
- Proposed zoning regulations;
- Deeds;
- Title insurance; and
- Tax bills.
We then verify the accuracy of these documents and determine how the
information contained in the documents impacts the property that we are
considering to purchase.
OUR FINANCING PROCEDURES:
We will obtain financing from local banks doing business within the area
where we are looking to buy land. Our president has, in the past, personally
guaranteed repayment of the debt along with necessary corporate guarantees and
we plan to use such guarantees in the future, if necessary; however, there are
no assurances that our president, or we, will be in a financial position to do
so. We hope to leverage the property with a financial institution or private
lender so that funds are available based on the collateral of the property.
The procedures for obtaining our financing are as follows:
1. File application.
2. Credit checks, property appraisal done.
3. Loan documents drafted.
4. Down payment made that is typically approximately 5 to 10% of the
appraised value.
5. Institution lends funds for the balance, less certain transaction fees
that are typically between approximately 2 to 3%.
6. A lien is then filed with the State of North Carolina.
There are no assurances that our financing procedures will be adequate to
secure the funds needed to sustain our operations.
OUR CONSULTING SERVICES:
We will provide the following services to land developers and building
contractors:
1. Verification of zoning approval from the local county and city
governments. We will apply on the behalf of the land owner with the local
government to obtain governmental approvals to build houses, condominiums, and
townhouses as we would request.
2. Arrange for soil testing from a North Carolina soil surveyor. We will
obtain complete soil tests from certified soil engineers to determine the
quality of the soil to build building.
3. Arrange for a recorded and approved plot plan. We will obtain complete
approvals stamped by the local registry of deed for approvals of subdivision
approvals.
4. Maps indicating where existing wet lands are located. We will obtain from
local engineering firms wetland evaluations for parcels of lands. This
assessment will include site inspections, detailed maps and review of those
maps.
5. Arrange for a stamped North Carolina surveyor that will conduct a survey
to include a complete survey listing all the features required by law to be in a
certified survey, including metes and bounds distance total number of acres,
streams, public easements, private easements and topography of the site.
6. Arrange for a sketch plan indicating where trees and bushes are required
to be planted within the subdivision. We will provide a complete parks and
recreation artist sketch plan rendering as to where all required improvement
must be located.
7. Provide names and address of all public agencies that regulate land
development, with the following information: name of city with jurisdiction,
name of county with jurisdiction, name of planning director, name of City
engineer, name of waste authority, name of sewer authority, name and contact of
State Department of Transportation driveway permit approvals.
8. Obtain copies of permits for necessary governmental agencies. We will
provide all copies and a checklist necessary to verify all existing permits.
9. Obtain copies of U.S. Core of engineers acknowledging their approval of
all impacted areas. We will provide all information to acknowledge the a proper
assessment has been completed by the US Core of Engineers
10. Obtain copies of State Department of Transportation driveway permits.
We will provide full maps and permits as was approved by the State Department of
Transportation.
11. Obtain copies of all approved road plans. We will provide all maps and
engineering road profiles as would be required to obtain approvals to construct
any proposed road or roadways.
12. Obtain notices of approvals of proper sewerage disposal. We will obtain
flow and volume calculations and total sewerage discharge into the public or
private systems.
13. Obtain notices of approvals for proper water use. We will provide all
the necessary calculations, testing as may be required by local and state
authorities to assure adequate drinking water standards.
14. Obtain copies of all endangered species effecting the property. We will
provide a site visit by a licensed engineer to determine impact of endangered
species.
15. Obtain copies of all historical designation effecting the property. We
will provide a site visit by a licensed engineer to determine impact of
historical designations.
16. Obtain letters for the local governmental engineering department
approvals. All approvals from the local and state engineering departments will
include necessary site visits and approval meeting all requirements.
17. Obtain all variance board approvals. We will provide all
correspondences and approvals from any variances board necessary to achieve our
approvals.
18. We will provide all necessary documentation to verify complete approvals
of proposed builders' approvals.
SUBCONTRACTORS:
We have established relationships or have had prior business relationships
with the following subcontractors that we plan to use in our business:
ENVIRONMENTAL ASSESSMENTS:
The following firms perform environmental assessments:
- Cooper Environmental
N Charlotte, North Carolina 28227
- Aware Environmental
Charlotte, North Carolina
- Environmental Design
Davidson, North Carolina
SURVEYING/ ENGINEERING:
The following firms perform surveying and engineering services:
- Concord Engineering and Surveying
Concord, North Carolina
- RD Davis Engineering and Surveying
Charlotte, North Carolina
REPORTS/ CONSULTANTS:
The following firms perform services that check information provided by
prospective purchasers:
- Cacie Reporting Services
Arlington, Virginia
- Hunter And Brown Consultants
Concord, North Carolina
MARKET REPORTS:
Market comparative reports are obtained from the local board of realtors
and Cacie Reporting Agency. Other market reports are obtained from Builder
Services and Marketing Precedents, both of which are located in Charlotte, North
Carolina
APPRAISALS:
We obtain appraisals from the following appraisers, all of which are
located in Charlotte, North Carolina:
- Alan Tucker;
- Hennigans Appraisal Service; and
- Ascher Real Estate Appraisals
GRADING CONTRACTORS:
- McCallum Grading of Monroe, North Carolina
REALTORS:
- Lakeland Realty or Mooresville, North Carolina
ZONING SPECIALIST:
- Walter Fields Group of Charlotte, North Carolina
REAL ESTATE ATTORNEY:
- Kirk, Palmer and Thingpen of Charlotte, North Carolina
- James Scarbough and Associates of Concord, North Carolina
TITLE INSURANCE:
- Lawyer Title Company of Charlotte, North Carolina
LAND DESIGN SPECIALIST:
- Wirth and Associates of Charlotte, North Carolina
TOPOGRAPHY DESIGN ENGINEER:
- Aero Dynamics of Charlotte, North Carolina
Should we lose any of the services of these subcontractors, we may be
unable to hire other subcontractors on acceptable terms. There are no
assurances that the services of these firms will be available or we will find
their proposed terms acceptable to us.
DISTRIBUTION.
