U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
Of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
LEXCO
(Name of Small Business Issuer)
<TABLE>
<S> <C>
NEVADA 74-2973330
(State or Other Jurisdiction of I.R.S. Employer Identification Number
Incorporation or Organization)
</TABLE>
8210 Blue Gill Dr., Falcon, CO 80831
(Address of Principal Executive Offices including Zip Code)
(972) 293-2424 / (972) 293-1171
-------------
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act: Common Stock
$.001 Par Value
(Title of Class)
PART I
ITEM 1. BUSINESS.
Lexco Incorporated (the "Company") was incorporated on September 7, 2000
under the laws of the State of Nevada to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage since inception and has no
operations to date other than issuing shares to its original shareholder.
The Company will attempt to locate and negotiate with a business entity
for the combination of that target company with the Company. The combination
will normally take the form of a merger, stock-for-stock exchange or
stock-for-assets exchange. In most instances the target company will wish to
structure the business combination to be within the definition of a tax-free
reorganization under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended.
No assurances can be given that the Company will be successful in locating
or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic
private company to become a reporting ("public") company with a class of
registered securities.
ASPECTS OF A REPORTING COMPANY
There are certain perceived benefits to being a reporting company. These
are commonly thought to include the following:
* increased visibility in the financial community;
* provision of information required under Rule 144 for
trading of eligible securities;
* compliance with a requirement for admission to quotation
on the OTC Bulletin Board maintained by Nasdaq or on the
Nasdaq SmallCap Market;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising of capital;
* compensation of key employees through stock options for
which there may be a market valuation;
* enhanced corporate image.
There are also certain perceived disadvantages to being a reporting
company. These are commonly thought to include the following:
* requirement for audited financial statements;
* required publication of corporate information;
* required filings of periodic and episodic reports with
the Securities and Exchange Commission;
* increased rules and regulations governing management,
corporate activities and shareholder relations.
COMPARISON WITH INITIAL PUBLIC OFFERING
Certain private companies may find a business combination more attractive
than an initial public offering of their securities. Reasons for this may
include the following:
* inability to obtain underwriter; * possible larger costs, fees and
expenses; * possible delays in the public offering process; * greater
dilution of their outstanding securities.
Certain private companies may find a business combination less attractive
than an initial public offering of their securities. Reasons for this may
include the following:
* no investment capital raised through a business combination;
* no underwriter support of after-market trading.
POTENTIAL TARGET COMPANIES
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for which a primary purpose of becoming public
is the use of its securities for the acquisition of
assets or businesses;
* a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of
securities on terms acceptable to it;
* a company which wishes to become public with less
dilution of its common stock than would occur upon an
underwriting;
* a company which believes that it will be able to obtain
investment capital on more favorable terms after it has
become public;
* a foreign company which may wish an initial entry into
the United States securities market;
* a special situation company, such as a company seeking a
public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan;
* a company seeking one or more of the other perceived
benefits of becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target company of its
own management and board of directors.
No assurances can be given that the Company will be able to enter into a
business combination, as to the terms of a business combination, or as to the
nature of the target company.
The proposed business activities described herein classify the Company as
a "blank check" company. The Securities and Exchange Commission and certain
states have enacted statutes, rules and regulations limiting the sale of
securities of blank check companies. The Company will not issue or sell
additional shares or take any efforts to cause a market to develop in the
Company's securities until such time as the Company has successfully implemented
its business plan and it is no longer classified as a blank check company.
The two shareholders of the Company have executed and delivered agreements
affirming that they will not sell or otherwise transfer their shares except in
connection with or following a business combination.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934. The Company will continue to file all reports
required of it under the Exchange Act until a business combination has occurred.
A business combination will normally result in a change in control and
management of the Company. Since a benefit of a business combination with the
Company would normally be considered its status as a reporting company, it is
anticipated that the Company will continue to file reports under the Exchange
Act following a business combination. No assurance can be given that this will
occur or, if it does, for how long.
Zellma C. Murr is the sole officer and director of the Company and the
single shareholder of the Company. The Company has no employees nor are there
any other persons than Mrs. Murr who devote any of their time to its affairs.
Mrs. Murr will not begin any services on behalf of the Company until after the
effective date of the registration statement. All references herein to
management of the Company are to Mrs. Murr. The inability at any time of Mrs.
Murr to devote sufficient attention to the Company could have a material adverse
impact on its operations.
GLOSSARY
"Blank Check" Company As used herein, a "blank check" company is a development
stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies.
Business Combination Normally a merger, stock-for-stock exchange or
stock-for-assets exchange between a target company and the Registrant or
the shareholders of the Registrant.
The Company or The corporation whose common stock is the subject of this
Registration Statement. the Registrant
Exchange Act The Securities Exchange Act of 1934, as amended.
