As filed with the Securities and Exchange Commission on December 28, 2000
Registration No. __________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRANTS OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CHALLEDON, INC.
(Name of Small Business Issuer in its charter)
UTAH 87-0472608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1037 East 3300 South #203, Salt Lake City, Utah 84106
(Address of principal executive officers) (Zip Code)
Issuer's telephone number: (801) 467-6715
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
CHALLEDON, INC.
FORM 10-SB
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business. . . . . . . . . . . . . . . . . 3
ITEM 2. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . 10
ITEM 3. Description of Property. . . . . . . . . . . . . . . . . 12
ITEM 4. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . 12
ITEM 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . 13
ITEM 6. Executive Compensation . . . . . . . . . . . . . . . . . 15
ITEM 7. Certain Relationships and Related Transactions . . . . . 15
ITEM 8. Description of Securities. . . . . . . . . . . . . . . . 16
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters. . . . . . 17
ITEM 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 19
ITEM 3. Changes in and Disagreements with Accountants. . . . . . 19
ITEM 4. Recent Sales of Unregistered Securities. . . . . . . . . 19
ITEM 5. Indemnification of Directors and Officers. . . . . . . . 20
PART F/S
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 21
PART III
ITEM 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . S-1
ITEM 2. Description of Exhibits. . . . . . . . . . . . . . . . . S-1
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
PART I
ITEM 1. Description of Business
Business Development
Challedon, Inc. (the "Company") was organized on May 24, 1990,
under the laws of the State of Utah. Since its inception, the
Company has not engaged in any material business operations.
Presently, the Company is actively 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 purpose is to locate and consummate a
merger or acquisition with a private entity. Because of the
Company has minimal assets and no operating history, in the event
the it successfully acquires or merges with an operating business
opportunity, it is likely that the Company's current shareholders
will experience substantial dilution and there will be a probable
change in control of the Company.
The Company is voluntarily filling this 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 ("Exchange Act"), could provide a prospective merger or
acquisition candidate with additional information concerning the
Company. Further, management believes that this could possibly
make the Company more attractive to an operating business
opportunity as a potential merger or acquisition candidate. As a
result of filing its registration statement, the Company is
obligated to file with the Securities and Exchange Commission (the
"Commission") certain interim and periodic reports including an
annual report containing audited financial statements. The Company
anticipates that it will continue to file such reports,
notwithstanding the fact that, in the future, it may not otherwise
be required to file such reports based on the criteria set forth
under Section 12(g) 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 merger or acquisition. Thus, in the event
the Company successfully completes the acquisition of or merger
with an operating business opportunity, that business opportunity
must provide audited financial statements for at least the two most
recent fiscal years or, in the event the business opportunity has
been in business for less than two years, audited financial
statements will be required from the period of inception. This
could limit the Company's potential target business opportunities
due to the fact that many private business opportunities either do
not have audited financial statements or are unable to produce
audited statements without undo time and expense.
The Company's principal executive offices are located at 1037
East 3300 South #203, Salt Lake City, Utah 84106, and its telephone
number is (801) 467-6715.
Business of Issuer
The Company has no 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
Management of the Company intends to use various resources in
the search for potential business opportunities including, but not
limited to, the Company's 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 on a fee basis
professional firms 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 or entered into any discussion, agreement or understanding
with a particular consultant regarding the Company's search for
business opportunities. Presently, no final decision has been made
nor is management in a position to identify any future prospective
consultants for the Company.
If the Company elects to engage an independent consultant, it
will look only to consultants that have experience in working with
small companies in search of an appropriate business opportunity.
Also, the consultant must have experience in locating viable merger
and/or acquisition candidates and have a proven track record of
finalizing such business consolidations. Further, the Company
would like to engage a consultant that will provide services for
only nominal up-front consideration and is willing to be fully
compensated only at the close of a business consolidation.
The Company does not intend to limit its search to any
specific 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 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 situation, having minimal
assets and no 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. Most likely, the owners of the
business opportunity which the Company acquires or mergers with
will acquire control of the Company following such transaction.
Management has not established any guidelines as to the amount of
control it will offer to prospective business opportunities, rather
management will attempt to negotiate the best possible agreement
for the benefit of the Company's shareholders.
Management does not presently intend to borrow funds to
compensate any persons, consultants, promoters or affiliates in
relation to the consummation of a potential merger or acquisition.
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. These possible private sales would
most likely have to be to persons known by the directors of the
Company or to venture capitalists that would be willing to accept
the risks associated with investing in a company with no current
operation. 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. Management will attempt to acquire
funds on the best available terms for the Company. However, 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 reasonable or acceptable to the
Company. The Company does not anticipate using Regulation S under
the Securities Act of 1933, as amended (the "Securities Act"), to
raise any funds prior to consummation of a merger or acquisition.
Although not presently anticipated, there is a remote possibility
that the Company could sell securities to its management or
affiliates.