We have no distribution agreements in place with anyone. We plan to
distribute the land we acquire primarily through direct selling efforts to
established home builders, real estate developers and corporations that may have
a need for residential and/or commercial real estate. We plan to develop an
internal marketing and sales force and to employ real estate brokers,
sub-contractors and other agents to assist in us on a project by project basis.
NEW PRODUCTS OR SERVICES.
We currently have no new products or services announced to the public. We
will make public announcement in the future upon entering into material
contracts to acquire any new real estate projects.
COMPETITIVE BUSINESS CONDITIONS.
We face competition from national home builders, local home builders,
commercial and industrial land developers and farmers. The market for real
estate development is highly competitive and subject to economic changes,
regulatory developments and emerging industry standards. When a significant
tract of potentially suitable land becomes available for sale, there is usually
intense competition for that property. Pricing is a particularly important
competitive factor.
Nationally, there are over one hundred major real estate land developers.
Approximately 10% of these developers capture approximately 50% of the market
for such developments. These developers have greater financial resources than
we do and are better poised for market retention and expansion than we are.
Specifically, our competition is as follows:
National Home Builders
We compete to acquire properties with the following national home builders:
- Pulte Homes;
- Ryan Homes;
- Ryland Homes;
- John Weiland Homes;
- Cresent Resources; and
- Harris Group
These national home builders purchase land or lots of vacant land parcels
to build single family homes, shopping centers and commercial buildings. The
national home builders have substantial resources to enable them to build single
family homes for resale. In addition, these companies have the operational and
financial ability to lease the building to major tenants for rental revenue or
to sell the buildings to the major tenants or others.
In addition, the primary local home builders and developers that we compete
against are the following, which are all located in Charlotte, North Carolina:
- Humphrey and Associates;
- Torrey Homes;
- Mulvaney Homes;
- Shea Homes; and
- Ryan Homes of Charlotte, North Carolina
These builders engage in single family home development and have greater
financial resources than we do. In addition, these companies have greater
operational resources because they are able to perform a variety of development
tasks themselves. These companies purchase vacant land tracts and perform all
the work necessary to construct the homes, such as land clearing and road
development and then build the homes themselves. In contrast, we do not have
the financial or operational resources to perform these tasks. In addition,
because of the intense competition with the national and local home builders,
large areas of quality land parcels are becoming increasingly rare. We are in
direct competition with the national and local home builders to acquire land
parcels that are equipped with sewer, water and gas availability. These
national and local builders are better equipped to acquire tracts of land
equipped with these capabilities due to their operational and financial
superiority over us. The intense competition with these companies has also led
to increases in the cost of land and greater competition to hire subcontractors
that are becoming increasingly expensive.
When an available property is zoned for agricultural purposes, we will
compete for that property with numerous individual farmers and/or companies of
all sizes who engage in agriculture. We have no competitive advantages over any
of the individuals and/or companies against whom we compete. We have
significantly less capital, assets, revenues, employees and other resources than
our local and/or national competition. There are no barriers to entry into this
market.
SOURCES AND AVAILABILITY OF RAW MATERIALS.
As of the date of this prospectus, we have no raw materials or suppliers.
To date, we have not obtained any raw materials for our business operations. In
the event that we use raw materials or suppliers, our main sources of lumber and
materials will be purchased form Lowes, Home Depot and 84 Lumber Supply, all of
which are within a three mile radius of our North Carolina Office. In
addition, these suppliers are within an approximately ten mile radius of any
location from which we may engage in the development business in North and South
Carolina. Our choice of suppliers, from which we will purchase our materials,
will be dictated primarily by competitive pricing decisions and secondarily by
availability. We do not anticipate a lack of supply to effect our development
efforts; however, there are no assurances that a shortage of materials will not
occur and that a corresponding price increase will not be passed on to our
customers.
CUSTOMER BASE
As of the date of this prospectus, we have sold subdivided tracts of land
to five customers. Currently, we have no established customers. We plan to
resell tracts of land to a number of customers, and do not plan on being
dependent upon one single or just a few customers. However, there are no
assurances that we will be successful in establishing a broad customer base.
INTELLECTUAL PROPERTY
At present, we do not have any patents, trademarks, licenses, franchises,
concessions, royalty agreements, labor contracts or other proprietary interests.
GOVERNMENT REGULATION ISSUES.
We are subject to applicable provisions of federal and state securities
laws and to regulations specifically governing the real estate industry,
including those governing federally backed mortgage programs. Our operations
will also be subject to regulations normally incident to business operations,
such as occupational safety and health acts, workmen's compensation statutes,
unemployment insurance legislation and income tax and social security related
regulations. Although we will make every effort to comply with applicable
regulations, it can provide no assurance of its ability to do so, nor can it
predict the effect of these regulations on its proposed activities.
In addition, we will be subject to local zoning and land use ordinances
which could restrict our ability to acquire, develop, sub-divide and resell
certain real estate parcels that would otherwise be attractive to us. We will
seek to conduct appropriate due diligence before committing to purchase a
particular parcel of land to determine what permits, licenses and/or land use
variances, if any, are required. To the extent that it is possible and
practical to do so, we will attempt to obtain such permits, licenses and/or
necessary variances prior to committing to purchase a property. However, there
are no assurances that we will be able to determine in advance of purchasing a
property whether the property can lawfully be developed under the existing
zoning, land use and/or environmental regulations. Nor can any assurance be
given that we will be able to obtain the permits, licenses and/or variances to
develop a property, once that property is acquired. If we should purchase a
property and subsequently be unable to develop, subdivide and/or resell that
property because of zoning or environmental issues, or for any other reasons,
our operations and financial condition would be negatively impacted.
RESEARCH AND DEVELOPMENT.
We have spent no funds on research and development.
ENVIRONMENTAL LAW COMPLIANCE.
