SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended March 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 0-22236
FARADAY FINANCIAL, INC.
(Exact name of small business issuer in its charter)
DELAWARE 33-0565710
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
1500 Quail Street, Suite 550
Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 660-1500
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Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
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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
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
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. [ X ]
State issuer's revenues for its most recent fiscal year: None
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 31, 1994 was not determinable since the Common
Stock was not traded.
The number of shares outstanding of the issuer's classes of Common
Stock as of March 31, 1994:
Common Stock, $.001 Par Value - 424,600 shares
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
Item 1. DESCRIPTION OF BUSINESS
Background
Faraday Financial, Inc., a Delaware corporation (the "Company") was
incorporated on June 11, 1992.The Company has no operating history other than
organizational matters, and was formed specifically to be a "clean public shell"
and for the purpose of either merging with or acquiring an operating company
with operating history and assets. The Securities and Exchange Commission has
defined and designated these types of companies as "blind pools" and "blank
check" companies.
The primary activity of the Company will involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The Company has
not selected any company for acquisition or merger and does not intend to limit
potential acquisition candidates to any particular field or industry, but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry. The Company's plans are in the conceptual stage
only.
The executive offices of the Company are located at 1500 Quail Street,
Suite 550, Newport Beach, California 92660. Its telephone number is (714)
660-1500.
Plan of Operation - General
The Company was organized for the purpose of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, acquire an
interest in one or more business opportunities presented to it by persons or
firms who or which desire to seek 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 promotor of the Company
has had any material discussions with any other company with respect to any
acquisition of that company. Although the Company's Common Stock is currently
not freely tradeable, it will eventually become so under exemptions such as Rule
144 promulgated under the Securities Act of 1933. See "Description of
Securities." The Company will not restrict its search to any specific business,
industry or geographical location, and the Company may participate in a business
venture of virtually any kind or nature. The discussion of the proposed business
under this caption and throughout 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 intends to obtain funds in one or more private placements
to finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent 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. There can be no assurance that the Company will be able to raise any
funds in private placements. In any private placement, management may purchase
shares on the same terms as offered in the private placement. (See "Risk
Factors" and "Management").
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
(see "Risk Factors").
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The Company may seek a business opportunity with a firm which only
recently commenced operations, or a developing company in need of additional
funds for expansion 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 is in the need for additional capital
which is perceived to be easier to raise by a public company. In some instances,
a business opportunity may involve the acquisition or merger 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 business 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 statutes) for all shareholders,
and other factors. Potentially available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$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.
As part of any transaction, the acquired company may require that
Management or other stockholders of the Company sell all or a portion of their
shares to the acquired company, or to the principals of the acquired company. It
is anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company's Common Stock.
The Company's funds are not expected to be used for purposes of any stock
purchase from insiders. The Company shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all or a
portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However, management
believes that since the anticipated sales price will be less than market value,
that the potential of a stock sale by management will be a material factor on
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 payments of cash or property are expected to be received by
Management in connection with any acquisition.
The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it will use the
services of such persons.
The Company has, and will continue to have, insufficient capital with
which to provide the owners of business opportunities with any significant cash
or other assets. However, management believes the Company will offer owners of
business opportunities 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 business opportunities
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
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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 business opportunity.
The Company does not intend to make any loans to any prospective merger
or acquisition candidates or to unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities for possible
acquisition will be referred by various sources, including its officers and
directors, professional advisers, 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 in 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 positions
rather than to the Company.
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 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; and other relevant factors. Officers and directors of each
Company 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 stage 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
unable to become a going concern or advance beyond the development stage. Many
of the 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 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,
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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.
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. On the consummation
of a transaction, 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
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any 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 reference 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 each Company participates in an opportunity 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 target company 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 dilative effect on the percentage of shares held
by the Company's then shareholders, including purchasers in this offering. (See
"Risk Factors.")
The Company will not have sufficient funds (unless it is able to raise
funds in a private placement) 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
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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
costs 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.
Management believes that the Company may be able to benefit from the
use of "leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, 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
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. No assurance can be given as to
the terms or the 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 opportunity 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.
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 personnel
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 a significant competitive disadvantage vis-a-vis the
Company's competitors.
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 of securities. While the Company
does not intend to engage in such activities, the Company could become subject
to regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to 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 intend 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").
