SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12 (b) or 12 (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
SHAFT, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0660287
(STATE OF INCORPORATION) (I.R.S. EMPLOYER ID NO.)
1981 E. Murray-Holladay Rd., Salt Lake City, Utah 84117
(Address of principal executive offices) (Zip Code)
(801)272-9294
(REGISTRANT'S TELEPHONE NUMBER)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12 (g) OF THE
ACT: 702,755
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12 (b) OF THE
ACT: NONE
Title of each class Name of each exchange on which
To be so registered Each class is to be registered
Common stock: $0.001 Par value N/A
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRATION WAS $0.001 AS OF SEPTEMBER 30, 2000.
SHARES OF COMMON STOCK OUTSTANDING AS OF SEPTEMBER 30, 2000: 702,755
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Part I
Item 1
Description of Business
SHAFT, INC., (hereinafter "The Company") was originally incorporated on
March 9, 1990 as Buckaroom, Inc., pursuant to the Nevada Business Corporation
Act. Its original Articles of Incorporation provided for authorized capital of
Twenty- five hundred (2500) shares of common stock with a $0.25 par value. On
July 3, 2000, the shareholders of the Company approved an amendment to the
Articles of Incorporation changing the authorized capital to one hundred million
(100,000,000) shares of common stock with a par value of $0.001 (1 mill) per
share and providing for an two hundred to one forward split of the outstanding
shares. The amended Articles were filed with the State of Nevada on July 21,
2000.The Company was formed with the stated purpose of conducting any lawful
business activity. However, the contemplated purpose was to engage in investment
and business development operations related to mineral research and exploration.
In pursuing its activities the Company raised approximately $28,425 through the
sale of common stock to evaluate a possible mining venture. After review of all
reports by a geologist and subsequent field examinations, it was determined that
the Company did not have the resources to pursue the project and all attempts to
engage in business ended before 1992, and the Company became dormant.
The Company never engaged in an active trade or business throughout the
period from inception through 1999. In June of 2000, the directors determined
that the Company should become active and reinstated the Company with the State
of Nevada, and began seeking potential operating businesses and business
opportunities with the intent to acquire or merge with such businesses. The
Company is considered a development stage company and, due to its status as a
"shell" corporation, its principal business purpose is to locate and consummate
a merger or acquisition with a private entity. Because of the Company's current
status having no assets and no recent operating history, in the event the
Company does successfully acquire or merge with an operating business
opportunity, it is likely that the Company's present shareholders will
experience substantial dilution and there will be a probable change in control
of the Company.
The Company is voluntarily filing its registration statement on Form 10-SB
in order to make information concerning itself more readily available to the
public. Management believes that being a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), could provide a
prospective merger or acquisition candidate with additional information
concerning the Company. In addition, management believes that this might make
the Company more attractive to an operating business opportunity as a potential
business combination candidate. As a result of filing its registration
statement, the Company is obligated to file with the Commission certain interim
and periodic reports including an annual report containing audited financial
statements. The Company intends to
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continue to voluntarily file these periodic reports under the Exchange Act even
if its obligation to file such reports is suspended under applicable provisions
of the Exchange Act.
Any target acquisition or merger candidate of the Company will become
subject to the same reporting requirements as the Company upon consummation of
any such business combination. Thus, in the event that the Company successfully
completes an acquisition or merger with another operating business, the
resulting combined business must provide audited financial statements for at
least the two most recent fiscal years or, in the event that the combined
operating business has been in business less than two years, audited financial
statements will be required from the period of inception of the target
acquisition or merger candidate.
The Company's principal executive offices are located at: 1981 E. Murray-
Holladay Rd., Salt Lake City, Utah 84117.
Business of Issuer
The Company has no recent operating history and no representation is made,
nor is any intended, that the Company will be able to carry on future business
activities successfully. Further, there can be no assurance that the Company
will have the ability to acquire or merge with an operating business, business
opportunity or property that will be of material value to the Company.
Management plans to investigate, research and, if justified, potentially acquire
or merge with one or more businesses or business opportunities. The Company
currently has no commitment or arrangement, written or oral, to participate in
any business opportunity and management cannot predict the nature of any
potential business opportunity it may ultimately consider. Management will have
broad discretion in its search for and negotiations with any potential business
or business opportunity.
