SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended: December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 33-14707-NY
FREEDOM FUNDING, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1047159
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1999 Broadway, Ste. 3235, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 292-2992
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing: The
common shares of registrant are traded on the "Bulletin Board" maintained by the
National Association of Securities Dealers, Inc. As of March 25, 1998, there
were 8,301,300 shares outstanding, of which 2,301,300 shares were held by non
affiliates. The closing inside bid and asked prices on that date were not being
published; thus, the market value for the voting stock of registrant held by non
affiliates could not be determined.
Indicate the number of shares outstanding of each of registrant's classes of
common stock as of the latest practicable date: As of March 25, 1998, there were
approximately 8,301,300 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents incorporated by reference and the Part of this Form
10 KSB into which the document is incorporated: None.
<PAGE>
PART I
Item 1. Description of Business
Freedom Funding, Inc. (the Company), was incorporated under the laws of Delaware
on September 18, 1986. The Company initially provided for its operations from
the sale of 800,000 shares of its restricted, $.0001 par value per share common
stock from inception through the period ended September 30, 1987. This initial
capitalization provided the Company with $7,000 in cash and services valued at
$1,000.
The funds raised from the initial capitalization were expended in the conduct of
an initial public offering which was conducted during the second and third
quarters of 1987. The securities offered to the public by the Company were units
of one share of common stock and four separate classes of warrants denominated
A, B, C and D Warrants. The public offering closed on September 30, 1987,
raising gross proceeds of $40,000. This offering resulted in the issuance of
800,000 common shares and a like number of each class of warrant. During 1988,
654,500 A Warrants were exercised, raising $65,450 in gross proceeds, and 46,800
B warrants were exercised, raising $11,690 in gross proceeds, a total of $77,140
in gross proceeds. The foregoing warrant exercises resulted in the issuance of
701,300 common shares of the Company. All of the unexercised warrants have
expired.
In the fourth quarter of 1987, the Company began its investigation of business
opportunities in which to engage. During 1988, the Company began discussions
with a group of individuals for the purpose of beginning a business using the
corporate structure of the Company for the business and the outstanding warrants
of the Company to raise capital for the new business.. These efforts were
unsuccessful, although the situs of the incorporation of the Company was changed
to Colorado as a result. As of the date of this report, the Company had not
fulfilled its business plan, although it is actively pursuing the successful
implementation of that plan.
In 1996, Mr. Roger F. Tompkins was appointed a director of the Company, and all
other directors resigned. In 1997, Mr. Tompkins resigned, after appointing Mr.
Mark S. Pierce to act in his stead. Mr. Pierce is now the sole director of the
Company and acts as its Chief Executive, Financial and Accounting Officer,
President and Treasurer.
On February 13, 1997, the Company entered into an arrangement with Mr. Pierce,
who was then an unaffiliated third party, whereby he agreed to extend up to
$100,000 in cash and services in exchange for the commitment of the Company to
forthwith issue to him 6,000,000 common shares of the Company. Mr. Pierce
committed to bring the Company current in its reports with the Securities and
Exchange Commission, including obtaining audits for the Company since 1987 and
filing tax returns for these periods. Mr. Pierce has now fulfilled his contract.
Item 2. Description of Properties
The principal executive offices of the Company are presently located at 1999
Broadway, Ste. 3235, Denver, Colorado 80202. The telephone number at this
address is (303) 292 2992. The Company is receiving the use of these offices
free of charge from Mr. Pierce.
Item 3. Litigation
No material legal proceedings to which the Company (or any officer or director
of the Company, or any affiliate or owner of record or beneficially of more than
five percent of the Common Stock, to management's knowledge) is a party or to
which the property of the Company is subject is pending and no such material
proceeding is known by management of the Company to be contemplated.
Item 4. Submission of Matters to a Vote of Security Holders
There were no meetings of security holders during the period covered by this
report.
