UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of the Securities and Exchange Act of 1934
AQUAMOTION, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0333296
(State of organization) (I.R.S. Employer
Identification No.)
5757 West Century Boulevard
Suite 340, Los Angeles, California 90045
(Address of principal executive offices)
Registrant's telephone number, including area code (310)-665-0221
Registrant's Attorney: Shawn F. Hackman, Esq., 3360 W. Sahara Ave., Suite
200, Las Vegas, NV 89102, (702) 732-2253
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: Common
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Aquamotion, Inc., (the "Company") is a Nevada corporation formed on March 14,
1995. Its principal place of business is located at 5757 West Century
Boulevard, Suite 340, Los Angeles, California 90045. The Company operates
on the calendar fiscal year. The Company was organized to engage in any
lawful corporate business, including but not limited to, participating in
mergers with and acquisitions of other companies. The Company has been in the
developmental stage since inception and has no operating history other than
organizational matters. The company currently has no operations and, in
accordance with SFAS #7, is considered a development stage company.
The Company was incorporated by Cort W. Christi. He no longer holds any
position with the Company, and holds none of the Company's stock. The Company
has never had any operations.
Founders shares were issued to 27 shareholders .All shareholders have held
their stock since that time.
Business of Issuer
The primary activity of the Company currently involves seeking a company or
companies that it can acquire or with whom it can merge. The Company has not
selected any company as an acquisition target or merger partner and does not
intend to limit potential candidates to any particular field or industry, but
does retain the right to limit candidates, if it so chooses, to a particular
field or industry. The Company's plans are in the conceptual stage only.
The Board of Directors has elected to begin implementing the Company's
principal business purpose, described below under "Item 2, Plan of
Operation". As such, the Company can be defined as a "shell" company, whose
sole purpose at this time is to locate and consummate a merger or acquisition
with a private entity.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules, and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan.
The Company's financial statements are prepared using the 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. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern.
Reports to Security Holders
The Company is filing this registration statement on a voluntary basis,
pursuant to section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act"), in order to ensure that public information is readily
accessible to all shareholders and potential investors, and to increase the
Company's access to financial markets. In the event the Company's obligation
to file periodic reports is suspended pursuant to the Exchange Act, the
Company anticipates that it will continue to voluntarily file such reports.
Risk Factors
The Company's business is subject to numerous risk factors, including the
following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had no
operating history and has received no revenues or earnings from operations.
The Company has no significant assets or financial resources. The Company
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until it completes a business combination. This may result
in the Company incurring a net operating loss which will increase
continuously until the Company completes a business combination with a
profitable business opportunity. There is no assurance that the Company will
identify a business opportunity or complete a business combination. Investing
in a company that does not have a financial background or operating history
is a risky proposition. There is nothing an investor can use to determine the
likelihood of success of the Company. Investing in a Company that may acquire
another company that does not have financial statements or an operating
history is also a risky proposition. Again, there is nothing an investor can
use to determine whether this acquisition will increase the likelihood of
success of the Company.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition, and management of the identified business
opportunity. While management intends to seek business combinations with
entities having established operating histories, it cannot assure that the
Company will successfully locate candidates meeting such criteria. In the
event the Company completes a business combination, the success of the
Company's operations may be dependent upon management of the successor firm
or venture partner firm together with numerous other factors beyond the
Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS. The
Company is, and will continue to be, an insignificant participant in the
business of seeking mergers and joint ventures with, and acquisitions of
small private entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may also be desirable target candidates for
the Company. Nearly all such entities have significantly greater financial
resources, technical expertise, and managerial capabilities than the Company.
The Company is, consequently, at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete with numerous other
small public companies in seeking merger or acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO STANDARDS FOR
BUSINESS COMBINATION. The Company has no arrangement, agreement, or
understanding with respect to engaging in a business combination with any
private entity. There can be no assurance the Company will successfully
identify and evaluate suitable business opportunities or conclude a business
combination. Management has not identified any particular industry or
specific business within an industry for evaluations. The Company has been in
the developmental stage since inception and has no operations to date. Other
than issuing shares to its original shareholders, the Company never commenced
any operational activities. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the Company. The
Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it
will require a target business opportunity to have achieved, and without
which the Company would not consider a business combination in any form with
such business opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets,
negative net worth, or other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
business combination, management anticipates devoting up to twenty hours per
month to the business of the Company. The Company's officers have not entered
into written employment agreements with the Company and are not expected to
do so in the foreseeable future. The Company has not obtained key man life
insurance on its officers or directors. Notwithstanding the combined limited
experience and time commitment of management, loss of the services of any of
these individuals would adversely affect development of the Company's
business and its likelihood of continuing operations. See "MANAGEMENT."
DISADVANTAGES OF BLANK CHECK OFFERING.
The Company may enter into business combination with an entity that desires
to establish a public trading market for its shares. A business opportunity
may attempt to avoid what it deems to be adverse consequences of undertaking
its own public offering by seeking a business combination with the Company.
Such consequences may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such an
offering, loss of voting control to public shareholders and the inability or
unwillingness to comply with various federal and state securities laws
enacted for the protection of investors. These securities laws primarily
relate to provisions regarding the registration of securities which require
full disclosure of the Company's business, management and financial
statements.