Sources of Business Opportunities
The Company intends to use various sources in its search for potential
business opportunities including its officers and directors, consultants,
special advisors, securities broker-dealers, venture capitalists, members of the
financial community and others who may present management with unsolicited
proposals. Because of the Company's lack of capital, it may not be able to
retain a fee based professional firm specializing in business acquisitions and
reorganizations. Rather, the Company will most likely have to rely on outside
sources, not otherwise associated with the Company, that will accept their
compensation only after the Company has finalized a successful acquisition or
merger. To date, the Company has not engaged nor any prospective consultants for
these purposes. The Company does not intend to restrict its search to any
specific entered into any definitive agreements nor understandings regarding
retention of any consultant to assist the Company in its search for business
opportunities, nor is management
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presently in a position to actively seek or retain kind of industry or business.
The Company may investigate and ultimately acquire a venture that is in its
preliminary or development stage, is already in operation, or in various stages
of its corporate existence and development. Management cannot predict at this
time the status or nature of any venture in which the Company may participate. A
potential venture might need additional capital or merely desire to have its
shares publicly traded. The most likely scenario for a possible business
arrangement would involve the acquisition of, or merger with, an operating
business that does not need additional capital, but which merely desires to
establish a public trading market for its shares. Management believes that the
Company could provide a potential public vehicle for a private entity interested
in becoming a publicly held corporation without the time and expense typically
associated with an initial public offering.
Evaluation
Once the Company has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine whether
acquisition or merger is warranted or whether further Investigation is
necessary. Such determination will generally be based on management's knowledge
and experience, or with the assistance of outside advisors and consultants
evaluating the preliminary information available to them. Management may elect
to engage outside independent consultants to perform preliminary analysis of
potential business opportunities. However, because of the Company's lack of
capital it may not have the necessary funds for a complete and exhaustive
investigation of any particular opportunity. In evaluating such potential
business opportunities, the Company will consider, to the extent relevant to the
specific opportunity, several factors including potential benefits to the
Company and its shareholders; working capital, financial requirements and
availability of additional financing; history of operation, if any; nature of
present and expected competition; quality and experience of management; need for
further research, development or exploration; potential for growth and
expansion; potential for profits; and other factors deemed relevant to the
specific opportunity. Because the Company has not located or identified any
specific business opportunity as of the date hereof, there are certain
unidentified risks that cannot be adequately expressed prior to the
identification of a specific business opportunity. There can be no assurance
following consummation of any acquisition or merger that the business venture
will develop into a going concern or, if the business is already operating, that
it will continue to operate successfully. Many of the potential business
opportunities available to the Company may involve new and untested products,
processes or market strategies which may not ultimately prove successful.
Form of Potential Acquisition or Merger
Presently, the Company cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate potential
opportunity will be reviewed and, upon the basis of that review, a suitable
legal
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structure or method of participation will be chosen. The particular manner in
which the Company participates in a specific business opportunity will depend
upon the nature of that opportunity, the respective needs and desires of the
Company and management of the opportunity, and the relative negotiating strength
of the parties involved. Actual participation in a business venture may take the
form of an asset purchase, lease, joint venture, license, partnership, stock
purchase, reorganization, merger or consolidation. The Company may act directly
or indirectly through an interest in a partnership, corporation, or other form
of organization, however, the Company does not intend to participate in
opportunities through the purchase of minority stock positions.
Because of the Company's current status and recent inactive status for the
prior eight years, and its concomitant lack of assets or relevant operating
history, it is likely that any potential merger or acquisition with another
operating business will require substantial dilution of the Company's existing
shareholders. There will probably be a change in control of the Company, with
the incoming owners of the targeted merger or acquisition candidate taking over
control of the Company. Management has not established any guidelines as to the
amount of control it will offer to prospective business opportunity candidates,
since this issue will depend to a large degree on the economic strength and
desirability of each candidate, and correspondent ending relative bargaining
power of the parties. However, management will endeavor to negotiate the best
possible terms for the benefit of the Company's shareholders as the case arises.