Our environmental compliance regarding our land development business is
site specific. We hire a private environmental engineer who inspects maps of
the property and personally inspects the property to determine whether the
property is in compliance with the regulations of the U.S. Environmental
Protection Agency and the applicable state environmental agency. Specifically,
the engineer determines whether there are any rare species, environmental
hazards or environmental wetlands at or in close proximity to the property. If
any of those conditions are detected the builder and/or developer must submit to
the U.S. Environmental Protection Agency and applicable state environmental
agency a permit form along with detailed surveys and maps indicating the
potential impact of the condition. The U.S. Environmental Protection Agency
and the applicable state environmental agency either issue an approval permit
permitting further development to proceed with the property or a denial letter
prohibiting further development. If development proceeds even though a denial
letter was issued, the developer or builder will be subject to a lawsuit a
damages by the federal and state government and may be ordered to restore or
repair the property to its original state.
We may be subjected to environmental liability if we fail to comply with
various state and federal environmental regulations. In addition, our operating
costs may experience substantial increases as a result of new and stricter
environmental laws, ordinances and regulations. Under local, state and federal
laws we may become liable for the costs of removal or remediation of hazardous
or toxic substances from our properties. Many of these laws impose liability
either for knowing violation or impose a recklessness standard for now knowing
of such hazards. In addition, the presence of such substances or our failure to
remove them, may affect our ability to borrow funds for the acquisition of
properties.
EMPLOYEES
Presently, we have two employees, Duane Bennett, our president, and his
wife Sharon Bennett, our vice president. Mr. Bennett is our only full time
employee. Ms. Bennett is a part time employee and works approximately 10 hours
per week. We have no employment agreements with any of our employees. We do
not anticipate hiring any additional employees.
REPORTS TO SECURITY HOLDERS.
After the effective date of this document, we will be a reporting company
under the requirements of the Securities Exchange Act of 1934 and will file
quarterly, annual and other reports with the Securities and Exchange Commission.
Our annual report will contain the required audited financial statements. We
are not required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to the security holders. The
reports and other information filed by us will be available for inspection and
copying at the public reference facilities of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS
The discussion contained in this prospectus contains "forward-looking
statements" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "believes", "expects", "may",
"will", or "should", or "anticipates", or expressing this terminology negatively
or similar expressions or by discussions of strategy. The cautionary statements
made in this prospectus should be read as being applicable to all related
forward-looking statements wherever they appear in this prospectus. Our actual
results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "risk factors," as well as those
discussed elsewhere in this prospectus.
Results of Operations.
Eleven months ended November 30, 2000 and 1999 (Unaudited) and the years
ended December 31, 1999 and 1998.
Sales.
Sales for the eleven months ended November 30, 2000 were $322,974 as
compared to sales of $126,933 over the same period in 1999. The increase in
revenues was primarily attributable to our development and sale of land parcels
in the Charlotte, North Carolina area.
Contract sales for the year ended December 1998 were $999,500. The revenues
were also primarily from the development and resale of land parcels in the
Charlotte, North Carolina area. Consulting service fees for the year ended
December 31, 1999 were $126,933. The revenues were primarily attributable
construction related consulting services provided to local contractors. There
were no contract sales for land parcels for the year ended December 31, 1999.
Gross profit decreased 15% during 1999 to $126,933.
We expect growth of contract sales in 2001 to increase based on future
planned land development projects and growing demand of developed real estate in
many areas of North Carolina. However, no new contracts for land development
projects have been initiated as of the date of this registration.
Income/ Losses.
Net loss for the eleven months ended December 31, 2000 was $133,350 as
compared to sales of $55,233 over the same period in 1999. The net loss was
primarily attributable to expenditures relating to our expenditures in
connection with this registration statement and management fees associated with
the development and sale of the land parcels. The management fee was paid to a
management company that is majority owned by our President.
Net income for the year ended December 31, 1999 increased to $50,439 from
$11,404 for the year ended December 31, 1998, an increase of $39,035, or 342%.
The increase in income was primarily related to our management of certain
expenses, particularly with land evaluation and subcontractor expenses.
We expect to continue to incur losses at least through the fourth quarter
of the year 2000. In addition, there can be no assurance that we will re-achieve
or maintain profitability or that its revenue growth can be sustained in the
future.
Expenses.
Selling, general and administrative expenses for the eleven months ended
November 30, 2000 were $251,302 as compared to $55,600 over the same period in
1999. This represented an increase of 352%. The increase in selling general and
administrative expenses was primarily due to expenditures relating to this
registration statements and the management fees associated with the development
and sale of the land parcels. The management fees paid to an entity controlled
by our president were in lieu of fees generally paid to subcontractors for land
evaluation and real estate brokers for sales of the properties. We believe it
incurred approximately the same amount of expenses for these services.
Selling, general and administrative expenses for the year ended December
31, 1999, decreased to $60,950 from $131,177 for the year ended December 31,
1998, a decrease of $70,227 or 54%. The decrease in selling, general and
administrative expenses was the result of our reduction of certain expenses,
particularly with land evaluation and subcontractor expenses. We typically incur
land evaluation expenses associated with development of land. For the year ended
December 31, 1999, we did not have contract sales for land development as it did
in 1998, but rather performed consultant services for other contractors,
therefore not incurring such land evaluation and subcontractor costs.
We expect increases in expenses through the year 2000 as the Company moves
toward new land acquisitions and development.
Cost of Sales.
The largest factor in the variation from year to year in the cost of sales
as a percentage of net sales is the cost of land purchased and developed for
resale. The cost of sales includes the purchase price for land plus other
capital improvements and direct cost associated with making the land available
for resale.
The cost of sales for the eleven months ended November 30, 2000 was
$217,653. Cost of sales as a percentage of sales for eleven months ended
November 30, 2000 was 67%.
The cost of sales for the year ended December 31, 1999 was $-0- because we
performed consulting services for other contractors instead of our own land
development. For the year ended December 31, 1998, cost of sales was $849,583.
Cost of goods sold as a percentage of sales for December 31, 1998 was 85%. We
expect cost of goods sold as a percentage of sales to increase as we pursue
larger development projects which yield lower margins, on a percentage basis.
However, we expect this to be somewhat offset by the strong real estate market
in the North Carolina area.
Impact of Inflation.
We believe that inflation has had a negligible effect on operations over
the past three years. We believe that it can offset inflationary increases in
the cost of labor by increasing sales and improving operating efficiencies.
Liquidity and Capital Resources.