In the case of a future acquisition or merger, there exists a
possibility that a condition of such transaction might include the
sale of shares presently held by officers and/or directors of the
Company to parties affiliated with or designated by the potential
business opportunity. Presently, management has no plans to seek
or actively negotiate such terms. However, if this situation does
arise, management is obligated to follow the Company's Articles of
Incorporation and all applicable corporate laws in negotiating such
an arrangement. Under this scenario of a possible sale by officers
and directors, it is unlikely that similar terms and conditions
would be offered to all other shareholders of the Company or that
the shareholders would be given the opportunity to approve such a
transaction.
In the event of a successful acquisition or merger, a finder's
fee, in the form of cash or securities, 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 it is likely that an appropriate fee will be
based upon negotiations by the Company and the appropriate business
opportunity and the finder. Management cannot at this time make an
estimate as to the type or amount of a potential finder's fee that
might be paid. It is unlikely that a finder's fee will be paid to
an affiliate of the Company because of the potential conflict of
interest that might result. If such a fee was paid to an
affiliate, it would have to be in such a manner so as not to
compromise an affiliate's possible fiduciary duty to the Company or
to violate the doctrine of corporate opportunity. Further, in the
unlikely event a finder's fee was to be paid to an affiliate, the
Company would have such an arrangement ratified by the shareholders
in an appropriate manner.
Presently, it is highly unlikely that the Company will acquire
or merge with a business opportunity in which the Company's
management, affiliates or promoters have an ownership interest.
Any possible related party transaction of this type would have to
be ratified by a disinterested Board of Directors and by the
shareholders. Management does not anticipate that the Company will
acquire or merge with any related entity. Further, as of the date
hereof, none of the Company's officers, directors, or affiliates or
associates have had any preliminary contact or discussions with any
specific business opportunity, nor are there any present plans,
proposals, arrangements or understandings regarding the possibility
of an acquisition or merger with any specific business opportunity.
Rights of Shareholders
It is presently anticipated by management that prior to
consummating a possible acquisition or merger, the Company, if
required by relevant state laws and regulations, will seek to have
the transaction ratified by shareholders in the appropriate manner.
Presently, it is the intent of the Company to provide to its
shareholders complete disclosure documentation concerning a
potential target business opportunity including the appropriate
audited financial statements of the target. This information will
be disseminated by proxy statement in the event a shareholders'
meeting is held, or by an information statement pursuant to
Regulation 14C of the Exchange Act if the action is taken by
resolution of the Board of Directors.
Under the corporation laws of the State of Utah, shareholders
of the Company may, under certain circumstances, be entitled to
assert dissenters' rights if the Company acquires or merges with a
business opportunity. Shareholders will be entitled to dissent
from and obtain payment of the fair value of their shares in the
event of consummation of a plan of merger to which the Company is
a party, if approval by the shareholders is required under
applicable Utah law. Also, shareholders will be entitled to
dissenters' rights if the Company enters into a share exchange if
the Company's shares are to be acquired. A shareholder who is
entitled to assert dissenter's rights and obtain of the fair value
for their shares, may not challenge the corporate action creating
this entitlement, unless the action is unlawful or fraudulent with
respect to the shareholder or the Company. A dissenting
shareholder shall refrain from voting their shares in approval of
the corporate action. If the proposed action is approved by the
required vote of shareholders, the Company must give notice to all
shareholders who delivered to the Company their written notice of
dissent.
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.
Employees
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 personal offices of a shareholder, James R. Glavas,
located in Salt Lake City, Utah. Mr. Glavas is the father of the
Company's President, James E. Glavas. The facilities are shared
with other businesses. 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 the Company acquires or
merges with an operating business, the Company will secure
commercial office space from which it will conduct its business.
However, until such time as the Company completes an acquisition or
merger, the type of business in which the Company will be engaged
and the type of office and other facilities that will be required
is unknown. The Company has no current plans to secure such
commercial office space.
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
The following information should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in
the Form 10-SB.
The Company is considered a development stage company with
minimal assets or capital and with no significant operations or
income since its inception. The costs and expenses associated with
the preparation and filing of this registration statement have been
paid for by an advance from a shareholder of the Company. 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 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 going
concern.
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 related to it business and
operations following a successful acquisition or merger.
Plan of Operation
During the next 12 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 1 above. Because the Company lacks funds, 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.
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.
Net Operating Loss
The Company has accumulated approximately $1,214 of net
operating loss carryforwards as of September 30, 2000, which may be
offset against taxable income and income taxes in future years
through 2020. The use of these losses to reduce future income
taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net operating loss carryforwards.
In the event of certain changes in control of the Company, there
will be an annual limitation on the amount of net operating loss
carryforwards which can be used. No tax benefit has been reported
in the financial statements for the year ended December 31, 1999 or
nine month period ended September 30, 2000 because there is a 50%
or greater chance that the carryforward will not be used.
Accordingly, the potential tax benefit of the loss carryforward is
offset by a valuation allowance of the same amount.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued SFAS
No. 130, Reporting Comprehensive Income and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. It requires that all items required to be recognized
under current accounting standards as components of comprehensive
income, be reported in a financial statement with the same
prominence as other financial statements. SFAS No. 131 establishes
standards as to how public companies report financial information
about operating segments in annual financial statements. It
requires reporting of selected information about operating segments
in interim financial statements issued to the public and
establishes standards for disclosure regarding products and
services, geographic areas and major customers. Implementation of
the new standards did not have a material effect the Company's
financial statements.
