U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
As filed with the Securities and Exchange Commission on _________, 2000
ARCHON GROUP, INC.
(Name of Small Business Issuer in its charter)
Nevada 5900 59-3562712
----------------------- --------------------------- ----------------------
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer I.D.)
Classification No.)
908-885 West Georgia Street, 9th Floor
Vancouver, BC Canada V6C 3E8
(604) 687-2298
---------------------------------------------------------
(Address and telephone number of Registrant's principal
executive offices and principal place of business)
Andrew Mah, President
Archon Group, Inc.
908-885 West Georgia Street, 9th Floor
Vancouver, BC Canada V6C 3E8
---------------------------------------------------------
Michael J. Daniels
557 East Sahara, Suite 221
Las Vegas, Nevada 89104
(727)415-1630
(Name, address, and telephone number of agent for service)
------------------------------------------------------------------------
Copies to:
Daniels McGowan & Associates
1201 Allen Market Lane, Suite 200
St. Louis, MO 63104
Richard E. Daniels, Esq.
314-621-2728 Phone
314-621-3388 Fax
<PAGE>
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. /---- /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /---- /
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective Registration statement
for the same offering. /---- /
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. /---- /
If any securities being registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. /---- /
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered Registered Per Share Offering Price Fee
------------------- ---------- --------------- -------------- ------------
Common Stock, 11,393,250 $.003 $37,000* $10
$.0005 par value
* Estimated solely for purposes of calculating the registration fee.
---------------------------------------------------------------------------
-----
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
<PAGE>
ARCHON GROUP, INC.
CROSS REFERENCE SHEET
PART I
<TABLE>
<CAPTION>
<S> <C>
Form SB-2 Item Caption in Prospectus
Item 1. Front of Registration Statement and Front of Registration Statement and
Outside Front Cover of Prospectus . . . . Outside Front Cover of Prospectus
Item 2. Inside Front and Outside Back Cover. . . . . . . .Inside Front and Outside Back Cover
Pages of Prospectus Pages of Prospectus
Item 3. Summary Information and Risk Factors. . . . . . . Prospectus Summary; Risk Factors
Item 4. Use of Proceeds . . . . . . . . . . . . . . . . Use of Proceeds
Item 5. Determination of Offering Price . . . . . . . . Determination of Offering Price
Item 6. Dilution . . . . . . . . . . . . . . . . . . . . Not Applicable
Item 7. Selling Shareholders . . . . . . . . . . . . . . Selling Shareholders
Item 8. Plan of Distribution . . . . . . . . . . . . . . .Plan of Distribution
Item 9. Legal Proceedings . . . . . . . . . . . . . . . .Business-Legal Proceedings
Item 10. Directors, Executive Officers,
Promoters and Control Persons . . . . . . Management
Item 11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . Management-Principal Shareholders
Item 12. Description of Securities . . . . . . . . . . . .Description of Securities
Item 13. Interest of Named Experts and Counsel. . . . . . Interest of Named Experts and Counsel
Item 14. Disclosure of Commission Position on
Indemnification . . . . . . . . . . . . . .Indemnification of Officers and Directors
Item 15. Organization Within Last Five Years . . . . . . Certain Transactions
Item 16. Description of Business . . . . . . . . . . . . .Business
Item 17. Management's Discussion and Analysis or
Plan of Operation Management's Discussion and Analysis of
Financial Conditions and Plan of Operation
Item 18. Description of Property . . . . . . . . . . . . .Business-Properties
Item 19. Certain Relationships and
Related Transactions . . . . . . . . . . . .Certain Transactions
Item 20. Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . Market Information
Item 21. Executive Compensation . . . . . . . . . . . . . Management-Executive Compensation
Item 22. Financial Statements . . . . . . . . . . . . . . Financial Statements
Item 23. Changes In and Disagreements
With Accountants on Accounting
and Financial Disclosure . . . . . . . . . Not Applicable
</TABLE>
<PAGE>
PART II
<TABLE>
<CAPTION>
<S> <C>
Item 24. Indemnification of Officers and Directors. . . . Indemnification of Directors and Officers
Item 25. Other Expenses of Issuance and Distribution . . .Other Expenses of Issuance and Distribution
Item 26. Recent Sales of Unregistered Securities . . . . .Recent Sales of Unregistered Securities
Item 27. Exhibits . . . . . . . . . . . . . . . . . . . .Exhibits
Item 28. Undertakings . . . . . . . . . . . . . . . . . . Undertakings
</TABLE>
SUBJECT TO COMPLETION, DATED ____________, 2000
<PAGE>
PROSPECTUS
ARCHON GROUP, INC.
11,393,250 SHARES OF COMMON STOCK
This Prospectus covers the resale, from time to time, of up to 11,393,250 shares
of common stock of Archon, in the over-the-counter market, at prevailing market
prices, at negotiated prices, or otherwise.
Archon will not be receiving any of the proceeds from the sale of the shares by
Selling Shareholders, but will bear all of the expenses of the registration of
the shares.
Archon's common stock is not currently listed or quoted on any quotation medium.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 TO READ ABOUT CERTAIN FACTORS YOU SHOULD
CONSIDER BEFORE BUYING THE SHARES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE ARE NOT ALLOWED TO SELL THE COMMON STOCK OFFERED BY THIS PROSPECTUS
UNTIL THE REGISTRATION STATEMENT THAT WE HAVE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") BECOMES EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL OUR STOCK NOR DOES IT SOLICIT OFFERS TO BUY OUR STOCK IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this Prospectus is _________, 2000.
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary.............................................................1
Selected Financial Data........................................................1
Risk Factors...................................................................3
Use of Proceeds................................................................6
Market for Common Equity and Related Stockholder Matters ......................6
Determination of Offering Price................................................6
Selling Shareholders...........................................................7
Plan of Distribution...........................................................8
Legal Proceedings..............................................................9
Directors, Executive Officers, Promoters
and Control Persons.................................................9
Business Experience of Directors...............................................9
Security Ownership of Certain
Beneficial Owners and Management..............................................11
Description of Securities.....................................................12
Shares Eligible for Future Sale...............................................13
Interest of Named Experts and Counsel.........................................13
Transfer Agent and Registrar..................................................13
Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.....................13
Description of Business.......................................................14
Managements Discussion and Analysis of Financial Condition
and Results of Operations..........................................14
Plan of Operations In-General.................................................15
Description of Property......................................................16
Certain Relationships and Related Transactions................................16
Executive Compensation .......................................................17
Additional Information .......................................................17
Until 90 days after the effective date, all dealers that effect transactions in
these shares, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations in connection with the offering
described in this prospectus other than those contained in this prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by Archon. Neither the delivery of this prospectus nor
any sale made pursuant to this prospectus shall, under any circumstances, create
any implication that there has been no change in the affairs of Archon since the
date of this prospectus or that the information contained in it is correct as of
any time subsequent to its date.