CONFLICTS OF INTEREST - GENERAL. The Company's officers and directors
participate in other business ventures which compete directly with the
Company. Additional conflicts of interest and non "arms-length" transactions
may also arise in the event the Company's officers or directors are involved
in the management of any firm with which the Company transacts business. The
Company's Board of Directors has adopted a resolution which prohibits the
Company from completing a combination with any entity in which management
serve as officers, directors or partners, or in which they or their family
members own or hold any ownership interest. Management is not aware of any
circumstances under which this policy could be changed while current
management is in control of the Company. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION AND MAY DISQUALIFY
BUSINESS OPPORTUNITIES. Companies subject to Section 13 of the Securities
Exchange Act of 1934 (the "Exchange Act") must provide certain information
about significant acquisitions, including certified financial statements for
the company acquired, covering one or two years, depending on the relative
size of the acquisition. The time and additional costs that may be incurred
by some target entities to prepare such statements may significantly delay or
even preclude the Company from completing an otherwise desirable acquisition.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the 1934 Act are applicable. Management believes
that any potential target company must provide audited financial statements
for review, and for the protection of all parties to the business
combination. One or more attractive business opportunities may forego a
business combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has not
conducted or received results of market research indicating that market
demand exists for the transactions contemplated by the Company. Moreover, the
Company does not have, and does not plan to establish, a marketing
organization. If there is demand for a business combination as contemplated
by the Company, there is no assurance the Company will successfully complete
such transaction.
LACK OF DIVERSIFICATION. In all likelihood, the Company's proposed
operations, even if successful, will result in a business combination with
only one entity. Consequently, the resulting activities will be limited to
that entity's business. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations
within a particular business or industry, thereby increasing the risks
associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation under the
Securities Exchange Act of 1934, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940, insofar as
the Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register
as an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving
the issuance of the Company's common stock will, in all likelihood, result in
shareholders of a private company obtaining a controlling interest in the
Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's common stock held by
them, or resign as members of the Board of Directors of the Company. The
resulting change in control of the Company could result in removal of one or
more present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of
the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION. The
Company's primary plan of operation is based upon a business combination with
a private concern which, in all likelihood, would result in the Company
issuing securities to shareholders of such private company. Issuing
previously authorized and unissued common stock of the Company will reduce
the percentage of shares owned by present and prospective shareholders, and a
change in the Company's control and/or management.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a business
combination with an entity that desires to establish a public trading market
for its shares. A target company may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. The perceived adverse consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders, and the inability or unwillingness to comply
with various federal and state securities laws enacted for the protection of
investors. These securities laws primarily relate to registering securities
and full disclosure of the Company's business, management, and financial
statements.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Typically, these transactions may be structured to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and
the target entity. Management cannot assure that a business combination will
meet the statutory requirements for a tax-free reorganization, or that the
parties will obtain the intended tax-free treatment upon a transfer of stock
or assets. A non-qualifying reorganization could result in the imposition of
both federal and state taxes, which may have an adverse effect on both
parties to the transaction.
BLUE SKY CONSIDERATIONS. Because the securities registered hereunder have not
been registered for resale under the blue sky laws of any state, and the
Company has no current plans to register or qualify its shares in any state,
holders of these shares and persons who desire to purchase them in any
trading market that might develop in the future, should be aware that there
may be significant state blue sky restrictions upon the ability of new
investors to purchase the securities. These restrictions could reduce the
size of any potential market. As a result of recent changes in federal law,
non-issuer trading or resale of the Company's securities is exempt from state
registration or qualification requirements in most states. However, some
states may continue to restrict the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider any
potential secondary market for the Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and "forward-looking
statements" as that term is defined in Section 27A of the Securities Act of
1933 as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"). All statements that are
included in this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management believes that the
expectations reflected in these forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
the expectations are disclosed in this Statement, including, without
limitation, in conjunction with those forward-looking statements contained in
this Statement.
Plan of Operation - General
The Company's plan is to seek, investigate, and if such investigation
warrants, acquire an interest in one or more business opportunities presented
to it by persons or firms desiring the perceived advantages of a publicly
held corporation. At this time, the Company has no plan, proposal, agreement,
understanding, or arrangement to acquire or merge with any specific business
or company, and the Company has not identified any specific business or
company for investigation and evaluation. No member of Management or any
promoter of the Company, or an affiliate of either, has had any material
discussions with any other company with respect to any acquisition of that
company. The Company will not restrict its search to any specific business,
industry, or geographical location, and may participate in business ventures
of virtually any kind or nature. Discussion of the proposed business under
this caption and throughout this Registration Statement is purposefully
general and is not meant to be restrictive of the Company's virtually
unlimited discretion to search for and enter into potential business
opportunities.
The Company's potential success is heavily dependant on the Company's
management, which will have virtually unlimited discretion in searching for
and entering into a business opportunity. None of the officers and directors
of the Company has had any experience in the proposed business of the
Company.
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from
another.