Management does not have any plans to borrow funds to compensate any
persons, consultants, promoters, or affiliates in conjunction with its efforts
to find and acquire or merge with another business opportunity. Management does
not have any plans to borrow funds to pay compensation to any prospective
business opportunity, or shareholders, management, creditors, or other potential
parties to the acquisition or merger. In either case, it is unlikely that the
Company would be able to borrow significant funds for such purposes from any
conventional lending sources. In all probability, a public sale of the Company's
securities would also be unfeasible, and management does not contemplate any
form of new public offering at this time. In the event that the Company does
need to raise capital, it would most likely have to rely on the private sale of
its securities. Such a private sale would to available exemptions, if any
applies. However, no private sales are contemplated by the Company's management
at this time. If a private sale of the Company's securities is deemed
appropriate in the future, management will endeavor to acquire funds on the best
terms available to the Company. However, there can be no assurance that the
Company will be able to obtain funding when and if needed, or that such funding,
if available, can be obtained on terms reasonable or acceptable to the Company.
Although not presently anticipated by management, there is a remote possibility
that the Company might sell its securities to its management or affiliates.
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In the event of a successful acquisition or merger, a finder's fee, in the
form of cash or securities of the Company, may be paid to persons instrumental
in facilitating the transaction. The Company has not established any criteria or
limits for the determination of a finder's fee, although most likely an
appropriate finder's fee will be negotiated between the parties, including the
potential business opportunity candidate, based upon economic considerations and
reasonable value as estimated and mutually agreed at that time. A finder's fee
would only be payable upon completion of the proposed acquisition or merger in
the normal case, and management does not contemplate any other arrangement at
this time. Management has not actively undertaken a search for, nor retention
of, any finder's fee arrangement with any person. It is possible that a
potential merger or acquisition candidate would have its own finder's fee
arrangement, or other similar business brokerage or investment banking
arrangement, whereupon the terms may be governed by a pre-existing contract; in
such case, the Company may be limited in its ability to affect the terms of
compensation, but most likely the terms would be disclosed and subject to
approval pursuant to submission of the proposed transaction to a vote of the
Company's shareholders. Management cannot predict any other terms of a finder's
fee arrangement at this time. It would be unlikely that a finder's fee payable
to an affiliate of the Company would be proposed because of the potential
conflict of interest issues. If such a fee arrangement was proposed, independent
management and directors would negotiate the best terms available to the Company
so as not to compromise the fiduciary duties of the affiliate in the proposed
transaction, and the Company would require that the proposed arrangement would
be submitted to the shareholders for prior ratification in an appropriate
manner.
Management does not contemplate that the Company would acquire or merge
with a business entity in which any affiliates of the Company have an interest.
Any such related party transaction, however remote, would be submitted for
approval by an independent quorum of the Board of Directors and the proposed
transaction would be submitted to the shareholders for prior ratification in an
appropriate manner. None of the Company's managers, directors, or other
affiliated parties have had any contact, discussions, or other understandings
regarding any particular business opportunity at this time, regardless of any
potential conflict of interest issues. Accordingly, the potential conflict of
interest is merely a remote theoretical possibility at this time.
Rights of Shareholders
It is presently anticipated by management that prior to consummating a
possible acquisition or merger, the Company will seek to have the transaction
ratified by shareholders in the appropriate manner. Most likely, this would
require a general or special shareholder's meeting called for such purpose,
wherein all shareholder's would be entitled to vote in person or by proxy. In
the notice of such a shareholder's meeting and proxy statement, the Company will
provide shareholders complete disclosure documentation concerning a potential
acquisition
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of merger candidate, including financial information about the target and all
material terms of the acquisition or merger transaction.
Competition
Because the Company has not identified any potential acquisition or merger
candidate, it is unable to evaluate the type and extent of its likely
competition. The Company is aware that there are several other public companies
with only nominal assets that are also searching for operating businesses and
other business opportunities as potential acquisition or merger candidates. The
Company will be in direct competition with these other public companies in its
search for business opportunities and, due to the Company's lack of funds, it
may be difficult to successfully compete with these other companies.
As of the date hereof, the Company does not have any employees and has no
plans for retaining employees until such time as the Company's business warrants
the expense, or until the Company successfully acquires or merges with an
operating business. The Company may find it necessary to periodically hire part-
time clerical help on an as-needed basis.