<PAGE>
PROSPECTUS SUMMARY
Archon Group, Inc.
The following summary does not contain all the information that may be important
to you. You should read this entire prospectus carefully, especially "Risk
Factors" and the financial statements and related notes included elsewhere in
this prospectus, before deciding to invest in shares of our common stock. This
prospectus contains forward-looking statements that are based upon the beliefs
of our management, but involve risks and uncertainties. Our actual results or
experience could differ significantly from the results discussed in the
forward-looking statements.
Our company, Archon Group, Inc. ("the Company" or "Archon"), was incorporated in
Nevada on February 10, 1999 to market products through the Internet. The founder
and former President, Michael J. Daniels, saw the need for good products and
services to be marketed via the world wide web and sought opportunities through
companies that had the ability to sell and deliver in a timely fashion. While
developing the business, a merger with Quantum Net, Inc. was completed and a
name change to Archon Group, Inc. was accomplished. Upon the merger, Mr. Andrew
Mah assumed the official duties as President of the corporation and brought the
corporation on its present path of selling items from the various artists and
associations that belong to Asiacue.com. Asiacue.com is an informational web
site that currently promotes Chinese government sanctioned artists from a
variety of Chinese artist associations such as the China Writers Association,
Film Association, Theater Association and many others. Archon has signed
strategic alliances to bring the project forward and generate revenues for the
Ministry of Culture and Archon. The strategic alliances with Asiacue, the China
Federations of Literary and Art Circles (CFLAC) and ZhongLian International
Cultural Development Co. Ltd. allow Archon to operate in China through the
official licenses held by ZhongLian.
The Offering
Archon previously issued 28,918,250 shares of its stock. This prospectus covers
any resale of the following shares.
Common Stock Registered for Resale 11,393,250
Common Stock Outstanding prior to the Offering 28,918,250
Common Stock Outstanding after the Offering 28,918,250
SELECTED FINANCIAL DATA
The following selected financial date should be read in conjunction with
"Management's Discussion and Analysis of the Financial Condition and Plan of
Operations", and the Financial Statements, including the Notes thereto, included
elsewhere in this Prospectus. The statement of operations data for the seven
months ended July 31, 2000 and the year ended December 31, 1999 and the balance
sheet data at July 31, 2000 and December 31, 1999 are derived from the company's
Financial Statements, which have been audited by the Company's independent
auditors, included elsewhere in this Prospectus, and include all adjustments
that Archon considers necessary for a fair presentation of the financial
position and results of operations at that date and for such periods.
1
<PAGE>
BALANCE SHEET DATA:
July 31, December 31,
--------------------
2000 1999
-------- -------
Assets: ............................................... $ -- $ --
======== =======
Liabilities - Accounts Payable ........................ $ -- $ --
-------- -------
Stockholders' Equity:
Common Stock, Par value $.0005
Authorized 50,000,000 shares,
Issued 26,640,000 shares at July 31, 2000
and 17,389,750 at December 31, 1999 ............... 13,320 8,695
Paid-In Capital ..................................... -- --
Deficit Accumulated During the
Development Stage ................................. (13,320) (8,695)
-------- -------
Total Stockholders' Equity ............................ -- --
-------- -------
Total Liabilities and
Stockholders' Equity .............................. $ -- $ --
======== =======
STATEMENT OF OPERATIONS DATA:
Cumulative
since
February 10,
Seven Months For the year 1999
Ended ended inception of
July 31, December 31, development
2000 1999 stage
------- ------- --------
Revenues: .............................. $ -- $ -- $ --
Expenses: .............................. 4,625 8,695 13,320
------- ------- --------
Net Loss .......................... $(4,625) $(8,695) $(13,320)
------- ------- --------
Basic & Diluted loss per share ......... $ -- $ --
======= ========
2
<PAGE>
RISK FACTORS
An investment in our Common Stock offered hereby is speculative in nature and
involves a high degree of risk. In addition to the other information contained
in this prospectus, the following factors should be considered carefully before
making any investment decisions with respect to purchasing our Common Stock.
This prospectus contains, in addition to the lack of historical information,
forward-looking statements that involve risks and uncertainties. Archon's actual
results may differ materially from the results discussed in the forward-looking
statements. Factors that might cause or contribute to such difference include,
but are not limited to, those discussed below, as well as those discussed
elsewhere in this prospectus.
Our business has not shown a profit. Since we commenced operations in February
of 1999, we have accumulated a negligible net loss through the present. Although
we expect to be profitable for the year ending December 31, 2001, we cannot
assure that a year-end profit will be realized or that profitability will
continue in the future.
While we have no debt as of September 30, 2000, other than the monies expended
by key individuals to move the operation forward, it is anticipated that the
securing of equipment and contracts to move the company forward, along with the
necessary personnel, some debt will be accumulated. This debt will be partially
retired upon the completion of the offering.
Other factors to be included in a risk analysis are the lack of operating
history, no recent profits from operations, poor financial condition due to the
lack of capital, the industry of using the world wide web for sales and the fact
that there has been some retrenchment in the financial markets that could affect
the liquidity of the stock.
The recent history of companies operating in the high-tech world of the
Internet, has shown the true volatility of the industry. The inability of
companies to be profitable and continue operations has proven that success in
the industry is not guaranteed just because it is an Internet company.
While the industry has suffered, the specific niche the company is entering also
carries with it a high degree of risk. The political climate in China is very
poor. This goes hand in glove with the relationships that exist within the whole
of Asia. Whether Asia, specifically China, can improve their international
acceptance leaves the business climate in a state of uncertainty. Within this
macro climate of Asia, there exists a micro climate of a lack of management
expertise that exists within China. These factors cannot be ignored, especially
when the language barrier itself lends credence to the fact that it has been
difficult at best for the Chinese to integrate into the international business
arena called the Internet.
As the political climate goes, so goes the business climate. This is another
reason for caution. In a part of the world where unrest and conflict have
persisted through time, business ventures remain extremely difficult. The
fragile state of affairs on an inter and intra county scale leaves the fortunes
of businesses in the position where they may not control their own destiny.
If we lose our key personnel, our business may suffer. We depend substantially
on the continued services and performance of our senior management and, in
particular, their contacts and relationships with the Chinese government and
various agencies. Our business may be hurt if one or more of our senior
management or key
3
<PAGE>
employees leave Archon. We do not have an employment agreement with any of our
key executive personnel. If we lose the services of any of these executive
officers or other key employees, we may not be able to attract and retain
additional qualified personnel to fill their positions in the future.
We are smaller than most of our national competitors and, consequently, we may
lack the financial resources to enter new markets or increase existing market
share. We compete with many companies marketing products similar to the ones we
sell. Most of these companies have longer histories, more products and greater
name recognition and more financial resources than we do.