2
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company effected its initial capitalization in late 1986 and early 1987
through the issuance of 800,000 shares of its $.0001 par value per share common
stock to various individuals in exchange for $7,000 in cash and $1,000 in
services. Subsequently, on September 30, 1987, the Company raised an additional
$40,000 in cash through the issuance and sale of 800,000 units in a public
offering. The units consisted of one share of common stock and four separate
warrants. During 1988, 654,500 A Warrants were exercised, raising $65,450 in
gross proceeds, and 46,800 B warrants were exercised, raising $11,690 in gross
proceeds, a total of $77,140 in gross proceeds. The foregoing warrant exercises
resulted in the issuance of 701,300 common shares of the Company.
No market for the common stock of the Company developed until the first quarter
of 1998; thus, there is no information to be supplied under this item since
there were no active market quotations previous to or during the period covered
by this report.
Outstanding Shares and Shareholders
As of March 25, 1998, the transfer ledgers maintained by the Company's stock
transfer agent indicated that there were 8,301,300 shares of common stock issued
and outstanding. The Company estimates that there were approximately 98
shareholders on that date. There were no shares of preferred stock outstanding
on that date.
Dividends
The Company has not declared or paid any dividends on the common stock from
inception to the date of this report, although there are no restrictions on the
payment of dividends. Further, no dividends are contemplated at any time in the
foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following should be reviewed in connection with the financial statements and
management's comments thereon set forth under this and Item 7, below.
Years Ended December 31,
1997 1996 1995
Statement of Operations:
Revenues $ -- $ -- $ --
Operating Expenses 55,021 -- --
Net Profit (Loss) (55,021) -- --
Profit (Loss) Per Share * * *
Balance Sheet Data:
Assets: $ -- $ -- $ --
Liabilities: 54,421 -- --
Stockholder's Equity
(Deficit): (180,161) -- --
*Negligible in amount.
Liquidity
The Company has not generated any cash flows from operating or investing
activities since inception. Operating capital was primarily provided from
inception through 1987 from the proceeds of an initial funding prior to a public
offering and then from the public offering itself. The proceeds of these efforts
resulted in approximate gross proceeds of $47,000 in cash and services valued at
$1,000. An additional $77,140 in operating capital was provided through the
exercise of warrants in 1988, all of which was expended in 1988.
3
<PAGE>
Results of Operations
The Company had no operations, other than its search for a business opportunity,
from inception through 1988. In 1989, these efforts ceased due to lack of
working capital. In 1997, this business plan was again implemented due to an
agreement with Mr. Pierce to infuse working capital and services as needed up to
the amount of $100,000.
Item 7. Financial Statements
HALLIBURTON, HUNTER & ASSOCIATES, P.C.
Certified Public Accountants
To the Board of Directors and Shareholders
FREEDOM FUNDING, INC.
We have audited the accompanying balance sheets of FREEDOM FUNDING, INC. (a
development stage company) as of December 31, 1997, December 31, 1996, and
December 31, 1995, and the related statements of operations, stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, based on our audit, the financial statements referred to above
present fairly, in all material respects, the financial position of FREEDOM
FUNDING, INC. (a development stage company), as of December 31, 1997, December
31, 1996, and December 31, 1995, and the results of its operations and cash
flows for the years then ended 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 has suffered recurring losses from operations
that raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are described in Note 3.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Halliburton, Hunter & Associates, P.C.
Littleton, Colorado
March 25, 1998
4
<PAGE>
FREEDOM FUNDING, INC.