Cash flows generated by operations were $55,932 for the eleven months ended
November 30, 2000 as compared with $68,607 over the same period in 1999.
Positive cash flows were attributable primarily to a decrease in inventory
partially offset by the net loss for the period ended November 30, 2000.
Cash flows generated by operations were $63,813 for the year ended December
31, 1999, and a negative $204,704 for the year ended December 31, 1998.
Negative cash flows from operating activities for the year ended December 31,
1998 were primarily attributable to additional land inventory purchased for
development and resale.
Cash flows generated from financing activities were a negative $4,826 for
the eleven months ended November 30, 2000 as compared with $63,473 cash used in
financing activities over the same period in 1999. This was primarily
attributable to net repayments on stockholder loans for the period.
Cash flows generated from financing activities were a negative $63,473 for
the year ended December 31, 1999 and a positive $198,181 for the year ended
December 31, 1998. The cash flows from financing activities in both years were
attributable to stockholder loans proceeds and repayments in their respective
periods.
A shareholder loan in the amount of $127,976 was executed on December 31,
1999 and payable to Duane Bennett, President and majority shareholder. The loan
was evidenced by a written promissory note and bore simple interest at 6% per
annum The shareholder loan was repaid in full subsequent to year end with
accrued interest waived and forgiven by the Duane Bennett.
During the period ended November 30, 2000, we received an additional
$10,000 from Duane Bennett, our majority stockholder for expenses relating to
gaining active trading status on the OTC Bulletin Board. The loan is due on
demand and bears interest at 6%. The loan has been partially repaid and carries
a balance of $5,900 as of the date of this prospectus.
Overall, we have funded our cash needs from inception through November 30,
2000 with a series of debt and equity transactions, primarily with our majority
stockholder. If we are unable to receive additional cash from our majority
stockholder, we may need to rely on financing from outside sources through debt
or equity transactions. Failure to obtain such financing could have a material
adverse effect on operations and financial condition.
We had cash on hand of $55,901 and working capital of $62,701 as of
November 30, 2000. As of December 31, 1999, we had cash on hand of $4,795 and
working capital of $77,763. We will substantially rely on the existence of
revenue from our land development and consulting businesses; however, we have no
current or projected revenues or capital reserves that will sustain our business
for the next12 months. If the projected revenues fall short of needed capital
we will not be able to sustain our capital needs for more than six months. We
will then need to obtain additional capital through equity or debt financing to
sustain operations for an additional year. A lack of significant revenues
beginning in the first quarter of 2001 will significantly affect our cash
position and move us towards a position where the raising of additional funds
through equity or debt financing will be necessary.
On a long-term basis, liquidity is dependent on continuation and expansion
of operations, receipt of revenues, and additional infusions of capital and debt
financing. We are considering additional land acquisitions and development
during the remainder of the year 2000 and into the Spring of 2001. Our current
capital and revenues are insufficient to fund such development. If we choose to
launch such a development campaign, we will require substantially more capital.
If necessary, we will raise this capital through an additional stock offering.
The funds raised from this offering will be used to acquire and develop
additional parcels as well as expand operations and contribute to working
capital. However , there can be no assurance that we will be able to obtain
additional equity or debt financing in the future, if at all. If we are unable
to raise additional capital, our growth potential will be adversely effected.
Additionally, we will have to significantly modify our plans.
Demand for the our land parcels and services will be dependent on, among
other things, market acceptance of our properties, the real estate market in
general, and general economic conditions, which are cyclical in nature.
Inasmuch as a major portion of our activities is the receipt of revenues from
the sales of our land parcels, our business operations may be adversely affected
by our competitors and prolonged recession periods.
Our success will be dependent upon implementing our plan of operations and
the risks associated with our business plans. We operate a land development and
resale business in the Charlotte, North Carolina area. We also provide land
development consulting services to various unrelated developers and builders. We
plan to strengthen our position in these markets. We plan to expand our
operations through our acquisition and/or development of land parcels.
ITEM 18. DESCRIPTION OF PROPERTY
We do not own any property nor do we have any contracts or options to
acquire any property in the future. Presently, we are operating out of offices
in our president's residence in North Carolina. This office has 200 square feet.
No other businesses operate from this office. We have no current plans to
occupy other or additional office space.
We have no policy with respect to investments in real estate or interests
in real and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 30, 1996 we issued 100 shares of our common stock to Duane Bennett,
our president in connection with his services connected to our formation. On
June 30, 2000, we declared a forward stock split in the form of a stock dividend
in the ratio of 80,000 for 1. As a result, Mr. Bennett's 100 shares were
exchanged for 8,000,000 of our common shares.
On about February 15, 1998, we borrowed a total of $191,449 from Mr.
Bennett in order to purchase a parcel of property in North Carolina from a third
party. The promissory note was unsecured, due on demand and carried an interest
rate of 6% per annum. On February 10, 2000, we repaid Mr. Bennett a total of
127,976, which reflected the unpaid principal balance of the loan plus accrued
interest. The loan was repaid using the proceeds of a sale of the underlying
property.
On about February 10, 2000, we borrowed $10,000 from Mr. Bennett for
working capital. The promissory note is unsecured, due on demand and carries an
interest rate of 6% per annum. This loan has been partially repaid and a
balance of $5,900 remains as of the date of this prospectus.
On June 7, 2000, we entered into a Consulting Services Agreement with
Greentree Financial Services, Corp. Under the terms of the agreement, Greentree
Financial Services, Corp. has agreed to use its best efforts to assist us in
having our common stock publicly traded. In exchange for its services, we have
agreed to pay Greentree Financial Services Corp., $36,475 and 512,500 shares of
restricted stock. Greentree Financial Services Corp. is owned by Michael
Bongiovanni and Robert C. Cottone.
We are not a subsidiary of any corporation.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
Our common stock is not traded on any exchange. We plan to eventually seek
listing on the National Association of Securities Dealers over-the-counter
Bulletin Board once our registration statement has cleared comments of the
Securities and Exchange Commission, if ever. We cannot guarantee that we will
obtain a listing. Management has not discussed market making with any market
maker or broker dealer. There is no trading activity in our securities, and
there can be no assurance that a regular trading market for our common stock
will ever be developed, or if developed, will be sustained.