If our information technology systems fail, we would not be able to conduct our
day-to-day business. Depending upon the severity and duration of the failure and
our ability to remedy the cause, our business could be hurt. If our Information
Technology systems fail, our operations could suffer. Our business is very
dependent upon Information Technology and its related systems to manage and
operate many of our key business functions, including:
o order processing;
o customer service;
o distribution of products;
o cash receipts and payments
o marketing inventory
There are state regulations which might affect the transferability of Archon's
shares. Archon has not registered its shares for resale under the securities or
"blue sky" laws of any state and has no plans to register or qualify its shares
in any state. Current shareholders, and persons who desire to purchase the
shares in any trading market that may develop in the future, should be aware
that there may be significant state restrictions upon the ability of new
investors to purchase the securities.
SEC and "blue sky" laws, regulations, orders, or interpretations place
limitations on offerings or sales of securities by development stage companies,
or if such securities represent "cheap stock" previously issued to promoters or
others. These limitations typically provide, in the form of one or more of the
following limitations, that such securities are:
o not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified
purchasers;
o not eligible for the transactional exemption from registration for
non-issuer transactions by a registered broker-dealer;
o not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
o required to be placed in escrow and the proceeds received held in escrow
subject to various limitations; or
o not permitted to be registered or exempted from registration, and
thus not permitted to be sold in the state under any circumstances.
Virtually all 50 states have adopted one or more of these limitations, or other
limitations or restrictions affecting the sale or resale of stock of development
stage companies, or "cheap stock" issued to promoters or others.
4
<PAGE>
Specific limitations on offering by development stage companies have been
adopted in:
Alaska Maryland Rhode Island
Arkansas Nebraska South Carolina
California New Mexico South Dakota
Delaware Ohio Tennessee
Florida Oklahoma Utah
Georgia Oregon Vermont
Idaho Pennsylvania Washington
Indiana
Archon's selling efforts, and any secondary trading market which may develop,
may only be conducted in those jurisdictions where an applicable exemption is
available or where the shares have been registered.
FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the future.
Forward-looking statements include statements about the future of the Internet
industry, statements about our future business plans and strategies, and most
other statements that are not historical in nature. In this prospectus,
forward-looking statements are generally identified by the words "anticipate,"
"plan," "believe," "expect," "estimate," and the like. Because forward-looking
statements involve future risks and uncertainties, there are factors that could
cause actual results to differ materially from those expressed or implied. For
example, a few of the uncertainties that could affect the accuracy of
forward-looking statements include:
(A) changes in general economic and business conditions affecting the world wide
web industry;
(B) our ability to design, order and stock merchandise that appeals to our
customers;
(C) technical developments that make our services obsolete;
(D) our costs in the pricing of our products;
(E) the level of demand for our products; and
(F) changes in our business strategies.
5
<PAGE>
USE OF PROCEEDS
The principal purpose of this registration statement is to create a more liquid
public market for Archon's common stock. Upon the effectiveness of this
registration statement, a portion of Archon's outstanding shares of common stock
will be registered for resale under the Securities Act. While Archon will bear
the expenses of the registration of the shares, Archon will not realize any
proceeds from any actual resale of the shares that might occur in the future.
All proceeds from any resale will be received by the Selling Shareholders.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this offering, the Company's common shares have never been freely
traded and there is no public market for its stock. No assurance can be given
that an active public market will develop or be sustained after the offering.
There also can be no assurance that the Company's securities will be quoted on
any recognized quotation medium. The offering price of the shares has been
arbitrarily determined by the Company. The trading price of the securities could
be subject to wide fluctuations in response to quarter-to- quarter variations in
operating results, announcements, and other events or factors. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for many
companies and which often have been unrelated to the operating performance of
these companies. These broad market fluctuations may adversely affect the market
price of the securities.
The Company's securities are not currently quoted on any recognized quotation
medium. While there can be no assurance that any public market will ever develop
for the company's stock, if such a market should develop, trading the company's
common stock would be subject to the requirements of certain rules promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), which
require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as a penny stock (generally, any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker- dealers
by such requirements may discourage them from effecting transactions in the
Company's securities, which could severely limit the liquidity of the Company's
securities and the ability of purchasers in this Offering to sell such
securities in the secondary market.
6
<PAGE>
DETERMINATION OF OFFERING PRICE
Offering Price has been arbitrarily determined by management. The offering price
of the Common Stock has been arbitrarily determined by us and may not be
indicative of the price at which shares of Common Stock will sell after this
offering. In determining the offering price, our Board of Directors considered,
among other things, our earnings, its view of our prospects, the earnings of
comparable publicly traded Internet companies and the trading price of the stock
of those companies. We make no representations as to any objectively reasonable
value of the Common Stock. Since we have not retained an underwriter for
purposes of this offering, the offering price has not been subject to evaluation
by any third party as would be the case in an underwritten offering. Prices for
the shares of our Common Stock after this offering will be determined in the
available market and may be influenced by many factors, including the depth and
liquidity of the market for our Common Stock, the perception of Archon by other
investors, the Internet industry as a whole, and general economic and market
conditions.
Our Business is subject to compliance with Various Government Regulations. We
are subject to regulation by numerous governmental agencies, the most active of
which is the Securities and Exchange Commission (the "SEC"), which will regulate
our status as a fully reporting company.
SELLING SHAREHOLDERS
The following table sets forth certain information as of the date of this
prospectus, with respect to the selling shareholders for whom Archon is
registering shares for resale to the public. The shares listed in the table were
issued to Archon Group, Inc. for cash at $.0005 (par value) per share. There are
no known relationships between any of the shareholders, or Archon's Management.
Method of
Date of Original Shares Maximum No.
Original Issuance Beneficially of Shares to be
Name of Issue/ (i.e.purchase Owned Prior Sold Pursuant to
Security Holder Purchase gift, etc.) to Offering this Prospectus
----------------------- -------- ----------- --------- ---------
Regency Financial
Group .................... 08-04-00 purchase 1,360,000 1,360,000
Berkshire Capital
Management Co. Inc. ...... 08-04-00 purchase 1,653,250 1,653,250
Thomas Hartwick .......... 08-04-00 purchase 2,000,000 2,000,000
Gina Della Femina ........ 08-04-00 purchase 100,000 100,000
Steven A. Sanders ........ 08-04-00 purchase 100,000 100,000
Laurence D. Paredes ...... 08-04-00 purchase 15,000 15,000
Timothy Matula ........... 08-04-00 purchase 2,080,000 2,080,000
John C. Sypek ............ 08-04-00 purchase 25,000 25,000
John M. Peragine ......... 08-04-00 purchase 525,000 525,000
James Mylock, Jr ......... 08-04-00 purchase 525,000 525,000
Andreas Lintzeris ........ 08-04-00 purchase 525,000 525,000
Jon Callahan ............. 08-04-00 purchase 525,000 525,000
Daniel Grieco ............ 08-04-00 purchase 10,000 10,000
Amanda E. Johnson ........ 08-04-00 purchase 525,000 525,000
7
<PAGE>
Method of
Date of Original Shares Maximum No.