The Company may seek a business combination with a firm which only recently
commenced operations, or a developing company in need of additional funds to
expand into new products or markets or seeking to develop a new product or
service, or an established business which may be experiencing financial or
operating difficulties and needs additional capital which is perceived to be
easier to raise by a public company. In some instances, a business
opportunity may involve acquiring or merging with a corporation which does
not need substantial additional cash but which desires to establish a public
trading market for its common stock. The Company may purchase assets and
establish wholly-owned subsidiaries in various businesses or purchase
existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in which
to participate will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some
industries, and shortages of available capital, management believes that
there are numerous firms seeking the benefits of a publicly-traded
corporation. Such perceived benefits of a publicly traded corporation may
include facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for the principals of a
business, creating a means for providing incentive stock options or similar
benefits to key employees, providing liquidity (subject to restrictions of
applicable statues) for all shareholders, and other items. Potentially
available business opportunities may occur in many different industries and
at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex.
Management believes that the Company may be able to benefit from the use of
"leverage" to acquire a target company. Leveraging a transaction involves
acquiring a business while incurring significant indebtedness for a large
percentage of the purchase price of that business. Through leveraged
transactions, the Company would be required to use less of its available
funds to acquire a target company and, therefore, could commit those funds to
the operations of the business, to combinations with other target companies,
or to other activities. The borrowing involved in a leveraged transaction
will ordinarily be secured by the assets of the acquired business. If that
business is not able to generate sufficient revenues to make payments on the
debt incurred by the Company to acquire that business, the lender would be
able to exercise the remedies provided by law or by contract. These
leveraging techniques, while reducing the amount of funds that the Company
must commit to acquire a business, may correspondingly increase the risk of
loss to the Company. No assurance can be given as to the terms or
availability of financing for any acquisition by the Company. During periods
when interest rates are relatively high, the benefits of leveraging are not
as great as during periods of lower interest rates, because the investment in
the business held on a leveraged basis will only be profitable if it
generates sufficient revenues to cover the related debt and other costs of
the financing. Lenders from which the Company may obtain funds for purposes
of a leveraged buy-out may impose restrictions on the future borrowing,
distribution, and operating policies of the Company. It is not possible at
this time to predict the restrictions, if any, which lenders may impose, or
the impact thereof on the Company.
As part of any transactions, the acquired company may require that Management
or other stockholders of the Company sell all or a portion of their shares to
the acquired Company or the principles of the acquired company. It is
anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company's Common
Stock. The Company's funds are not expected to be used for any stock
purchase from insiders. The Company'' shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all
or a portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However,
management believes that since the anticipated sales price will be less than
the market value, the potential of a stock sale by management will be a
material factor in their decision to enter a specific transaction.
The above description of potential sales of management stock is not based
upon any corporate bylaw, shareholder or board resolution, or contract or
agreement. No other payment of cash or property are expected to be received
by Management in connection with any acquisition.
The Company has insufficient capital with which to provide the owners of
businesses significant cash or other assets. Management believes the Company
will offer owners of businesses the opportunity to acquire a controlling
ownership interest in a public company at substantially less cost than is
required to conduct an initial public offering. The owners of the businesses
will, however, incur significant post-merger or acquisition registration
costs in the event they wish to register a portion of their shares for
subsequent sale. The Company will also incur significant legal and accounting
costs in connection with the acquisition of a business opportunity, including
the costs of preparing post-effective amendments, Forms 8-K, agreements, and
related reports and documents. Nevertheless, the officers and directors of
the Company have not conducted market research and are not aware of
statistical data which would support the perceived benefits of a merger or
acquisition transaction for the owners of a businesses. The Company does not
intend to make any loans to any prospective merger or acquisition candidates
or to unaffiliated third parties.
The Company will not restrict its search for any specific kind of firms, but
may acquire a venture which is in its preliminary or development stage, which
is already in operation, or in essentially any stage of its corporate life.
It is impossible to predict at this time the status of any business in which
the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may
seek other perceived advantages which the Company may offer. However, the
Company does not intend to obtain funds in one or more private placements to
finance the operation of any acquired business opportunity until such time as
the Company has successfully consummated such a merger or acquisition. The
Company also has no plans to conduct any offerings under Regulation S.
Sources of Opportunities
The Company anticipates that business for possible acquisition will be
referred by various sources, including its officers and directors,
professional advisors, securities broker-dealers, venture capitalists,
members of the financial community, and others who may present unsolicited
proposals.
The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations between them and other business
and professional people. It is not presently anticipated that the Company
will engage professional firms specializing in business acquisitions or
reorganizations.
The officers and directors of the Company are currently employed in other
positions and will devote only a portion of their time (not more than one
hour per week) to the business affairs of the Company, until such time as an
acquisition has been determined to be highly favorable, at which time they
expect to spend full-time investigating and closing any acquisition for a
period of two weeks. In addition, in the face of competing demands for their
time, the officers and directors may grant priority to their full-time
position rather than to the Company.
Management, while not especially experienced in matters relating to the new
business of the Company, will rely upon their own efforts and, to a much
lesser extent, the efforts of the Company's shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business
purposes described herein. However, if the Company does retain such an
outside consultant or advisor, any cash fee earned by such party will need to
be paid by the prospective merger/acquisition candidate, as the Company has
no cash assets with which to pay such obligation. There have been no
discussions, understandings, contracts or agreements with any outside
consultants and none are anticipated in the future. In the past, the
Company's management has never used outside consultants or advisors in
connection with a merger or acquisition.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be
approved by the Company's Board of Directors and will be in accordance with
the industry standards. Such fees are customarily between 1% and 5% of the
size of the transaction, based upon a sliding scale of the amount involved.
