As filed with the Securities and Exchange Commission on September 7, 2000
Registration No. 333-
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 4812 95-4773237
------ ------ ----------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Code Number) Identification No.)
24330 WEST ALYSSUM PLACE, VALENCIA, CA 91354
Telephone (661) 294-5009
-------------------------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Warren J. Soloski
A Professional Corporation
11300 West Olympic Boulevard, Suite 800
Los Angeles, CA 90064
Telephone 310.477.9742 Facsimile 310.473.1470
(Name, Address and Telephone Number of Agent for Services)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective. The Registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
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 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, please check the following box and list
the Securities act registration statement number of the earlier effective
registration statement for the same offering. [ ]
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
maximum maximum
Title of each class Amount offering aggregate Amount
of Securities to be price per offering of Reg.
to be Registered registered share price Fee
------------------- ------------ ---------- ------------- --------
Common Stock, 2,000,000 $0.052 $100,000.00 $26.40
$0.001 par value
================================================================================
<PAGE>
Preliminary Prospectus
MAJOR LEAGUE COMMUNICATIONS CORPORATION
a Nevada Corporation
2,000,000 Shares of $0.001 Par Value Common Stock
This Prospectus relates to 2,000,000 shares of our $0.001 par value common
stock. We are registering these shares by filing a registration statement with
the Securities and Exchange Commission.
Prospective Purchasers of our common stock should carefully review the "Risk
Factors" section of this Prospectus beginning on Page 3.
Our common stock is currently not trading on the Over The Counter (OTC) Bulletin
Board or any National Securities. The shares may be sold directly or through
brokers or dealers.
Any broker-dealers participating in the distribution of shares of our common
stock may be deemed to be "underwriters" within the meaning of the 1933 Act, and
any commissions or discounts given to any such broker-dealer may be regarded as
underwriting commissions or discounts under the 1933 Act. The shares have not
been registered for sale under the securities laws of any state as of the date
of this Prospectus. Brokers or dealers effecting transactions in the shares
should confirm the registration thereof under the securities laws of the states
in which transactions occur or the existence of any exemption from registration.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is August , 2000
1
<PAGE>
Part I - Information required in Prospectus
Item 3. Summary Information and Risk Factors.
Background of the Company. We were formed as Major League Communications
Corporation in Nevada on October 20, 1999, for the purpose of engaging in the
communications business. We had no predecessors and never engaged in any
business activity, other than organizational matters.
We were a development stage company and had no operating history. No
representation was made nor was any intended that our activities would be
profitable and that we would be able to effect a business combination. We
remained inactive until our directors and officers decided to develop a
communications business (see Item 17. Management's Discussion and Analysis).
Our short operating history and operating losses raise substantial doubt about
our ability to continue as a going concern. This fact is reported by our
auditors,
Summary of the Offering
-----------------------
Securities Offered We are registering 2,000,000 shares
of our common stock.
Dividends We have not paid any cash dividends
on our common stock during the last
fiscal year. Payment of dividends
is at the sole discretion of our
Board of Directors and it is
unlikely that holders of our common
stock will receive dividends during
the next fiscal year.
Voting Rights Each holder of shares of our common
stock is entitled to one vote for
each share on all matters on which
our shareholders are entitled to
vote.
The warrants have no voting rights.
Ownership Limit None.
2
<PAGE>
Risk Factors
------------
A purchase of our common stock involves risk. You should consider these
risks before making a decision to purchase our common stock. Prospective
Purchasers of our common stock must be prepared for the possible loss of their
entire investments. The order in which the following risk factors are presented
is arbitrary, and you should not conclude, because of the order of presentation,
that one risk factor is more significant than another risk factor.
WE ARE OPERATING AT A LOSS AND HAVE ACCUMULATED A DEFICIT. Our short operating
history and operating losses raise substantial doubt about our ability to
continue as a going concern. This fact has been reported by our auditors, London
and Company
WE USE DEBT FINANCING. Our corporate bylaws do not contain any limitation on the
amount of indebtedness, funded or otherwise, we might incur. Accordingly, we
could become more highly leveraged, resulting in an increase in debt service
that could adversely affect our ability to pay dividends to our stockholders and
result in an increased risk of default on our obligations. We are also subject
to other risks normally associated with debt financing. We expect to use
indebtedness and leveraging to finance development and acquisition.
WE NEED SUBSTANTIAL ADDITIONAL CAPITAL. Our future capital requirements will
depend upon many factors, including our ability to obtain new customers and to
execute our business plan. Capital will be necessary to fund our activities.
There can be no assurance that sufficient financing will be available to us on a
timely basis, or on acceptable terms. If we do not have adequate funds, we may
be required to delay, scale back or eliminate our efforts to expand our
activities. Accordingly, our business, financial condition and results of
operations could be materially and adversely affected. If additional funds are
raised by issuing equity or convertible debt securities, options or warrants,
the ownership interest of our existing stockholders would be diluted.
DEPENDENCE ON KEY PERSONNEL. Our future success will depend in part on the
service of our key personnel and, additionally, our ability to identify, hire
and retain additional qualified personnel. There is significant competition for
qualified personnel in our areas of activity, and there can be no assurance that
we will be able to continue to attract and retain such personnel necessary for
the development of our business. Because of the significant competition, there
can be no assurance that we will be successful in adding personnel as needed to
satisfy our staffing requirements. Failure to attract and retain qualified
personnel could have a material adverse effect on us.
WE ARE DEPENDENT ON THE EFFORTS AND ABILITIES OF OUR SENIOR MANAGEMENT. The loss
of various members of that management could have a material adverse effect on
our business and prospects. Our Board of Directors believes that all
commercially reasonable efforts have been made to minimize the risks attendant
with the departure by qualified personnel from the Company. There is no
assurance, however, that upon the departure of qualified personnel from the
Company that replacement personnel will cause us to operate profitably. As
owners of significant portions of our issued and outstanding common stock,
management has every incentive to remain.
3
<PAGE>
RELIANCE ON MANAGEMENT. All decisions regarding management affairs will be made
exclusively by our officers and directors. The Purchasers of the shares may not
participate in our management and, therefore, are dependent upon the management
abilities of our officers and directors. The only assurance that our
shareholders have that officers and directors will not abuse their discretion in
making decisions with respect to our shares and other business decisions is the
fiduciary obligations and business integrity of the officers and directors.