Original Issuance Beneficially of Shares to be
Name of Issue/ (i.e.purchase Owned Prior Sold Pursuant to
Security Holder Purchase gift, etc.) to Offering this Prospectus
------------------- -------- ----------- --------- ---------
Milton Izizarry .... 08-04-00 purchase 525,000 525,000
Lamar Jensen ....... 02-10-99 purchase 780,000 780,000
Diane J. Harrison .. 02-10-99 purchase 500 500
Dawn M. Koerner .... 02-10-99 purchase 500 500
Stefani L. Pito .... 02-10-99 purchase 500 500
William B. & Belvey
D. Harrison, II .... 02-10-99 purchase 500 500
Greg Alan & Donna L.
Corlyn ............. 02-10-99 purchase 500 500
Daniel J. Terzo .... 02-10-99 purchase 500 500
Mark & Deborah
Kepes .............. 02-10-99 purchase 500 500
Debra Hensen ....... 02-10-99 purchase 500 500
Sandra K. Taunton .. 02-10-99 purchase 500 500
Lynette Wade ....... 02-10-99 purchase 500 500
Eileen Daniels ..... 02-10-99 purchase 500 500
Lydia Metzger ...... 02-10-99 purchase 500 500
Michael J. Daniels . 02-10-99 purchase 114,000 114,000
All of the shares offered by this prospectus may be offered for resale, from
time to time, by the Selling Shareholders, pursuant to this prospectus, in one
or more private or negotiated transactions, in open market transactions in the
over-the-counter market, or otherwise, or by a combination of these methods, at
fixed prices that may be changed, at market prices prevailing at the time of the
sale, at prices related to such market prices, at negotiated prices, or
otherwise. The Selling Shareholders may effect these transactions by selling
their shares directly to one or more purchasers or to or through broker-dealers
or agents. The compensation to a particular broker-dealer or agent may be in
excess of customary commissions. Each of the Selling Shareholders may be deemed
an "underwriter" within the meaning of the Securities Act in connection with
each sale of shares. The Selling Shareholders will pay all commissions, transfer
taxes and other expenses associated with their sales.
PLAN OF DISTRIBUTION
To our knowledge, none of the Selling Shareholders has made any arrangement with
any brokerage firm for the sale of the shares. We have been advised by the
Selling Shareholders that they presently intend to dispose of the shares through
broker-dealers in ordinary brokerage transaction at market prices prevailing at
the time of sale.
Any broker-dealers or agents who act in connection with the sale of the shares
may be deemed to be
8
<PAGE>
underwriters. Any discounts, commissions or concessions received by ant
broker-dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
Archon has not registered its shares for resale under the securities or "blue
sky" laws of any state. Current shareholders and persons who desire to purchase
the shares in any trading market that may develop in the future, should be aware
that there may be significant state "blue sky" restrictions upon the ability of
new investors to purchase the securities. These restrictions could reduce the
size of any potential trading market. Under federal law, non-issuer trading or
resale of Archon's common stock may be exempt from most state registration or
qualification requirements. However, some states may continue to restrict the
ability to register or qualify Archon's common stock for both initial sale and
secondary trading by regulations prohibiting or imposing limitations on the sale
of securities of development stage issuers.
LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
We currently have no paid full time employees. The management team consisting of
the following individuals is conducting the business of the company:
NAME POSITION AGE
------------------------------- ---------------------------------- ---
Andrew Mah .................... President/Director 35
Daniel Yu ..................... Director of Operations 26
James Tutton .................. Corporation Secretary 61
Philip Toy .................... Corporate Treasurer 48
Li, Yinghong .................. Marketing Manager (Proposed) UNK
Wang, Chenglin ................ Chief Financial Officer (Proposed) UNK
Li, Yangxin ................... Vice President (Proposed) UNK
Tu, Yunan ..................... Chief Technical Officer (Proposed) UNK
Chen, Jiangmao ................ Steering Board Member (Proposed) UNK
BUSINESS EXPERIENCE OF DIRECTORS
Andrew Mah is the President and a Director and has served in those capacities
since the inception of the merged company Quantum Net, Inc. and has assumed
those positions upon the merger with the Harrison
9
<PAGE>
Corp., now Archon Group, Inc. Mr. Mah received his education at Simon Frasier
University in Business Administration and Finance. His further education was at
the Columbia Institute of Technology. He has also completed the Canadian
Securities Course. Mr. Mah has a broad range of experience including positions
in private industry as well as government work. His government tenure included a
position with Government of British Columbia for more than ten years. Mr. Mah
served on the Board of Directors of several different companies and most
recently was a director with Sakon International Investments Ltd. Specific
companies he has been employed by are Pacific Gaming Ltd.; BC Gaming Commission,
Ministry of Attorney General, Provincial Government of BC; GameStar
Entertainment, Inc.; Crystal Hill Management, Ltd.; Hebei Glacier Breweries
(China); and Celestial Investments Ltd.
Daniel Yu, Director of Operations, received his education at the Beacom College
(Sister of Berkley) and New York University. Mr. Yu began his career at Jennifer
Daniels in New York City and progressed to President of Xtreme Technologies
Group in New York City. Mr. Yu was instrumental in eliminating the corporations
yearly loss of over $100k to operating in the black. He specifically developed
new products that increased earnings by 100%. He further assisted the company in
moving from computer hardware to consulting and web design.
James Tutton, Secretary, received his B.Com in 1965 in Estate Management at
Urban Land Economics University of British Columbia. In 1968 he joined
Wolstencroft Agencies Ltd. As Assistant to the President. Then in 1969 he
purchased the company from James Wolstencroft in 1969. He has held numerous
directorships in public companies and has extensive professional memberships and
associations. He has been a Director in the following corporations: Canplats
Resources Corporation; Consolidated first Fund Capital Corp.; Cross Lake
Minerals Ltd; East West Resource Corp.; Horseshoe Gold Mining Inc.;
International Sinstate Ventures Ltd.; New Nadina Explorations Limited; NovaDx
International Corp.; and Telelink Communication Corp.
Mr. Philip Toy, Treasurer, is a graduate of the University of Manitoba and is a
Certified Management Accountant with over twenty years experience. His most
recent experience was as a partner in the firm of Philip Toy & Co., an
accounting firm. His prior experience was with Laventhol, Horwath, Doan &
Raymond and Campbell Mining Corp. He was a director in Pacific Minesearch, Ltd.