Securities Act The Securities Act of 1933, as amended.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
THE COMPANY HAS NO OPERATING HISTORY NOR REVENUE AND MINIMAL ASSETS AND
OPERATES AT A LOSS. The Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant assets or financial
resources. The Company has operated at a loss to date and will, in all
likelihood, continue to sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. See PART
F/S: "FINANCIAL STATEMENTS Mrs. Murr has agreed to pay all expenses incurred by
the Company until a business combination without repayment by the Company. Mrs.
Murr is the sole shareholder of the Company. There is no assurance that the
Company will ever be profitable.
COMPANY HAS ONLY ONE DIRECTOR AND ONE OFFICER. The Company's president, is
Zellma C. Murr who is a director and a 100% beneficial owner of it's common
stock. Because management consists of only one person, the Company does not
benefit from multiple judgments that a greater number of directors or officers
would provide and the Company will rely completely on the judgment of its sole
officer and director when selecting a target company. Mrs. Murr anticipates
devoting only a limited amount of time per month to the business of the Company
and does not anticipate commencing any services until after the effective date
of the registration statement. Mrs. Murr has not entered into a written
employment agreement with the Company and he is not expected to do so. The
Company has not obtained key man life insurance on Mrs. Murr. The loss of the
services of Mrs. Murr would adversely affect development of the Company's
business and its likelihood of continuing operations.
CONFLICTS OF INTEREST. Mrs. Murr, the Company's president, participates in
other business ventures which may compete directly with the Company. Additional
conflicts of interest and non-arms length transactions may also arise in the
future. The Company has adopted a policy that it will not enter into a business
combination with any entity in which any member of management serves as an
officer, director or partner, or in which such person or such person's
affiliates or associates hold any ownership interest. The terms of business
combination may include such terms as Mrs. Murr remaining a director or officer
of the Company. The terms of a business combination may provide for a payment by
cash or otherwise to Mrs. Murr., for the purchase or retirement of all or part
of its common stock of the Company by a target company or for services rendered
incident to or following a business combination. Mrs. Murr would directly
benefit from such employment or payment. Such benefits may influence Mrs. Murr's
choice of a target company. The Certificate of Incorporation of the Company
provides that the Company may indemnify officers and/or directors of the Company
for liabilities, which can include liabilities arising under the securities
laws. Therefore, assets of the Company could be used or attached to satisfy any
liabilities subject to such indemnification. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS--Conflicts of Interest."
THE PROPOSED OPERATIONS OF THE COMPANY ARE SPECULATIVE. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target company.
While business combinations with entities having established operating histories
are preferred, there can be no assurance that the Company will be successful in
locating candidates meeting such criteria. The decision to enter into a business
combination will likely be made without detailed feasibility studies,
independent analysis, market surveys or similar information which, if the
Company had more funds available to it, would be desirable. In the event the
Company completes a business combination the success of the Company's operations
will be dependent upon management of the target company and numerous other
factors beyond the Company's control. There is no assurance that the Company can
identify a target company and consummate a business combination.
PURCHASE OF PENNY STOCKS CAN BE RISKY. In the event that a public market
develops for the Company's securities following a business combination, such
securities may be classified as a penny stock depending upon their market price
and the manner in which they are traded. The Securities and Exchange Commission
has adopted Rule 15g-9 which establishes the definition of a "penny stock," for
purposes relevant to the Company, as any equity security that has a market price
of less than $5.00 per share or with an exercise price of less than $5.00 per
share whose securities are admitted to quotation but do not trade on the Nasdaq
SmallCap Market or on a national securities exchange. For any transaction
involving a penny stock, unless exempt, the rules require delivery by the broker
of a document to investors stating the risks of investment in penny stocks, the
possible lack of liquidity, commissions to be paid, current quotation and
investors' rights and remedies, a special suitability inquiry, regular reporting
to the investor and other requirements. Prices for penny stocks are often not
available and investors are often unable to sell such stock. Thus an investor
may lose his investment in a penny stock and consequently should be cautious of
any purchase of penny stocks.
THERE IS A SCARCITY OF AND COMPETITION FOR BUSINESS
OPPORTUNITIES AND COMBINATIONS. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with and
acquisitions of business entities. A large number of established and
well-financed entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be merger or acquisition target
candidates for the Company. Nearly all such entities have significantly greater
financial resources, technical expertise and managerial capabilities than the
Company and, consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete with numerous
other small public companies in seeking merger or acquisition candidates.