A shareholder in all likelihood, therefore, will not be able to resell
their securities should he or she desire to do when eligible for public resales.
Furthermore, it is unlikely that a lending institution will accept our
securities as pledged collateral for loans unless a regular trading market
develops. We have no plans, proposals, arrangements or understandings with any
person with regard to the development of a trading market in any of our
securities.
Penny Stock Considerations.
Broker-dealer practices in connection with transactions in penny stocks are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. Our shares may someday be subject to such penny stock rules
and our shareholders will, in all likelihood, find it difficult to sell their
securities.
Options.
We have two outstanding options to purchase a total of 6,000 shares of
common stock. Mr. Stanley Nadolny has an option to purchase 4,000 shares of our
common stock at a price of $0.50 per share until December 31, 2002. Ms. Karol
Kapinos has an option to purchase 2,000 shares of our common stock at a price of
$0.50 per share until December 31, 2002. We have no outstanding warrants.
Agreements to Register.
We have no agreements to register any of our securities.
Holders.
As of December 15, 2000, there were approximately 46 holders of record of
our common stock.
Shares Eligible For Future Sale.
Upon effectiveness of this registration statement, the 832,000 shares of
common stock sold in this offering will be freely tradable without restrictions
under the Securities Act of 1933, except for any shares held by our
"affiliates", which will be restricted by the resale limitations of Rule 144
under the Securities Act of 1933.
In general, under Rule 144 as currently in effect, any of our affiliates
and any person or persons whose sales are aggregated who has beneficially owned
his or her restricted shares for at least one year, may be entitled to sell in
the open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates who have
held their restricted shares for one year may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited
resales of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in a public market, if developed, beginning 90 days
after the date of this prospectus. The availability for sale of substantial
amounts of common stock under Rule 144 could adversely affect prevailing market
prices for our securities.
Dividends.
We have not declared any cash dividends on our common stock since our
inception and do not anticipate paying such dividends in the foreseeable future.
We plan to retain any future earnings for use in our business. Any decisions as
to future payment of dividends will depend on our earnings and financial
position and such other factors, as the Board of Directors deems relevant.
The 832,000 shares of common stock sold in this offering will be freely
tradable without restrictions under the Securities Act of 1933, except for any
shares held by our "affiliates", which will be restricted by the resale
limitations of Rule 144 under the Securities Act of 1933.
Dividend Policy.
All shares of common stock are entitled to participate proportionally in
dividends if our Board of Directors declares them out of the funds legally
available. These dividends may be paid in cash, property or additional shares of
common stock. We have not paid any dividends since our inception and presently
anticipate that all earnings, if any, will be retained for development of our
business. Any future dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
ITEM 21. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Long Term Compensation
------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Restricted Securities Underlying Stock Award
Name and Principle Position Year Salary ($) Bonus ($) Other Annual Compensation ($) (s) ($)
--------------------------- ---------- ----------------------
Duane Bennett . . . . . . . 1999 0 0 0 0
Sharon Bennett. . . . . . . 1999 0 0 0 0
--------------------------- ---------- ---------------------- --------- ------------------- --------------
Duane Bennett . . . . . . . 2000 0 0 0 0
--------------------------- ---------- ---------------------- --------- ------------------- --------------
Sharon Bennett. . . . . . . 2000 0 0 0 0
--------------------------- ---------- ---------------------- --------- ------------------- --------------
<S> <C> <C> <C>
Name and Principle Position Options (#) LTIP Payouts ($) Other ($)
---------------------------
Duane Bennett . . . . . . . 0 0 0
Sharon Bennett. . . . . . . 0 0 0
--------------------------- ----------- ---------------- ---------
Duane Bennett . . . . . . . 0 0 0
--------------------------- ----------- ---------------- ---------
Sharon Bennett. . . . . . . 0 0 0
--------------------------- ----------- ---------------- ---------
</TABLE>
We have not entered into any other employment agreements with our
employees, Officers or Directors. We have no standard arrangements under which
we will compensate our directors for their services provided to us.
ITEM 22. FINANCIAL STATEMENTS
Statements included in this prospectus that do not relate to present or
historical conditions are "forward-looking statements." We may make future
forward-looking statements, which may be included in documents that we file with
the Commission other than this registration statement. Forward-looking
statements involve risks and uncertainties that may differ materially from
actual results, and may relate to our plans, strategies, objectives,
expectations, intentions and adequacy of resources.
<TABLE>
<CAPTION>
XENICENT, INC.
--------------
BALANCE SHEET (UNAUDITED)
AT NOVEMBER 30, 2000
ASSETS
---------------------------------------------------------------
<S> <C>
CURRENT ASSETS
---------------------------------------------------------------
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . $ 55,901
Deferred Tax Asset. . . . . . . . . . . . . . . . . . . . . . 12,700
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . 68,601
PROPERTY AND EQUIPMENT
---------------------------------------------------------------
Furniture & Office Equipment. . . . . . . . . . . . . . . . . 6,800
Accumulated Depreciation. . . . . . . . . . . . . . . . . . . (3,170)
Net Property and Equipment . . . . . . . . . . . . . . . . 3,630
---------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . $ 72,231
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------
CURRENT LIABILITIES
---------------------------------------------------------------
Loans From Stockholder. . . . . . . . . . . . . . . . . . . . $ 5,900
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . 5,900
STOCKHOLDERS' EQUITY
---------------------------------------------------------------
Common Stock ($.001 par value, 50,000,000 shares authorized:
8,832,000 issued and outstanding) . . . . . . . . . . . . . . 8,832
Additional Paid-in-Capital. . . . . . . . . . . . . . . . . . 129,006
Retained Deficit. . . . . . . . . . . . . . . . . . . . . . . (71,507)
TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . . 66,331
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . . . $ 72,231
</TABLE>
<TABLE>
<CAPTION>
XENICENT, INC.