Such fees are typically in the range of 5% on a $1,000,000 transaction
ratably down to 1% in a $4,000,000 transaction. Management has adopted a
policy that such a finder's fee or real estate brokerage fee could, in
certain circumstances, be paid to any employee, officer, director or 5%
shareholder of the Company, if such person plays a material role in bringing
a transaction to the Company.
The Company will not have sufficient funds to undertake any significant
development, marketing, and manufacturing of any products which may be
acquired. Accordingly, if it acquires the rights to a product, rather than
entering into a merger or acquisition, it most likely would need to seek debt
or equity financing or obtain funding from third parties, in exchange for
which the Company would probably be required to give up a substantial portion
of its interest in any acquired product. There is no assurance that the
Company will be able either to obtain additional financing or to interest
third parties in providing funding for the further development, marketing and
manufacturing of any products acquired.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company (see "Management").
Management intends to concentrate on identifying prospective business
opportunities which may be brought to its attention through present
associations with management. In analyzing prospective business
opportunities, management will consider, among other factors, such matters
as; the available technical, financial and managerial resources working
capital and other financial requirements history of operation, if any
prospects for the future present and expected competition the quality and
experience of management services which may be available and the depth of
that management the potential for further research, development or
exploration specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company the potential
for growth or expansion the potential for profit the perceived public
recognition or acceptance of products, services or trades name identification
Management will meet personally with management and key personnel of the firm
sponsoring the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
It may be anticipated that any opportunity in which the Company participates
will present certain risks. Many of these risks cannot be adequately
identified prior to selection of the specific opportunity, and the Company's
shareholders must, therefore, depend on the ability of management to identify
and evaluate such risk. In the case of some of the opportunities available
to the company, it may be anticipated that the promoters thereof have been
unable to develop a going concern or that such business is in its development
state in that it has not generated significant revenues from its principal
business activities prior to the Company's participation. There is a risk,
even after the Company's participation in the activity and the related
expenditure of the Company's funds, that the combined enterprises will still
be able to become a going concern or advance beyond the development stage.
Many of the opportunities may involve new and untested product, processes, or
market strategies which may not succeed. Such risks will be assumed by the
Company and, therefore, its shareholders.
The Company will not restrict its search for any specific kind of business,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is currently impossible to predict the status of any business in
which the Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
The Company will not have sufficient funds to undertake any significant
development, marketing and manufacturing of any products which may be
acquired. Accordingly, following the acquisition of any such product, the
Company will, in all likelihood, be required to either seek debt or equity
financing or obtain funding from third parties, in exchange for which the
Company would probably be required to give up a substantial portion of its
interest in any acquired product. There is no assurance that the Company
will be able either to obtain additional financing or interest third parties
in providing funding for the further development, marketing and manufacturing
of any products acquired.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to participate in a specific
business opportunity the cost therefore incurred in the related investigation
would not be recoverable. Furthermore, even if an agreement is reached for
the participation in a specific business opportunity, the failure to
consummate that transaction may result in the loss of the Company of the
related costs incurred. Opportunities in which the Company participates will
present certain risks, many of which cannot be identified adequately prior to
selecting a specific opportunity. The Company's shareholders must, therefore,
depend on Management to identify and evaluate such risks. Promoters of some
opportunities may have been unable to develop a going concern or may present
a business in its development stage (in that it has not generated significant
revenues from its principal business activities prior to the Company's
participation.) Even after the Company's participation, there is a risk that
the combined enterprise may not become a going concern or advance beyond the
development stage. Other opportunities may involve new and untested products,
processes, or market strategies which may not succeed. Such risks will be
assumed by the Company and, therefore, its shareholders.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and
other instruments will require substantial management time and attention as
well as substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business opportunity the
costs incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business opportunity, the failure to consummate that transaction may
result in the loss by the Company of the related costs incurred.
There is the additional risk that the Company will not find a suitable
target. Management does not believe the Company will generate revenue without
finding and completing a transaction with a suitable target company. If no
such target is found, therefore, no return on an investment in the Company
will be realized, and there will not, most likely, be a market for the
Company's stock.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, franchise, or licensing agreement with another corporation or
entity. It may also purchase stock or assets of an existing business. Once a
transaction is complete, it is possible that the present management and
shareholders of the Company will not be in control of the Company. In
addition, a majority or all of the Company's officers and directors may, as
part of the terms of the transaction, resign and be replaced by new officers
and directors without a vote of the Company's shareholders.
It is anticipated that securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable Federal
and state securities laws. In some circumstances, however, as a negotiated
element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's Common Stock may have a depressive effect on
such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so called "tax free"
reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code
of 1986, as amended (the "Code"). In order to obtain tax free treatment under
the Code, it may be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event, the
shareholders of the Company, including investors in this offering, would
retain less than 20% of the issued and outstanding shares of the surviving
entity, which could result in significant dilution in the equity of such
shareholders.
