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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Amendment #3
General Form For Registration of Securities
of Small Business Issuers Under
Section 12(b) or (g) of
the Securities Exchange Act of 1934
Knight Natural Gas, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1002467
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
5650 Greenwood Plaza Blvd
Suite 216, Englewood, CO 80111
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(Address of principal executive offices) (zip code)
(303) 741-1118
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(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $0.00001 per share par value
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DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference are found in Item 15.
ITEM 1. DESCRIPTION OF BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS
Knight Natural Gas, Inc. (the "Company" or the "Registrant"), is a Colorado
corporation. The principal business address is 5650 Greenwood Plaza Blvd.,
Suite 216, Englewood, Colorado 80111.
The Company was originally incorporated under the laws of the State of
Colorado on September 19, 1985 as a gas exploration company. On January 1, 1993,
the Company entered into the development stage.
In 1994, the present management became involved with the Company. Mr.
Gregory Skufca, one of the members of present management, provided consulting
services to reactivate the Company and received 1,500,000 post-split shares of
the Company for a consideration of par value. On November 1, 1994, the Company
did a one-for-twenty reverse split of its common stock. As of December 31, 1994,
the Company had a total of 2,052,500 common shares issued and outstanding. The
Company has not been subject to any bankruptcy, receivership or similar proceed-
ing.
(b) NARRATIVE DESCRIPTION OF THE BUSINESS
GENERAL
From December, 1989 to the date of this Registration Statement, the Company
has had no activities. During this period, the Company has carried no invento-
ries or accounts receivable. No independent market surveys have ever been
conducted to determine demand for the Company's products and services, since the
Company has never had any products or services which it has provided to anyone.
During this period, the Company has carried on no operations and generated no
revenues.
OIL AND GAS OPERATIONS
From inception to December, 1989, the Company operated briefly as an oil
and gas company. No operations remain from this period. The Company investigat-
ed certain possibilities but drilled no oil or gas wells. This was the entire
extent of the Company's activities.
ORGANIZATION
The Company presently comprises one corporation with no subsidiaries or
parent entities and is in the developmental stage.
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(c) OPERATIONS
PROPOSED BUSINESS
Since January 1, 1993, the primary activity of the Company has been
directed towards organizational efforts. During this fiscal year, the Company
plans to search for and to identify potential acquisition candidates. As of the
date of this Registration Statement, the Company has not engaged in any prelimi-
nary efforts intended to identify possible business opportunities and has
neither conducted negotiations nor entered into a letter of intent concerning
any business opportunity.
The Company proposes to implement a business plan to investigate and, if
warranted, merge with or acquire the assets or common stock of an entity
actively engaged in business which generates revenues. The Company will seek
opportunities for long-term growth potential as opposed to short-term earnings.
As of the date hereof, the Company has no business opportunities under
investigation. None of the Company's officers, directors, promoters or affili-
ates have engaged in any preliminary contact or discussions with any representa-
tive of any other company regarding the possibility of an acquisition or merger
between the Company and such other company.
The Company's Board of Directors will provide the Company's shareholders
with complete disclosure documentation in the form of a proxy statement concern-
ing any potential business opportunity and the structure of the proposed
business combination prior to its consummation. While such disclosure will
include audited financial statements of such a target entity, there is no assur-
ance that such audited financial statements will be available prior to closing.
However, the Board of Directors does intend to obtain certain assurances of
value of the target entity's assets prior to consummating such a transaction,
with further assurances that an audited statement would be provided within sixty
days after closing of such a transaction and such other assurances as would
permit the Company to comply with the securities laws in connection with the
acquisition. Closing documents relative thereto will include representations
that the value of the assets conveyed to or otherwise so transferred will not
materially differ from the representations included in such closing documents,
or the transaction will be voidable.
The Registrant has no full-time employees. The Registrant's President and
Secretary-Treasurer have agreed to allocate a portion of their time to the
activities of the Registrant, without compensation. These officers anticipate
that the business plan of the Company can be implemented by their collectively
devoting approximately twenty-five hours per month to the business affairs of
the Company and, consequently, conflicts of interest may arise with respect to
the limited time commitment of such officers.
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One of the Company's officers and directors has been involved and all plan
to be involved with other "blank check" companies and, as a result, additional
potential conflicts of interest may arise. If such a conflict does arise in the
future and an officer or director of the Company is presented with business
opportunities under circumstances where there may be doubt as to whether the
opportunity should belong to the Company or another "blank check" company with
which they are affiliated, they will disclose the opportunity to the Boards of
Directors of all such companies. If a situation arises in which more than one
company desires to merge with or acquire that business opportunity, and the
principals of the business opportunity have no preference as to which company
will merge with or acquire such business opportunity, the company which first
contacted or was contacted by the proposed business opportunity will be entitled
to proceed with the proposed transaction.
The primary attraction of the Registrant as a merger partner or as an
acquisition vehicle will be its status as a public company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present shareholders of the Registrant.
The Articles of Incorporation of the Company provides that the Company may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, the assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification. See Part II, Item 5 below.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, to acquire controlling interest in business opportunities presented to
it by persons or firms who or which desire to seek the perceived advantages of
an Exchange Act registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location. The Company may
participate in a business venture of virtually any kind or nature.