STATEMENTS OF INCOME (UNAUDITED)
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 2000 AND 1999
November 30,
<S> <C> <C>
2000 1999
-------------- ---------
REVENUE AND COST OF SALES:
---------------------------------------
Contract Sales. . . . . . . . . . . . $ 322,974 $ -0-
Consulting Services . . . . . . . . . -0- 126,933
Cost of Sales . . . . . . . . . . . . (217,653) -0-
Gross Profit. . . . . . . . . . . . 105,321 126,933
-------------- ---------
OPERATING EXPENSES:
---------------------------------------
Selling, General, and Administrative
Expenses. . . . . . . . . . . . . . . 251,302 55,600
OPERATING INCOME. . . . . . . . . (145,981) 71,333
OTHER INCOME (EXPENSE):
---------------------------------------
Interest Expense. . . . . . . . . . . (69) -0-
TOTAL OTHER INCOME (EXPENSE). . . . (69) -0-
-------------- ---------
INCOME (LOSS) BEFORE TAXES. . . . (146,050) 71,333
INCOME TAX BENEFIT (EXPENSE). . . 12,700 (16,100)
NET INCOME (LOSS) . . . . . . . . $ (133,350) $ 55,233
</TABLE>
<TABLE>
<CAPTION>
XENICENT, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 2000 AND 1999
November 30,
2000 1999
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
----------------------------------------------------
Net income (loss). . . . . . . . . . . . . . . . . $(133,350) $ 55,233
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . 450 680
Common stock issued for services . . . . . . . . 588 -0-
(Increase) decrease in operating assets:
Inventories. . . . . . . . . . . . . . . . . . 216,488 -0-
Deferred tax asset . . . . . . . . . . . . . . (12,700) -0-
Increase (decrease) in operating liabilities:
Income taxes payable . . . . . . . . . . . . . (15,544) 12,694
NET CASH PROVIDED BY OPERATING ACTIVITIES. . . 55,932 68,607
CASH FLOWS FROM FINANCING ACTIVITIES:
----------------------------------------------------
Proceeds from sales of common stock. . . . . . . . 117,250 -0-
Proceeds from stockholder loans. . . . . . . . . . 10,000 -0-
Repayments of stockholder loans. . . . . . . . . . (132,076) (63,473)
NET CASH USED IN FINANCING ACTIVITIES. . . . . (4,826) (63,473)
NET INCREASE IN
CASH AND CASH EQUIVALENTS. . . . . . . . . . . 51,106 5,134
CASH AND CASH EQUIVALENTS:
----------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . 4,795 4,455
End of year. . . . . . . . . . . . . . . . . . $ 55,901 $ 9,589
</TABLE>
--------
AUDITED FINANCIAL STATEMENTS
XENICENT, INC.
(FORMERLY: GREAT LAND DEVELOPMENT CO., INC)
DECEMBER 31, 1999
--------
PERRELLA & ASSOCIATES, P.A.
Certified Public Accountants
CONTENTS
========
INDEPENDENT AUDITORS' REPORT. F-1
BALANCE SHEET
ASSETS, LIABILITIES AND STOCKHOLDER'S EQUITY2
STATEMENTS OF INCOME F-3
STATEMENT OF STOCKHOLDER'S
EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL
STATEMENTS F-6-9
PERRELLA AND ASSOCIATES, P.A.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Great Land Development Co., Inc.
10712 Old Wayside Street
Charlotte, North Carolina
We have audited the accompanying balance sheet of Great Land Development Co,
Inc. as of December 31, 1999 and the related statements of income, stockholder's
equity, and cash flows for the years ended December 31, 1999 and 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Great Land Development Co, Inc.
as of December 31, 1999, and the results of its operations and its cash flows
for the years ended December 31, 1999 and 1998 in conformity with generally
accepted accounting principles.
/s/ Perrella and Associates, P.A.
-------------------------------------
August 3, 2000
F -1-
<TABLE>
<CAPTION>
GREAT LAND DEVELOPMENT CO., INC.
BALANCE SHEET
AT DECEMBER 31, 1999
ASSETS
------
<S> <C>
CURRENT ASSETS
----------------------------------------------------------------
Cash and Cash Equivalents. . . . . . . . . . . . . . . . . . . $ 4,795
Inventories - Note A . . . . . . . . . . . . . . . . . . . . . 216,488
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . 221,283
PROPERTY AND EQUIPMENT
----------------------------------------------------------------
Furniture & Office Equipment . . . . . . . . . . . . . . . . . 6,800
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . (2,720)
Net Property and Equipment. . . . . . . . . . . . . . . . . 4,080
---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $225,363
LIABILITIES AND STOCKHOLDER'S EQUITY
----------------------------------------------------------------
CURRENT LIABILITIES
----------------------------------------------------------------
Income Taxes Payable - Note A. . . . . . . . . . . . . . . . . $ 15,544
Loans From Stockholder - Note D. . . . . . . . . . . . . . . . 127,976
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . . . 143,520
STOCKHOLDER'S EQUITY
----------------------------------------------------------------
Common Stock (no par value, 100 shares authorized: 100 issued
and outstanding ) . . . . . . . . . . . . . . . . . . . . . . -0-
Additional Paid-in-Capital . . . . . . . . . . . . . . . . . . 20,000
Retained Earnings. . . . . . . . . . . . . . . . . . . . . . . 61,843
TOTAL STOCKHOLDER'S EQUITY . . . . . . . . . . . . . . . . . 81,843
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY . . . . . . . . . $225,363
See notes to audited financial statements and auditors' report
F -2-
</TABLE>
<TABLE>
<CAPTION>
GREAT LAND DEVELOPMENT CO., INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
<S> <C> <C>
REVENUE AND COST OF SALES:
---------------------------------------------------------------
Contract Sales. . . . . . . . . . . . . . . . . . . . . . . . $ -0- $ 999,500
Consulting Services . . . . . . . . . . . . . . . . . . . . . 126,933 -0-
Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . -0- (849,583)
Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . 126,933 149,917
--------- ----------
OPERATING EXPENSES:
---------------------------------------------------------------
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 680 680
Land Evaluation . . . . . . . . . . . . . . . . . . . . . . . 35,452 93,339
Office Expenses . . . . . . . . . . . . . . . . . . . . . . . 10,292 8,169
Professional Fees . . . . . . . . . . . . . . . . . . . . . . 3,319 9,629
Taxes & Licenses. . . . . . . . . . . . . . . . . . . . . . . -0- 527
Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 2,627 4,073
Travel & Automobile Expenses. . . . . . . . . . . . . . . . . 8,580 14,760
TOTAL EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 60,950 131,177
OPERATING INCOME. . . . . . . . . . . . . . . . . . . . . 65,983 18,740
OTHER INCOME (EXPENSE):
---------------------------------------------------------------
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . -0- (4,486)
TOTAL OTHER INCOME (EXPENSE). . . . . . . . . . . . . . . . -0- (4,486)
--------- ----------
INCOME BEFORE TAXES . . . . . . . . . . . . . . . . . . . 65,983 14,254
INCOME TAXES - NOTE A . . . . . . . . . . . . . . . . . . (15,544) (2,850)
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . $ 50,439 $ 11,404
See notes to audited financial statements and auditors' report
F -3-