Li, Yinghong received her undergraduate degree at Fudan University in 1998. She
has been working in the marketing department of U.S. Bao Long Imports & Exports
Co. Ltd., Beijing subsidiary since 1998. From 1995 to 1998 she was employed by
Ningxia Metals & Mineral Imports & Exports Company as the International
Marketing Manager. Her proposed position is that of Manager Marketing
Department.
Wang, Chenglin graduated with a degree in accounting from Shanghai University of
Finance and Economics. For two years he taught undergraduate and graduate
students in accounting. Since 1992 he has been working as a Chief Financial
Officer at Hainan Provincial Securities Company. His proposed position is that
of Chief Financial Officer.
Li, Yangxin graduated from Nanjing Aeronautics & Astronautics University in
1982. He was employed by the Research Institute of Ministry of Aerospace
Industry from 1982 to 1988 and worked in Computer Research Institute of Ministry
of Machine Building & Electronics Industry from 1988 to 1995. Presently he is
the President of Huacheng Computer Co. Ltd. His proposed position is
Vice-President.
Tu, Yuyan has an MS in Computer Science. He has been working as the Manager of
Development Department of Beijing BoShijie Electrical Research Institute since
1996. He was employed as Manager of
10
<PAGE>
Development Department Beijing Yinyan Automation Controlling Co Ltd from 1989 to
1996 and as a researcher in Research Institute of Ministry of Aerospace Industry
from 1983 to 1986. His proposed position is Chief Technical Officer.
Chen, Jiangmao is the President of Shanghai Runtong Investment Consulting Co
Ltd. After graduating from Shanghai Huadong Normal University with an M.A. in
International Finance in 1990, he lectured in Shanghai University before working
as General Manager of Trust & Investment Co Ltd Shanghai Office of the
Construction Bank of China. His proposed position is that of Steering Board
Member, Association Liaison Manager.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to Archon Group, Inc.
regarding beneficial ownership of Archon's common stock at October 15, 2000 and
as adjusted to reflect the sale of the shares of common stock in this offering
by:
o each person known by Archon to be the beneficial owner of more than 5% of
Archon's common stock;
o each of Archon's directors and executive officers; and
o all executive officers and directors as a group.
Percentage of Outstanding
Shares Common After Offering
Name and Address of Beneficially Stock Prior to
Beneficial Owner ......... Owned (1) Offering Minimum Maximum
Berkshire Capital
Management Co., Inc. ...........
670 White Plains Rd ............
Suite 120
Scarsdale, NY 10583 ............1,653,250 5.72% 5.72% 5.72%
Timothy Matula
3639 211th Place NE
Redmond, WA 98053 ..............2,080,000 7.19% 7.19% 7.19%
Thomas Hartwick
3639 211th Place NE
Redmond, WA 98053 ..............2,000,000 6.92% 6.92% 6.92%
All Officers and Directors as ..2,453,500 8.48% 8.48% 8.48%
a group (4 in number)
11
<PAGE>
(1) The information contained in this table with respect to beneficial ownership
reflects "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act.
All information with respect to the beneficial ownership of any shareholder has
been furnished by such shareholder and, except as otherwise indicated or
pursuant to community property laws, each shareholder has sole voting and
investment power with respect to shares listed as beneficially owned by such
shareholder. Pursuant to the rules of the Commission, in calculating percentage
ownership, each person is deemed to beneficially own shares subject to options
or warrants exercisable within 60 days of the date of this Prospectus, but
shares subject to options or warrants owned by others (even if exercisable
within 60 days) are deemed not to be outstanding.
DESCRIPTION OF SECURITIES
The Articles of Incorporation authorize capital stock consisting of 50,000,000
shares of common stock, $0.0005 par value.
Common Stock
As of October 15, 2000, there were 28,918,250 shares of common stock issued and
outstanding that were held of record by approximately 48 shareholders.
Each outstanding share of common stock is entitled to one vote on all matters to
be submitted to a vote of shareholders, except that, upon giving the notice
required by law, shareholders may cumulate their votes in the election of
directors. Holders do not have preemptive rights, so we may issue additional
shares that may reduce each holder's voting and financial interest in our
company. The right of holders of our common stock to receive dividends may be
restricted by the terms of any shares of our preferred stock issued in the
future. If we were to liquidate, dissolve, or wind up our affairs, holders of
common stock would share proportionately in our assets that remain after payment
of all of our debts and obligations and after any liquidation payments with
respect to preferred stock.
Preferred Stock
There is no provision in the Articles of Incorporation for preferred stock at
this time.
Dividends
We don't plan to pay dividends at this time. We don't expect to pay dividends on
common stock anytime soon. We expect to use all earnings, and the proceeds from
this offering, to pay outstanding debt and to develop our business. Our board
will decide on any future payment of dividends, depending on our results of
operations, financial condition, capital requirements, and any other relevant
factors.
Presently in the By-laws there are two provisions that could delay a change in
control of the company. There is a provision for a staggered board of directors.
There are three (3) members to be elected annually until the board is full.
Second, there is a super majority voting provision regarding takeovers. A super
majority of seventy-five percent (75%) is required to approve a takeover by
another person or entity.
Convertible Notes
There are no convertible notes outstanding at this time.
12
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the effectiveness of this registration statement, Archon will have
11,393,250 shares of common stock outstanding and registered for resale by the
Selling Shareholders in accordance with the Securities Act of 1933.
Prior to this offering, no public trading market has existed for shares of
Archon common stock. The sale, or availability for sale, of substantial amounts
of common stock in the public trading market could adversely affect the market
prices for Archon's common stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
The law firm of Daniels McGowan & Associates of 1201 Allen Market Lane, Suite
200, St. Louis, Missouri 63104, phone (314) 621-2728, Richard E. Daniels, Esq.,
has been retained to advise the company regarding this filing.
The audited financial statements of Archon Group, Inc. included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Robison, Hill & Co., 1366 East Murray-Holladay Road, Salt Lake City, Utah, phone
(801) 272-8045 independent public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance given upon their
authority of said firm as experts in accounting and auditing.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Signature Stock
Transfer, Inc., 14675 Midway Road, Suite 221, Addison, Texas 75001; telephone:
972-788-4193.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 78(1)(2)(3) & (4) of the Nevada Revised Statutes (the "NRS") permits
corporations to indemnify a Director, Officer or control person of the
corporation or its stockholders for any liability asserted against him and
liability and expenses incurred by him in his capacity as a director, officer,
employee or agent, or arising out of his status as such, whether or not the
corporation has the authority to indemnify him against such liability and
expense. Our Articles of Incorporation and By-laws do not include such a
provision automatically indemnifying an Director, Officer or control person of
the corporation or its stockholders for any liability asserted against him and
liability and expenses incurred by him in his capacity as a director, officer,
employee or agent, or arising out of his status as such.
Our By-laws, Article X Section 3, do permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in such capacity, regardless of whether or not Nevada law
would permit indemnification.