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Risk Factors
Potential investors should consider the following special risk factors
which pertain to the Company.
New Company: No Revenues from Operation; Risk of Loss. The Company was
incorporated on May 4, 1992 and faces all of the risks inherent in a new
business, coupled with the risks involved with a blind pool/blank check company.
Since the Company is a start-up venture, it is without any record of earnings
and sales. There is no information at this time upon which to base an assumption
that its plans will either materialize or prove successful. There can be no
assurance that any of the Company's business activities will result in any
operating revenues or profits. Investors should be aware that they may lose all
or substantially all of their investment.
Reliance Upon Officers; No Experience. The Company is dependent upon
the personal efforts and abilities of its officers and directors, who devote
only minimal time to the affairs of the Company. The officers and directors of
the Company have certain business experience but have limited experience in
acquisition or merger activities. The officers and directors have not agreed to
expend any specific amount of time on behalf of the Company, but will devote
such time as necessary to identify and consummate a merger or acquisition. (See
"Management").
Dilution on Change in Control. The Company may acquire or merge with
another company through the issuance of its Common Stock or shares of its
preferred stock which will dilute the existing shareholders' percentage interest
in the Company, and may, in come instances, result in the further dilution of
the per share book value of the Company's Common Stock. An acquisition may
involve the appointment of additional members to the Company's Board of
Directors or resignation of some or all of the current directors, which may
result in a change of Management. Should any such acquisition or merger take
place, investors in this offering will not have the benefit of knowing the
business backgrounds of any future members of the Company's Board of Directors.
The Company does not intend to provide the Company's security holders with any
disclosure documents, including audited financial statements, concerning an
acquisition or merger candidate and its business prior to the consummation of
any merger or acquisition transaction.
Financing Required. The Company's ability to operate as a going concern
is contingent upon its receipt of additional financing through private
placements or by loans or capital contributions from officers and directors. The
Company's business may require additional funds in the future. There can be no
assurance that if additional funds are required they will be available, or, if
available, that they can be obtained on terms satisfactory to Management. In the
event the Company elects to issue preferred stock to raise additional capital
for acquisition or merger purposes, any rights or privileges attached to such
preferred stock may either (i) dilute the percentage of ownership of the already
issued common shares or (ii) dilute the value of such shares. No rights or
privileges have been assigned to the preferred stock and any such rights and
privileges will be at the total discretion of the Board of Directors of the
Company.
Lack of Market for the Common Stock. At the present time, there is no
public market for the Company's Common Stock, and there can be no assurance that
a market will in fact develop. Even if a market does develop, it may not be
sustained. At present there are no market makers for the shares of the Company
and the Common Stock of the Company does not trade on any market.
Leveraged Transactions. There is a possibility that any acquisition of
a business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing on the assets
of the business opportunity to be acquired, on the projected future revenues, or
the profitability of the business opportunity. This could increase the Company's
exposure to larger losses. A business opportunity acquired through a leveraged
transaction is profitable only if it generates enough revenues to cover the
related debt and expenses. Failure to make payments on the debt incurred to
purchase the business opportunity could result in the loss of a portion or all
of the assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient revenues to
cover the related debt and expenses.
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No Arrangements. None of the Company's officers, directors, promoters,
their affiliates or associates have had any material contact or discussions with
and there are no present plans, proposals, arrangements or undertakings with any
representatives of the owners of any business or company regarding the
possibility of an acquisition or merger transaction contemplated herein.
Time to be Devoted by Management. 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 in 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 positions rather than to the Company.
Type of Business Acquired. The type of business to be acquired may be
one which desires to avoid effecting its own public offering and the
accompanying expense, delays, and federal and state requirements which purport
to protect investors. In particular, business acquired may be one which, due to
merit requirements of state securities authorities, would not be permitted to
make a securities offering in many states. Because of the Com- pany's limited
capital, it is more likely than not that any acquisition by the Company that
would take place would involve other parties whose primary interest is the
acquisition of a publicly traded company.
Blue Sky Compliance. The trading of securities of blank check companies
may be restricted by the "Blue Sky" laws of the several states. With the
exception of solicited "unsolicited" transactions, Management is aware that
unrestricted trading of blank check stocks is prohibited in the states of
California, Idaho, Indiana, Minnesota, Michigan, and Texas, and may be
prohibited in many other states absent the availability of exemptions which are
in the discretion of state securities administrators. The effect of these state
laws will be to limit the trading market, if any, for the shares of the Company
and make the resale of shares acquired by investors more difficult.