Accordingly, no person should purchase shares unless that person is willing to
entrust all aspects of management to our officers and directors, or their
successors. Potential Purchasers of the shares must carefully evaluate the
personal experience and business performance of our officers and directors. Our
officers and directors may retain independent contractors to provide services to
us. Those contractors have no fiduciary duty to our shareholders and may not
perform as expected.
RECEIPT OF COMPENSATION REGARDLESS OF PROFITABILITY. Our officers, directors,
and employees are entitled to receive significant compensation, payments and
reimbursements regardless of whether we operate at a profit or a loss. Any
compensation received by officers, directors, and management personnel will be
determined from time to time by our Board of Directors. Officers, directors, and
management personnel will be reimbursed for any out-of-pocket expenses incurred
on our behalf.
LIMITATION ON LIABILITY OF OFFICERS AND DIRECTORS. Our Articles of Incorporation
include a provision eliminating or limiting the personal liability of our
officers and directors for damages for breach of fiduciary duty as a director or
officer. Accordingly, our officers and directors may have no liability to our
shareholders for any mistakes or errors of judgment or for any act of omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to our shareholders.
DISCLOSURE OF POSITION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES
ACT OF 1933 LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
INFLUENCE OF THE INTERNET ON MARKETING. The Internet has changed marketing
patterns in a wide variety of industries. The significant amount of personal
computer usage has resulted in entirely new methods of marketing and sales of
products and services. We may establish home pages on the Internet for its
products and services. We may be able to keep pace with the rate of change in
its markets brought about the Internet and may invest in Internet-based projects
which future changes may render obsolete.
COMPLIANCE WITH GOVERNMENT REGULATIONS. We are subject to various forms of
government regulations, including safety laws and regulations. Any future
violation of, and the cost of compliance with, these laws and regulations could
have a material adverse effect on our business, financial condition and results
of operations.
4
<PAGE>
Although we believe we are in material compliance with all applicable laws,
rules, regulations, and policies, there can be no assurance that our business,
financial condition and results of operations will not be materially adversely
affected by current or future laws, rules, regulations, and policies or by
liability arising out of any of our past or future conduct.
MARKET ACCEPTANCE AND DEPENDENCE ON PRINCIPAL PRODUCTS AND SERVICES. Our
strategy for growth is substantially dependent upon our ability to market and
distribute products and services successfully. There can be no assurance that
our products and services will achieve significant market acceptance, and that
acceptance, if achieved, will be sustained for any significant period of that
product life cycles will be sufficient (or substitute products and services
developed) to permit us to recover associated costs. Failure of our products and
services to achieve or sustain market acceptance could have a material adverse
effect on our business, financial conditions, and results of operations.
RISK OF PRODUCT RECALL, PRODUCT RETURNS. Product recalls may be issued at our
discretion or government agencies having regulatory authority for product sales
and may occur due to disputed labeling claims, manufacturing issues, quality
defects or other reasons. No assurance can be given that product recalls will
not occur in the future. Any product recall could materially adversely affect
our business, financial condition or results of operations. There can be no
assurance that future recalls or returns would not have a material adverse
effect upon our business, financial condition and results of operations.
FAILURE TO MANAGE GROWTH. We expect to experience significant growth and expect
such growth to continue for the foreseeable future. Our growth may result in
significant pressure on our management, financial, operating and technical
resources. Failure to manage this growth effectively could have a material
adverse effect on our financial condition or results of operations.
LOSS ON DISSOLUTION OF THE COMPANY. In the event of our dissolution, the
proceeds realized form the liquidation of our assets, if any will be distributed
to our shareholders only after satisfaction of claims of our creditors. The
ability of a Purchaser of shares to recover all or any portion of his or her
purchase price for the shares in that event will depend on the amount of funds
realized and the claims to be satisfied therefrom.
OUR ABILITY TO IMPLEMENT OUR BUSINESS STRATEGIES. Implementation of our business
strategies will depend in large part on our ability to (i) establish a
significant customer base and maintain favorable relationships with those
customers; (ii) effectively introduce acceptable products and services to our
customers; (iii) obtain adequate financing on favorable terms to fund our
business strategies; (iv) maintain appropriate procedures, policies, and
systems; (v) hire, train, and retain skilled employees; and (vi) continue to
operate with increasing competition. Our inability to obtain or maintain any or
all these factors could impair our ability to implement our business strategies
successfully, which could have a material adverse effect on our results of
operations and financial condition.
5
<PAGE>
LIQUIDITY. The prices of our common stock is not quoted at present on the Over
The Counter Bulletin Board, an electronic quotation service maintained by the
National Quotation Bureau for the National Association of Securities Dealers,
Inc. for securities not traded on a national, regional or other securities
exchange although we hope to be an OTC Bulletin Board company soon. The OTC
Bulletin Board does not provide the level of liquidity provided by securities
exchanges and the public market may not develop for our shares. Purchasers of
the shares will have no right to present the shares to us for repurchase.
Purchasers of shares who wish to terminate their investment in the shares must
rely solely upon their ability to sell or otherwise transfer their shares,
subject to applicable securities laws. Consequently, the purchase of shares
should be considered only a long-term investment. Moreover, we may require
additional cash to implement our business strategies, including cash for (i)
payment of increased operating expenses and (ii) further implementation of those
business strategies. No assurance can be given, however, that we will have
access to the capital markets in the future, or that financing will be available
on acceptable terms to satisfy our cash requirements to implement our business
strategies. Our inability to access the capital markets or obtain acceptable
financing could have material adverse effects on our results of operations and
finance.
UNCERTAINTY OF FUTURE RESULTS, FLUCTUATIONS IN OPERATING RESULTS. Our results of
operations may vary from period to period due to a variety of factors, including
the introduction of new products and services by us or our competitors, cost
increase form third-party providers, supply interruptions, the availability and
cost of equipment, the mix of our products and services sold, changes in
marketing and sales expenditures, market acceptance of our products and
services, competitive pricing pressures, and general economic and industry
conditions that effect customer demand.
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING. To achieve and
maintain competitiveness of our products and services, we may require
substantial funds. Our forecast of the period of time through which our
financial resources will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties, and actual
results could vary as a result of a number of factors, including those described
in these Risk Factors and elsewhere in this Prospectus.