As part of the Company's investigation, officers and directors of the Company
will meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis or verification of certain
information provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
The manner in which the Company participates in an opportunity with a target
company will depend on the nature of the opportunity, the respective needs
and desires of the Company and other parties, the management of the
opportunity, and the relative negotiating strength of the Company and such
other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
the target company's shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will, in
all likelihood, hold a lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may be subject
to significant reduction in the event the Company acquires a target company
with substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage of
shares held by the Company's then shareholders, including purchasers in this
offering.
Management has advanced, and will continue to advance, funds which shall be
used by the Company in identifying and pursuing agreements with target
companies. Management anticipates that these funds will be repaid from the
proceeds of any agreement with the target company, and that any such
agreement may, in fact, be contingent upon the repayment of those funds.
Competition
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development-stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personal
resources, technical expertise and experience than the Company. In view of
the Company's limited financial resources and management availability, the
Company will continue to be at significant competitive disadvantage vis-a-vis
the Company's competitors.
Year 2000 Compliance
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Company has
assessed these issues as they relate to the Company, and since the Company
currently has no operating business and does not use any computers, and since
it has no customers, suppliers or other constituents, it does not believe
that there are any material year 2000 issues to disclose in this Form 10-SB.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as an
issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading securities. While the Company
does not intend to engage in such activities, the Company may, through
business combinations, obtain and hold a minority interest in a number of
development stage enterprises. The Company could be expected to incur
significant registration and compliance costs if required to register under
the Investment Company Act of 1940. Accordingly, management will continue to
review the Company's activities from time to time with a view toward reducing
the likelihood the Company could be classified as an "investment company".
The Company intends to structure a merger or acquisition in such manner as to
minimize Federal and state tax consequences to the Company and to any target
company.
Employees
The Company's only employees at the present time are its officers and
directors, who will devote as much time as the Board of Directors determine
is necessary to carry out the affairs of the Company. (See "Management").
ITEM 3. DESCRIPTION OF PROPERTY.
The Company at present has no interest in any real property. The Company
neither owns nor leases any real property. Office services are provided
without charge by Kelly J. Ryan, the Secretary and Director of Aquamotion.
Such costs are immaterial to the financial statements, and accordingly, have
not been reflected therein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth each person known to the Company, as of June
30, 1999, to be a beneficial owner of five percent (5%) or more of the
Company's common stock, by the Company's directors individually, and by all
of the Company's directors and executive officers as a group. Each person has
sole voting and investment power with respect to the shares shown. (Note: the
only such beneficial holder is also a member of management. Therefore, only
one table is included.)
Title of Name and Address Shares Percentage
Class Of Owner Beneficially Ownership
Owned
Common Angela Tzortzatos 220,000 22%
31-29 79 Street
Jackson Heights, NY
11370
Common Kelly J. Ryan 220,000 22%
8033 Sunset Blvd
#396
Los Angeles, CA 90040
Common Emily Tzortzatos 220,000 22%
31-29 79th Street
Jackson Heights, NY
11370
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The members of the Board of Directors of the Company serve until the
next annual meeting of the stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
There are no agreements for any officer or director to resign at the request
of any other person, and none of the officers or directors named below are
acting on behalf of, or at the direction of, any other person.
The Company's officers and directors will devote their time to the business
on an "as-needed" basis, which is expected to require 5-10 hours per month.
Information as to the directors and executive officers of the Company is as
follows:
Name/Address Age Position
Emily Tzortzatos 29 President
3129 79th Street
Jackson Heights, NY 11370
Angela Tzortzatos 25 Vice President
3129 79th Street
Jackson Heights, NY 11370
Kelly J. Ryan 29 Secretary and
8033 Sunset Boulevard Director
Number 396
Los Angeles, CA 90040
All the current Officers and Directors have held their position since
September 15th, 1997.
Emily Tzortzatos,the President, serves as Chairman of the Board
Emily Tzortzatos; President
Emily Tzortzatos is the president and a director of the company. From 1992
to 1995, Ms. Tzortzatos was engaged in retail sales. From November of 1995
to the present, in addition to being a merchandiser for MaidenForm Worldwide
Products in New York, New York, she is the President of Ultimate Wrestling
Federation, Inc., a professional wrestling organization and merchandising
company.
Angela Tzortzatos; Vice President
Angela Tzortzatos is the vice president and a director of the company. From
1992 to present, Ms. Tzortzatos has been engaged in retail sales, management
and merchandising in the jewelry industry.
Kelly J. Ryan
Kelly J. Ryan is the secretary and director of the Issuer. From 1992 to
1995, Ms. Ryan has been an actress in the entertainment industry. From 1995
to present, Ms. Ryan has been and administrator with Hoffman Travel
Management Company of Los Angeles, California.
Blank Check Experience
None of the above officers and directors has had any previous blank check
experience.
There is no family relationship between any of the officers and directors of
the Company. The Company's Board of Directors has not established any
committees.
Conflicts of Interest
Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time
to the Company's affairs. The officers and directors of the Company may in
the future become shareholders, officers or directors of other companies
which may be formed for the purpose of engaging in business activities
similar to those conducted by the Company. The Company does not currently
have a right of first refusal pertaining to opportunities that come to
management's attention insofar as such opportunities may relate to the
Company's proposed business operations.