SFAS No 132. Employers' Disclosures about Pensions and Other
Postretirement Benefits," standardizes disclosure requirements for
pensions and other postretirement benefits. It requires additional
information on changes in the benefit obligations and fair values
of plan assets that will facilitate financial analysis. Adoption
of this statement did not have a material impact on the Company's
financial statements.
SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities requires companies to record derivatives as
assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. The Company believes
the adoption of this statement will have no material impact on its
financial statements.
Inflation
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking
statements. The Company wishes to advise readers that actual
results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: the ability of the Company
search for appropriate business opportunities and subsequently
acquire or merge with such entity, to meet its cash and working
capital needs, the ability of the Company to maintain its existence
as a viable entity, and other risks detailed in the Company's
periodic report filings with the Commission.
ITEM 3. Description of Property
The information required by this Item 3, Description of
Property, is set forth in Item 1, Description of Business, of this
Form 10-SB/A.
ITEM 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information, to the best of the
Company's knowledge, as of December 1, 2000, with respect to each
person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, each director and all directors and
officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
James E. Glavas* 70,000 4.96%
6640 South 2475 East
Salt Lake City, UT 84121
Randy Flanders* 500 0.04%
1336 East 8330 South
Salt Lake City, UT 84093
Guy H. Ivins* 70,000 4.96%
1120 East 700 North
American Fork, UT 84003
All directors and officers 140,500 9.95%
a group (3 persons)
* Director and/or executive officer
Note: Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting power over the shares indicated above.
(1) Based upon 1,412,000 shares of common stock outstanding
on December 1, 2000.
ITEM 5. Directors, Executive Officers, Promoters and Control
Persons
Executive Officers and Directors
The executive officers and directors of the Company are as
follows:
Name Age Position
James E. Glavas 47 President, Chief Executive
Officer and Director
Randy Flanders 49 Vice President and Director
Guy H. Ivins 73 Secretary / Treasurer and
Director
___________________________
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, but
directors are entitled to be reimbursed for expenses incurred for
attendance at meetings of the Board of Directors and any committee
of the Board of Directors. However, due to the Company's lack of
funds, the directors will defer their expenses and any compensation
until such time as the Company can consummate a successful
acquisition or merger. 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.
Except for Guy H. Ivins, none of the Company's directors are
currently, nor for the past three years have been, a director of
any other "shell" or "blank check" company or other corporation
that is actively pursuing acquisitions or mergers. Mr. Ivins is
presently the President and a director of Jaipur, Inc., a shell or
blank check company, incorporated in Utah on February 2, 1989.
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.
All of the Company's present directors have other full-time
employment or sources of income and will routinely devote only such
time to the Company necessary to maintain its viability. It is
estimated that each director will devote less than ten hours per
month to the Company's activities. The directors will, when the
situation requires, review potential business opportunities or
actively participate in negotiations for a potential merger or
acquisition on an as-needed-basis.
Currently, there is no arrangement, agreement or understanding
between the Company's management and non-management shareholders
under which non-management shareholders may directly or indirectly
participate in or influence the management of the Company's
affairs. Present management openly accepts and appreciates any
input or suggestions from the Company's shareholders. However, the
Board of Directors is elected by the shareholders and the
shareholders have the ultimate say in who represents them on the
Board of Directors. There are no agreements or understandings for
any officer or director of the Company to resign at the request of
another person and none of the current offers or directors of the
Company are acting on behalf of, or will act at the direction of
any other person.
In connection with the preparation and filing of this
registration statement, one of the Company's shareholders, James R.
Glavas, has advanced funds to the Company to pay for certain legal
and professional fees related to the registration statement.
Although, as of the date hereof there is no agreement or
arrangement for Mr. Glavas to provide additional funds, the Company
is not precluded from approaching Mr. Glavas or any other
shareholder and requesting additional financial assistance.
Because such additional funding is only speculative at this time,
the Company has not developed any criteria or plans related to this
funding. Mr. Glavas is the father of the Company's President,
James E. Glavas.
The business experience of each of the persons listed above
during the past five years is as follows:
James E. Glavas has been for the past 24 years a purchasing
agent and estimator for Sun Lithographing Company in Salt Lake
City, Utah. Mr. Glavas attended the University of Utah from 1972
to 1976 majoring in Sociology, but did not receive a degree.
Randy Flanders has been for the past 12 years a manager and
salesman for Realty Brokers of Utah, a Salt Lake City, Utah real
estate firm. Prior to his association with Realty Brokers of Utah,
he was for ten years a purchasing agent for Utah Mobile Homes, Inc.
Mr. Flanders attended Kearney State from 1970 to 1972 and the
University of Nebraska from 1972 to 1974 where he majored in
Business, but did not receive a degree.
Guy H. Ivins retired in 1985 after working for 12 years as
Chief of Right-of-Way for the Utah Department of Transportation.