We anticipate that we will require additional cash to develop, promote, produce
and distribute our various products and services. Such additional cash may be
received from public or private financing transactions, as well as borrowing and
other resources. To the extent that additional cash is received by the sale of
equity or equity-related securities, the issuance of such securities could
result in dilution to our stockholders. There can be no assurance that
additional funding will be available on favorable terms, if at all. If adequate
cash is not available, we will be required to curtail operations significantly
or to obtain cash by entering into arrangements with collaborative partners or
other persons that may require us to relinquish rights to certain of its
products and services that we would not otherwise relinquish.
6
<PAGE>
GREATER COSTS THAN ANTICIPATED. We have used reasonable efforts to assess and
predict costs and expenses related to our operations. However, there can be no
assurance that implementing our business plan may require more employees,
capital equipment, supplies or other expenditure items than we have predicted.
Similarly, the cost of compensating additional management, employees and
consultants or other operating costs may be more than our estimates, which could
result in sustained losses.
COMPETITION. Competition in the communications industry is intense. Many of our
competitors have substantially more experience, financial and technical
resources and production, marketing and development capabilities than we do.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS. Our research, development,
manufacturing and production processes may involve the controlled use of
hazardous materials. We may be subject to various laws and regulations governing
the use, manufacture, storage, handling, and disposal of such materials and
certain waste products and services. Although we believe that our safety
procedures for handling and disposing of such materials comply with the
standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from hazardous materials cannot be completely
eliminated. In the event of such an accident, we could be held liable for any
damages that result and any such liability could exceed our financial resources.
In addition, there can be no assurance that in the future we will not be
required to incur significant costs to comply with environmental laws and
regulations relating to hazardous materials nor that our operations, business or
assets will not be materially or adversely affected by current or future
environmental laws or regulations.
PENNY STOCK REGULATIONS. The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in "penny stocks". Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in penny stock
not otherwise exempt from those rules, deliver a standardized risk disclosure
document prepared by the SEC, which specifies information about penny stocks and
the nature and significance of risks of the penny stock market. The
broker-dealer also must provide the customer with bid and other quotations for
the penny stock, the compensation of the broker-dealer and its salesperson on
the transaction, and monthly account statements specifying the market value of
each penny stock held in the customer" account. In addition, the penny stock
rules require that, prior to a transaction in a penny stock not otherwise exempt
from those rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the Purchaser and receive the
Purchaser's written agreement to that transaction. These disclosure requirements
may have the effect of reducing the trading activity in the secondary market for
an equity security (capital stock) that becomes subject to the penny stock
rules. Our common stock is subject to the penny stock rules, and Purchasers of
shares may determine that it is quite difficult to sell their shares.
7
<PAGE>
SECURITIES MARKET FACTORS. There is currently a limited public market for our
common stock. Should there develop a significant market for our common stock,
the market price for our common stock may be significantly affected by such
factors as our financial results and introduction of new products and services
and technologies. Additionally, in recent years, the stock market has
experienced significant price and volume volatility, and market prices for many
companies, particularly small and emerging growth companies, have experienced
significant price fluctuations not necessarily related to the operating
performance of such companies. In the event a market for our common stock
develops, the market price for our common stock may be affected by general stock
market volatility.
NO FORESEEABLE DIVIDENDS. We do not anticipate paying dividends on our common
stock in the foreseeable future; but, rather, we plan to retain earnings, if
any, for the operation and expansion of business.
NO ASSURANCES OF REVENUE OR OPERATING PROFITS. There can be no assurance that we
will be able to develop consistent revenue sources or that our operations will
become profitable.
UNINSURED LOSS; ACTS OF GOD. We may, but are not required to, obtain
comprehensive liability and other business insurance of the types customarily
maintained by similar businesses. However, there are certain types of
extraordinary occurrences which may be either uninsurable or not economically
insurable. For example, in the event of a major earthquake, our
telecommunications and computer systems could be rendered inoperable for
protracted periods of time, which would adversely affect our financial
condition. In the event of a major civil disturbance, our operations could be
adversely affected. Should such an uninsured loss occur, we could lose
significant revenues and financial opportunities in amounts which would not be
partially or fully compensated by insurance proceeds.
WE DO NOT HAVE ENVIRONMENTAL LIABILITY INSURANCE. We do not have environmental
liability insurance now, and we may not be able to obtain such insurance at a
reasonable cost. If we decide to become insured for environmental liability, we
will probably carry the minimum insurance required by regulatory permits. In
addition, the extent of insurance coverage under certain forms of policies has
been the subject in recent years of litigation in which insurance companies
have, in some cases, successfully taken the position that certain risks are not
covered by such policies. If we incur liability for environmental damages while
we are uninsured, it could have a material adverse effect on the Company and its
financial condition.
SOME OF OUR OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST. Several of our
directors are independently employed and, by engaging in other business
activities, have conflicts of interest in allocating their time and resources.
For a more detailed account of those existing and potential conflicts of
interest, see the information contained under the heading "Certain Relationships
and Related Transactions" in this Prospectus.
8
<PAGE>
Item 4. Use of Proceeds.
Following the sale of the 2,000,000 Shares Offered by the Company there will be
a gross proceeds of $100,000 (less certain expenses of this offering). These
proceeds will be used to provide start-up and working capital for the Company.
The following table sets forth the use of proceeds from this offering (based on
the minimum and maximum offering amounts):
Minimum Offering Maximum Offering
------------------ -----------------------
Use of Proceeds Amount Percent Amount Percent
--------------- ------ ------- ------ -------
Transfer Agent Fee $500 10% $500 0.5%
Printing Costs $500 10% $500 0.5%
Legal Fees $3,000 60% $3,000 3%
Accounting Fees $1,000 20% $1,000 1%
Sales Commissions 0 0% 0 0%
Working Capital 0 0% $95,000 95%
------ ------ -------- ----
Total $5,000 100% $100,000 100%
Management anticipates expending these funds for the purposes indicated above.
To the extent that expenditures are less than projected, the resulting balances
will be retained and used for general working capital purposes or allocated
according to the discretion of the Board of Directors. Conversely, to the extent
that such expenditures require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other sources, including,
but not limited to, general working capital and/or external financing. The net
proceeds of this offering that are not expended immediately may be deposited in
interest or non-interest bearing accounts, or invested in government
obligations, certificates of deposit, commercial paper, money market mutual
funds, or similar investments.
Item 5. Determination of Offering Price.