13
<PAGE>
We are not obligated to indemnify the indemnitee with respect to (a) acts,
omissions or transactions from which the indemnitee may not be relieved of
liability under applicable law, (b) claims initiated or brought voluntarily by
the indemnitee and not by way of defense, except in certain situations, (c)
proceedings instituted by the indemnitee to enforce the Indemnification
Agreements which are not made in good faith or are frivolous, or (d) violations
of Section 16(b) of the Securities Exchange Act of 1934 or any similar statute.
While not requiring the maintenance of directors' and officers' liability
insurance, if there is such insurance, the indemnitee must be provided with the
maximum coverage afforded to Directors, officers, key employees, agents or
fiduciaries if indemnitee is a Director, officer, key employee, agent or
fiduciary, respectively. Any award of indemnification to an agent would come
directly from our assets, thereby affecting a stockholder's investment.
These indemnification provisions may be broad enough to permit indemnification
of our officers and Directors for liabilities (including reimbursement of
expenses) arising under the Securities Act.
DESCRIPTION OF BUSINESS
Our company, Archon Group, Inc. ("the Company" or "Archon"), was incorporated in
Nevada on February 10, 1999 to market products through the Internet. The founder
and former President, Michael J. Daniels, saw the need for good products and
services to be marketed via the world wide web and sought opportunities through
companies that had the ability to sell and deliver in a timely fashion. While
developing the business, a merger with Quantum Net, Inc. was completed and a
name change to Archon Group, Inc. was accomplished. Upon the merger, Mr. Andrew
Mah assumed the official duties as President of the corporation and brought the
corporation on its present path of selling items from the various artists and
associations that belong to Asiacue.com. Asiacue.com is an informational web
site that currently promotes Chinese government sanctioned artists from a
variety of Chinese artist associations such as the China Writers Association,
Film Association, theater Association and many others. Archon has signed
strategic alliances to bring the project forward and generate revenues for the
Ministry of Culture and Archon. The strategic alliances with Asiacue, the China
Federations of Literary and Art Circles (CFLAC) and ZhongLian International
Cultural Development Co. Ltd. allow Archon to operate in China through the
official licenses held by ZhongLian.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the Notes thereto, appearing
elsewhere in this Prospectus.
14
<PAGE>
COMPANY OVERVIEW
The Company was organized on February 10, 1999, and has never commenced
operations. The Company's common stock is not listed on any recognized exchange
or quoted on any quotation medium.
PLAN OF OPERATIONS-IN GENERAL
The Company was organized for the purpose of creating a corporate vehicle to
seek, investigate and, if such investigation warrants, acquire an interest in
one or more business opportunities presented to it. At this time, the Company
has completed a merger with a New York company, and the Company has identified a
specific business that it has targeted for operations. No member of Management
or promoter of the Company has had any material discussions with any other
company with respect to any acquisition of that company. 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. The discussion of the proposed business under this caption and
throughout is purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to enter into other potential business
opportunities related to the Internet. The Company's plan of operations over the
next 12 months includes the seeking of acquisition or merger opportunities.
During the next twelve months, the Company plans to satisfy its cash
requirements by additional equity financing. There can be no assurance that the
company will be successful in raising additional equity financing, and, thus, be
able to satisfy its cash requirements, which primarily consist of legal and
accounting fees at the present time. If the company is not able to raise equity
capital, and it presently has no cash with which to satisfy any future cash
requirements. The company will need a minimum of $30,000 to satisfy its cash
requirements for the next 12 months. The company will not be able to operate if
it does not obtain equity financing. The Company has no current material
commitments. The Company depends upon capital to be derived from future
financing activities such as subsequent offerings of its stock. There can be no
assurance that the Company will be successful in raising the capital it
requires. The company does not anticipate any further research and development
of any products, nor does it expect to incur any research and development costs.
The company does not expect the purchase or sale of plant or any significant
equipment, and it does not anticipate any change in the number of its employees.
The Company has no current material commitments. The Company has generated no
revenue since its inception.
The Company is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. There can be no assurance that the Company will
be successful in raising the capital it requires through the sale of its common
stock.
Management anticipates that it will only participate in one business venture.
This lack of diversification should be considered a substantial risk in
investing in the Company because it will not permit the Company to offset
potential losses from one venture against gains from another. The Company may
seek business opportunity with firms that commenced operations. The Company may
purchase assets and establish wholly owned subsidiaries in various businesses or
purchase existing businesses as subsidiaries. Potentially available business
opportunities may occur 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 extremely difficult and complex. As is
customary in the industry, the Company may pay a finder's fee for locating an
acquisition prospect. If any such fee is paid, it will be approved by the
Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
15
<PAGE>
$4,000,000 transaction. Management had adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company. As part of any
transaction, the acquired company may require that Management or other
stockholders of the Company sell all or a portion of their shares to the
acquired company, or to the principals of the acquired company. It is
anticipated that the sales price of such shares will be lower than the
anticipated market price of the Company's Common Stock at such a time. The
Company's funds are not expected to be used for purposes of any stock purchase
from insiders. The Company shareholders will not be provided the opportunity to
approve or consent to such sale. The opportunity to sell all or a portion of
their shares in connection with an acquisition may influence management's
decision to enter into a specific transaction. However, management believes that
since the anticipated sales price will potentially be less than market value,
that the potential of a stock sale will be a material factor in their decision
to enter a specific transaction. The above description of potential sales of
management stock is not based upon any corporate By-laws, shareholder or board
resolution, or contract or agreement. No other payments of cash or property are
expected to be received by Management in connection with any acquisition. The
Company has not formulated any policy regarding the use of consultants or
outside advisors, but does not anticipate that it will use the services of such
persons.
DESCRIPTION OF PROPERTY
The principal location of the company is 908-885 West Georgia Street, 9th Floor,
Vancouver, BC, Canada V6C 3E8, telephone number (604) 687-2298. The total
rentable space of 2,100 square feet is sub-leased. The sub-lease includes the
use of furniture, utilities, photocopier and telephone system.
The company owns the following equipment in good condition:
o One (1) NEC Computer
o One (1) Panasonic Laser Printer
o One (1) AGHA Scanner
o One (1) Generic K6-350 Computer
o One (1) Brother Laser Printer
o One (1) Filing Cabinet
o One (1) Office Desk and Chair
o Paintings and Miscellaneous Decor Items
The company will develop specific policies regarding the allocation of assets
once the Chief Financial Officer has been brought on board. The current use of
equipment will be for the generation of income versus capital gains. Specific
investments of funds in securities, real estate, mortgages and other investment
programs will be developed by the CFO and will be approved by the Board of
Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
To the best of the company's knowledge there are no transactions involving any
director, executive officer, any nominee for election as a director or officer
or any security holder who is a beneficial owner or any member of the immediate
family of the same.