THERE IS NO AGREEMENT FOR A BUSINESS COMBINATION AND NO MINIMUM
REQUIREMENTS FOR BUSINESS COMBINATION. The Company has no current arrangement,
agreement or understanding with respect to engaging in a business combination
with a specific entity. There can be no assurance that the Company will be
successful in identifying and evaluating suitable business opportunities or in
concluding a business combination. No particular industry or specific business
within an industry has been selected for a target company. The Company has not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which it will require a target
company to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company may
enter into a business combination with a business entity having no significant
operating history, losses, limited or no potential for immediate earnings,
limited assets, negative net worth or other negative characteristics. There is
no assurance that the Company will be able to negotiate a business combination
on terms favorable to the Company.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Pursuant to the
requirements of Section 13 of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Company is required to provide certain information about significant
acquisitions including audited financial statements of the acquired company.
These audited financial statements must be furnished within 75 days following
the effective date of a business combination. Obtaining audited financial
statements are the economic responsibility of the target company. The additional
time and costs that may be incurred by some potential target companies to
prepare such financial statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. Notwithstanding a
target company's agreement to obtain audited financial statements within the
required time frame, such audited financials may not be available to the Company
at the time of effecting a business combination. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information that has not been verified by outside auditors in making its
decision to engage in a transaction with the business entity. This risk
increases the prospect that a business combination with such a business entity
might prove to be an unfavorable one for the Company.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has neither
conducted, nor have others made available to it, market research indicating that
demand exists for the transactions contemplated by the Company. Even in the
event demand exists for a transaction of the type contemplated by the Company,
there is no assurance the Company will be successful in completing any such
business combination.
REGULATION UNDER INVESTMENT COMPANY ACT. In the event the Company engages
in business combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to regulation
under the Investment Company Act of 1940. Passive investment interests, as used
in the Investment Company Act, essentially means investments held by entities
which do not provide management or consulting services or are not involved in
the business whose securities are held. In such event, the Company would be
required to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940. Any violation of
such Act could subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a target company obtaining a controlling interest in
the Company. As a condition of the business combination agreement, Mrs. Murr, a
100% beneficial owner of the Company, may agree to sell or transfer all or a
portion of its Company's common stock so to provide the target company with all
or majority control. The resulting change in control of the Company will likely
result in removal of the present officer and director of the Company and a
corresponding reduction in or elimination of his participation in the future
affairs of the Company.
POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS
COMBINATION. A business combination normally will involve the issuance of a
significant number of additional shares. Depending upon the value of the assets
acquired in such business combination, the per share value of the Company's
common stock may increase or decrease, perhaps significantly.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization or
that the parties will obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
ITEM 2. PLAN OF OPERATION
SEARCH FOR TARGET COMPANY
Zellma Murr, will supervise the search for target companies as potential
candidates for a business combination. Zellma Murr will continue the search
until such time as the Company has effected a business combination. Mrs. Murr
will also be paying all expenses of the Company without repayment until such
time as a business combination is effected.
Mrs. Murr may only locate potential target companies for the Company and is
not authorized to enter into any agreement with a potential target company
binding the Company. The Company has no written agreement with Mrs. Murr. Mrs.
Murr may provide assistance to target companies incident to and following a
business combination, and receive payment for such assistance from target
companies.
Mrs. Murr was issued 5,000,000 shares of par value $.001 common stock per
share at inception as a founder and for services performed at inception.
Mrs. Murr may enter into agreements with other consultants to assist it
in locating a target company and may share its stock in the Company with or
grant options on such stock to such referring consultants and may make payment
to such consultants from its own resources. There is no minimum or maximum
amount of stock, options, or cash that Mrs. Murr may grant or pay to such
consultants. Mrs. Murr is solely responsible for the costs and expenses of its
activities in seeking a potential target company, including any agreements with
consultants, and the Company has no obligation to pay any costs incurred or
negotiated by Mrs. Murr.
Mrs. Murr may seek to locate a target company through solicitation. Such
solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. If Mrs. Murr engages in solicitation, no estimate can
be made as to the number of persons who may be contacted or solicited. To date
Mrs. Murr has not utilized solicitation and expects to rely on consultants in
the business and financial communities for referrals of potential target
companies.
MANAGEMENT OF THE COMPANY
The Company has no full time employees. Zellma Murr is the sole officer of
the Company and its sole director. Mrs. Murr is a fulltime account technician at
he USAF Academy in Colorado Springs, Colorado. Mrs. Murr, as president of the
Company, has agreed to allocate a limited portion of his time to the activities
of the Company after the effective date of the registration statement without
compensation. Potential conflicts may arise with respect to the limited time
commitment by Mrs. Murr and the potential demands of the Company's activities.