The offering price is not based upon the Company's net worth, total asset value,
or any other objective measure of value based upon accounting measurements. The
offering price is determined by the Board of Directors of the Company and was
determined arbitrarily based upon the amount of funds needed by the Company to
start-up the business, and the number of shares that the initial shareholders
were willing to allow to be sold.
9
<PAGE>
Item 6. Dilution.
"Net tangible book value" is the amount that results from subtracting
the total liabilities and intangible assets of an entity from its total assets.
"Dilution" is the difference between the public offering price of a security and
its net tangible book value per Share immediately after the Offering, giving
effect to the receipt of net proceeds in the Offering. As of December 30, 1999,
the net tangible book value of the Company was $0.0 or $0.0 per Share. Giving
effect to the sale by the Company of all offered Shares at the public offering
price; the pro forma net tangible book value of the Company would be $100,000 or
$0.025 per Share, which would represent an immediate increase of $0.025 in net
tangible book value per Share and $0.025 per Share dilution per share to new
investors. Dilution of the book value of the Shares may result from future share
offerings by the Company.
The following table illustrates the pro forma per Share dilution:
Assuming
Maximum
Shares Sold
-----------
Offering Price (1) $0.05
Net tangible book value per 0
share before Offering (2)
Increase Attributable to $100,000
purchase of stock by new
investors (3)
Net tangible book value per $0.025
Share after offering (4)
Dilution to new investors (5) $0.025
Percent Dilution to new 50.00%
investors (6,7)
(1) Offering price before deduction of offering expenses, calculated on a
"Common Share Equivalent" basis.
(2) The net tangible book value per share before the offering $0.0 is
determined by dividing the number of Shares outstanding prior to this
offering into the net tangible book value of the Company.
(3) The net tangible book value after the offering is determined by adding the
net tangible book value before the offering to the estimated proceeds to
the Corporation from the current offering (assuming all the Shares are
subscribed), and dividing by the number of common shares outstanding.
10
<PAGE>
(4) The net tangible book value per share after the offering, $0.025, is
determined by dividing the number of Shares that will be outstanding,
assuming sale of all the Shares offered, after the offering into the net
tangible book value after the offering as determined in note 3 above.
(5) The Increase Attributable to purchase of stock by new investors is derived
by taking the net tangible book value per share after the offering $0.025
and subtracting from it the net tangible book value per share before the
offering $0.0 for an increase of $0.025.
(6) The dilution to new investors is determined by subtracting the net tangible
book value per share after the offering $0.025 from the offering price of
the Shares in this offering $0.05, giving a dilution value of $0.025.
(7) The Percent Dilution to new investors is determined by dividing the
Dilution to new investors $0.025 by the offering price per Share $0.05
giving a dilution to new investors of 50.00%.
Item 7. Selling Security Holders
Not Applicabl
Item 8. Plan of Distribution.
The Company will sell a maximum of 2,000,000 Shares of its common stock, par
value $.001 per Share to the public on a "best efforts" basis. The minimum
purchase required of an investor is $100.00. There can be no assurance that any
of these Shares will be sold. The gross proceeds to the Company will be $100,000
if all the Shares offered are sold. No commissions or other fees will be paid,
directly or indirectly, by the Company, or any of its principals, to any person
or firm in connection with solicitation of sales of the shares other than the
10% commission to be paid to the Broker/Dealer; certain costs are to be paid in
connection with the offering (see "Use of Proceeds"). The public offering price
of the Shares will be modified, from time to time, by amendment to this
Prospectus, in accordance with changes in the market price of the Company's
common stock. These securities are offered by the Company subject to prior sale
and to approval of certain legal matters by counsel.
Opportunity to Make Inquiries.
-----------------------------
The Company will make available to each Offeree, prior to any sale of the
Shares; the opportunity to ask questions and receive answers from the Company
concerning any aspect of the investment and to obtain any additional information
contained in this Memorandum, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense.
11
<PAGE>
Execution of Documents.
----------------------
Each person desiring to subscribe to the Shares must complete, execute,
acknowledge, and deliver to the Company a Subscription Agreement, which will
contain, among other provisions, representations as to the investor's
qualifications to purchase the common stock and his ability to evaluate and bear
the risk of an investment in the Company. By executing the subscription
agreement, the subscriber is agreeing that if the Company accepts the
Subscription Agreement, such a subscriber will be, a shareholder in the Company
and will be otherwise bound by the articles of incorporation and the bylaws of
the Company in the form attached to this Prospectus. Promptly upon receipt of
subscription documents by the Company, it will make a determination as to
whether a prospective investor will be accepted as a shareholder in the Company.
The Company may reject a subscriber's Subscription Agreement for any reason.
Subscriptions will be rejected for failure to conform to the requirements of
this Prospectus (such as failure to follow the proper subscription procedure),
insufficient documentation, over subscription to the Company, or such other
reasons other as the Company determines to be in the best interest of the
Company. If a subscription is rejected, in whole or in part, the subscription
funds, or portion thereof, will be promptly returned to the prospective investor
without interest by depositing a check (payable to said investor) in the amount
of said funds in the United States mail, certified returned-receipt requested.
Subscriptions may not be revoked, canceled, or terminated by the subscriber,
except as provided herein.
Item 9. Legal Proceedings.
The Company is not a party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
The names, ages, and respective positions of the directors, officers, and
significant employees of the Company are set forth below. All these persons have
held their positions since inception. There are no other persons who can be
classified as a promoter or controlling person of the Company.
KERWIN BURNS, Age 31, Chief Executive Officer, President and Director of
the Company since inception.
KENDALL BURNS, Age 25, Corporate Secretary, Treasurer, and Director of the
Company since its inception.
All directors hold office until the next annual stockholders' meeting or until
their respective successors are elected or until their earlier death,
resignation or removal. Officers are appointed by, and serve at the discretion
of, our Board of Directors.
12
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Prospectus, the
outstanding Shares of common stock of the Company owned of record or
beneficially by each person who owned of record, or was known by the Company to
own beneficially, more than 5% of the Company's Common Stock, and the name and
share holdings of each officer and director and all officers and directors as a
group.
Title of Name of Amount and Nature Percent of
Class Beneficial Owner of Beneficial Owner Class
(1) (2)
------- ---------------- ------------------- ----------
Common Kerwin Burns 1,000,000 50%
Stock
Common Kendall Burns 1,000,000 50%
Stock
Compliance with Beneficial Ownership Reporting Rules.
---------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who beneficially own more than 10%
of a registered class of our common stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission.