16
<PAGE>
EXECUTIVE COMPENSATION
No compensation is currently being paid by the company to any of the executives.
It is possible that upon completion of equity financing a compensation package
will be developed, however there is no time frame for the foreseeable future.
Compensation of executives will be determined by the Board of Directors and
shareholders of the company will not have the opportunity to vote on or approve
such compensation. The Board of Directors will be developing a compensation
package that will be within industry standards for executives similarly situated
with other companies in the same industry.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
To the best of the company's knowledge there has been no disagreement with the
independent auditors regarding the method(s) used in the preparation of the
financials for this filing.
ADDITIONAL INFORMATION
This prospectus is part of a registration statement on Form SB-2 filed under the
Securities Act of 1933, as amended (which is referred to later as the
"Securities Act"). This prospectus does not contain all of the information in
the Registration Statement and its exhibits. Statements in this prospectus about
any contract or other document are just summaries. You may be able to read the
complete document as an exhibit to the Registration Statement.
Archon Group, Inc., when it becomes a fully reporting company, will have to file
reports under the Securities Exchange Act of 1934, as amended (which is referred
to later as the "Exchange Act"). You may read and copy the Registration
Statement and our report at the Securities and Exchange Commission's (which is
referred to later as the "Commission") public reference rooms at 450 Fifth
Street, N.W. Washington, D.C. 20549, Seven World Trade Center, 13th Floor, New
York, New York 10048. (You may telephone the Commission's Public Reference
Branch at 800-SEC-0330.) Our Registration Statement and reports will also be
available on the Commission's Internet site at http://www.sec.gov.
We intend to furnish our stockholders with annual reports containing financial
statements audited by an independent public accounting firm after the end of
each fiscal year.
17
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants ......................... F-1
Balance Sheets
July 31, 2000 and December 31, 1999 ....................................... F-2
Statement of Operations, For the Seven Months Ended
July 31, 2000, and
For The Year Ended December 31, 1999 ...................................... F-3
Statement of Stockholders' Equity
Since February 10, 1999 (Inception) to July 31, 2000 ..................... F-4
Statement of Cash Flows, For The Seven Months Ended
July 31, 2000, and
For The Year Ended December 31, 1999 ..................................... F-5
Notes to Financial Statements .............................................. F-6
<PAGE>
ARCHON GROUP, INC.
(Formerly The Harrison Corp.)
(A Development Stage Company)
-:-
INDEPENDENT AUDITOR'S REPORT
JULY 31, 2000
AND
DECEMBER 31, 1999
<PAGE>
CONTENTS
Page
Independent Auditor's Report...............................................F - 1
Balance Sheets
July 31, 2000 and December 31, 1999......................................F - 2
Statements of Operations for the
Seven Months Ended July 31, 2000 and the Year Ended December 31, 1999....F - 3
Statement of Stockholders' Equity
Since February 10, 1999 (inception) to July 31, 2000......................F - 4
Statements of Cash Flows for the
Seven Months Ended July 31, 2000 and the Year Ended December 31, 1999....F - 5
Notes to Financial Statements..............................................F - 6
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Archon Group, Inc.
(formerly The Harrison Corp.)
(A Development Stage Company)
We have audited the accompanying balance sheets of Archon Group, Inc.
(formerly The Harrison Corp.) (a development stage company) as of July 31, 2000
and December 31, 1999, and the related statements of operations, and cash flows
for the seven months ended July 31, 2000 and the year ended December 31, 1999
and the statement of stockholders' equity from February 10, 1999 (inception) to
July 31, 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 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 financial statement 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 Archon Group, Inc. (formerly
The Harrison Corp.) (a development stage company) as of July 31, 2000 and
December 31, 1999, and the results of its operations and its cash flows for the
seven months ended July 31, 2000 and the year ended December 31, 1999 in
conformity with generally accepted accounting principles.
Respectfully submitted
/S/ Robison, Hill & Co.
------------------------
Certified Public Accountants
Salt Lake City, Utah
October 4, 2000
F - 1
<PAGE>
ARCHON GROUP, INC.
(formerly The Harrison Corp.)
(A Development Stage Company)
BALANCE SHEETS
July 31, December 31,
--------------------
2000 1999
-------- -------
Assets: ............................................... $ -- $ --
======== =======
Liabilities - Accounts Payable ........................ $ -- $ --
-------- -------
Stockholders' Equity:
Common Stock, Par value $.0005
Authorized 50,000,000 shares,
Issued 26,640,000 shares at July 31, 2000
and 17,389,750 at December 31, 1999 ............... 13,320 8,695
Paid-In Capital ..................................... -- --
Deficit Accumulated During the
Development Stage ................................. (13,320) (8,695)
-------- -------
Total Stockholders' Equity ....................... -- --
-------- -------
Total Liabilities and
Stockholders' Equity ........................... $ -- $ --
======== =======
The accompanying notes are an integral part of these financial statements.
F - 2
<PAGE>
ARCHON GROUP, INC.
(formerly The Harrison Corp.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
since
February 10,
Seven Months For the year 1999
Ended ended inception of
July 31, December 31, development
2000 1999 stage
------- ------- --------
<S> <C> <C> <C>
Revenues: .............................. $ -- $ -- $ --
Expenses: .............................. 4,625 8,695 13,320
------- ------- --------
Net Loss .......................... $(4,625) $(8,695) $(13,320)
------- ------- --------
Basic & Diluted loss per share ......... $ -- $ --
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
ARCHON GROUP, INC.
------------------
(formerly The Harrison Corp.)
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE FEBRUARY 10, 1999 (INCEPTION) TO JULY 31, 2000
Deficit
Accumulated
Since
February 10,
1999
Common inception of
Stock Par Paid-In Development
Shares Value Capital Stage
---------- ------- ------- --------
Balance at February 10, 1999 ......... -- $ -- $ -- $ --
(inception)
February 10, 1999 Issuance of Stock
for Payment of Accounts Payable .... 470,000 235 -- --
Capital contributed by Shareholder ... -- -- 8,460 --
Net Loss ............................. -- -- -- (8,695)
---------- ------- ------- --------
Balance at December 31, 1999
As Originally Reported .............. 470,000 235 8,460 (8,695)
Retroactive adjustment for 37
to 1 stock split July 31, 2000 ......16,920,000 8,460 (8,460) --
---------- ------- ------- --------
Restated balance January 1, 2000 .....17,390,000 8,695 -- (8,695)
February 10, 2000 Issuance of Stock
for Payment of Accounts Payable .... 9,250,000 4,625 --
Net Loss ............................. -- -- -- (4,625)
---------- ------- ------- --------
Balance at July 31, 2000 .............26,640,000 $13,320 $ -- $(13,320)
========== ======= ======= ========
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
ARCHON GROUP, INC.