The amount of time spent by Mrs. Murr on the activities of the Company is
not predictable. Such time may vary widely from an extensive amount when
reviewing a target company and effecting a business combination to an
essentially quiet time when activities of management focus elsewhere, or some
amount in between. It is impossible to predict the amount of time Mrs. Murr will
actually be required to spend to locate a suitable target company. Mrs. Murr
estimates that the business plan of the Company can be implemented by devoting
approximately 10 to 25 hours per month over the course of several months but
such figure cannot be stated with precision. Mrs. Murr does not anticipate
performing any services on behalf of the Company until after the effective date
of the registration statement.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity which desires to seek the
perceived advantages of a corporation which has a class of securities registered
under the Exchange Act. The Company will not restrict its search to any specific
business, industry, or geographical location and the Company may participate in
a business venture of virtually any kind or nature. Management anticipates that
it will be able to participate in only one potential business venture because
the Company has nominal assets and limited financial resources. See PART F/S,
"FINANCIAL STATEMENTS." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Management believes
(but has not conducted any research to confirm) that there are business entities
seeking the perceived benefits of a reporting corporation. Such perceived
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, increasing the opportunity to use
securities for acquisitions, providing liquidity for shareholders and other
factors. Business opportunities may be available in many different industries
and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities difficult
and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets. However,
management believes the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
reporting company without incurring the cost and time required to conduct an
initial public offering. Management has not conducted market research and is not
aware of statistical data to support the perceived benefits of a business
combination for the owners of a target company.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officer and director of the Company, who is not a
professional business analyst. In analyzing prospective business opportunities,
management may consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. This discussion of the proposed
criteria is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Company is subject to all of the reporting requirements included in
the Exchange Act. Included in these requirements is the duty of the Company to
file audited financial statements as part of or within 60 days following the due
date for filing its Current Report on Form 8-K which is required to be filed
with the Securities and Exchange Commission within 15 days following the
completion of a business combination. The Company intends to acquire or merge
with a company for which audited financial statements are available or for which
it believes audited financial statements can be obtained within the required
period of time. The Company may reserve the right in the documents for the
business combination to void the transaction if the audited financial statements
are not timely available or if the audited financial statements provided do not
conform to the representations made by the target company.
The Company will not restrict its search for any specific kind of business
entities, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
business life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
Following a business combination the Company may benefit from the services
of others in regard to accounting, legal services, underwritings and corporate
public relations. If requested by a target company, management may recommend one
or more underwriters, financial advisors, accountants, public relations firms or
other consultants to provide such services.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to the
Company only on the condition that the services of a consultant or advisor be
continued after a merger or acquisition. Such preexisting agreements of target
companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.
TERMS OF A BUSINESS COMBINATION
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will no longer be in control of the Company. In
addition, it is likely that the Company's officer and director will, as part of
the terms of the business combination, resign and be replaced by one or more new
officers and directors.
It is anticipated that any securities issued in any such business
combination would be issued in reliance upon exemption from registration under
applicable federal and state securities laws. In some circumstances, however, as
a negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, it will be
undertaken by the surviving entity after the Company has entered into an
agreement for a business combination or has consummated a business combination
and the Company is no longer considered a blank check company. The issuance of
additional securities and their potential sale into any trading market which may
develop in the Company's securities may depress the market value of the
Company's securities in the future if such a market develops, of which there is
no assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a tax-free reorganization under Sections 351 or 368
of the Internal Revenue Code of 1986, as amended.
With respect to negotiations with a target company, management expects to
focus on the percentage of the Company which target company shareholders would
acquire in exchange for their shareholdings in the target company. Depending
upon, among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage of ownership may be subject to significant reduction
in the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
shareholders at such time.
The Company will participate in a business combination only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.
Mrs. Murr will pay all expenses in regard to its search for a suitable
target company. The Company does not anticipate expending funds itself for
locating a target company. Zellma Murr, the officer and director of the Company,
will provide his services without charge or repayment by the Company after the
effective date of the registration statement. The Company will not borrow any
funds to make any payments to the Company's management, its affiliates or
associates. If Mrs. Murr stops or becomes unable to continue to pay the
Company's operating expenses, the Company may not be able to timely make its
periodic reports required under the Securities Exchange Act of 1934 nor to
continue to search for an acquisition target. In such event, the Company would
seek alternative sources of funds or services, primarily through the issuance of
its securities.
The Board of Directors has passed a resolution which contains a policy
that the Company will not seek a business combination with any entity in which
the Company's officer, director, shareholders or any affiliate or associate
serves as an officer or director or holds any ownership interest.
