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 0-24372
THE THORSDEN GROUP, LTD.
(Exact name of small business issuer in its charter)
DELAWARE 33-0611746
(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
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, 1995 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, 1995:
Common Stock, $1.00 Par Value - 424,600 shares
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
Item 1. DESCRIPTION OF BUSINESS
Background
The Thorsden Group, Ltd., 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").
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.
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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 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.
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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, 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
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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 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.
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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 June 11, 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 Company'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 holding restricted securities for a period of two years may thereafter sell
in brokerage transactions, an amount not
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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.
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.
9
<PAGE>
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
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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 114 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 and Secretary of the Company since its
inception, and chief financial officer since January 29, 1995. 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. 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 Hermaton Company; Achiote
Corporation; Helsinki Capital Partners, 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.
12
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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 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 40,000 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
13
<PAGE>
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.
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.
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
Eric Anderson (1)(2) 180,000 42.4%
Jehu Hand (1)(2) 130,000 28.0%
Elizabeth Rodelli 90,000 21.2%
2249 Via Salvador
San Clemente, CA 92672
All officers and
directors as a group
(1 person) (1) 130,000 28.0%
(1) Includes 40,000 shares issuable upon exercise of stock options
held by Mr. Hand.
(2) The address of such person is care of the Company.
14
<PAGE>
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.
Mr. Hand has advanced certain funds, at no interest, on behalf of the
Company from time to time. As of
March 31, 1995 the amount advanced was $1,614.
15
<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)
10.3 Stock Option Agreement with Eric Anderson(1)
10.4 Stock Option Agreement with Jehu Hand(2)
(1) Incorporated by reference to such exhibit as filed with the Company's
registration statement on Form 10-SB,
File No. 0-24372.
(2) Filed herewith.
(b) Reports on Form 8-K.
Not Applicable.
16
<PAGE>
Board of Directors of
The Thorsden Group, Ltd.
INDEPENDENT AUDITOR'S REPORT
I have audited the statement of financial position of The Thorsden Group, LTD. (
a development stage company) as of March 31, 1994 and 1993, and the related
statements of operations, changes in stockholders' equity and cash flows for the
year ended March 31, 1994 and from inception (June 11, 1992) through March 31,
1993.
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 The Thorsden Group, LTD. (a
development stage company) as of March 31, 1994 and 1993, and the results of its
operations, changes in stockholders' equity and cash flows for the year ended
March 31, 1994 and from inception (June 11, 1992) through March 31, 1993, in
conformity with generally accepted accounting principles.
Terrence J. Dunne
Certified Public Accountant
Spokane, Washington
May 26, 1994
17
<PAGE>
<TABLE>
<CAPTION>
THE THORSDEN GROUP, LTD.
(A Development Stage Company) Statements of Financial Position
ASSETS
March 31, March 31, March 31,
1995 1994 1993
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS - CASH $ $ 763 $ 237
OTHER ASSETS
Organization costs, net of accumulated
amortization of $155, $102 and $49 (Note 1) 108 161 214
TOTAL ASSETS $ 108 $ 924 $ 951
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES - Accounts payable $ 1,614 $ 168 $ 220
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000 shares
authorized; no shares issued and outstanding -0- -0- -0-
Common Stock, $.001 par value; 20,000,000 shares
authorized; 424,600 and 400,000 shares issued
and outstanding 425 425 400
Additional paid-in Capital 821 821 100
Accumulated deficit during the development stage (2,752) (490) (269)
TOTAL STOCKHOLDERS' EQUITY (1,506) 756 231
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $ 108 $ 924 $ 451
</TABLE>
The accompanying notes are an integral part of the
financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
THE THORSDEN GROUP, LTD.