Such reporting persons are required to furnish us with copies of all such
reports that they file.
Based solely upon our review of copies of such reports furnished to the Company
during the year ended December 31, 1999 and thereafter, or any written
representations received by the Company from reporting persons that no other
reports were required, we believe that, during the last fiscal year, all Section
16(a) filing requirements applicable to the Company's reporting persons were
complied with.
Item 12. Description of Securities.
General Description.
-------------------
The securities being offered are shares of common stock. The Articles of
Incorporation authorize the issuance of 50,000,000 shares of common stock, with
a par value of $0.001. The holders of the Shares: (a) have equal ratable rights
to dividends from funds legally available therefore, when, as, and if declared
by the Board of Directors of the Company; (b) are entitled to share ratably in
all of the assets of the Company available for distribution upon winding up of
13
<PAGE>
the affairs of the Company; (c) do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund applicable
thereto; and (d) are entitled to one non-cumulative vote per share on all
matters on which shareholders may vote at all meetings of shareholders. These
securities do not have any of the following rights: (a) cumulative or special
voting rights; (b) preemptive rights to purchase in new issues of Shares; (c)
preference as to dividends or interest; (d) preference upon liquidation; or (e)
any other special rights or preferences. In addition, the Shares are not
convertible into any other security. There are no restrictions on dividends
under any loan other financing arrangements or otherwise. See a copy of the
Articles of Incorporation, and amendments thereto, and Bylaws of the Company,
attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Form SB-2. As of
the date of this Form SB-2, the Company has 2,000,000 Shares of common stock
outstanding.
Non-Cumulative Voting.
---------------------
The holders of Shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining
Shares will not be able to elect any of the Company's directors.
Dividends.
---------
The Company does not currently intend to pay cash dividends. The Company's
proposed dividend policy is to make distributions of its revenues to its
stockholders when the Company's Board of Directors deems such distributions
appropriate. Because the Company does not intend to make cash distributions,
potential shareholders would need to sell their shares to realize a return on
their investment. There can be no assurances of the projected values of the
shares, or can there be any guarantees of the success of the Company
A distribution of revenues will be made only when, in the judgment of the
Company's Board of Directors, it is in the best interest of the Company's
stockholders to do so. The Board of Directors will review, among other things,
the investment quality and marketability of the securities considered for
distribution; the impact of a distribution of the investor's securities on its
customers, joint venture associates, management contracts, other investors,
financial institutions, and the company's internal management, plus the tax
consequences and the market effects of an initial or broader distribution of
such securities.
14
<PAGE>
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
---------------------------------------------------------------
Upon the completion of this Offering, the Company's authorized but unissued
capital stock will consist of 46,000,000 shares (assuming the entire offering is
sold) of common stock. One effect of the existence of authorized but unissued
capital stock may be to enable the Board of Directors to render more difficult
or to discourage an attempt to obtain control of the Company by means of a
merger, tender offer, proxy contest, or otherwise, and thereby to protect the
continuity of the Company's management. If, in the due exercise of its fiduciary
obligations, for example, the Board of Directors were to determine that a
takeover proposal was not in the Company's best interests, such shares could be
issued by the Board of Directors without stockholder approval in one or more
private placements or other transactions that might prevent, or render more
difficult or costly, completion of the takeover transaction by diluting the
voting or other rights of the proposed acquirer or insurgent stockholder or
stockholder group, by creating a substantial voting block in institutional or
other hands that might undertake to support the position of the incumbent Board
of Directors, by effecting an acquisition that might complicate or preclude the
takeover, or otherwise.
Transfer Agent.
---------------
The Company intends to engage the services of American Securities Transfer &
Trust to act as transfer agent and registrar.
Item 13. Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228509(b) of Regulation S-B, was hired on a contingent basis,
or will receive a direct or indirect interest in the Company, or was a promoter,
underwriter, voting trustee, director, officer, or employee of the Company, at
any time prior to the filing of this Registration Statement.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Violations.
No director of the Company will have personal liability to the Company or any of
its stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or, which involve intentional
misconduct or a knowing violation of law, (iii) under applicable Sections of the
Nevada Revised Statutes, (iv) the payment of dividends in violation of Section
78.300 of the Nevada Revised Statutes or, (v) for any transaction from which the
director derived an improper personal benefit.
15
<PAGE>
The By-laws provide for indemnification of the directors, officers, and
employees of the Company in most cases for any liability suffered by them or
arising out of their activities as directors, officers, and employees of the
Company if they were not engaged in willful misfeasance or malfeasance in the
performance of his or her duties; provided that in the event of a settlement the
indemnification will apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of the Corporation.
The Bylaws, therefore, limit the liability of directors to the maximum extent
permitted by Nevada law. The officers and directors of the Company are
accountable to the Company as fiduciaries, which mean they are required to
exercise good faith and fairness in all dealings affecting the Company. In the
event that a shareholder believes the officers and/or directors have violated
their fiduciary duties to the Company, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the shareholder's rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management. Shareholders, who have suffered
losses in connection with the purchase or sale of their interest in the Company
in connection with such sale or purchase, including the misapplication by any
such officer or director of the proceeds from the sale of these securities, may
be able to recover such losses from the Company.
The registrant undertakes the following: Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, is unenforceable.
Item 15. Organization within Last Five Years.
The Company was incorporated in the State of Nevada on October 20, 1999.
Item 16. Description of Business.
The Company was originally formed as Major League Communications Corporation
under the laws of Nevada on October 20, 1999, for the purpose of engaging in any
business. Deregulation of telephone services has created tremendous shifts in
what was once viewed as a mature industry. Internationally, sixty nations have
signed the World Trade Organization agreement that starts the process for
deregulation and allows for competition. The formerly dominant, often
monopolistic, phone company within these sixty countries is threatened by
competition. In the United States and abroad resellers have emerged to capture
market share for international long distance voice and data services. Further as
long distance rates decline due to deregulation and competition, usage of long
distance services is rising. Overall, long distance revenues are growing at
double-digit annual rates.
16
<PAGE>
AN INDUSTRY IN TRANSITION
The telephone industry is being dramatically restructured as a result of
massive changes, occurring simultaneously, on three different fronts; (1)
technological change, (2) domestic deregulation and (3) international
deregulation. These are discussed below.
Impact of Technology
The telephone industry is being affected by sweeping changes in
technology. Fiber-optic cables are replacing copper wire, and can carry,
significantly, more traffic than the old style copper cable.