UNDERTAKINGS AND UNDERSTANDINGS REQUIRED OF TARGET COMPANIES
As part of a business combination agreement, the Company intends to
obtain certain representations and warranties from a target company as to its
conduct following the business combination. Such representations and warranties
may include (i) the agreement of the target company to make all necessary
filings and to take all other steps necessary to remain a reporting company
under the Exchange Act (ii) imposing certain restrictions on the timing and
amount of the issuance of additional free-trading stock, including stock
registered on Form S-8 or issued pursuant to Regulation S and (iii) giving
assurances of ongoing compliance with the Securities Act, the Exchange Act, the
General Rules and Regulations of the Securities and Exchange Commission, and
other applicable laws, rules and regulations.
A prospective target company should be aware that the market price and
trading volume of the Company's securities, when and if listed for secondary
trading, may depend in great measure upon the willingness and efforts of
successor management to encourage interest in the Company within the United
States financial community. The Company does not have the market support of an
underwriter that would normally follow a public offering of its securities.
Initial market makers are likely to simply post bid and asked prices and are
unlikely to take positions in the Company's securities for their own account or
customers without active encouragement and a basis for doing so. In addition,
certain market makers may take short positions in the Company's securities,
which may result in a significant pressure on their market price. The Company
may consider the ability and commitment of a target company to actively
encourage interest in the Company's securities following a business combination
in deciding whether to enter into a transaction with such company.
A business combination with the Company separates the process of
becoming a public company from the raising of investment capital. As a result, a
business combination with Company normally will not be a beneficial transaction
for a target company whose primary reason for becoming a public company is the
immediate infusion of capital. The Company may require assurances from the
target company that it has or that it has a reasonable belief that it will have
sufficient sources of capital to continue operations following the business
combination. However, it is possible that a target company may give such
assurances in error, or that the basis for such belief may change as a result of
circumstances beyond the control of the target company.
Prior to completion of a business combination, the Company may require
that it be provided with written materials regarding the target company
containing such items as a description of products, services and company
history; management resumes; financial information; available projections, with
related assumptions upon which they are based; an explanation of proprietary
products and services; evidence of existing patents, trademarks, or service
marks, or rights thereto; present and proposed forms of compensation to
management; a description of transactions between such company and its
affiliates during relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; a financial plan of
operation and estimated capital requirements; audited financial statements, or
if they are not available, unaudited financial statements, together with
reasonable assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 75 days following
completion of a business combination; and other information deemed relevant.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company currently uses the offices of Ancas Financial, Inc.
at no cost to the Company. Ancas Financial, Inc. has agreed to continue this
arrangement until the Company completes a business combination.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common Stock, all
directors individually and all directors and officers of the Company as a group.
Except as noted, each person has sole voting and investment power with respect
to the shares shown.
<TABLE>
<S> <C> <C>
Amount of
Name and Address Beneficial Percentage
of Beneficial Owner Ownership of Class
Zellma C. Murr (1)
8210 Blue Gill Dr. 5,000,000 100%
Falcon, CO 80831
All Executive Officers and
Directors and control persons
as a Group (1Person) 5,000,000 100%
</TABLE>
(1) Mrs. Murr has agreed to provide certain assistance to the Company in
locating potential target companies, and to pay all costs of the Company until a
business combination, without reimbursement. See "PLAN OF OPERATION General
Business Plan".
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has one Director and Officer as follows:
<TABLE>
<S> <C> <C>
Name Age Positions and Offices Held
Zellma Murr 59 President, Secretary, Director
</TABLE>
There are no agreements or understandings for the officer or director to
resign at the request of another person and the above-named officer and director
is not acting on behalf of nor will act at the direction of any other person.
Set forth below is the name of the director and officer of the Company,
all positions and offices with the Company held, the period during which she has
served as such, and the business experience during at least the last five years:
Zellma Murr has been the company's President and Director since it's
inception. From 1980 to present , Zelma has been an account technician for the
USAF Academy located in Colorado Springs, Colorado. Her duties include
Accounting Technician for Cadet Services. She is responsible for Cadet
activities involving the ordering and distribution of the Air Force Academy
Uniforms. Additionally she has been the Medica Records Technician for all
Service Academies for the past four years.
PREVIOUS BLANK CHECK COMPANIES
The Company's President, Zellma Murr has not been involved with other
blank check companies in the past.
CURRENT BLANK CHECK COMPANIES
Zellma Murr, the president of the Company, is not currently involved in
other blank check companies.
CONFLICTS OF INTEREST
Zellma Murr, the Company's sole officer and director, expects to organize
other companies of a similar nature and with a similar purpose as the Company.
Consequently, there could be potential inherent conflicts of interest in acting
as an officer and director of the Company. In addition, insofar as Mrs. Murr
would be engaged in other business activities, she may devote only a portion of
his time to the Company's affairs.
A conflict may arise in the event that another blank check company with
which Mrs. Murr would be affiliated also would actively seek a target company.