Facilities
The Company is currently using as its principal place of business the
offices of its transfer agent located in Salt Lake City, Utah. Although the
Company has no written agreement and pays no rent for the use of this facility,
it is contemplated that at such future time as an acquisition or merger
transaction may be completed, the Company will secure commercial office space
from which it will conduct its business. Until such an acquisition or merger,
the Company lacks any basis for determining the kinds of office space or other
facilities necessary for its future business. The Company has no current plans
to secure such commercial office space. It is also possible that a merger or
acquisition candidate would have adequate existing facilities upon completion of
such a transaction, and the Company's principal offices may be transferred to
such existing facilities.
Industry Segments
No information is presented regarding industry segments. The Company is
presently a development stage company seeking a potential acquisition of or
merger with a yet to be identified business opportunity. Reference is made to
the statements of income included herein in response to Part F/S of this Form
10-SB, for a report of the Company's operating history for the past two fiscal
years.
Item 2. Management's Discussion and Analysis or Plan of Operation
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The Company is considered a development stage company with no assets or
capital and with no operations or income since inception. The costs and expenses
associated with the preparation and filing of this registration statement and
other operations of the Company have been paid for by two shareholders and
directors of the Company, specifically David Williams and Jennifer Harris (see
Part I Item 4,"Security Ownership of Certain Beneficial Owners and Management"
and Part II Item 4, "Recent Sales of Unregistered Securities"). It is
anticipated that the Company will require only nominal capital to maintain the
corporate viability of the Company and necessary funds will most likely be
provided by the Company's existing shareholders or its officers and directors in
the immediate future. However, unless the Company is able to facilitate an
acquisition of or merger with an operating business or is able to obtain
significant outside financing, there is substantial doubt about its ability to
continue as a viable corporation.
In the opinion of management, inflation has not and will not have a
material effect on the operations of the Company until such time as the Company
successfully completes an acquisition or merger. At that time, management will
evaluate the possible effects of inflation on the Company as it relates to its
business and operations following a successful acquisition or merger.
Plan of Operation
During the next twelve months, the Company will actively seek out and
investigate possible business opportunities with the intent to acquire or merge
with one or more business ventures. In its search for business opportunities,
management will follow the procedures outlined in Item I above. Because the
Company lacks finds, it may be necessary for the officers and directors to
either advance funds to the Company or to accrue expenses until such time as a
successful business consolidation can be made. Management intends to hold
expenses to a minimum and to obtain services on a contingency basis when
possible. Further, the Company's directors will defer any compensation until
such time as an acquisition or merger can be accomplished and will strive to
have the business opportunity provide their remuneration. However, if the
Company engages outside advisors or consultants in its search for business
opportunities, it may be necessary for the Company to attempt to raise
additional funds.
As of the date hereof, the Company has not made any arrangements or
definitive agreements to use outside advisors or consultants or to raise any
capital. In the event the Company does need to raise capital most likely the
only method available to the Company would be the private sale of its
securities. Because of the nature of the Company as a development stage company,
it is unlikely that it could make a public sale of securities or be able to
borrow any significant sum, from either a commercial or private lender. There
can be no assurance that the Company will be able to obtain additional funding
when and if needed, or that such funding, if available, can be obtained on terms
acceptable to the Company.
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The Company does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal
cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.
Item 3. Description of Property
The information required by this Item 3 is not applicable to this Form
10-SB due to the fact that the Company does not own or control any material
property.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best knowledge of the
Company as of September 30, 2000, with respect to each person known by the
Company to own beneficially more than 5% of the Company's outstanding common
stock, each director of the Company and all directors and officers of the
Company as a group.
Name and Address Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
David Williams (Pres/Dir)* 103,755 14.8%
50 Chardonnay
Irvine, Ca.92614
Christina Williams (Sec/Dir)* 2,500 0.5%
50 Chardonnay
Irvine, Ca 92614
Jennifer Harris (Dir) 102,500 14.6%
944 E. Olympus Cove
Salt Lake City, Utah 84117
Joey May 60,000 8.5%
449 Bryan
Salt Lake City, Utah 84106
Richard Godfrey 50,000 7.1%
8530 Kings Cove Drive
Salt Lake City, Ut. 84121
All officers and
directors as a group 208,755 29.9%
*Father & daughter.