Previously, Mr. Ivins served for two years as head of the Office of
Economic Opportunity for the State of Utah and was County Assessor
of Utah County, Utah for six years. He graduated from Brigham
Young University in 1951 with a B.S. Degree in Economics.
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, 1999 and 1999, or the nine month period ended
September 30, 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.
ITEM 7. Certain Relationships and Related Transactions
During the past two fiscal years, there have been no
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
The Company's officers and directors are subject to the
doctrine of corporate opportunities only insofar as it applies to
business opportunities in which the Company has indicated an
interest, either through its proposed business plan or by way of an
express statement of interest contained in the Company's minutes.
If directors are presented with business opportunities that may
conflict with business interests identified by the Company, such
opportunities must be promptly disclosed to the Board of Directors
and made available to the Company. In the event the Board shall
reject an opportunity so presented and only in that event, any of
the Company's officers and directors may avail themselves of such
an opportunity. Every effort will be made to resolve any conflicts
that may arise in favor of the Company. There can be no assurance,
however, that these efforts will be successful.
In the event of a successful acquisition or merger, a finder's
fee, in the form of cash or securities, 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 it is likely that an appropriate fee will be
based upon negotiations by the Company and the appropriate business
opportunity and the finder. Such fees are estimated to be
customarily between 1% and 5% of the size of the transaction,
based upon a sliding scale of the amount involved. Management
cannot at this time make an estimate as to the type or amount of a
potential finder's fee that might be paid, but is expected to be
comparable to consideration normally paid in like transactions. It
is unlikely that a finder's fee will be paid to an affiliate of the
Company because of the potential conflict of interest that might
result. Any such fee would have to be approved by the shareholders
or a disinterested Board of Directors. See Item 1 "Description of
Business - Form of Potential Acquisition or Merger" above.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common
Stock, par value $.001 per share, of which 1,412,000 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
preemptive 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.
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 Commission or any state securities agency or
authority. The Company intends to make an application to the NASD
for the Company's shares to be quoted on the OTC Bulletin Board.
The Company's application to the NASD will consist of current
corporate information, financial statements and other documents as
required by Rule 15c2-11 of the Exchange Act. Inclusion on the OTC
Bulletin Board permits price quotations for the Company's shares to
be published by such service. 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.
Although the Company intends to submit its application to the OTC
Bulletin Board subsequent to the filing of this registration
statement, the Company does not anticipate its shares to be traded
in the public market until such time as a merger or acquisition can
be consummated. Also, secondary trading of the Company's shares
may be subject to certain state imposed restrictions regarding
shares of shell companies. Except for the application to the OTC
Bulletin Board, there are no plans, proposals, arrangements or
understandings with any person concerning the development of a
trading market in any of the Company's securities. The Company's
common stock has not traded in a public market.
The ability of an individual shareholder to trade their shares
in a particular state may be subject to various rules and
regulations of that state. A number of states require that an
issuer's securities be registered in their state or appropriately
exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to
register its securities in any particular state. Further, most
likely the Company's shares will be subject to the provisions of
Section 15(g) and Rule 15g-9 of 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 15g-9(d)(1)
incorporates the definition of penny stock as that used in Rule
3a51-1 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 3a51-1 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 December 1, 2000 there were 44 holders of record of the
Company's common stock. Because there has been no established
public trading market for the Company's securities, no trading
history is presented herein.
Of the Company's total outstanding shares, 1,271,500 shares
may be sold, transferred or otherwise traded in the public market
without restriction, unless held by an affiliate or controlling
shareholder of the Company. For purposes of this registration
statement a controlling shareholder is considered to be a person
owning ten percent (10%) or more of the Company's total outstanding
shares, or is otherwise an affiliate of the Company. No individual
person owning a portion of the 1,271,500 shares owns more than five
percent (5%) of the Company's total outstanding shares.
A total of 140,500 shares are considered restricted securities
and are presently held by affiliates and/or controlling
shareholders of the Company. All holders of these shares are
directors and executive officers of the Company. All of the
140,500 restricted shares are presently eligible for sale pursuant
to Rule 144, subject to the volume and other limitations set forth
under Rule 144. In general, under Rule 144 as currently in effect,
a person (or persons whose shares are aggregated) who has
beneficially owned restricted shares of the Company for at least
one year, including any person who may be deemed to be an
"affiliate" of the Company (as the term "affiliate" is defined
under the Securities Act), is entitled to sell, within any three-
month period, an amount of shares that does not exceed the greater
of (i) the average weekly trading volume in the Company's common
stock, as reported through the automated quotation system of a
registered securities association, during the four calendar weeks
preceding such sale or (ii) 1% of the shares then outstanding. A
person who is not deemed to be an "affiliate" of the Company and
has not been an affiliate for the most recent three months, and who
has held restricted shares for at least two years would be entitled
to sell such shares without regard to the resale limitations of
Rule 144.
Available corporate records indicate that the Company has not
previously filed a registration statement with the Commission.