Loss of Control by Present Management and Shareholders. The Company may
consider a merger in which the Company issues a substantial amount of its Common
Stock as consideration for any acquisition (70 - 80% if a tax-free
reorganization is desired). The result of such a merger would be that the
acquired Company's shareholders and management would control the Company, and
the Company's management could be replaced by persons whose background and
competence are unknown at this time. Such a merger could leave the investors in
this offering with stock worth substantially less than the price paid for such
stock in this offering, and a greatly reduced percentage of ownership of the
Company. The Company acquired may be a privately held company. Management could
sell its control block of stock to the acquired company's shareholders. There
are no agreements or understandings for any officer or director to resign at the
request of another person and none of the officers or directors are acting on
behalf of or will act at the direction of any other person. See "Acquisition of
Opportunities."
Lack of Dividends. The Company has no paid dividends and does not
contemplate paying dividends in the foreseeable future. There is no assurance
that if a merger or acquisition occurs, the surviving company will pay any
dividends.
Substantial Management Conflicts. Certain conflicts of interest may
exist between the Company and its management, and conflicts may develop in the
future. The officers and directors of the Company hold similar positions with
Hermaton Company, a company engaged in the same business as the Company. In the
event a business opportunity is presented to the management, they will present
the opportunity to the Company before the Hermaton Company, until such time as
the Company has entered into an acquisition or a merger transaction. The
officers and directors intend to become involved with several other blank check
companies, and a similar conflict policy will be adopted.
Possible Rule 144 Sales. All of the 400,000 shares of the Company's
outstanding Common Stock are "restricted securities" and may be sold only in
compliance with Rule 144 adopted under the Securities Act of 1933 or other
applicable exemptions from registration. Rule 144 provides that a person
affiliated with the Company and
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holding restricted securities for a period of two years may thereafter sell in
brokerage transactions, an amount not exceeding in any three month period the
greater of either (i) 1% of the Company's outstanding Common Stock, or (ii) the
average weekly trading volume during a period of four calendar weeks immediately
preceding any sale. Persons who are not affiliated with the Company and who have
held their restricted securities for at least three years are not subject to the
volume limitation. Possible or actual sales of the Company's Common Stock by
present shareholders under Rule 144, which could occur as early as May 4, 1994,
may have a depressive effect on the price of the Company's Common Stock in any
market which may develop.
Inability to Conduct Extensive Analysis. Because of its limited funds,
the Company will unable to conduct extensive analysis of any prospective merger
or acquisition. As a result, any decisions made by management may be made
without the benefit of exhaustive studies and analysis which might be available
if the Company had more money for analysis. If the funds allotted by the Company
are depleted before an acquisition or merger is completed, the Company will have
exhausted its capital and may not be able to continue operations.
Risks of Low Priced Stocks. Trading, if any, in the Common Stock will
likely be conducted in the over-the-counter market in the so-called "pink
sheets," or the NASD's "Electronic Bulletin Board." Consequently, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the price of, the Company's securities.
In the absence of a security being quoted on NASDAQ, or the Company
having $2,000,000 in net tangible assets, trading in the Common Stock is covered
by Rule 15c2-6 promulgated under the Securities Exchange Act of 1934 for
non-NASDAQ and non-exchange listed securities. Under such rule, broker/dealers
who recommend such securities to persons other than established customers and
accredited investors (generally institutions with assets in excess of $5,000,000
or individuals with a net worth in excess of $1,000,000 or an annual income
exceeding $200,000 or $300,000 jointly with their spouse) must make a special
written suitability determination for the purchaser and receive the purchaser's
written agreement to a transaction prior to sale. Securities are also exempt
from this rule if the market price is at least $5.00 per share, or for warrants,
if the warrants have an exercise price of at least $5.00 per share.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure related to the market for penny stocks and for trades in
any stock defined as a penny stock. The Commission has recently adopted
regulations under such Act which define a penny stock to be any NASDAQ or
non-NASDAQ equity security that has a market price or exercise price of less
than $5.00 per share and allow for the enforcement against violators of the
proposed rules. In addition, unless exempt, the rules require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
prepared by the Commission explaining important concepts involving the penny
stock market, the nature of such market, terms used in such market, the
broker/dealer's duties to the customer, a toll-free telephone number for
inquiries about the broker/dealer's disciplinary history, and the customer's
rights and remedies in case of fraud or abuse in the sale. Disclosure also must
be made about commissions payable to both the broker/dealer and the registered
representative, current quotations for the securities, and if the broker/dealer
is the sole market-maker, the broker/dealer must disclose this fact and its
control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.