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Item 5
Directors, Executive Officers, Promoters and Control Persons
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Position
Name Age Title Held Since
<S> <C> <C> <C>
David Williams 55 President and Director 6/15/2000
Christina Williams 23 Secretary/Treasurer/Dir 6/15/2000
Jennifer Harris 29 Director 6/15/2000
Greg Arnold 70 President and Director 4/6/1991 thru
6/15/2000
Scott Arnold 45 Secretary/Treasurer/Dir 4/6/1991 thru
6/15/1991
</TABLE>
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof. As of the date hereof, no director has accrued any expenses or
compensation. Officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. The
Company does not have any standing committees at this time.
No director, Officer, affiliate or promoter of the Company has, within the
past five years, filed any bankruptcy petition, been convicted in or been the
subject of any pending criminal proceedings, or is any such person the subject
or any order, judgment or decree involving the violation of any state or federal
securities laws.
The business experience of each of the persons listed above during the past
five years is as follows:
David Williams: Director and President
Mr. Williams, since 1997, has been Management Director of Housekeeping for
Windsor Hotels of Los Angeles, California. Prior to that he was Management
Director of Housekeeping for Sheraton Hotels in San Diego, Long Beach, and Los
Angeles California from 1985 to 1997 and the same for the Sheraton Hotel in Salt
Lake City, Utah from 1983 to 1985.
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Christina Williams: Director, Treasurer/Secretary
Ms. Williams is presently a full time student in business management and,
since July of 2000, has been a part time secretary and bookkeeper for a civil
engineer. Prior to that she was a part time manager for a retail store.
Jennifer Harris: Director
Ms. Harris is presently a homemaker. From 1997 to 1999 she worked as a
business clerk at LDS Hospital in Salt Lake City, Utah. Prior to that she
attended Ocean Community College for two years but received no degree.
Greg Arnold: Former President and Director
Mr. Arnold has been retired since 1992. Prior to that he was a business
management consultant to mining engineers for many years. In this capacity he
assisted mining engineers in structuring their businesses to operate in a
businesslike manner.
Scott Arnold: Former Secretary, Treasurer, and Director
Mr. Arnold, since 1985 has been in the mining equipment retail sales
business, presently being a sales manager. In such position his duties include
his traveling to the mining sites of prospective purchasers to evaluate such
purchaser's need for specific equipment. Mr. Arnold holds a Bachelor's degree id
business from Arizona State University.
Item 6. Executive Compensation
The Company has not had a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors. The Company has
not paid any salaries or other compensation to its officers, directors or
employees for the years ended December 31, 1998 and 1999, nor at any time during
2000. Further, the Company has not entered into an employment agreement with any
of its officers, directors or any other persons and no such agreements are
anticipated in the immediate future. It is intended that the Company's directors
will defer any compensation until such time as an acquisition or merger can be
accomplished and will strive to have the business opportunity provide their
remuneration. As of the date hereof, no person has accrued any compensation from
the Company.
Item 7. Certain Relationships and Related Transactions
In July of 2000, in a private transaction, the Company sold 3755, 2500,
and 2500 shares to David Williams, Christina Williams and Jennifer Harris,
respectively, to cover in order to fund certain expenses of the Company. In
September of 2000, in
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a private transaction, the Company sold 100,000 shares each to David Williams
and Jennifer Harris in order to pay outstanding payables and pay for the costs
of filing this registration. Aside from those transactions, during the Company's
last two fiscal years, there have not been any transactions between the Company
and any officer, director, nominee for election as director, or any shareholder
owning greater than five percent (5%) of the Company's outstanding shares, nor
any member of the above referenced individuals' immediate family.
Item 8. Description of Securities
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock, Par Value
$0.001, of which 702,755 shares are issued and outstanding as of the date
hereof. All shares of common stock have equal rights and privileges with respect
to voting, liquidation and dividend rights. Each share of common stock entitles
the holder thereof to (i) one non-cumulative vote for each share held of record
on all matters submitted to a vote of the stockholders; (ii) to participate
equally and to receive any and all such dividends as may be declared by the
Board of Directors out of funds legally available therefor; and (iii) to
participate pro rata in any distribution of assets available for distribution
upon liquidation of the Company. Stockholders of the Company have no pre-emptive
rights to acquire additional shares of common stock or any other securities. The
common stock is not subject to redemption and carries no subscription or
conversion rights. All outstanding shares of common stock are fully paid and
non-assessable.