In the absence of any evidence that the Company ever filed a
registration statement with the Commission or with any other agency
relating to the issuance of shares, it is concluded that all shares
were issued as restricted securities. Available corporate records
indicate that all of the Company's issued and outstanding shares of
common stock were issued between 1991 and 1997 in various private,
isolated transactions. The Company has relied upon the exemption
provided by Section 4(2) of the Securities Act in the issuance of
all of its shares. No private placement memorandum was used in
relation to the issuance of shares.
Dividend Policy
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 invest future
earnings to finance its operations.
ITEM 2. Legal Proceedings
There are presently no material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to which
any of its property is subject and, to the best of its knowledge,
no such actions against the Company are contemplated or threatened.
ITEM 3. Changes in and Disagreements With Accountants
There have been no changes in or disagreements with
accountants.
ITEM 4. Recent Sales of Unregistered Securities
The Company has not issued any securities for the past three
fiscal years except as set forth hereafter. On September 26, 1997,
the Company issued an aggregate of 2,500 shares to the following
five persons, 500 shares each, for past services rendered related
to their serving as directors of the Company: Marge Berry, Al
Garcia, Lorrie Jackson, Viola Powell and Pat Reuland. This
issuance of 2,500 shares was not registered with the Commission
because it was exempt from the registration requirements of the
Securities Act pursuant to the provisions of Section 4(2) of such
Act. The shares were issued in a private transaction not involving
a public offering or distribution. Those persons acquiring the
shares were considered sophisticated investors and had personal
knowledge of the operation of the Company and had access to
material information regarding the Company.
ITEM 5. Indemnification of Directors and Officers
As permitted by the provisions of the Utah Revised Business
Corporation Act (the "Utah Act"), the Company has the power to
indemnify an individual made a party to a proceeding because they
are or were a director, against liability incurred in the
proceeding, if such individual acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interest
of the Company and, in a criminal proceeding, they had no
reasonable cause to believe their conduct was unlawful.
Indemnification under this provision is limited to reasonable
expenses incurred in connection with the proceeding. The Company
must indemnify a director or officer who is successful, on the
merits of otherwise, in the defense of any proceeding or in defense
of any claim, issue, or matter in the proceeding, to which they are
a party to because they are or were a director of officer of the
Company, against reasonable expenses incurred by them in connection
with the proceeding or claim with respect to which they have been
successful. The Company's Articles of Incorporation do not contain
any specific provisions to empower the Board of Directors to
indemnify its officers, directors, agents, or employees.
The Company may pay for or reimburse reasonable expenses
incurred by a director, officer employee, fiduciary or agent of the
Company who is a party to a proceeding in advance of final
disposition of the proceeding provided the individual furnishes
the Company with a written affirmation that their conduct was in
good faith and in a manner reasonably believed to be in, or not
opposed to, the best interest of the Company, and undertake to
repay the advance if it is ultimately determined that they did not
meet such standard of conduct.
Also pursuant to the Utah Act, a corporation may set forth in
its articles of incorporation, by-laws or by resolution, a
provision eliminating or limiting in certain circumstances,
liability of a director to the corporation or its shareholders for
monetary damages for any action taken or any failure to take action
as a director. This provision does not eliminate or limit the
liability of a director (i) for the amount of a financial benefit
received by a director to which they are not entitled; (ii) an
intentional infliction of harm on the corporation or its
shareholders; (iii) for liability for a violation of Section
16-10a-842 of the Utah Act (relating to the distributions made in
violation of the Utah Act); and (iv) an intentional violation of
criminal law. To date, the Company has not adopted such a
provision in its Articles of Incorporation, By-Laws, or by
resolution. A corporation may not eliminate or limit the liability
of a director for any act or omission occurring prior to the date
when such provision becomes effective. The Utah Act also permits
a corporation to purchase and maintain liability insurance on
behalf of its directors, officers, employees, fiduciaries or
agents.
Transfer Agent
The Company has designated Standard Registrar & Transfer
Company, 12528 South 1840 East, Draper, Utah 84020, as its
transfer agent. The telephone number of the transfer agent
is (801) 571-8844.
PART F/S
The Company's financial statements for the fiscal years ended
December 31, 1999 and 1998 have been examined to the extent
indicated in their reports by H J & Associates, independent
certified public accountants, and have been prepared in accordance
with generally accepted accounting principles and pursuant to
Regulation S-B as promulgated by the Commission and are included
herein in response to Item 15 of this Form 10-SB. Unaudited
financial statements for the period ended September 30, 2000 have
been prepared by the Company.
CHALLEDON, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . 3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity . . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 8
Notes to Financial Statements. . . . . . . . . . . . . . . . . 9
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Challedon, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Challedon, Inc.
(a development stage company) as of December 31, 1999 and the related
statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1999 and 1998 and from inception on May 24,
1990 through 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 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 Challedon, Inc.