It is anticipated that target companies will be located for the Company and
other blank check companies in chronological order of the date of formation of
such blank check companies or, in the case of blank check companies formed on
the same date, alphabetically. However, other blank check companies may differ
from the Company in certain items such as place of incorporation, number of
shares and shareholders, working capital, types of authorized securities, or
other items. It may be that a target company may be more suitable for or may
prefer a certain blank check company formed after the Company. In such case, a
business combination might be negotiated on behalf of the more suitable or
preferred blank check company regardless of date of formation. However, Mrs.
Murr's beneficial and economic interest in all blank check companies with which
she would be involved would be identical to this one.
Mrs. Murr is currently employed on a fulltime basis as an Account
Technician for the USAF Academy in Colorado Springs, Colorado. As such, demands
may be placed on the time of Mrs. Murr which will detract from the amount of
time she is able to devote to the Company. Mrs. Murr intends to devote as much
time to the activities of the Company as required. However, should such a
conflict arise, there is no assurance that Mrs. Murr would not attend to other
matters prior to those of the Company. Mrs. Murr estimates that the business
plan of the Company can be implemented in theory by devoting approximately 10 to
25 hours per month over the course of several months but such figure cannot be
stated with precision.
The terms of a business combination may include such terms as Mrs. Murr
remaining a director or officer of the Company and/or the continuing consulting
or invesment banking for the prospective merger candidate. The terms of a
business combination may provide for a payment by cash or otherwise to Mrs. Murr
for the purchase or retirement of all or part of its common stock of the Company
by a target company or for services rendered incident to or following a business
combination. Mrs. Murr would directly benefit from such employment or payment.
Such benefits may influence Mrs. Murr's choice of a target company.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management of the Company or any
affiliates or associates have any interest, direct or indirect.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest in
favor of the Company could result in liability of management to the Company.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities the Company could be subject to regulation under the Investment Company
Act of 1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940. Any violation of such Act would subject the
Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's officer and director does not receive any compensation for
his services rendered to the Company, has not received such compensation in the
past, and is not accruing any compensation pursuant to any agreement with the
Company. However, the officer and director of the Company anticipates receiving
benefits as a beneficial shareholder of the Company.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has issued a total of 5,000,000 shares of Common Stock to the
following persons:
<TABLE>
<S> <C> <C>
Name Number of Total Shares Consideration
Zellma Murr 5,000,000 Founder services at inception
</TABLE>
With respect to the shares issued to Zellma Murr the Company issued shares
at inception for services rendered during the incorporation process. The issued
and outstanding shares of the Company's Common Stock were issued in accordance
with the exemptions from registration afforded by Section 4(2) of the Securities
Act of 1933 and Rule 506 promulgated thereunder.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 25,000,000 shares
of common stock, par value $.001 per share, of which there are 5,000,000 issued.
The Company does not have any preferred stock authorized at this time, however,
the officer and director of the company has the right to amend the articles of
incorporation at any time to authorize the issuance of a class of preferred
stock. The following statements relating to the capital stock set forth the
material terms of the Company's securities; however, reference is made to the
more detailed provisions of, and such statements are qualified in their entirety
by reference to, the Certificate of Incorporation and the By-laws, copies of
which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are
fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion or redemption rights or sinking
fund provisions with respect to the common stock.
PREFERRED STOCK
The Board of Directors is authorized to amend the articles of
incorporation to provide for the issuance of preferred stock in series and, by
filing a certificate pursuant to the applicable law of Nevada, to establish from
time to time the number of shares to be included in each such series, and to fix
the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof without any
further vote or action by the shareholders. Any shares of preferred stock so
issued would have priority over the common stock with respect to dividend or
liquidation rights. Any future issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of the Company without
further action by the shareholders and may adversely affect the voting and other
rights of the holders of common stock. At present, the Company has no plans to
issue any preferred stock nor adopt any series, preferences or other
classification of preferred stock.
The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of the
common stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of the Company, the Board of Directors could act in a manner
that would discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
market price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules. The Company has no
present plans to issue any preferred stock.
DIVIDENDS
Dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in its business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends prior to a business combination.
TRADING OF SECURITIES IN SECONDARY MARKET
The National Securities Market Improvement Act of 1996 limited the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Exchange Act. Upon effectiveness of
this registration statement, the Company will be required to, and will, file
reports under Section 13 of the Exchange Act. As a result, sales of the
Company's common stock in the secondary market by the holders thereof may then
be made pursuant to Section 4(1) of the Securities Act (sales other than by an
issuer, underwriter or broker) without qualification under state securities
acts.
Following a business combination, a target company will normally wish to
cause the Company's common stock to trade in one or more United States
securities markets. The target company may elect to take the steps required for
such admission to quotation following the business combination or at some later
time.