(a development stage company)
BALANCE SHEETS
December 31,
1997 1996 1995
Assets:
Current Assets:
Cash $ -- $ -- $ --
Organizational
Expenses -- -- --
--------- --------- ---------
Total Assets $ -- $ -- $ --
========= ========= =========
Liabilities and Stockholders' Equity :
Current Liabilities:
Trade accounts
payable 54,421 -- --
--------- --------- ---------
Total Liabilities -- -- --
--------- --------- ---------
Stockholders' Equity:
Preferred stock,
par value $.001 per share
Authorized 100,000,000
shares; none issued -- -- --
Common stock,
par value $.0001 per
share. Authorized
500,000,000 shares;
issued 8,301,300 830 230 230
Additional
paid-in capital 124,910 124,910 124,910
Accumulated deficit
during development
stage (180,161) (125,140) (125,140)
Total stockholders'
equity (deficit) -- -- --
Total Liabilities
and Stockholders'
Equity $ -- $ -- $ --
See accompanying Notes to Financial Statements
5
<PAGE>
FREEDOM FUNDING, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
Years ended December 31,
1997 1996 1995
Revenues $ -- $ -- $ --
Operating Expenses 55,021 -- --
-------- --------- -------
Net Profit (Loss) $(55,021) $ -- $ --
======== ========= =======
Loss per share * * *
(* negligible in amount)
See accompanying Notes to Financial Statements
6
<PAGE>
<TABLE>
<CAPTION>
FREEDOM FUNDING, INC.
(a development stage company)
STATEMENTS OF STOCKHOLDER'S EQUITY
Additional Retained
Paid-In Earnings
Shares Amount Capital (Deficit)
------ ------ ------- ---------
Balance at inception
<S> <C> <C> <C> <C>
September 19, 1986 -- $ -- $ -- $ --
Issuance of stock for cash
November 18, 1986
$.0001 per share 600,000 60 5,940 --
Issuance of stock for cash and services on
January 15, 1987
$.0001 per share 200,000 20 1,980 --
Issuance of stock for cash on
September 30, 1987 800,000 80 39,920 --
Net loss for period ended
December 31, 1987 -- -- -- (21,141)
Balance at December 31, 1987 -- -- -- (21,141)
Issuance of stock for cash from exercise
of warrants 701,300 70 77,070 --
Net Loss for year ended December 31, 1988 (103,499)
Balance at December 31, 1988 (124,640)
Net Loss for year ended December 31, 1989 (250)
Balance at December 31, 1989 (124,890)
Net Loss for year ended December 31, 1990 (250)
Balance at December 31, 1990 (125,140)
Net Loss for year ended December 31, 1991 --
Balance at December 31, 1991 (125,140)
Net Loss for year ended December 31, 1992 --
Balance at December 31, 1992 (125,140)
Net Loss for year ended December 31, 1993 --
Balance at December 31, 1993 (125,140)
Net Loss for year ended December 31, 1994 --
Balance at December 31, 1994 (125,140)
Net Loss for year ended December 31, 1995 --
Balance at December 31, 1995 (125,140)
Net Loss for year ended December 31, 1996 --
Balance at December 31, 1996 (125,140)
Issuance of stock for cash and
services in February,1997
$ .0001 per share 6,000,000 600 -- (125,140)
Net Loss for year ended December 31, 1997 (55,021)
Balance at December 31, 1997 (180,161)
See accompanying Notes to Financial Statements
7
</TABLE>
<PAGE>
FREEDOM FUNDING, INC.
(a development stage company)
STATEMENTS OF CASH FLOW
Years Ended December 31,
1997 1996 1995
Operations:
Profit (loss) $(55,021) $ -- $ --
Items not requiring
working capital:
(Increase) decrease
in organization
costs -- -- --
Increase (decrease)
in accounts payable 54,421 -- --
Net cash from
operations (600) -- --
Financing:
Sale of common stock
Net cash
from financing 600 -- --
Net increase (decrease)
in cash -- -- --
-------- ------- -------
Cash at beginning
of period -- -- --
-------- ------- -------
Cash at end of period -- -- --
======== ======= =======
See accompanying Notes to Financial Statements
8
<PAGE>
FREEDOM FUNDING, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. Organization and Nature of Business: Freedom Funding, Inc., a Colorado
corporation, was incorporated September 18, 1986, under the laws of the State of
Delaware, and changed its situs to Colorado in 1989. Since inception, the
Company has been in the development stage. The Company's primary intended
activity is to engage in all aspects of review and evaluation of private
companies, partnerships or sole proprietorships for the purpose of completing
mergers or acquisitions with the Company, and to engage in mergers and
acquisitions with any or all varieties of private entities.