While many NASDAQ stocks are covered by the proposed definition of
penny stock, transactions in NASDAQ stock are exempt from all but the sole
market-maker provision for (i) issuers who have $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three years),
(ii) transactions in which the customer is an institutional accredited investor
and (iii) transactions that are not recommended by the broker/dealer. In
addition, transactions in a NASDAQ security directly with the NASDAQ
market-maker for such securities, are subject only to the sole market-maker
disclosure, and the disclosure with regard to commissions to be paid to the
broker/dealer and the registered representatives.
9
<PAGE>
Finally, all NASDAQ securities are exempt if NASDAQ raised its
requirements for continued listing so that any issuer with less than $2,000,000
in net tangible assets or stockholder's equity would be subject to delisting.
These criteria are more stringent than the proposed increased in NASDAQ's
maintenance requirements.
The Company's securities are subject to the above rules on penny stocks
and the market liquidity for the Company's securities could be severely affected
by limiting the ability of broker/dealers to sell the Company's securities.
Preferred Shares. The Board of Directors has total discretion in the
issuance and the determination of the rights and privileges of any shares of
Preferred Stock or Common Stock which may be issued in the future, which rights
and privileges may be detrimental to the holders of the Common Stock of the
Company. The Company is authorized to issue 1,000,000 shares of its Preferred
Stock, par value $.001 and a total of 20,000,000 shares of Common Stock. (See
"Description of Securities").
Item 2. DESCRIPTION OF PROPERTY
The Company rents an executive suite on an as needed basis. The Company
pays its own charges for long distance telephone calls and other miscellaneous
secretarial, photocopying and similar expenses.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended March 31, 1995.
10
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has not traded. As of March 31, 1995, there
were approximately 115 stockholders of record.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company has been recently formed and has not engaged in any
operations other than organizational matters.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company required to be
included in Item 7 are set forth in the Financial Statements Index.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
11
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
Information as to the directors and executive officers of the Company is as
follows. Each of the officers and directors holds similar positions in a number
of other "blind pool-blank check" companies. See "Conflicts of Interest."
Jehu Hand has been President, Secretary and Chief Financial Officer
since April 1, 1994. Mr. Hand has been engaged in corporate and securities law
practice and has been a partner of the law firm of Hand & Hand since 1992. From
January 1992 to December 1992 he was the Vice President-Corporate Counsel and
Secretary of Laser Medical Technology, Inc., which designs, manufactures and
markets dental lasers and endodontics equipment. He was a director of Laser
Medical from February 1992 to February 1993. Mr. Hand is a director of
Interactive Medical Technologies Ltd., which manufactures and sells diagnostic
imaging spheres to measure blood flow, of Faraday Financial, Inc., and Monarch
Pictures Corporation. From January to October, 1992 Mr. Hand was Of Counsel to
the Law Firm of Lewis, D'Amato, Brisbois & Bisgaard. From January 1991 to
January 1992 he was a shareholder of McKittrick, Jackson, DeMarco & Peckenpaugh,
a law corporation. From January to December 1990 he was a partner of Day,
Campbell & Hand, and was an associate of its predecessor law firm from July 1986
to December 1989. From 1984 to June 1986 Mr. Hand was an associate attorney with
Schwartz, Kelm, Warren & Rubenstein in Columbus, Ohio. Jehu Hand received a J.D.
from New York University School of Law and a B.A. from Brigham Young University.
Conflicts of Interest
Certain conflicts of interest now exist and will continue to exist
between the Company and its officers and directors due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its
management, and conflicts may develop in the future. The officers and directors
of the Company hold similar positions with Basic Science Associates, Inc.,
Hermaton Company; Achiote Corporation; Rook Haven, Ltd.; Faraday Financial,
Inc.; Keratoplanetes Corporation; Quasar Projects Company, and Vendalux
Corporation, all companies engaged in the same business as the Company. In the
event a business opportunity is presented to the management, they will present
the opportunity to the Company and to these companies in the foregoing order of
priority, until such time as each company has entered into an acquisition or a
merger transaction. The officers and directors may become involved with several
other blank check companies, and a similar conflict policy will be adopted.