In order to qualify for listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years of
$750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market capitalization. For continued listing on the Nasdaq
SmallCap Market, a company must have at least (i) net tangible assets of
$2,000,000 or market capitalization of $35,000,000 or net income for two of the
last three years of $500,000; (ii) a public float of 500,000 shares with a
market value of $1,000,000; (iii) a bid price of $1.00; (iv) two market makers;
and (v) 300 shareholders.
If, after a business combination, the Company does not meet the
qualifications for listing on the Nasdaq SmallCap Market, the Company may apply
for quotation of its securities on the OTC Bulletin Board. In certain cases the
Company may elect to have its securities initially quoted in the "pink sheets"
published by the National Quotation Bureau, Inc.
To have its securities quoted on the OTC Bulletin Board a company must:
(1) be a company that reports its current financial information to the
Securities and Exchange Commission, banking regulators or insurance
regulators;
(2) has at least one market maker who completes and files a Form 211 with
NASD Regulation, Inc.
The OTC Bulletin Board is a dealer-driven quotation service. Unlike the
Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC
Bulletin Board, only market makers can initiate quotes, and quoted companies do
not have to meet any quantitative financial requirements. Any equity security of
a reporting company not listed on the Nasdaq Stock Market or on a national
securities exchange is eligible.
In general there is greatest liquidity for traded securities on the Nasdaq
SmallCap Market, less on the NASD OTC Bulletin Board, and least through
quotation by the National Quotation Bureau, Inc. on the "pink sheets". It is not
possible to predict where, if at all, the securities of the Company will be
traded following a business combination.
TRANSFER AGENT
It is anticipated that Nevada Agency and Trust Company, Reno, Nevada will
act as transfer agent for the common stock of the Company.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET PRICE. There is no trading market for the Company's Common
Stock at present and there has been no trading market to date. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:
(i) that a broker or dealer approve a person's account for transactions in
penny stocks and
(ii) the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny stock to
be purchased.
In order to approve a person's account for transactions in penny stocks,
the broker or dealer must
(i) obtain financial information and investment experience and objectives
of the person; and
(ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form,
(i) sets forth the basis on which the broker or dealer made the suitability
determination and
(ii) that the broker or dealer received a signed, written agreement from
the investor prior to the transaction. Disclosure also has to be made about the
risks of investing in penny stocks in both public offerings and in secondary
trading, and about commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock
transactions.
Finally, monthly statements have to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
(B) HOLDERS. There is one holder of the Company's Common Stock. The issued
and outstanding shares of the Company's Common Stock were issued in accordance
with the exemptions from registration afforded by Section 4(2) of the Securities
Act of 1933 and Rule 506 promulgated thereunder.
(C) DIVIDENDS. The Company has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has issued securities which were
not registered as follows:
<TABLE>
<S> <C> <C> <C>
Number of
Date Name Shares Consideration
09/11/00 Zellma Murr 5,000,000 Founder & Services Performed
During Incorporation
</TABLE>
With respect to the share issue made to Mrs. Murr the Company relied upon
Section 4(2) of the Securities Act of 1933, as amended and Rule 506 promulgated
thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Nevada provides
that a certificate of incorporation may contain a provision eliminating the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation 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 Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the General Corporation Law of the State of Delaware, or (iv)
for any transaction from which the director derived an improper personal
benefit. The Company's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
PART F/S
FINANCIAL STATEMENTS.
Set forth below are the audited financial statements for the Company for
the period ended September 30, 2000. The following financial statements are
attached to this report and filed as a part thereof.
LEXCO INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<S> <C>
PAGE
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDER'S DEFICIENCY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF LEXCO INCORPORATED:
We have audited the accompanying balance sheet of Lexco Incorporated (A
Development Stage Company) as of September 30, 2000 and the related statements
of operations, stockholder's equity and cash flows for the period from September
7, 2000 (inception) to September 30, 2000. 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 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 Lexco Incorporated as of
September 30, 2000 and the results of its operations and its cash flows for the
period from September 7, 2000 (inception) to September 30, 2000 in conformity
with generally accepted accounting principles.