(a development stage company) as of December 31, 1999 and the results of
its operations and its cash flows for the years ended December 31, 1999
and 1998 and from inception on May 24, 1990 through 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. As discussed in Note 3
to the financial statements, the Company is a development stage company
with no significant operating results to date, which raises substantial
doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might result
from the outcome of the uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
November 6, 2000
CHALLEDON, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1999
CURRENT ASSETS
Cash $ 3,000
Total Current Assets 3,000
TOTAL ASSETS $ 3,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to related party (Note 4) $ 370
Taxes payable 1,000
Total Current Liabilities 1,370
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 50,000,000 shares
authorized; 1,412,000 shares issued and outstanding 1,412
Additional paid-in capital 1,412
Deficit accumulated during the development stage (1,194)
Total Stockholders' Equity 1,630
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,000
CHALLEDON, INC.
(A Development Stage Company)
Statements of Operations
From
Inception on
For the May 24,
Year Ended 1990 Through
December 31, December 31,
1999 1998 1999
REVENUES $ - $ - $ -
EXPENSES
General and administrative 110 110 1,194
Total Expenses 110 110 1,194
(LOSS) FROM OPERATIONS (110) (110) (1,194)
INCOME TAX EXPENSE - - -
NET (LOSS) $ (110) $ (110) $(1,194)
BASIC (LOSS) PER SHARE $ (0.00) $ (0.00)
CHALLEDON, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscriptions Development
Shares Amount Capital Receivable Stage
Balance at inception on
May 24, 1990 - $ - $ - $ - $ -
Net loss for the period ended
December 31, 1990 - - - - (174)
Balance at
December 31, 1990 - - - - (174)
Common stock issued on
subscription at $0.002 per
share - September 27, 1991 350,000 350 350 (700) -
Net loss for the year ended
December 31, 1991 - - - - (115)
Balance at
December 31, 1991 350,000 350 350 (700) (289)
Net loss for the year ended
December 31, 1992 - - - - (120)
Balance at
December 31, 1992 350,000 350 350 (700) (409)
Common stock issued on
subscription at $0.002 per
share, September 24, 1993 350,000 350 350 (700) -
Net loss for the year ended
December 31, 1993 - - - - (115)
Balance at
December 31, 1993 700,000 700 700 (1,400) (524)
Common stock issued on
subscription at $0.002 per
share, February 11, 1994 350,000 350 350 (700) -
Common stock issued for
services at $0.002 per share,
September 30, 1994 2,500 3 2 - -
Net loss for the year ended
December 31, 1994 - - - - (115)
Balance at
December 31, 1994 1,052,500 $ 1,053 $ 1,052 $(2,100) $ (639)
CHALLEDON, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscriptions Development
Shares Amount Capital Receivable Stage
Balance at
December 31, 1994 1,052,500 $ 1,053 $ 1,052 $(2,100) $ (639)
Common stock issued for
services at $0.002 per share,
September 29, 1995 4,500 4 5 - -
Net loss for the year ended
December 31, 1995 - - - - (115)
Balance at
December 31, 1995 1,057,000 1,057 1,057 (2,100) (754)
Common stock issued on
subscription at $0.002 per
share, May 17, 1996 350,000 350 350 (700) -
Common stock issued for
services at $0.002 per share,
September 27, 1996 2,500 2 3 - -
Net loss for the year ended
December 31, 1996 - - - - (110)
Balance at
December 31, 1996 1,409,500 1,409 1,410 (2,800) (864)
Common stock issued for
services at $0.001 per share,
September 26, 1997 2,500 3 2 - -
Performance on stock
subscriptions - - - 2,800 -
Net loss for the year ended
December 31, 1997 - - - - (110)
Balance at
December 31, 1997 1,412,000 1,412 1,412 - (974)
Net loss for the year ended
December 31, 1998 - - - - (110)
Balance at
December 31, 1998 1,412,000 1,412 1,412 - (1,084)
Net loss for the year ended
December 31, 1999 - - - - (110)
Balance at
December 31, 1999 1,412,000 $ 1,412 $ 1,412 $ - $ (1,194)
CHALLEDON, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
For the May 24,
Year Ended 1990 Through
December 31, December 31,
1999 1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (110) $ (110) $ (1,194)
Adjustments to reconcile net loss to net cash
provided by operations:
Common stock issued for services - - 24
Changes in operating assets and liabilities
accounts:
Increase in accrued expenses 100 100 1,000
Increase in due to related party 210 10 370
Net Cash Provided by Operating Activities 200 - 200
CASH FLOWS FORM INVESTING ACTIVITIES - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash - - 2,800
Net Cash Provided by Financing Activities - - 2,800
NET INCREASE IN CASH 200 - 3,000
CASH AT BEGINNING OF PERIOD 2,800 2,800 -
CASH AT END OF PERIOD $ 3,000 $ 2,800 $ 3,000
CASH PAID FOR:
Interest expense $ - $ - $ -
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ - $ - $ 24
CHALLEDON, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Challedon,
Inc. (a development stage company) (the Company). The
Company was organized under the laws of the State of Utah
on May 24, 1990. The Company was organized to seek
potential business opportunities or merge with an existing
operating company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual
method of accounting. The company has elected a December
31 year end.
b. Basic Loss Per Share
The computation of basic loss per share of common stock is
based on the weighted average number of shares outstanding
during the period of the financial statements (see Note 5).
c. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
e. Revenue Recognition Policy
The Company will develop its revenue recognition policies
when planned principal operations commence.
f. Income Taxes
As of December 31, 1999, the Company had a net operating
loss carryforward for federal income tax purposes of $1,194
that may be used in future years to offset taxable income.