The Company has not established policies or procedures for the
resolution of current or potential conflicts of interests between the Company,
its officers and directors or affiliated entities. There can be no assurance
that management will resolve all conflicts of interest in favor of the Company,
and failure by management to conduct the Company's business in the Company's
best interest may result in liability to the management. The officers and
directors are accountable to the Company as fiduciaries, which means that they
are required to exercise good faith and integrity in handling the Company's
affairs. Shareholders who believe that the Company has been harmed by failure of
an officer or director to appropriately resolve any conflict of interest may,
subject to applicable rules of civil procedure, be able to bring a class action
or derivative suit to enforce their rights and the Company's rights.
The Company has no arrangement, understanding or intention to enter
into any transaction for participating in any business opportunity with any
officer, director, or principal shareholder or with any firm or
12
<PAGE>
business organization with which such persons are affiliated, whether by reason
of stock ownership, position as an officer or director, or otherwise.
The Company, by resolution of its Board of Directors and
stockholders, adopted a 1992 Stock Option Plan (the "Plan")on June 11, 1992.The
Plan enables the Company to offer an incentive based compensation system to
employees, officers and directors and to employees of companies who do business
with the Company.
In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries or employees of companies with which the Company does business
become participants in the Plan upon receiving grants in the form of stock
options or restricted stock. A total of 2,000,000 shares are authorized for
issuance under the Plan, of which 20,000 shares are issuable under options
granted to officers and directors at $.50 per share, exercisable until May 4,
1997. The Company does not intend to grant additional options until such time as
a merger or acquisition has been consummated. The Company may increase the
number of shares authorized for issuance under the Plan or may make other
material modifications to the Plan without shareholder approval. However, no
amendment may change the existing rights of any option holder.
Any shares which are subject to an award but are not used because the
terms and conditions of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any option may again be
used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.
Stock options may be granted as non-qualified stock options or
incentive stock options, but incentive stock options may not be granted at a
price less than 100% of the fair market value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market value of the
stock as of the date of grant. Restricted stock may not be granted under the
Plan in connection with incentive stock options.
Stock options may be exercised during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability, whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock acquired through the exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination of notes, cash and shares of the Company's common stock or a
combination thereof. Incentive stock options may only be issued to directors,
officers and employees of the Company.
Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant contains the AO feature and if a participant pays all or part of the
purchase price of the option with shares of the Company's common stock, then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the Company equal to the sum of the number of whole shares used by the
participant in payment of the purchase price and the number of whole shares, if
any, withheld by the Company as payment for withholding taxes. An AO may be
exercised between the date of grant and the date of expiration, which will be
the same as the date of expiration of the option to which the AO is related.
Stock appreciation rights and/or restricted stock may be granted in
conjunction with, or may be unrelated to stock options. A stock appreciation
right entitles a participant to receive a payment, in cash or common stock or a
combination thereof, in an amount equal to the excess of the fair market value
of the stock at the time of exercise over the fair market value as of the date
of grant. Stock appreciation rights may be exercised during a period of time
fixed by the Committee not to exceed ten years after the date of grant or three
years after death or disability, whichever is later. Restricted stock requires
the recipient to continue in service as an officer, director, employee or
consultant for a fixed period of time for ownership of the shares to vest. If
restricted shares or stock appreciation rights are issued in tandem with
options, the restricted stock or stock appreciation right is canceled upon
exercise of the option and the option will likewise terminate upon vesting of
the restricted shares.
13
<PAGE>
Item 10. EXECUTIVE COMPENSATION
No compensation is paid or anticipated to be paid by the Company
until an acquisition is made.
On acquisition of a business opportunity, current management may
resign and be replaced by persons associated with the business opportunity
acquired, particularly if the Company participates in a business opportunity by
effecting a reorganization, merger or consolidation. If any member of current
management remains after effecting a business opportunity acquisition, that
member's time commitment will likely be adjusted based on the nature and method
of the acquisition and location of the business which cannot be predicted.
Compensation of management will be determined by the new board of directors, and
shareholders of the Company will not have the opportunity to vote on or approve
such compensation.