Compression of voice communications into electronic signals allows a
fiber to carry hundreds of communications down a single strand, in place of the
old style of 1:1 wire transmission. As more sophisticated electronics, and
higher compression rates become available, the capacity of old trunk lines is
multiplied many fold.
Domestic Market
Prior to 1984 individual companies who held a monopoly within a defined
area generally, operated phone service. Revenues from calls between areas
controlled by separate monopolists were divided according to traffic schedules
that did little to reduce rates or pass along to consumers, efficiencies that
may occur due to technological changes.
There are presently over 1,000 resellers of phone services operating in
the United States. Many of these companies are grossing significant revenues in
the millions of dollars annually. These firms are often very price sensitive,
and brand allegiances mean less to these resellers than to consumers in general.
Resellers typically do business with other resellers possessing
switching capabilities, who combine the volume of a number of smaller resellers
in order to build volume and obtain lower rates. These entities serve as a type
of broker, between the firms controlling consumer volume, and firms having
direct access to foreign long distance services. These "brokers" have become a
major force in the new telephone industry, and are a major development in our
business strategy.
Foreign Markets
Foreign markets are, likewise, in the process of deregulation of the
telephone business. As new carriers emerge in these markets, carriers of long
distance traffic from other markets are no longer forced to accept the revenue
sharing agreements that would have been offered in the past, when each country
or region had only one carrier. These new carriers are eager to provide
termination services as a means of increasing their revenues, with no marketing
expense or additional capital outlay.
Those firms who are able to assemble significant volumes or traffic to
foreign markets can negotiate favorable terms with these foreign firms.
17
<PAGE>
Private Lines
A private line, as the term is used in this document, means (1) cable or
satellite access to a particular long distance market, and (2) a termination
agreement with a local carrier within that market. The termination agreement
allows an international telecommunications company to use that carrier's local
access system to deliver long distance traffic.
A company with private line agreements performs a valuable service by
linking willing foreign phone companies with several thousand reselling firms
eager to compete.
BUSINESS and MARKETING STRATEGY
The Company intends to develop a significant enterprise that can
stand-alone as an operating and profitable organization, or as an attractive
acquisition target for larger firms. Our business and marketing strategy
involves the following principles:
Identification of and development of essential relationships with the
secondary international telecommunication carrier companies ("Secondary
Carriers"). These firms offer the facilities of telephone switching, compression
and fiber optic highways to terminate long distance traffic in targeted
countries. The Company intends to enter into reselling agreements with these
various international carriers. After establishing reselling agreements, the
Company intends to sell minutes to customers via pre-paid calling cards. The
Company's objective is to target specific ethnic groups with marketing
strategies as outlined within this document. Identification of and development
of essential relationships in select international markets that offer the
opportunity of substantial volume of long distance, at attractive profit
margins. These international countries represent emerging markets ideal for the
Company to negotiate agreements for private lines and termination rights.
Ultimately, the Company intends to acquire its own facilities of telephone
switching equipment and fiber optic highways to countries where we terminate
long distance traffic.
Application of Business and Marketing Strategies
Item 1. Meeting Secondary Carriers - Secondary carriers can be marketed
at telecommunication Industry trade shows and at telecommunication conferences.
These firms are willing to contract with resellers able to purchase minutes at
the secondary carriers wholesale rate
Item 2. Pre-paid calling card sales - The Company intends to distribute
pre-paid calling cards via the following marketing channels:
Print - Advertise in target market publications and periodicals.
Radio and TV - Advertise to target markets via cable television
commercials, and am radio broadcasts.
18
<PAGE>
Retail Outlets - Establish point-of-purchase displays at retail
outlets frequented by members of our target market.
Internet - Create web site and hyperlinks with websites, which reach
our target markets.
Sales agents - Out source to minute brokers with current customers
within our target market.
Item 3. Emerging Market Carriers - The Company intends to seek long-term
contractual relationships with carriers that enable our Company to terminate
long distance traffic within its borders. Foreign telecommunication carriers can
be marketed at international telecommunication trade shows and conferences.
Foreign telecommunication carriers can also be marketed at some regional
telecommunication trade shows in the United States.
Item 4. Company Purchase of Facilities - Once the Company establishes
its own specific telecommunications routes and customer base, the Company will
seek additional financing to lease or purchase it s own telephone switches and
fiber optic highways between the United States and the countries with which it
terminates long distance voice and data traffic.
Initial Target Markets
The Company has identified target markets in which it is believed the
Company will execute termination agreements for telecommunications. These target
markets are separated in groups primarily determined by their native languages.
For example, should the Company execute termination agreements with Korea Telcom
(the first tier carrier in Korea), the Company would focus its market strategy,
including print and media campaigns, as well as point-of-purchase campaigns on
residents in the United States who speak Korean. The concept holds true for
Spanish speaking residents in the United States, in addition to other languages
as well.
Use of Sales Representatives
The Company intends to seek to sell the capacity of phone minutes via
the use of sales representatives. Management believes that contracting with
sales agents in the telecommunications industry, even though we will share
revenue with the sales agents, is worth the effort given that sales agents are
able to sell minutes of voice and data long distance more effectively than
current management. Engaging the proper sales agent will enable the Company to
operate at full capacity of minute's sales and efficiency.
19
<PAGE>
GROWTH PLANS
As the Company develops customers, it can contract to lease greater
amounts of bandwidth (i.e. long distance minutes), lease primary space on the
backbone of a preexisting fiber optic highway, or lease time on a satellite
delivery network. While growth requires additional capital for greater purchase
of bulk capacity and equipment, the risk can be mitigated to the extent
additional bandwidth is pre-sold to our customer base. The Company intends to
fund as much expansion as much as possible with retained earnings, however,
additional financing may be required to fully exploit opportunities within the
international long distance market place.
The Offering.
Shares of the Company will be offered at $0.05 per Share. See "Plan of
Distribution." The minimum purchase required of an investor is $100.00. If all
the Shares are sold, the net proceeds to the Company will be $100,000, less
certain costs associated with the offering. See "Use of Proceeds." The net
proceeds will be used as working capital for the Company.
Item 17. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
This Prospectus specifies forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from these
forward-looking statements. "Forward looking statements" can be identified by
the use of forward-looking terminology such as "believes", "could", "possibly",
"anticipates", "estimates", "projects", "expects", "may", "will", or "should".