The net operating loss carryforward will expire in 2019.
The tax benefit of the cumulative carryforwards has been
offset by a valuation allowance of the same amount.
CHALLEDON, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets
and liquidation of liabilities in the normal course of
business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs
and allow it to continue as a going concern. The ability
of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to
cease operations.
In order to continue as a going concern, develop a reliable
source of revenues, and achieve a profitable level of
operations the Company will need, among other things,
additional capital resources. Management's plans to
continue as a going concern include raising additional
capital through sales of common stock. However, management
cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern
is dependent upon its ability to successfully accomplish
the plans described in the preceding paragraph and
eventually secure other sources of financing and attain
profitable operations. The accompanying financial
statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company's president has paid out-of-pocket expenses
through December 31, 1999 totaling $370. The amount is
unsecured, non-interest bearing and is due on demand.
NOTE 5 - BASIC LOSS PER SHARE
The following is an illustration of the reconciliation of
the numerators and denominators of the basic loss per share
calculation:
For the
Year Ended
December 31,
1999 1998
Net loss (numerator) $ (110) $ (110)
Weighted average shares outstanding
(denominator) 1,412,000 1,412,000
Basic loss per share $ (0.00) $ (0.00)
CHALLEDON, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
CHALLEDON, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
September 30, December 31,
2000 1999
(Unaudited)
CURRENT ASSETS
Cash $ 3,080 $ 3,000
Total Current Assets 3,080 3,000
TOTAL ASSETS $ 3,080 $ 3,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to related party (Note 4) $ 470 $ 370
Taxes payable 1,000 1,000
Total Current Liabilities 1,470 1,370
TOTAL LIABILITIES 1,470 1,370
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares
authorized of $0.001 par value,
1,412,000 shares issued and outstanding 1,412 1,412
Additional paid-in capital 1,412 1,412
Deficit accumulated during the
development stage (1,214) (1,194)
Total Stockholders' Equity 1,610 1,630
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 3,080 $ 3,000
CHALLEDON, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
For the For the May 24,
Three Months Ended Nine Months Ended 1990 Through
September 30, September 30, September 30,
2000 1999 2000 1999 2000
REVENUES $ - $ - $ - $ - $ -
EXPENSES
General and administrative 20 - 20 - 1,214
Total Expenses 20 - 20 - 1,214
LOSS FROM OPERATIONS (20) - (20) - (1,214)
NET INCOME (LOSS) $ (20) $ - $ (20) $ - $(1,214)
BASIC INCOME (LOSS) PER
SHARE $ (0.00) $ 0.00 $ (0.00) $ 0.00
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 1,412,000 1,412,000 1,412,000 1,412,000
CHALLEDON, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on May 24, 1990 through September 30, 2000
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscriptions Development
Shares Amount Capital Receivable Stage
Balance at inception on
May 24, 1990 - $ - $ - $ - $ -
Net loss for the period ended
December 31, 1990 - - - - (174)
Balance at
December 31, 1990 - - - - (174)
Common stock issued on
subscription at $0.002 per
share - September 27, 1991 350,000 350 350 (700) -
Net loss for the year ended
December 31, 1991 - - - - (115)
Balance at
December 31, 1991 350,000 350 350 (700) (289)
Net loss for the year ended
December 31, 1992 - - - - (120)
Balance at
December 31, 1992 350,000 350 350 (700) (409)
Common stock issued on
subscription at $0.002 per
share, September 24, 1993 350,000 350 350 (700) -
Net loss for the year ended
December 31, 1993 - - - - (115)
Balance at
December 31, 1993 700,000 700 700 (1,400) (524)
Common stock issued on
subscription at $0.002 per
share, February 11, 1994 350,000 350 350 (700) -
Common stock issued for
services at $0.002 per share,
September 30, 1994 2,500 3 2 - -
Net loss for the year ended
December 31, 1994 - - - - (115)
Balance at
December 31, 1994 1,052,500 $ 1,053 $ 1,052 $(2,100) $ (639)
<PAGE>
CHALLEDON, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on May 24, 1990 through September 30, 2000
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscriptions Development
Shares Amount Capital Receivable Stage
Balance at
December 31, 1994 1,052,500 $ 1,053 $ 1,052 $(2,100) $ (639)
Common stock issued for
services at $0.002 per share,
September 29, 1995 4,500 4 5 - -
Net loss for the year ended
December 31, 1995 - - - - (115)
Balance at
December 31, 1995 1,057,000 1,057 1,057 (2,100) (754)
Common stock issued on
subscription at $0.002 per
share, May 17, 1996 350,000 350 350 (700) -
Common stock issued for
services at $0.002 per share,
September 27, 1996 2,500 2 3 - -
Net loss for the year ended
December 31, 1996 - - - - (110)
Balance at
December 31, 1996 1,409,500 1,409 1,410 (2,800) (864)
Common stock issued for
services at $0.001 per share,
September 26, 1997 2,500 3 2 - -
Performance on stock
subscriptions - - - 2,800 -
Net loss for the year ended
December 31, 1997 - - - - (110)
Balance at
December 31, 1997 1,412,000 1,412 1,412 - (974)
Net loss for the year ended
December 31, 1998 - - - - (110)
Balance at
December 31, 1998 1,412,000 1,412 1,412 - (1,084)
Net loss for the year ended