Directors currently receive no compensation for their duties as
directors.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C> <C>
Eric Anderson (1)(2) 200,000 45.0%
Jehu Hand (1)(2) 110,000 24.7%
Elizabeth Rodelli 90,000 21.2%
2249 Via Salvador
San Clemente, CA 92672
All officers and
directors as a group
(2 persons) (1) 310,000 66.7%
</TABLE>
(1) Includes 20,000 shares issuable upon exercise of stock options
held by each of Messrs. Hand and
Anderson.
(2) The address of such person is care of the Company.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with organizing the Company, persons consisting of its
officers, directors, and other individuals paid an aggregate of $500 in cash to
purchase a total of 400,000 shares of Common Stock at an average sales price of
$.00125 per share. In April 1993 Messrs. Hand and Anderson also contributed
$500.00 to the Company as a contribution to capital. Under Rule 405 promulgated
under the Securities Act of 1933, Messrs. Hand and Anderson may be deemed to be
promoters of the Company. No other persons are known to Management which would
be deemed to be promoters.
14
<PAGE>
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits of the Company are included herein.
Exhibit No. Document Description
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(1)
3.2 Bylaws(1)
10. Material Contracts
10.1. 1992 Stock Option Plan(1)
10.2 Stock Option Agreement with Jehu Hand(1)
(1) Incorporated by reference to such exhibit as filed with the Company's
registration statement on Form 10-
SB, File No. 0-22236.
(b) Reports on Form 8-K.
Not Applicable.
15
<PAGE>
To The Shareholders Board of Directors of FARADAY FINANCIAL, INC.
INDEPENDENT AUDITOR'S REPORT
I have audited the statement of financial position of Faraday Financial, Inc. (a
development stage company), as of March 31, 1993 and 1994, and the related
statements of operations, changes in stockholders' equity (deficiency) and cash
flows for the period inception (May 4, 1992) to March 31, 1993 and for the year
ended March 31, 1994. 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
misstatements. 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.
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 Faraday Financial, Inc. (a
development stage company), as of March 31, 1994, and the results of its
operations, changes in stockholders' equity and cash flows for the period
inception (June 11, 1992) to March 31, 1993 and for the yearendedMarch 31, 1994,
all in conformity with generally accepted accounting principles.
Carolyn J. Bunker, CPA
Los Angeles, California
July 7, 1994
16
<PAGE>
FARADAY FINANCIAL, INC.
(A Development Stage Company) Statements of Financial Position
ASSETS
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
<S> <C> <C>
CURRENT ASSETS - CASH -0- -0-
OTHER ASSETS
Organization costs, net of accumulated
amortization of $161 and $104 (Note 1) 110 167
TOTAL ASSETS $ 110 $ 167
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES - Accounts payable $ 1,216 $ 48
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000 shares authorized, including one
share of Series A Preferred
Stock; no shares issued and outstanding
Common Stock, $.001 par value; 20,000,000 shares
authorized; 424,600 shares issued and outstanding 425 425
Additional paid-in Capital 821 821
Accumulated deficit during the development stage (2,352) (1,127)
TOTAL STOCKHOLDERS' EQUITY (1,106) 119
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 110 $ 167
</TABLE>
The accompanying notes are an integral part of the financial
statements.
17
<PAGE>
FARADAY FINANCIAL, INC.
(A Development Stage Company) Statements of Operations
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE FOR THE FROM INCEPTION
FISCAL YEAR FISCAL YEAR (June 11, 1992)
ENDED ENDED TO
March 31, 1995 March 31, 1994 March 31, 1995
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ -0- $ -0- $ -0-
OPERATING EXPENSES
General and Administrative 268 803 2,191
Amortization 57 54 161
TOTAL OPERATING EXPENSES 1,225 857 2,352
NET (LOSS) $ (1,225) $ (857) $ (2,352)
NET (LOSS) PER SHARE $ (Nil) $ (Nil) $ (Nil)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 418,450 400,000 406,461
</TABLE>
The accompanying notes are an integral part of the financial
statements.