The officers and directors are, so long as they are officers or directors of
the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in
the performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this requirement will
be a breach of the fiduciary duties of the officer or director. Subject to
the next paragraph, if a situation arises in which more than one company
desires to merge with or acquire that target company and the principals of
the proposed target company have no preference as to which company will merge
or acquire such target company, the company of which the President first
became an officer and director will be entitled to proceed with the
transaction. Except as set forth above, the Company has not adopted any other
conflict of interest policy with respect to such transactions.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers and/or directors receive any compensation for
their respective services rendered to the Company, nor have they received
such compensation in the past. They both have agreed to act without
compensation until authorized by the Board of Directors, which is not
expected to occur until the Registrant has generated revenues from operations
after consummating a merger or acquisition. As of the date of this
registration statement, the Company has no funds available to pay directors.
Further, none of the directors are accruing any compensation pursuant to any
agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or more members of the Company's management for the purposes of
providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of
management will not be a consideration in the Company's decision to undertake
any proposed transaction. Each member of management has agreed to disclose to
the Company's Board of Directors any discussions concerning possible
compensation to be paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on such
transaction. Therefore, as a practical matter, if each member of the
Company's Board of Directors is offered compensation in any form from any
prospective merger or acquisition candidate, the proposed transaction will
not be approved by the Company's Board of Directors as a result of the
inability of the Board to affirmatively approve such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for
their referral in the form of a finder's fee. It is anticipated that this fee
will be either in the form of restricted common stock issued by the Company
as part of the terms of the proposed transaction, or will be in the form of
cash consideration. However, if such compensation is in the form of cash,
such payment will be tendered by the acquisition or merger candidate, because
the Company has insufficient cash available. The amount of such finder's fee
cannot be determined as of the date of this registration statement, but is
expected to be comparable to consideration normally paid in like
transactions. No member of management of the Company will receive any finders
fee, either directly or indirectly, as a result of their respective efforts
to implement the Company's business plan outlined herein. Persons
"associated" with management is meant to refer to persons with whom
management may have had other business dealings, but who are not affiliated
with or relatives of management.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Registrant for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors has passed a resolution which contains a policy that
the Company will not seek an acquisition or merger with any entity in which
any of the Company's Officers, Directors, principal shareholders or their
affiliates or associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under which this
policy may be changed through their own initiative.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein.
There are no relationships or transaction to be reported.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and, to
the best of its knowledge, no such action by or against the Company has been
threatened.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is not quoted on the over-the-counter market in
the United States. Management has not undertaken any discussions, preliminary
or otherwise, with any prospective market maker concerning the participation
of such market maker in the after-market for the Company's securities and
management does not intend to initiate any such discussions until such time
as the Company has consummated a merger or acquisition. There is no assurance
that a trading market will ever develop or, if such a market does develop,
that it will continue.
After a merger or acquisition has been completed, one or both of the
Company's officers and directors will most likely be the persons to contact
prospective market makers. It is also possible that persons associated with
the entity that merges with or is acquired by the Company will contact
prospective market makers. The Company does not intend to use consultants to
contact market makers.
Market Price
The Registrant's Common Stock is not quoted at the present time. Effective
August 11, 1993, the Securities and Exchange Commission adopted Rule 15g-9,
which established the definition of a "penny stock," for purposes relevant to
the Company, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks; and (ii) the broker or
dealer receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that
person and that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny
stocks. The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that
the broker or dealer received a signed, written agreement from the investor
prior to the transaction. Disclosure also has to be made about the risks of
investing in penny stocks in both public offerings and in secondary trading,
and about commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on
the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers NASDAQ, has recently made changes in the criteria for initial
listing on the NASDAQ Small Cap market and for continued listing. For initial
listing, a company must have net tangible assets of $4 million, market
capitalization of $50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years. For initial
listing, the common stock must also have a minimum bid price of $4 per share.
In order to continue to be included on NASDAQ, a company must maintain
$2,000,000 in net tangible assets and a $1,000,000 market value of its
publicly-traded securities. In addition, continued inclusion requires two
market-makers and a minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to
be traded without the aforesaid limitations. However, there can be no
assurances that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure continued
listing. The failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may
result in the discontinuance of the inclusion of the Company's securities on
a national exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter market. As a
result, a shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
Holders
There is one shareholder of the Company's Common Stock. All shares were
issued initially to the founder of the Company. All of the issued and
outstanding shares of the Company's Common Stock were issued in accordance
with the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933.
Dividends
The Registrant has not paid any dividends to date, and has no plans to do so
in the immediate future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
There are no recent sales of unregistered securities to be reported.
With respect to the sales made, the Registrant relied on Section 4(2) of the
Securities Act of 1933, as amended. No transfers of stock have occurred since
initial issuance. No advertising or general solicitation was employed in
offering the shares. The securities were offered for investment only and not
for the purpose of resale or distribution, and the transfer thereof was
appropriately restricted.