December 31, 1999 - - - - (110)
Balance at
December 31, 1999 1,412,000 $ 1,412 $ 1,412 $ - $ (1,194)
CHALLEDON, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on May 24, 1990 through September 30, 2000
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscriptions Development
Shares Amount Capital Receivable Stage
Balance at
December 31, 1999 1,412,000 $ 1,412 $ 1,412 $ - $ (1,194)
Net loss for the nine months
ended September 30,2000
(unaudited) - - - - (20)
Balance, September 30, 2000
(unaudited) 1,412,000 $ 1,412 $ 1,412 $ - $ (1,214)
CHALLEDON, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
For the For the May 24,
Three Months Ended Nine Months Ended 1990 Through
September 30, September 30, September 30,
2000 1999 2000 1999 2000
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $ (20) $ - $ (20) $ - $ (1,214)
Adjustments to reconcile net
loss to net cash provided
(used) by operating activities:
Common stock issued for
services - - - - 24
Changes in operating assets and
liabilities:
Increase in accrued expenses - - - - 1,000
Increase in accounts payable - - 100 - 470
Net Cash Provided (Used) by
Operating Activities (20) - 80 - 280
CASH FLOWS FROM INVESTING
ACTIVITIES: - - - - -
CASH FLOWS FROM FINANCING
ACTIVITIES:
Common stock issued for cash - - - - 2,800
Net Cash Provided by Financing
Activities - - - - 2,800
NET INCREASE (DECREASE)
IN CASH (20) - 80 - 3,080
CASH AT BEGINNING OF PERIOD 3,100 - 3,000 - -
CASH AT END OF PERIOD $ 3,080 $ - $ 3,080 $ - $ 3,080
CASH PAID FOR:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued
for services $ - $ - $ - $ - $ 24
CHALLEDON, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Challedon,
Inc. (a development stage company) (the Company). The
Company was organized under the laws of the State of Utah
on May 24, 1990. The Company was organized to seek
potential business opportunities or merge with an existing
operating company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual
method of accounting. The company has elected a December
31 year end.
b. Basic Loss Per Share
The computation of basic loss per share of common stock is
based on the weighted average number of shares outstanding
during the period of the financial statements (see Note 5).
c. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
e. Revenue Recognition Policy
The Company will develop its revenue recognition policies
when planned principal operations commence.
f. Income Taxes
As of September 30, 2000, the Company had a net operating
loss carryforward for federal income tax purposes of $1,214
that may be used in future years to offset taxable income.
The net operating loss carryforward will expire in 2020.
The tax benefit of the cumulative carryforwards has been
offset by a valuation allowance of the same amount.
CHALLEDON, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Unaudited Financial Statements
The accompanying unaudited financial statements include all
of the adjustments which, in the opinion of management, are
necessary for a fair presentation. Such adjustments are of
a normal recurring nature.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets
and liquidation of liabilities in the normal course of
business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs
and allow it to continue as a going concern. The ability
of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to
cease operations.
In order to continue as a going concern, develop a reliable
source of revenues, and achieve a profitable level of
operations the Company will need, among other things,
additional capital resources. Management's plans to
continue as a going concern include (1) raising additional
capital through sales of common stock. However, management
cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern
is dependent upon its ability to successfully accomplish
the plans described in the preceding paragraph and
eventually secure other sources of financing and attain
profitable operations. The accompanying financial
statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company's president has paid out-of-pocket expenses
through September 30, 2000 totaling $470. The amount is
unsecured, non-interest bearing and is due on demand.
CHALLEDON, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 5 - BASIC LOSS PER SHARE
The following is an illustration of the reconciliation of
the numerators and denominators of the basic loss per share
calculation:
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Income (loss) (numerator) $ (20) $ - $ (20) $ -
Weighted average
shares outstanding
(denominator) 1,412,000 1,412,000 1,412,000 1,412,000
Basic loss per share $ (0.00) $ 0.00 $ (0.00) $ 0.00
The computation of basic earnings per share of common stock
is based on the weighted standard average number of shares
outstanding during the period of the financial statements.
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Exhibit Name
3.1 Articles of Incorporation
3.2 By-Laws of Registrant
4.1 Instrument defining rights of holders (See Exhibit No.
3.1, Articles of Incorporation, Article IV)
27. Financial Data Schedule
________________
ITEM 2. Description of Exhibits
See Item I above.
SIGNATURES
In accordance with Section 12 of the Securities and Exchange
Act of 1934, the registrant caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
organized.
Challedon, INC.
(Registrant)
Date: December 28, 2000 By: /S/ James E. Glavas
James E. Glavas
President, Chief Executive
Officer and Director