Organization costs are amortized over a period of 60 months.
The Company's fiscal year ends on December 31.
2. Results of Operations: The Company had no operations during the period from
inception through December 31, 1996, other than its search for a business
opportunity in which to engage.
3. Going Concern: Due to a lack of operating experience, a lack of working
capital and a lack of a selected merger or acquisition candidate, as well as
recurring operating losses, there is substantial doubt of the Company's ability
to establish itself as a going concern and its success is dependent upon the
Company obtaining sufficient financial capital to continue its development
activities and, ultimately, to achieve profitable operations through a merger or
acquisition.
4. Change in Control: In the fourth quarter of 1987, the Company began its
investigation of business opportunities in which to engage. In 1996, Mr. Roger
F. Tompkins was appointed a director of the Company, and all other directors
resigned. In 1997, Mr. Tompkins resigned, after appointing Mr. Mark S. Pierce to
act in his stead. Mr. Pierce is now the sole director of the Company and acts as
its Chief Executive, Financial and Accounting Officer, President and Treasurer.
Further, on February 13, 1997, the Company entered into an arrangement with Mr.
Pierce, then an unaffiliated party, whereby he agreed to extend up to $100,000
in cash and services in exchange for the commitment of the Company to issue to
him 6,000,000 common shares of the Company. Mr. Pierce committed to bring the
Company current in its reports with the Securities and Exchange Commission,
including obtaining audits for the Company since 1987 and filing tax returns for
these periods.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company has had no disagreement with its accountant on any matter of
accounting principal or practice, financial statement disclosure or auditing
scope or procedure which would have caused the accountant to make reference in
its report upon the subject matter of the disagreement. Further, the principal
accountant's report In the financial statements does not contain an adverse
opinion or a disclaimer of opinion or qualification as to audit scope or
accounting principle. The Company has had the same auditor since 1988, its
former principal accountant having ceased the practice.
PART III
Item 9. Directors and Executive Officers of the Company
The following table sets forth all current directors and executive officers of
the Company, as well as their ages:
NAME AGE POSITION WITH COMPANY*
---- --- ----------------------
Mark S. Pierce 41 Director, Chief Executive, Financial
and Accounting Officer, President and
Treasurer
* No current director has any arrangement or understanding whereby they are or
will be selected as a director or nominee.
Mr. Pierce will hold office until the next annual meeting of shareholders and
until his successor has been duly elected and qualified. The officers are
elected by the Board of Directors at its annual meeting immediately following
the shareholders' annual meeting and hold office until their death or until they
earlier resign or are removed from office. There are no written or other
contracts providing for the election of directors or term of employment of
executive officers, all of whom serve on an at will basis.
9
<PAGE>
The Board of Directors currently consists of one member, Mr. Pierce. The Company
does not have any standing audit, nominating or compensation committees, or any
committees performing similar functions. The board will meet periodically
throughout the year as necessity dictates. During the years of 1986, 1987, 1988,
1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996 and 1997, and to the date of this
report, the board held various meetings and acted by unanimous consent as
necessity dictated.
Executive Profiles
Mark Pierce has served as a director and executive officer of the Company since
1997, having been appointed to serve as its sole director and its Chief
Executive, Financial and Accounting Officer, President and Treasurer. He served
Midland, Inc., as a director and the secretary from October, 1994, until
February 18, 1997, when it acquired the shares of two subsidiary corporations.