Upon closing of a business combination, certain of the shareholders will be
restricted from selling their shares. Of the 1,000,000 shares currently
issued and outstanding, the shares held by management, totaling 1,000,000
shares, are restricted and may be sold in accordance with Rule 144. In
general, under Rule 144, a person (or persons whose shares are aggregated)
who has satisfied a one year holding period, under certain circumstances, may
sell within any three-month period a number of shares which does not exceed
the greater of one percent of the then outstanding Common Stock or the
average weekly trading volume during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three
months, an affiliate of the Company.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorized the issuance of Twenty
Five Million (25,000,000) shares, consisting of Twenty Five Million
(25,000,000) shares of Common Stock, $0.0027 par value of which 1,000,000
Common Shares were issued and are now outstanding. The shares are
non-assessable, without pre-emptive rights, and do not carry cumulative
voting rights. Holders of common shares are entitled to one vote for each
share on all matters to be voted on by the stockholders. The shares are fully
paid, non-assessable, without pre-emptive rights, and do not carry
cumulative voting rights. Holders of common shares are entitled to share
ratably in dividends, if any, as may be declared by the Company from
time-to-time, from funds legally available. In the event of a liquidation,
dissolution, or winding up of the Company, the holders of shares of common
stock are entitled to share on a pro-rata basis all assets remaining after
payment in full of all liabilities.
Management is not aware of any circumstances in which additional shares of
any class or series of the Company's stock would be issued to management or
promoters, or affiliates or associates of either.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its shareholders for
errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud, or a knowing violation of the law, since provisions have
been made in the Articles of incorporation and By-laws limiting such
liability. The Articles of Incorporation and By-laws also provide for
indemnification of the officers and directors of the Company in most cases
for any liability suffered by them or arising from their activities as
officers and directors of the Company if they were not engaged in intentional
misconduct, fraud, or a knowing violation of the law. Therefore, purchasers
of these securities may have a more limited right of action than they would
have except for this limitation in the Articles of Incorporation and By-laws.
The officers and directors of the Company are accountable to the Company as
fiduciaries, which means such officers and directors are required to exercise
good faith and integrity in handling the Company's affairs. A shareholder may
be able to institute legal action on behalf of himself and all others
similarly stated shareholders to recover damages where the Company has failed
or refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure, be able to
bring a class action or derivative suit to enforce their rights, including
rights under certain federal and state securities laws and regulations.
Shareholders who have suffered losses in connection with the purchase or sale
of their interest in the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from
the Company.
Insofar as indemnification for liabilities arising under the federal
securities laws may be permitted to directors and controlling persons of the
Company, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the law and is, therefor, unenforceable. In the event a demand
for indemnification is made, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the law and will be governed
by the final adjudication of such issue.
ITEM 13. FINANCIAL STATEMENTS.
The financial statements and supplemental data required by this Item 13
follow the index of financial statements appearing at Item 15 of this Form
10-SB.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation, and
Management has had no disagreements with the findings of its accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
Report of Independent Auditors, Kurt D. Saliger, dated May 1, 1999.
Balance Sheet as of April 30, 1999.
Statement of Operation for the period ended April 30, 1999.
Statement of Stockholders Equity.
Statement of Cash Flows for the period ended April 30, 1999
AQUAMOTION, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1997
DECEMBER 31, 1998
MAY 31, 1999
AQUAMOTION, INC.
CONTENTS
Page
Independent Auditor's Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-7
Member American Institute Member Nevada Society
of Certified Public Accountants 1K<4>5 of Certified Public
Accountants
KURT D. SALIGER, CPA.
Certified Public Accountant
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Aquamotion, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Aquamotion, Inc. (a
development stage company), as of May 31, 1999* December 31, 1998; and December
31, 1997 and the related statements of operations, stockholders' equity and
cash flows for the five month period ended May 31, 1999 and the years ended
December 31, 1998 and December 31, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit ncludes 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aquamotion, Inc. at May 31,
1999; December 31, 1998; December 31, 1997 and the results of their operations
and their cash flows for the five month ended May 31, 1999; and years ended
December 31, 1998 and December 31, 1997 in conformity with generally accepted
accounting principles.The accompanying financial statements have been
prepared assuming the Company will continue as a going concern. As discussed
in Note 4 to the financial statements, the Company has had no operations and
has no established source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in regard to these
matters are also described in Note 4. The financial statements do not include
any adjustments that might result from the outcome
of this uncertainty.
Kurt D. Saliger C.P.A. Las Vegas, Nevada January 25, 2000
5000 W. Oakey * Suite A-4 0 Las Vegas, Nevada 89146
Phone: (702) 367-1988 Fax: (702) 870-8388
AQUAMOTION, INC.
A Devolpment Stage Company
BALANCE SHEETS
May 31, December 31, December 31,
1999 1998 1997
ASSETS
CURRENT ASSETS
Cash $0 $0 $0
Accounts Receivable $0 $0 $0
-------- --------- ---------
TOTAL CURRENT ASSETS $0 $0 $0
PROPERTY AND EQUIPMENT, NET $0 $0 $0
OTHER ASSETS $0 $0 $0
-------- ---------- ---------
TOTAL ASSETS $0 $0 $0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $0 $0 $0
Accrued Liabilities $0 $0 $0
Current Portion, Long Term Debt $0 $0 $0
------ --------- ---------
TOTAL CURRENT LIABILITIES $0 $0 $0
LONG-TERM DEBT $0 $0 $0
STOCKHOLDERS' EQUITY
Common Stock, $0.0027 par value
authorized 25,000,000 shares;
issued and outstanding
1,000,000 shares $2,700 $2,70 $2,700
Additional Paid In Capital $0 $0 $0
Deficit Accumulated During
Development Stage ($2,700) ($2,700) ($2,700)
------ --------- ---------
TOTAL STOCKHOLDERS' EQUITY $0 $0 $0
------ ---------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $0 $0 $0
See accompanying notes to financial statements.