Preferred Stock
The Company does not have any preferred stock, authorized or issued.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
No shares of the Company's common stock have previously been registered
with the Securities and Exchange Commission (the "Commission") or any state
securities agency or authority.
The Company is not aware of any established trading market for its
common stock nor is there any record of any reported trades in the public market
in recent years. The Company's common stock has never traded in a public market.
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The Company's common shares are subject to the provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth
certain requirements for transactions in penny stocks and Rule 15g9(d)(1)
incorporates the definition of penny stock as that used in Rule 3a5l-l of the
Exchange Act. The Commission generally defines penny stock to be any equity
security that has a market price less than $5.00 per share, subject to certain
exceptions. Rule 3a5l-l provides that any equity security is considered to be a
penny stock unless that security is: registered and traded on a national
securities exchange meeting specified criteria set by the Commission; authorized
for quotation on The NASDAQ Stock Market; issued by a registered investment
company; excluded from the definition on the basis of price (at least $5.00 per
share) or the issuer's net tangible assets; or exempted from the definition by
the Commission. If the Company's shares are deemed to be a penny stock, trading
in the shares will be subject to additional sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors, generally persons with assets in excess of $1,000,000
or annual income exceeding $200,000, or $300,000 together with their spouse. For
transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker dealers to
trade and/or maintain a market in the Company's common stock and may affect the
ability of shareholders to sell their shares.
As of September 30, 2000 there were 27 holders of record of the
Company's common stock. As of the date hereof, the Company has issued and
outstanding 702,755 shares of common stock. Of this total, all shares, excepting
those issued to in July and September of 2000, were issued in transactions more
than two years ago. (A forward 200-for-1 stock split occurred on July 21, 2000
increasing the number of shares held by existing shareholders, which is not
deemed a "new" issuance.) Thus, all but 208,755 shares were issued more than two
years ago and may be sold or otherwise transferred without restriction pursuant
to the terms of Rule 144 ("Rule 144") of the Securities Act of 1933, as amended
(the "Act"), unless held by an affiliate or controlling shareholder of the
Company. These 208,755 shares were sold less than two years ago and are what is
commonly known as "restricted securities". As such they may not be resold except
pursuant to an effective registration statement or an applicable exemption from
registration. The remaining 494,000 shares are deemed free from restrictions and
may be sold and/or transferred without further registration under the Act.
Transfer Agent & Dividend Policy
The Company has designated Interwest Transfer Company, Inc., 1981 E. Murray
Holliday Road, Salt Lake City, Utah 84117, (801) 272-9294 its transfer agent.
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The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that it will pay
cash dividends or make distributions in the foreseeable future. The Company
currently intends to retain and reinvest future earnings, if any, to finance its
operations.
Item 2. Legal Proceedings
The Company is currently not a party to any material pending legal
proceedings and no such action by, or to the best of its knowledge, against the
Company has been threatened.
Item 3. Changes in and Disagreements with Accountants
Item 3 is not applicable to this Form 10-SB.
Item 4. Recent Sales of Unregistered Securities
In July of 2000, in a private transaction, the Company sold 3755, 2500, and
2500 shares to David Williams, Christina Williams and Jennifer Harris,
respectively, to cover in order to fund certain expenses of the Company. In
September of 2000, in a private transaction, the Company sold 100,000 shares
each to David Williams and Jennifer Harris in order to pay outstanding payables
and pay for the costs of filing this registration. The transactions are deemed
exempt pursuant to Section 4(2) of the Act.
All other issues of securities by the Company were made more than three
years ago.
Item 5. Indemnification of Directors and Officers
The Company's Articles and By-Laws provide for indemnification for
liability, including expenses incurred in connection with a claim of liability
arising from having been an officer or director of the Company for any action
alleged to have been taken or omitted by any such person acting as an officer or
director, not involving gross negligence or willful misconduct by such person.
Section 78.751 of the Nevada General Corporation Law allows the Company to
indemnify any person who was or is threatened to made party to any threatened,
pending, or completed action, suit or proceeding, by reason of the fact that he
or she is or was a director, officer, employee or agent of the Company, or is or
was serving at the request of the Company as a director, officer, employee, or
agent of any corporation, partnership, joint venture, trust or other enterprise.