Midland is a publicly-held Colorado corporation with a class of equity
securities registered under Section 12(g) of the Exchange Act. He was a director
and an executive officer of Intercell Corporation from April, 1992, until July
7, 1995, when it acquired the assets of another business. Intercell is a
publicly-held Colorado corporation with a class of equity securities registered
under Section 12(g) of the Exchange Act. Mr. Pierce was the secretary and a
director of Forestry International, Inc., a publicly- held Colorado corporation
from December 24, 1992, until April 7, 1995, at which time he resigned to pursue
other business interests. Forestry International also has a class of equity
securities registered under Section 12(g) of the Exchange Act. Mr. Pierce was a
director, and subsequently an executive officer, from May 22, 1992, until
January 14, 1994, of Indemnity Holdings, Inc. a publicly-held Colorado
corporation. From September 1, 1993, until April 7, 1995, Mr. Pierce was the
President and a director of a small, privately-held merchant banking firm with
six employees, including himself. In this company, he was involved in the
supervision of five employees and worked with independent consultants in the
areas of marketing, public relations, accounting, law and corporate finance.
Prior to September 1, 1993, Mr. Pierce was engaged in the private practice of
law in Denver, Colorado, where he specialized in mergers, acquisitions, the
representation of publicly-held companies, bankruptcy and international
transactions.
Mr. Pierce graduated from the University of Wyoming in Laramie, Wyoming, in May,
1979, with a Bachelor of Science degree in Accounting with honors. He passed his
examination as a Certified Public Accountant in May, 1979, in his first sitting.
Mr. Pierce received his Juris Doctorate from the University of Colorado in
Boulder, Colorado, during May of 1983. He is a member of the American and
Colorado Bar Associations, and is a member of the securities and international
subsections of this latter association.
Item 10. Executive Compensation
No compensation has been paid since inception to the Board of Directors or
executive officers of the Company in their capacities as such, and none is
anticipated to be paid at any time in the immediate future.
Item 11. Security Ownership of Management and Certain Others
Based upon information which has been made available to the Company by its stock
transfer agent, the following table sets forth, as of March 25, 1998, the shares
of common stock owned by each current director, by directors and executive
officers as a group and by each person known by the Company to own more than 5%
of the outstanding Common Stock:
Name and Address of Number Percent
Title of Class Beneficial Owner of Shares of Class (1)
- -------------- ---------------- --------- ------------
Common Stock Mark S. Pierce 6,000,000 72.30%
1999 Broadway
Ste. 3235
Denver, CO 80204
Directors and Executive
Officers as a Group
(one in number): 6,000,000 72.30%
(1) Based on 8,301,300 shares of common stock issued and outstanding on March 5,
1997.
10
<PAGE>
Item 12. Certain Transactions
On February 13, 1997, the Company entered into an agreement with Mr. Pierce
whereby he agreed to advance cash and services to the Company of up to $100,000
in amount. In exchange for entering into this obligation, Mr. Pierce received
6,000,000 shares of the restricted common shares of the Company.
PART IV
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
The following documents and reports have been filed as a part of this report:
1. Financial Statements:
(a) Report of Independent Certified Public Accountants;
(b) Balance Sheets
(c) Statements of Operations
(d) Statements of Stockholders' Equity
(e) Statements of Cash Flows
(f) Notes to Financial Statements
2. Financial Statement Schedules: None.
3. Exhibits required by Item 601: None.
4. Reports on Form 8-K: None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FREEDOM FUNDING, INC.
Date: March 25, 1998 By: /s/ Mark S. Pierce
------------------ -------------------------------
President, Chief Executive,
Financial and Accounting
Officer, Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: March 25, 1998 By: /s/ Mark S. Pierce
------------------ -------------------------------
Mark S. Pierce, Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 55,021
<BONDS> 0
0
0
<COMMON> 54,421
<OTHER-SE> (180,161)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 55,021
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (55,021)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,021)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> (.001)
</TABLE>