-2-
AQUAMOTION, INC.
A Development Stage Company
STATEMENT OF OPERATIONS
Jan. 1 Jan. 1 Jan. 1 March 14,1995
to to to (inception)
May December December to May
31, 1999 30, 1998 31, 1997 31,1999
INCOME
Revenue $0 $0 $0 $0
------ ------- ------ -------
TOTAL INCOME $0 $0 $0 $0
EXPENSES
General &
Administrative $0 $0 $0 $2,700
------ ------ ------- ------
TOTAL EXPENSES $0 $0 $0 $2,700
NET PROFIT (LOSS) $0 $0 $0 ($2,700)
NET PROFIT (LOSS)
PER SHARE $0.0000 $0.0000 $0.0000 ($0.0027)
AVERAGE NUMBER
OF SHARES OF COMMON STOCK
OUTSTANDING 1,000,000 1,000,000 1,000,000 1,000,000
See accompanying notes to financial statements.
-3-
AQUAMOTION, INC.
A Development Stage Company
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
May 31, 1999
Common Stock (Deficit)
Accumulated
Number Additional During
of Paid In Development
Shares Amount Capital Stage
--------- ------- --------- ---------
March 14, 1995
issued for cash (Note 3) 10,000 $2,700 $0
Net (Loss), 03-14-95
(inception) to 12-31-95
($2,700)
--------- ------- ------- --------
Balance, Dec. 31, 1995 10,000 $2,700 $0 ($2,7OO)
Net (Loss), 12-31-96 $0
--------- ------- ------- --------
Balance, Dec. 31, 1996 10,000 $2,700 $0 ($2,700)
September 28, 1997
Forward Stock Split 100:1 990,000
Net (Loss), 12-31-97 $0
--------- ------- ------- --------
Balance, Dec. 31, 1997 1,000,000 $2,700 $0 ($2,700)
Net (Loss), 12-31-98 $0
Balance, Dec. 31, 1998 1,000,000 $2,700 $0 ($2,700)
Net (Loss), 05-31-99
$0
--------- ------- ------- --------
Balance May
31, 1999 1,000,000 $2,700 $0 ($2,700)
See accompanying notes to financial statements.
-4-
AQUAMOTION, INC.
A Development Stage Company
STATEMENT OF CASH FLOWS
Jan. 1 Jan. 1 Jan. 1 Mar. 14, 1995
to to to (inception)
May 31, December December to May 31,
1999 31, 1998 31, 1997 1999
CASH FLOWS FROM
FROM OPERATING ACTIVITIES
Net (Loss) $0 $0 $0 ($2,700)
Accounts Payable $0 $0 $0 $0
CASH FLOWS FROM
FROM OPERATING ACTIVITIES
Issue common stock $0 $0 $0 $2,700
-------- -------- -------- -------
Net increase
(decrease) in cash $0 $0 $0 $0
Cash, Beginning
of Period $0 $0 $0 $0
Cash, End -------- -------- -------- -------
of Period $0 $0 $0 $0
See accompanying notes to financial statements.
-5-
AQUAMOTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized March 14, 1995 under the laws of the
State of Nevada, under the name Aquamotion, Inc. The Company currently
has no operations and, in accordance with SFAS V, is considered a
development stage company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method of
accounting.
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, disclosure of contingent assets and liabilities, and
the rerported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
For the statements of cash flows, all highly liquid investments
with a maturity of three months or less are considered to be cash
equivalents. There were no cash equivalents as of December 31, 1997 and
December 31, 1998 and May 31, 1999.
Fixed assets
The Company does not maintain or control any fixed assets.
Income taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS #109) "Accounting for Income Taxes." A deferred
tax asset or liability is recorded for all temporary differences
between financial and tax reporting. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
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AQUAMOTION, INC.
A Development Stage Company
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONIT)
Loss Per Share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per
Share." Basic loss per share is computed by dividing losses available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted loss per share reflects per share
amounts that would have resulted if dilutive common stock equivalents had
been converted to common stock. As of May 31, 1999; December 31,
1998 and December 31, 1997 the Company had no dilutive common stock
equivalents such as stock options.
NOTE 3 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the Company consists of
25,000,000 shares with a par value of $0.0027 per share.
On March 14, 1995, the Company issued 10,000 shares of its
common stock for $2,700 cash.
On September 28, 1997, the Company declared to increase the
authorized number of shares of common stock to 25,000,000 shares with a
stated par value of $0.0027 per share. The Company also declared a
forward stock split of 100:1 for issued and outstanding common stock
shares resulting in 1,000,000 common shares of stock outstanding.
Preferred Stock
The authorized preferred stock of the Company consists of no
preferred stock.
NOTE 4 - GOING CONCERN
The Company's financial statements are prepared using the
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. However, the Company has no current
source of revenue. Without realization of additional capital, it would be
unlikely for the Company to continue as a going concern. It is
management's plan to seek additional capital through a merger with an
existing operating company.
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