MERDINGER, FRUCHTER ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
October 6, 2000
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
BALANCE SHEET
SEPTEMBER 30, 2000
<TABLE>
<S> ........................................................ <C>
ASSETS ..................................................... $
-------
=======
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities ........................................... $
-------
-------
-------
STOCKHOLDER'S EQUITY
Common stock, $0.001 par value;
25,000,000 shares authorized,
5,000,000 shares issued and outstanding
5,000
Deficit accumulated during
the development stage .................................. (5,000)
-------
-------
Total stockholder's equity
-------
-------
-------
Total liabilities and stockholder's equity ............ $
-------
=======
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 7, 2000
(INCEPTION) TO SEPTEMBER 30, 2000
<TABLE>
<S> ....................................................... <C>
Revenue .................................................. $
-----------
General and administrative expenses ...................... 5,000
-----------
Loss from operations before provision for income taxes ... (5,000)
Provision for income taxes
-----------
-----------
Net loss ................................................. $ (5,000)
===========
===========
Net loss per share - basic and diluted ................... $ --
===========
Weighted average number of common shares
outstanding ............................................. 5,000,000
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
SEPTEMBER 7, 2000 (INCEPTION) TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Common Stock Development
<S> ........................... <C> <C> <C> <C>
*********
* ............................. Shares Amount Stage Total
Balance, September 7, 2000 .... -- $ -- $ -- $ --
Issuance of shares for services
September 11, 2000 ............ 5,000,000 5,000 -- 5,000
Net loss ...................... -- (5,000) (5,000)
Balance, September 30, 2000 ... 5,000,000 $ 5,000 $ (5,000) $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
LEXCO INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS
SEPTEMBER 7, 2000 (INCEPTION) TO SEPTEMBER 30, 2000
<TABLE>
<S> ............................................................. <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .............................................. $(5,000)
Stock issued for services
5,000
-------
NET CASH USED IN OPERATING ACTIVITIES
-------
-------
-------
CASH AND CASH EQUIVALENTS - September 7, 2000
-------
-------
-------
CASH AND CASH EQUIVALENTS - September 30, 2000
$
-------
=======
</TABLE>
SUPPLEMENTAL INFORMATION:
During the initial period September 7 to September 30, 2000, the
Company paid no cash for interest or income taxes.
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Lexco Incorporated (the "Company") is currently a
development-stage company under the provisions of the
Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") NO. 7. The Company
was incorporated under the laws of the state of Nevada on
September 7, 2000.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with original maturities of three months or less
to be cash equivalents.
Income Taxes
Income taxes are provided for based on the liability method
of accounting pursuant to SFAS No. 109, "Accounting for
Income Taxes". Deferred income taxes, if any, are recorded
to reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities
and their financial reporting amounts at each year-end.
Earnings Per Share
The Company calculates earnings per share in accordance with
SFAS No. 128, "Earnings Per Share", which requires
presentation of basic earnings per share ("BEPS") and
diluted earnings per share ("DEPS"). The computation of BEPS
is computed by dividing income available to common
stockholders by the weighted average number of outstanding
common shares during the period. DEPS gives effect to all
dilutive potential common shares outstanding during the
period. The computation of DEPS does not assume conversion,
exercise or contingent exercise of securities that would
have an antidilutive effect on earnings. As of September 30,
2000, the Company has no securities that would effect loss
per share if they were to be dilutive.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive
income and its components in the financial statements. The
Company had no items of other comprehensive income and
therefore has not presented a statement of comprehensive
income.
- 6 -
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 2 - INCOME TAXES
<TABLE>
<S> ............................................................................ <C>
Current Tax Expense
U.S. Federal ................................................................. $--
State and Local .............................................................. --
Total Current .................................................................. --
Deferred Tax Expense
U.S. Federal ................................................................. --
State and Local .............................................................. --
Total Deferred ................................................................. --
Total Tax Provision (Benefit) from
Continuing Operations ........................................................ $--
The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:
Federal Income Tax Rate ........................................................ 34.0%
Effect of Valuation Allowance .................................................. (34.0)%
Effective Income Tax Rate ...................................................... 0.0%
</TABLE>
At September 30, 2000, the Company had net carryforward
losses of $5,000. Because of the current uncertainty of
realizing the benefits of the tax carryforward, a valuation
allowance equal to the tax benefits for deferred taxes has
been established. The full realization of the tax benefit
associated with the carryforward depends predominantly upon
the Company's ability to generate taxable income during the
carryforward period.
Deferred tax assets and liabilities reflect the net tax
effect of temporary differences between the carrying amount
of assets and liabilities for financial reporting purposes
and amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and
liabilities as of September 30, 2000 are as follows:
<TABLE>
<S> ............................................ <C>
Deferred Tax Assets
Loss Carryforwards ............................. $1,700
Less: Valuation Allowance ..................... (1,700)
Net Deferred Tax Assets ........................ $ --
Net operating loss carryforwards expire in 2020
</TABLE>
- 7 -
<PAGE>
LEXCO INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 3 - COMMON STOCK
On September 11, 2000, the Company issued 5,000,000 shares
of common stock for services valued at $5,000.
- 8 -
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
3.1 Certificate of Incorporation
3.2 By-Laws
10.1 Shareholder agreement
27 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized.
LEXCO INCORPORATED
By: /s/ Zellma C. Murr
Zellma C. Murr, President
EXHIBIT 3.1