18
<PAGE>
FARADAY FINANCIAL, INC. Statement of Changes in Stockholders'
(A Development Stage Company) Equity From Inception (June 11, 1992)
Through March 31, 1995
<TABLE>
<CAPTION>
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
Issuance of common stock
<S> <C> <C> <C> <C>
for cash 400,000 $ 400 100 $ $ 500
Net (loss) (270) (270)
Balances at
March 31, 1993 400,000 400 100 (270) 230
Net (loss) (857) (857)
Contribution to capital 500 500
Sale of shares in private placement
on September 30, 1993 24,600 25 221 246
Balances at
March 31, 1994 424,600 $ 425 $ 821 $ (1,127) $ 119
Net (loss) unaudited (1,225) (1,225)
Balances at
March 31, 1995 (unaudited) 424,600 $ 425 $ 821 $ (2,352) $ (1,106)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
19
<PAGE>
FARADAY FINANCIAL, INC.
(A Development Stage Company) Statements of Cash Flows
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE FOR THE FROM INCEPTION
YEAR YEAR June 11, 1992
ENDED ENDED TO
March 31, 1995 March 31, 1994 March 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (Loss) $ (1,225) $ (857) $ (2,352)
Add item not requiring the use of cash
Amortization 57 54 161
Increase (decrease) in accounts payable 1,168 (172) 1,216
Net cash flows from operating activities (975) 975
CASH FLOWS FROM INVESTING ACTIVITIES
Organization Costs (271)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital 500 500
Sale of common stock 246 746
Net Cash flows from financing activities 746 1,246
NET INCREASE (DECREASE) IN CASH (229)
CASH BALANCE AT BEGINNING OF PERIOD 229
CASH BALANCE AT END OF PERIOD $ $ $
</TABLE>
The accompanying notes are an integral part of the
financial statements.
20
<PAGE>
FARADAY FINANCIAL, INC.
(A Development Stage Company) Notes to Financial Statements
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware
on June 11, 1992, for the purpose of seeking out business
opportunities, including acquisitions. The Company is in the
development stage and will be very dependent on the skills, talents,
and abilities of management to successfully implement its business
plan. Due to the Company's lack of capital, it is likely that the
Company will not be able to compete with larger and more experienced
entities for business opportunities which are lower risk and are
more attractive for such entities. Business opportunities in which
the Company may participate will likely be highly risky and
speculative. Since inception, the Company's activities have been
limited to organizational matters. Organizational costs are
amortized on a straight-line basis over five years.
NOTE 2 RELATED PARTY TRANSACTIONS
The Company currently has informal arrangements with an affiliate of
an officer and director for use of office space and professional and
clerical services. The Company currently receives the use of office
space free of charge, and the officers and directors currently serve
without compensation.
NOTE 3 STOCK OPTION PLAN
On June 11, 1992, the Company adopted a stock option plan whereby a
total of 2,000,000 shares of common stock are reserved for issuance
under the plan. Any officer, employee, director, advisor or
consultant of the Company is eligible to participate. The plan
provides for administration by an option committee, which will be
composed of two or more members of the board of directors who are
disinterested directors. Stock options may be granted as
non-qualified or incentive options. Incentive stock options may not
be granted at a price less than 100% of the fair market value of the
stock as of the date of grant (110% as to any 10% shareholder at the
time of the grant); non-qualified stock options may not be granted
at a price less than 85% of the fair market value of the stock as of
the date of grant.
NOTE 4 INCOME TAXES
The fiscal year end of the Company is March 31st and an income tax
return has not been filed.
NOTE 5 STOCKHOLDERS' EQUITY
The Company issued 400,000 shares on incorporation for consideration
of $500. The directors and officers contributed an additional $500
to capital in the fiscal year ended March 31, 1994. On September 30,
1993 the Company closed a private placement of 24,600 shares at $.01
per share for net proceeds of $246.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized June 28, 1995.
FARADAY FINANCIAL, INC.
By: /s/ Jehu Hand
Jehu Hand
President
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 on June 28, 1995.
By: /s/ Jehu Hand President, Chairman, Chief Financial Officer
Jehu Hand and Director
22
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE STATEMENTS FOR THE YEAR ENDED MARCH 31, 1995 AND
AS OF MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000919602
<NAME> FARADAY FINANCIAL, INC.
<MULTIPLIER> 1
<CURRENCY> US dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Mar-31-1995
<PERIOD-START> Apr-01-1994
<PERIOD-END> Mar-31-1995
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 1,216
<BONDS> 0
0
0
<COMMON> 1,246
<OTHER-SE> (2,352)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,225
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,225)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,225)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,225)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