The Company's By- Laws provide that such a person shall be indemnified and held
harmless to the fullest extent provided by Nevada law.
PART F/S
Financial Statements and Supplementary Data
The Company's financial statements for the years ended December 31, 1999,
1998, and the period March 9, 1990 (date of inception) to September 30, 2000,
have been examined to the extent indicated in the reports by Andersen Andersen
and Strong, L.C., Certified Public Accountants, and have been prepared in
accordance with generally accepted accounting principles and pursuant to
Regulation S-B as promulgated by the Securities and Exchange Commission and are
included herein, on the following eight (8) pages, in response to Part F/S of
this Form 10-SB.
-13-
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C.
--------------------------------
Certified Public Accountants and Business Consultants
941 East 3300 South, Suite 202 Telephone 801 486-0096
Salt Lake City, Utah 84106
Fax 801 486-0098
Board of Directors
Shaft, Inc.
Salt Lake City, Utah
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Shaft, Inc. ( development
stage company) at December 31, 1999 and the related statements of operations,
stockholders' equity, and cash flows for the years ended December 31, 1999, and
1998 and the period March 9, 1990 (date of inception) to December 31, 1999.
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 audits.
We conducted our audits 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 balance sheet presentation. We
believe that our audits provide 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 Shaft, Inc. at December 31,
1999 and the results of operations, and cash flows for the years ended December
31, 1999, and 1998 and the period March 9 1990 (date of inception) to December
31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 4 . These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Andersen Andersen & Strong
August 10, 2000
Salt Lake City, Utah
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C.
--------------------------------
Certified Public Accountants and Business Consultants
941 East 3300 South, Suite 202 Telephone 801 486-0096
Salt Lake City, Utah 84106
Fax 801 486-0098
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Shaft, Inc.
Salt Lake City, Utah
We have reviewed the balance sheet of Shaft, Inc. (development stage company) at
September 30, 2000, the related statements of operations, stockholders' equity,
and cash flows for the nine months ended September 30, 2000 and the period March
9, 1990 (date of inception) to September 30, 2000. These financial statements
are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
Andersen Andersen & Strong
Salt Lake City, Utah
October 17, 2000
<PAGE>
<TABLE>
<CAPTION>
SHAFT, INC.
BALANCE SHEETS
September 30, 2000 and December 31, 1999
-------------------------------------------------------------------------------------------------------------------
(Unaudited)
Sept 30, Dec 31,
2000 1999
------ ------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ - $ -
--------- --------
Total Current Assets $ - $ -
========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ -
--------- --------
Total Current Liabilities - -
--------- --------
STOCKHOLDERS' EQUITY
Common stock
100,000,000 shares authorized at $0.001 par value;
702,755 issued and outstanding on September 30, 2000;
494,000 on December 31, 1999 703 494
Capital in excess of par value 54,477 35,931
Accumulated deficit during the development stage (55,180) (36,425)
--------- --------
Total Stockholders' Equity - -
--------- ---------
$ - $ -
========= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SHAFT, INC.
STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2000 and the
Years Ended December 31, 1999, and 1998
and the period March 9, 1990 (date of inception) to September 30, 2000
---------------------------------------------------------------------------------------------------------------------------------
(Unaudited) Period
Sept 30, Dec 31, Dec 31, Mar 9 1990
2000 1999 1998 to Sept 30, 2000
------ ----- ------ ----------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
EXPENSES 18,755 - - 55,180
--------- --------- --------- ----------
NET LOSS $ (18,755) $ - $ - $ (55,180)
========== ========= ========= ----------
NET LOSS PER COMMON
SHARE
Basic $ (.04) $ - $ -
--------- -------- --------
AVERAGE OUTSTANDING
SHARES
Basic 496,600 494,000 494,000
-------- --------- --------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SHAFT, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period March 9, 1990 (date of inception) to September 30, 2000
-------------------------------------------------------------------------------------------------------------------
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
--------- --------- ------------ -------------
<S> <C> <C> <C> <C>
Balance March 9, 1990 (date of inception) - $ - $ - $ -
Issuance of common stock for services at $.05 -
July 18, 1991 160,000 160 7,840 -
Issuance of common stock for cash at $.09 -
August 13, 1991 225,000 225 20,025 -
Issuance of common stock for cash at $.075
September 8, 1991 63,000 63 4,662 -
Issuance of common stock for cash at $.075
September 17, 1991 46,000 46 3,404 -
Net operating loss for the year ended
December 31, 1991 - - - (36,425)
Balance December 31, 1999 494,000 494 35,931 (36,425)
Issuance of common stock for cash at $1.00
July 10, 2000 8,755 9 8,746 -
Issuance of common stock for expenses paid by
related parties at $.05 - September 28, 2000 200,000 200 9,800 -
Net operating loss for the nine months
ended September 30, 2000 - - - (18,755)
Balance September 30, 2000 702,755 $ 703 $ 54,477 $ (55,180)
========= ========= ============ ==========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
<TABLE>
<CAPTION>
SHAFT, INC.