Such statements are subject to certain risks, uncertainties and assumptions. No
assurances can be given that the future results anticipated by forward looking
statements will be achieved. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Prospectus.
The following discussion regarding our financial statements should be read in
conjunction with the financial statements and notes thereto.
RESULTS OF OPERATIONS
-----------------------
In September, 1999 management recognized opportunities in the resale of
telecommunication products that present entry strategies for early stage
development companies. The business model enables the registrant to pre-sell
long distance products and manage growth with limited capital resources.
Management believes that independently owned retail merchants will purchase the
registrant's pre-paid international long distance telephone cards. The
registrant further intends to assist its customers with the placement and
fulfillment of point-of-purchase product displays.
In October 1999 management incorporated the registrant in the State of Nevada,
invested $5,000 and retained legal and accounting professionals in connection
with the preparation of a registration statement to be filed with the United
States Securities and Exchange Commission ("SEC"). Management believes that
reporting the activities of the registrant to the SEC of quarterly, annual and
other material events of the registrant elicits credibility in the market place
and credibility amongst the registrant's shareholders.
20
<PAGE>
For the period ending May 31, 2000 the financial statements reveal a net loss of
$4,799 that reflects professional fees incurred in connection with the filing of
the registration statement. The registrant has no previous years of operations
for which to compare financial results. Other than the preparation of the
registration statement, the registrant has engaged in no material operations to
date.
In June 2000 management identified several wholesale carriers that offer
international long distance products to reselling telecommunication service
providers at a discount to current retail rates. One such wholesale
telecommunications carrier, Clear Point Communications, Inc., located in
Orlando, Florida, offers pre-paid telephone cards targeting various cultural and
ethnic groups with long distance service to Mexico, South America and Asia.
Management intends to joint venture with Clear Point Communications, Inc., or
such other provider of similar international long distance products, as a means
for the registrant to execute their entry strategy. Management anticipates
executing joint venture contracts with wholesale telecommunication carriers
offering discounted rates on international long distance minutes. Wholesale
minute rates are expected to yield up to a thirty three percent (33.0%) gross
margin to the registrant.
Management intends to execute revenue sharing agreements with various
independently owned retail establishments. Management anticipates independently
owned retail merchants of all types, such as gasoline merchants, food marts,
strip mall retail tenants, and others, located in specific ethnic and cultural
concentrated areas will contract with the registrant to provide pre-paid
international long distance telecommunication products. Management will commence
the pursuit of joint venture and revenue sharing partnerships upon the
completion of the registrant's equity offering as registered with the SEC.
Management has the marketing, roll-out and growth strategy to utilize limited
funds efficaciously. Management has sources of income from other endeavors that
allows salaries to be deferred until such time as the registrant is cash flow
positive on revenues in excess of one million dollars ($1,000,000). During this
phase of growth, management will operate by performing both sales and
administrative tasks. Management will also seek to retain outside
telecommunication sales representatives and hire an internal sales force to be
paid on a commission only basis; and therefore, roll-out its sales and marketing
programs without incurring large expenses for salaries, employee benefits and
payroll taxes. It is estimated that the registrant will require a year of
operations to reach its target objective of one million dollars ($1,000,000) in
sales revenue. Until such time, however, management will utilize proceeds from
the equity offering to create and pay for collateral marketing brochures and
meet working capital needs of the registrant at the current monthly "burn rate"
of less than five thousand dollars ($5,000) per month. Management is confident
that they will penetrate target markets and reach sales objectives with limited
capital resources.
21
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
We currently have limited capital resources pending the completion of the
registration statement. Current assets have been allocated to pay professional
fees. Management anticipates that the effectiveness of the registration
statement will enable the registrant the opportunity to raise working capital to
launch start-up operations. The majority of our capital resources will be
allocated to general and administrative overhead, pre-paid card fulfillment and
marketing expenses. The business model does NOT require the registrant to
advance capital requirements for international long distance minute costs, the
international long distance minute costs are deferred until after the actual
sale of the pre-paid card; thus enabling the registrant to commence operations
with limited funds.
Item 18. Description of Property.
The Company has no property.
Item 19. Certain Relationships and Related Transactions.
There are no material relationships or related transactions between the
Company and its officers or directors.
Item 20. Market for Common Equity and Related Stockholder Matters.
The Shares have not previously been traded on any securities exchange. At
the present time, there are no assets available for the payment of dividends on
the Shares.
Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders.
Item 21. Executive Compensation.
(a) No officer or director of the Company is receiving any remuneration at
this time.
(b) There are no annuity, pension or retirement benefits proposed to be
paid to officers, directors, or employees of the corporation in the
event of retirement at normal retirement date pursuant to any
presently existing plan provided or contributed to by the corporation
or any of its subsidiaries.
(c) No remuneration is proposed to be in the future directly or indirectly
by the corporation to any officer or director under any plan, which
presently exists
22
<PAGE>
Item 22. Financial Statements.
The Financial Statements required by Item 310 of Regulation S-B begin on
page F-1 of this prospectus.
Item 23. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Since the inception of the Company on October 20, 1999, the principal
independent accountant for the Company has neither resigned (or declined to
stand for reelection) nor been dismissed. The independent accountant for the
Company is London and Company, Certified Public Accountants.
23
<PAGE>
FINANCIAL STATEMENTS
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
INDEX
Page
Independent Auditors' Report F-2
Balance Sheet - May 31, 2000 F-3
For the Period From October 20, 1999 (Inception) to
May 31, 2000:
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-8
F-1
<PAGE>
Independent Auditors' Report
To the Board of Directors
Major League Communications Corporation
Los Angeles, California
We have audited the accompanying balance sheet of Major League Communications
Corporation (a Nevada corporation in the development stage) as of May 31, 2000,
and the related statements of operations, changes in stockholders' equity, and
cash flows for the period from October 20, 1999 (inception), to May 31, 2000.
These 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 of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
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 Major League Communications
Corporation as of May 31, 2000, and the results of its operations and its cash
flows for the initial period then ended, in conformity with generally accepted
accounting principles.