------------------
(formerly The Harrison Corp.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
Seven For the Since
months years February 10,
ended ended 1999
July December inception of
31, 31, Development
------- --------- ------
2000 1999 Stage
------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss ...................................... $(4,625) $ (8,695) $(13,320)
Increase (Decrease) in Accounts Payable ....... -- -- --
------- -------- --------
Net Cash Used in operating activities ....... (4,625) (8,695) (13,320)
------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by
investing activities ........................ -- -- --
------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of Common Stock ...................... 4,625 235 4,860
Capital contributed by shareholder ............ -- 8,460 8,460
------- -------- --------
Net Cash Provided by
Financing Activities ........................ 4,625 8,695 13,320
------- -------- --------
Net (Decrease) Increase in
Cash and Cash Equivalents ................... -- -- --
Cash and Cash Equivalents
at Beginning of Period ...................... -- -- --
------- -------- --------
Cash and Cash Equivalents
at End of Period ............................ $ -- $ -- $ --
======= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ...................................... $ -- $ -- $ --
Franchise and income taxes .................... $ 125 $ -- $ 125
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES: None
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
ARCHON GROUP, INC.
(formerly The Harrison Corp.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SEVEN MONTHS ENDED JULY 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
--------------------------------
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Archon Group, Inc. (formerly The
Harrison Corp.) is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
February 10, 1999. Since February 10, 1999, the Company is in the development
stage, and has not commenced planned principal operations.
Nature of Business
The Company has no products or services as of July 31, 2000. The Company
was organized as a vehicle to seek merger or acquisition candidates. The Company
intends to acquire interests in various business opportunities, which in the
opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F - 6
<PAGE>
ARCHON GROUP, INC.
(formerly The Harrison Corp.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SEVEN MONTHS ENDED JULY 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
--------------------------------
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the seven months ended July 31, 2000
Basic Loss per Share
Loss to common shareholders $ (4,625) 26,640,000 $ --
============= ============= ==========
For the year ended December 31, 1999
Basic Loss per Share
Loss to common shareholders $ (8,695) 17,389,750 $ --
============= ============= ==========
The effect of outstanding common stock equivalents would be anti-dilutive
for July 31, 2000 and December 31, 1999 and are thus not considered.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
NOTE 2 - INCOME TAXES
As of July 31, 2000, the Company had a net operating loss carryforward for
income tax reporting purposes of approximately $13,000 that may be offset
against future taxable income through 2019. Current tax laws limit the amount of
loss available to be offset against future taxable
F - 7
<PAGE>
ARCHON GROUP, INC.
(formerly The Harrison Corp.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SEVEN MONTHS ENDED JULY 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
--------------------------------
(Continued)
NOTE 2 - INCOME TAXES (continued)
income when a substantial change in ownership occurs. Therefore, the amount
available to offset future taxable income may be limited. No tax benefit has
been reported in the financial statements, because the Company believes there is
a 50% or greater chance the carryforwards will expire unused. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of July 31, 2000 all activities of the Company have been conducted by
corporate officers from either their homes or business offices. Currently, there
are no outstanding debts owed by the company for the use of these facilities and
there are no commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
On July 31, 2000 the Board of Directors authorized 37 to 1 stock split for
the Company's common stock. As a result of the split, 25,920,000 shares were
issued. All references in the accompanying financial statements to the number of
common shares and per-share amounts for 2000 and 1999 have been restated to
reflect the stock split.
NOTE 6 - MERGER
On August 4, 2000 the Company entered into an Acquisition Agreement with
Quantum Net, Inc. The acquisition will be reported as a reverse acquisition with
Quantum Net, Inc. being the survivor for accounting purposes.
F - 8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 78(1)(2)(3) & (4) of the Nevada Revised Statutes (the "NRS") permits
corporations to indemnify a Director, Officer or control person of the
corporation or its stockholders for any liability asserted against him and
liability and expenses incurred by him in his capacity as a director, officer,
employee or agent, or arising out of his status as such, whether or not the
corporation has the authority to indemnify him against such liability and
expense. Our Articles of Incorporation and By-laws do not include such a
provision automatically indemnifying a Director, Officer or control person of
the corporation or its stockholders for any liability asserted against him and
liability and expenses incurred by him in his capacity as a director, officer,
employee or agent, or arising out of his status as such.
18
<PAGE>
Our By-laws, Article X Section 3, do permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in such capacity, regardless of whether or not Nevada law
would permit indemnification.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the offering, all of which are to be borne by the
Registrant, are as follows:
SEC Filing Fee ................................................. $ 10 *
Printing Expenses .............................................. 2,000 *
Accounting Fees and Expenses ................................... 3,000 *
Legal Fees and Expenses ........................................ 15,000 *
Blue Sky Fees and Expenses ..................................... 5,000 *
Registrar and Transfer Agent Fees .............................. 500
Miscellaneous .................................................. 1,000 *
-
Total .......................................................... $26,510
*Estimated Amounts
All expenses of the registration will be borne by Archon.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities of Archon Group, Inc. were issued by Archon within the
past two (2) years and were not registered under the Securities Act of 1933.
Upon incorporation there were 26,640,000 shares of common stock issued pursuant
to the exemption from registration contained within Section 4(2) of the
Securities Act of 1933, to company officers and directors. Pursuant to a Board
resolution of the corporation a forward split of 37 to 1 was completed and a
reorganization occurred on August 4, 2000 and an additional 2,278,250 shares
were issued from treasury for due consideration from the merging corporation.
ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement pursuant
to Item 601 of Regulation S-B:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1 Articles of Incorporation
3.2 Corporate By-Laws
4.1 Form of Common Stock Certificate
5.1* Opinion of Counsel
23.1* Consent of Robinson, Hill & Co.
23.2* Consent of Richard E. Daniels, Esq. (see 5.1)
27.1* Financial Data Schedule
* To be filed by amendment.
<PAGE>
ITEM 28. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post effective amendment to this Registration Statement to:
i. Include any prospectus required by Section I 0(a)(3) of the Securities
Act of 1933 (the "Securities Act");
ii. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement.
iii. Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, each post-effective
amendment shall be treated as a new registration statement of the securities
offered, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of Archon pursuant to the foregoing provisions,
or otherwise, Archon has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by Archon of expenses incurred or
paid by a director, officer or a controlling person of Archon in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, Archon will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of competent jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
20
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of
Vancouver, B.C., Canada, on November 13, 2000.
Archon Group, Inc.
BY: /s/ Andrew Mah
Andrew Mah
President/Director
In accordance with the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
/s/ Andrew Mah President November 13, 2000
--------------
Andrew Mah Director
/s/ Daniel Yu Director of Operations November 13, 2000
-------------
Daniel Yu Director
/s/ James Tutton Secretary November 13, 2000
----------------
James Tutton
/s/ Philip Toy Treasurer November 13, 2000
--------------
Philip Toy
21