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and the Years Ended December 31, 1999,
and 1998, and the period March 9, 1990 (date of inception) to September 30, 2000
-------------------------------------------------------------------------------------------------------------------
(Unaudited) Period
Sept 30, Dec 31, Dec 31, Mar 9, 1990
2000 1999 1998 to Sept 30, 2000
------- -------- -------- -----------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (18,755) $ - $ - $ (55,180)
Adjustments to reconcile net loss to
net cash provided by operating - - - -
activities
Capital stock issued for services and expenses 10,000 - - 18,000
Net Cash From (Used) in Operations ( 8,755) - - (37,180)
----------- --------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
- - - -
----------- --------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common
stock 8,755 - - 37,180
----------- --------- ----------
Net Increase (Decrease) in Cash - - - -
Cash at Beginning of Period - - - -
----------- --------- ---------- ----------
Cash at End of Period $ - $ - $ - $ -
=========== ========= ========== ==========
NONCASH FLOWS FROM OPERATING ACTIVITIES
Issuance of 160,000 shares for services - 1991 $ 8,000
------
Issuance of 200,000 shares for expenses - 2000 10,000
------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
SHAFT, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on March 9,
1990 with authorized common stock of 2,500 shares with no par value with the
name "Buckaroom Inc." and on July 21, 2000 the authorized common stock was
increased to 100,000,000 shares with a par value of $0.001 with a name change to
"Shaft, Inc." On July 21, 2000 the Company completed a forward stock split of
two hundred shares for each outstanding share.
This report has been prepared showing after stock split shares with a par value
of $0.001 from inception.
The Company has been in the business of the development of mineral deposits.
During 1991 all activities were abandoned and the Company has remained inactive
since that time.
The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
------------
On September 30, 2000, the Company had a net operating loss carry forward of
$55,180. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is undeterminable
since the Company has no operations. The loss carryover expires in the years
from 2007 through 2021.
Estimates and Assumptions
-------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses.
Earnings (Loss) Per Share
-------------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding, after the stock splits.
<PAGE>
SHAFT, INC.
NOTES TO FINANCIAL STATEMENTS - continued
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity.
Recent Accounting Pronouncements
--------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
Financial Instruments
---------------------
The carrying amounts of financial instruments is considered by management to be
their estimated fair values.
3. RELATED PARTY TRANSACTIONS
Related parties have acquired 41% of the common stock issued by the Company.
4. GOING CONCERN
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company,
however there is insufficient working capital for any future planned activity.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding and long term debt which will enable the Company to conduct
operations for the coming year.
<PAGE>
PART III
EXHIBIT INDEX
Exhibit
Number Description
3(i) Articles of Incorporation
3(ii) Bylaws
4 Instruments defining rights of security holders, including
indentures.
None.
9 Voting Trust Agreement
None
10 Material Contracts
None
16 Letter re Change in Certifying Accountant
None
21 Subsidiaries of the Registrant
None
27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SHAFT, INC.
(Registrant)
By: s/ David Williams
--------------------------------
David Williams
President and Director
Dated: 17th day of October 2000.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 17th day of October, 2000.
s/ David Williams
--------------------------------------
David Williams
Director and Chief Executive Officer
s/ Christina Williams
--------------------------------------
Christina Williams
Director and Treasurer