</TABLE>
<TABLE>
<CAPTION>
GREAT LAND DEVELOPMENT CO., INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Common Additional
Common Stock Paid-in Retained
Shares No Par Capital Earnings
<S> <C> <C> <C> <C>
Balances, January 1, 1998. . . . . . . . . . . . . . . . . . . 100 $ -0- $ 20,000 $ -0-
Net income for year. . . . . . . . . . . . . . . . . . . . . . -0- -0- -0- 11,404
Balances, December 31, 1998. . . . . . . . . . . . . . . . . . 100 -0- -0- 11,404
Net income for year. . . . . . . . . . . . . . . . . . . . . . -0- -0- -0- 50,439
Balances, December 31, 1999. . . . . . . . . . . . . . . . . . 100 $ -0- $ 20,000 $ 61,843
See notes to audited financial statements and auditors' report
F -4-
</TABLE>
<TABLE>
<CAPTION>
GREAT LAND DEVELOPMENT CO., INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
--------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,439 $ 11,404
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 680 680
(Increase) decrease in operating assets:
Inventories. . . . . . . . . . . . . . . . . . . . . . . -0- (216,488)
Increase (decrease) in operating liabilities:
Income taxes payable - Note A. . . . . . . . . . . . . . 12,694 (300)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES. . . 63,813 (204,704)
CASH FLOWS FROM FINANCING ACTIVITIES:
--------------------------------------------------------------
Proceeds from stockholder loans. . . . . . . . . . . . . . . -0- 198,181
Repayments of stockholder loans. . . . . . . . . . . . . . . (63,473) -0-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES. . . (63,473) 198,181
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . 340 (6,523)
CASH AND CASH EQUIVALENTS:
--------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . 4,455 10,978
End of year. . . . . . . . . . . . . . . . . . . . . . . $ 4,795 $ 4,455
See notes to audited financial statements and auditors' report
F -5-
</TABLE>
GREAT LAND DEVELOPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
==============================================
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------
The following items comprise the significant accounting policies of the Company.
These policies reflect industry practices and conform to generally accepted
accounting principles.
Business Activity - Great Land Development Co., Inc. (the Company) was organized
-----------------
under the laws of the State of North Carolina on July 20, 1996.
The Company provides land development and consulting services primarily to
construction contractors and investors in and around the Charlotte, North
Carolina area. The Company's contracts are performed primarily under fixed price
contracts. The contracts vary in completion time from six months to twenty-four
months.
Basis of Presentation - The financial statements included herein include the
-----------------------
accounts of Great Land Development Co, Inc. prepared under the accrual basis of
---
accounting.
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the
----------------------------
Company considers liquid investments with an original maturity of three months
---
or less to be cash equivalents.
Management's Use of Estimates - The preparation of financial statements in
--------------------------------
conformity with generally accepted accounting principles requires management to
-----
make estimates and assumptions that effect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the date of
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition- Revenue is recognized when land parcels are sold.
--------------------
Consulting and engineering related service revenue is recorded when earned,
---------
provided collection of the related receivable is reasonably likely. The Company
----
performs ongoing credit evaluations of its customers.
Inventories- Inventories consist of land parcels purchased and developed for
-----------
resale. Cost is determined by using the lower of average cost or market value.
---
F -6-
GREAT LAND DEVELOPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
==============================================
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
-------------------------------------------------------------------
Comprehensive Income (Loss) - The Company adopted Financial Accounting Standards
---------------------------
Board Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", which establishes standards for the reporting and display
of comprehensive income and its components in the financial statements. There
were no items of comprehensive income (loss) applicable to the Company during
the period covered in the financial statements.
Advertising Costs - Advertising costs are expensed as incurred. The Company does
-----------------
not incur any direct-response advertising costs or any other material
advertising for the years ended December 31, 1999 and 1998.
Income Taxes - Income taxes are provided in accordance with Statement of
-------------
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
------
Taxes." A deferred tax asset or liability is recorded for all temporary
--
differences between financial and tax reporting and net operating
--
loss-carryforwards.
--
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that, some portion or all of the deferred
tax asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of enactment.
Income tax expense for the years ended December 31, 1999 and 1998 was $15,544
and $2,850, respectively.
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
----------------------------------------------
In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, which the Company has adopted. The Statement, deferred
by SFAS No, 134, is effective for fiscal years beginning after June 15, 2000,
and establishes standards for accounting and reporting for derivative
instruments and hedging activities. Statement of Financial Accounting Standards
No.133 does not have an impact on its financial statements because the Company
does not currently hold any derivative instruments.
F -7-
GREAT LAND DEVELOPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
==============================================
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS (CONT.)
-------------------------------------------------------
In March, 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) No. 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which establishes
guidelines for the accounting for the costs of all computer software developed
or obtained for internal use. The Company adopted this SOP but the adoption of
the SOP does not have a material impact on the Company's financial statements.
In April, 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities". The SOP is effective for fiscal years beginning after December 15,
1998. The SOP requires costs of start-up activities and organization costs to be
expensed as incurred. The Company has adopted SOP 98-5, however, the adoption of
SOP 98-5 does not have a material impact on the Company's financial statements.