(A Development Stage Company) Statements of Operations
FOR THE CUMULATIVE
FISCAL YEAR FROM
FROM INCEPTION INCEPTION
FOR THE FOR THE (June 11, 1992) (June 11, 1992)
YEAR ENDED YEAR ENDED TO TO
March 31, 1995 March 31, 1994 March 31, 1993 March 31, 1995
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES $ -0- $ -0- $ -0- $ -0-
OPERATING EXPENSES
General and Administrative 2,209 168 220 2,597
Amortization 53 53 49 155
TOTAL OPERATING EXPENSES 2,262 221 269 2,752
NET (LOSS) $ (2,262) $ (221) $ (269) $ (2,752)
NET (LOSS) PER SHARE $ (.01) $ (Nil) $ (Nil)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 424,600 412,300 406,709
</TABLE>
The accompanying notes are an integral part of the
financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
THE THORSDEN GROUP, LTD. Statement of Changes in Stockholders'
(A Development Stage Company) Equity From Inception (June 11, 1992)
Through March 31, 1995
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
Issuance of common stock
<S> <C> <C> <C> <C> <C>
for cash 400,000 $ 400 $ 100 $ $ 500
Net (loss) (269) (269)
Balances at
March 31, 1993 400,000 400 100 (269) 231
Net (loss) (221) (221)
Contribution to capital 500 500
Sale of shares in private placement 24,600 25 221 246
on September 30, 1993
Balances at
March 31, 1994 424,600 $ 425 $ 821 $ (490) $ 756
Net (loss) (unaudited) (2,262) (2,262)
Balances at
March 31, 1995 (unaudited) 424,600 $ 425 $ 821 $ (2,752) $ (1,506)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
THE THORSDEN GROUP, LTD.
(A Development Stage Company) Statements of Cash Flows
FOR THE
FISCAL YEAR CUMULATIVE
FOR THE FOR THE FROM INCEPTION FROM INCEPTION
YEAR YEAR (June 11, 1992) June 11, 1992
ENDED TO TO TO
March 31, 1995 March 31, 1994 March 31, 1993 March 31, 1995
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net (Loss) $ (2,262) $ (221) $ (269) $ (2,752)
Add item not requiring the use of cash 53 53 49 155
Increase (decrease) in accounts payable 1,446 (52) 220 1,614
Net cash flows from operating activities (763) (220) (983)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization Costs (263) (263)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital 500 500
Sale of common stock 246 500 746
Net Cash flows from financing activities 746 500 1,246
NET INCREASE IN CASH (763) 526 237
CASH BALANCE AT BEGINNING OF PERIOD 763 237
CASH BALANCE AT END OF PERIOD $ $ 763 $ 237 $
</TABLE>
The accompanying notes are an integral part of the
financial statements.
21
<PAGE>
THE THORSDEN GROUP, LTD.
(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.
The financial statements as of and for the year ended March 31, 1995
are unaudited, pursuant to the exemption provided by Rule 3-12 of
Regulation S-X.
NOTE 2 CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
NOTE 3 RELATED PARTY TRANSACTIONS
The Company currently receives the use of office space free of
charge from Jehu Hand, president of the Company. The fair market
value of the office space in the same geographic region is $20 per
month.
The officer and director of the Company currently serves without
compensation, and has advanced all costs shown as accounts payable
as of March 31, 1995.
NOTE 4 INCOME TAXES
The fiscal year end of the Company is March 31st and an income tax
return has not been filed. However, if an income tax return had been
filed, the Company would have a net operating loss carryforward of
$2,752 that would begin expiring in the year 2009.
NOTE 5 STOCK OPTION PLAN
The Company has stock option plans for directors, officers,
employees, advisors, and employees of companies that do business
with the Company, which provide for non-qualified and qualified
stock options. The Stock Option Committee of the Board determines
the option price which cannot be less than the fair market value at
the date of the grant of 110% of the fair market value if the
Optionee holds 10% or more of the Company's common stock. The price
per share of share subject to a Non-Qualified Option shall not be
less than 85% of the fair market value at the date of the grant.
Options generally expire either three months after termination of
employment, or ten years after date of grant (five years if the
optionee holds 10% or more of the Company's common stock at the time
of grant).
22
<PAGE>
THE THORSDEN GROUP, LTD.
(A Development Stage Company) Notes to Financial Statements
Options outstanding:
Shares allocated 2,000,000
Option price $ .50
Balance at inception --
Granted 40,000
Balance outstanding at
March 31, 1993 40,000
Granted --
Balance outstanding at
March 31, 1994 40,000
Granted 20,000
Lapsed 20,000
Balance Outstanding at
March 31, 1995 40,000
Year exercisable:
1997 40,000
23
<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 on June 22, 1995.
THE THORSDEN GROUP, LTD.
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 22, 1995.
By: /s/ Jehu Hand President, Secretary,
Jehu Hand Chief Financial Officer and Director