LONDON & CO., LLP
August 2, 2000
F-2
<PAGE>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
MAY 31, 2000
Assets
Current Assets
Cash $ 4,289
-------
Total Assets $ 4,289
=======
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 4,088
-------
Total Liabilities 4,088
-------
Stockholders' Equity
Common Stock, $.001 Par Value, 50,000,000 Shares
Authorized, 2,000,000 Shares Issued and Outstanding 2,000
Paid in Capital 3,000
Retained Earnings (Deficit) (4,799)
-------
Total Stockholders' Equity 201
-------
Total Liabilities and Stockholders' Equity $ 4,289
=======
(See Accompanying Auditors' Report and Notes to Financial Statements)
F-3
<PAGE>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
FROM OCTOBER 20, 1999 (INCEPTION) TO MAY 31, 2000
Revenues $ 0
---------
Expenses 4,799
---------
Net Loss Before Income Taxes (4,799)
---------
Provisions for Income Taxes 0
---------
Net Loss $ (4,799)
-------- =========
Basic Earnings (Loss) Per Share $ 0.00
=========
(See Accompanying Auditors' Report and Notes to Financial Statements)
F-4
<PAGE>
<TABLE>
<CAPTION>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM OCTOBER 20, 1999 (INCEPTION) TO MAY 31, 2000
Common Stock
-------------------- Paid In Net
Shares Amount Capital Loss Total
--------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at Inception 0 $ 0 $ 0 $ 0 $ 0
Common Stock Issued 2,000,000 2,000 3,000 5,000
Net Loss From Inception
to May 31, 2000 0 0 0 (4,799) (4,799)
--------- ------- ------- -------- --------
Balance at May 31, 2000 2,000,000 $ 2,000 $ 3,000 $(4,799) $(4,799)
----------------------- ========= ======= ======= ======= =======
</TABLE>
(See Accompanying Auditors' Report and Notes to Financial Statements)
F-5
<PAGE>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FROM OCTOBER 20, 1999 (INCEPTION) TO MAY 31, 2000
Cash Flows from Operating Activities
Net Loss $ (4,799)
Increase (Decrease) In:
Accounts Payable 4,088
--------
Total Cash Used By Operating Activities (711)
--------
Cash Flows From Financing Activities
Common Stock Issuance 5,000
--------
Total Cash Flows Provided By Financing Activities 5,000
--------
Net Increase in Cash 4,289
Cash at Inception 0
--------
Cash at the End of the Period $ 4,289
========
(See Accompanying Auditors' Report and Notes to Financial Statements)
F-6
<PAGE>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
Note 1 - Summary of Significant Accounting Policies:
Organization
------------
Major League Communications Corporation (the Company) was incorporated in
the state of Nevada on October 20, 1999. The Company was formed to take
advantage of increasing opportunities in the long distance voice and data
services evolving from the global deregulation of the telecommunications
industry.
Statement of Cash Flows
-----------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. For the period
ended May 31, 2000 cash paid for interest and income taxes was $0.
Income Taxes
------------
The Company has adopted SFAS 109, Accounting for Income Taxes, to account
for deferred income taxes. Deferred taxes are computed based on the tax
liability or benefit in future years of the reversal of temporary
differences in the recognition of income or deduction of expenses between
financial and tax reporting purposes. As of May 31, 2000 no deferred tax has
been recognized.
Earnings (Loss) per share
-------------------------
Earnings (loss) per share are computed by dividing net loss by the number of
shares issued and outstanding which remained unchanged during the reporting
period.
F-7
<PAGE>
MAJOR LEAGUE COMMUNICATIONS CORPORATION
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
Note 2 - Income Taxes
The provision for income taxes is comprised of the following:
Current:
Federal $0
State 0
--
0
Deferred 0
--
Provision for Income Taxes $0
==
Note 3 - Common Stock Offering:
The Company is preparing a common stock offering to be submitted to
prospective investors. The share offering will range from a minimum of
100,000 shares to 2,000,000 shares at $.05 per share. Proceeds to the
Company will range from $5,000 to $100,000 before an 8% commission payment
and offering expenses. Ownership by the Company officers would fall from
100% to 50% if all 2,000,000 shares are sold. Net proceeds will be used for
start-up and operational purposes.
F-8
<PAGE>
PART II - Information Not Required in Prospectus.
Item 24. Indemnification of Officers and Directors.
Limitation on Liability of Officers and Directors of the Company. Section 145 of
the Nevada General Corporation Law specifies that the Certificate of
Incorporation of a Nevada corporation may include a provision eliminating or
limiting the personal liability of a director or officer to that corporation or
its stockholders for damages for breach of fiduciary duty as a director of
officer, but such a provision must not eliminate or limit the liability of a
director or officer for (a) acts or omissions which involve intentional
misconduct, fraud, or a knowing violation of law; or (b) unlawful distributions
to stockholders. Our Certificate of Incorporation includes a provision
eliminating or limiting the personal liability of our officers and directors to
the Company and our shareholders for damages for breach of fiduciary duty as a
director or officer. Moreover, Sections 6.1 through 6.6 of our By-laws provide
[material deleted] indemnity to a controlling person, director or officer which
affects such a person's liability while acting in a corporate capacity.
Accordingly, our officers and directors may have no liability to our
shareholders for any mistakes or errors of judgment or for any act or omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to our shareholders.
Item 25. Other Expenses of Issuance and Distribution.
We will pay all expenses in connection with the registration and sale of the
shares of our common stock specified in this Prospectus.
Item 26. Recent Sales of Unregistered Securities.
None
Item 27. Exhibits.
The Exhibits required by Item 601 of Regulation S-B, and an index thereto,
are attached.
II-1
<PAGE>
Item 28. Undertakings.
A. Insofar as indemnification for liabilities arising under the 1933 Act
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 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) To specify in the prospectus any facts or events arising
after the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of Regulation S-B) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii)To include any additional or changed material information
with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information
in the Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered with remain unsold at the
termination of the offering.
II-3
<PAGE>
Signatures
In accordance with the requirements of the 1933 Act, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 to be signed on our behalf by the
undersigned, in the City of Valencia, California, on September 7, 2000.
MAJOR LEAGUE COMMUNICATIONS CORPORATION
a Nevada corporation
/s/ Kerwin Burns
By: --------------------------------------
Kerwin Burns
Its: Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form SB-2 was signed by the following persons in the
capacities and on the dates stated.
By: /s/ Kevin Burns Chief Financial Officer September 7, 2000
---------------------
Kevin Burns
II-4
<PAGE>
EXHIBIT INDEX
MAJOR LEAGUE COMMUNICATIONS, INC.
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation
3.2 By-Laws
5 Opinion re: Legality
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (included in 5)
27 Financial Data Schedule