The FASB has issued SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise," an amendment of FASB Statement No. 65, which the Company
has not been required to adopt as of March 31, 2000. Statement No. 65, as
amended by FASB Statements No. 115, "Accounting for Certain Investments in Debt
and Equity Securities", and No. 125, "Accounting for Transfer and Servicing of
Financial Assets and Extinguishments of Liabilities", require that after the
securitization of a mortgage loan held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed security as a trading
security. This statement further amends Statement No. 65 to require that after
the securitization of mortgage banking activities classify the resulting
mortgage-backed securities or other retained interests based on its ability and
intent to sell or hold those investments. This Statement is effective for fiscal
years after December 15, 1998 and does not have a material impact on the
Company.
F -8-
GREAT LAND DEVELOPMENT CO., INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
==============================================
NOTE C - SUPPLEMENTAL CASH FLOW INFORMATION
-------------------------------------------------
Supplemental disclosures of cash flow information for years ended December 31,
1999 and 1998 are summarized as follows:
Cash paid during the years for interest and income taxes:
1999 1998
---- ----
Income Taxes $ 2,850 $ 300
Interest $ -0- $ 4,486
NOTE D - STOCKHOLDER LOANS PAYABLE
---------------------------------------
Loans payable to stockholder at December 31, 1999 consist of an unsecured note
payable to the Company's president and sole stockholder. The note bears interest
at a rate of 6% and is due on demand. Accrued interest charges through December
31, 1999 have been waived and forgiven by the president and sole stockholder.
NOTE E - SUBSEQUENT EVENTS
------------------------------
Subsequent to December 31, 1999, the Company's Board of Directors amended its
articles of incorporation to increase the amount of authorized common stock to
100,000,000, change its common stock par value to $.001 per share, and enact a
80,000 for 1 forward stock split on the common stock. In addition, the Board of
Directors authorized 5,000,000 shares of preferred stock to be issued.
Also subsequent to year-end, the Company commenced a plan of operation to
register its common stock with Securities and Exchange Commission and apply with
the appropriate regulatory agencies for listing on the Over-the-Counter Bulletin
Board. In connection with this plan, the Company issued 587,500 shares of its
post-split common stock for various consulting services.
F -9-
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Perrella & Associates, P.A., Certified Public
Accountants audited our financial statements. Since inception, we have had no
changes in or disagreements with our accountants.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ninety days after the effectiveness of the registration statement of
which this prospectus is a part, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PART II INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws provide for indemnification of each person (including the heirs,
executors, administrators, or estate of such person) who is or was director and
officer of the corporation to the fullest extent permitted or authorized by
current or future legislation or judicial or administrative decision against all
fines, liabilities, costs and expenses, including attorneys' fees, arising out
of his or her status as a director, officer, agent, employee or representative.
The foregoing right of indemnification shall not be exclusive of other rights to
which those seeking an indemnification may be entitled. The corporation may
maintain insurance, at its expense, to protect itself and all officers and
directors against fines, liabilities, costs, and expenses, whether or not the
corporation would have the legal power to indemnify them directly against such
liability.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling an issuer
pursuant to the foregoing provisions, the opinion of the Commission is that such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without
consideration to future contingencies, incurred or expected to be incurred by
our Corporation in connection with the issuance and distribution of the
securities being offered by this prospectus. Items marked with an asterisk (*)
represent estimated expenses. We have agreed to pay all the costs and expenses
of this offering. Selling security holders will pay no offering expenses.
ITEM EXPENSE
---- -------
SEC Registration Fee $ 0
Legal Fees and Expenses $ 15,500
Accounting Fees and Expenses $ 20,975
Miscellaneous* $ 3,525
=============================================
Total* $ 40,000
* Estimated Figure
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On July 20, 1996, we issued a total of 100 shares of our common stock to
Duane Bennett, our president.
On June 30, 2000, we forward split our common stock at a ratio of 80,000
shares for 1 share.
On October 15, 2000, we issued 512,500 shares to Greentree Financial
Services Corp. for consulting services. Greentree Financial Services Corp. is
owned by Robert C. Cottone and Michael Bongiovanni.
On October 15, 2000, we issued 75,000 shares of our common stock to Brenda
Hamilton for legal services.
From September to November 2000, we sold 194,500 shares of our common stock
to 42 accredited investors at a price of $0.50 per share raising proceeds of
$97,250 and over the same period we also sold 50,000 shares of our common stock
at $0.40 per share raising additional proceeds of $20,000.
The above issuances were made pursuant to Section 4(2) of the Securities
Act of 1933. We believed that Section 4(2) was applicable because all sales
were made without general solicitation and advertising.
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit Number Exhibit Description
---------------------------------------------------------------------------------------
Articles of Incorporation
3.1. . . . . . Amendments
-------------- ---------------------------------------------------------------------------------------
3.2. . . . . . Amendment to Articles of Incorporation
-------------- ---------------------------------------------------------------------------------------
3.3. . . . . . Bylaws
-------------- ---------------------------------------------------------------------------------------
5. . . . . . . Legal Opinion
-------------- ---------------------------------------------------------------------------------------
10.1 . . . . . Consulting Services Agreement between GREAT LAND DEVELOPMENT CO.
and GreenTree Financial Services Corp.
-------------- ---------------------------------------------------------------------------------------
23 . . . . . . Consents of Experts
-------------- ---------------------------------------------------------------------------------------
27 . . . . . . Financial Data Schedule
-------------- ---------------------------------------------------------------------------------------
</TABLE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement;
c. Include any additional or changed material information on the plan of
distribution.
2. That, for determining liability under the Securities Act of 1933, to
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that
Remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities,
other than the
payment by the Registrant of expenses incurred and paid by a director, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling person
in connection with the securities being registered hereby, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing of Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Charlotte, State of North Carolina on December 15, 2000.
Xenicent, Inc. (Formerly Great Land Development, Inc.)
/s/DUANE BENNETT
__________________
By: Duane Bennett
Title: President (Acting Chief Financial
Officer)
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the date stated.
/S/DUANE BENNETT
_________________________________________
By: Duane Bennett
Title: Director
/S/SHARON BENNETT
_________________________________________
By: Sharon Bennett
Title: Director