The Company may seek a business opportunity in the form of firms which have
recently commenced operations, are developing companies in need of expansion
into new products or markets, are seeking to develop a new product or service or
are established, mature businesses.
In seeking business opportunities, the management decision of the Company
will be based upon the objective of seeking long-term appreciation in the value
of the Company. Current income will only be a minor factor in such decisions.
It is not anticipated that the Company will be able to participate in more
than one business opportunity. However, Management may, in its sole discretion,
elect to enter into more than one acquisition if it believes these transactions
Can be effectuated on terms favorable to the Company. This lack of diversifica-
tion will not permit the Company to offset potential losses from one business
opportunity against profits from another and should be considered a substantial
risk to shareholders of the Company.
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The analysis of new business opportunities will be undertaken by or under
the supervision of the officers and directors. The Company will have unrestrict-
ed flexibility in seeking, analyzing and participating in business opportuni-
ties. In its efforts, the Company will consider the following, among other,
factors:
(a) potential for growth, as indicated by new technology, anticipated
market expansion or new products;
(b) competitive position compared to other firms of similar size and
experience within the industry segment, as well as within the industry
as a whole;
(c) strength and diversity of management, either in place or scheduled for
recruitment;
(d) Capital requirements and anticipated availability of required funds to
be provided by the target company from operations, through the sale of
additional securities, the formation of joint ventures or similar ar-
rangements, or from other sources;
(e) the cost of participation by the Company as compared to the perceived
tangible and intangible values and potential;
(f) the extent to which the business opportunity can be advanced;
(g) the accessibility of required management expertise, personnel, raw
materials, services, professional assistance and other required items;
and
(h) such other relevant factors as may arise from time to time, including
investor and market maker, if any, interest.
In applying the foregoing criteria, no one of which is now known to be
controlling, Management will attempt to analyze all relevant factors and make a
determination based upon reasonable investigative measures and available data.
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. Because of the Company's lack of capital, the
Company may not discover or adequately evaluate adverse facts about the opportu-
nity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take a substantial amount of time
after the effective date of this Registration Statement.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity and
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containing such items as: (i) a description of product, service and company
history; (ii) management resumes; (iii) financial information (including
projections and audited financial statements, if available); (iv) available
projections with related assumptions upon which they are based; (v) an explana-
tion of proprietary products and services; (vi) evidence of existing patents,
trademarks or service marks or rights thereto; (vii) present and proposed forms
of compensation to management; (viii) a description of transactions between the
target and its affiliates during relevant periods; (ix) a description of present
and required facilities; (x) an analysis of risks and competitive conditions;
(xi) a financial plan of operation and estimated capital requirements; and (xii)
other information deemed relevant under the circumstances, including investor
and market makers, but only after the release of public information on the
target.
As part of the Company's investigation, officers and directors will meet
personally with management and key personnel, visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check references of management and key personnel and take other
reasonable investigative measures to the extent of the Company's limited
financial resources. Management of the Company will utilize the services of its
present attorney and accountants in the investigation of prospective acquisi-
tions. The Company may also utilize the services of hired consultants. At the
present time, the Company has no arrangements, nor has it identified any such
consultants.
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 perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for 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 ex-
tremely difficult and complex.
(d) MARKETS
The Company's initial marketing plan will be focused completely on finding
an acquisition candidate as discussed above. No efforts toward this marketing
plan have been made as of the date of this Registration Statement.
(e) RAW MATERIALS
The use of raw materials is not now material factor in the Company's
operations at the present time.
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(f) CUSTOMERS AND COMPETITION
At the present time, the Company is expected to be an insignificant
participant among the firms which engage in the acquisition of business opportu-
nities. There are a number of established companies, such as venture capital and
financial concerns, many of which are larger and better capitalized than the
Company and/or have greater personnel resources and technical expertise. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
(g) BACKLOG
At December 31, 1994, the Company had no backlogs.
(h) EMPLOYEES
At as of the date hereof, the Company has no employees. The Company does
not plan to hire employees in the future.
(i) PROPRIETARY INFORMATION
The Company has no proprietary information.
(j) GOVERNMENT REGULATION
The Company is not subject to any material governmental regulation or
approvals.
(k) RESEARCH AND DEVELOPMENT
The Company has never spent any amount in research and development
activities.
(l) ENVIRONMENTAL COMPLIANCE
At the present time, the Company is not subject to any costs for compliance
with any environmental laws.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
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The Company has generated no substantial revenues from its operations and
has been a development stage company since inception. Since the Company has not
generated revenues and has never been in a profitable position, it operates with
minimal overhead. The Company's primary activity will be to seek an acquisition
candidate. As of the end of the reporting period, the Company has concluded no
acquisitions and has spoken with no potential candidates. The attempt to seek an
acquisition candidate or candidates will be the primary focus of the Company's
activities in the coming fiscal year.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year.
Management feels that the Company has inadequate working capital to pursue
any business opportunities other than seeking an acquisition candidate. The
Company will have negligible capital requirements prior to the consummation of
any acquisition but can pursue an acquisition candidate. The Company does not
intend to pay dividends in the foreseeable future.
ITEM 3. DESCRIPTION OF PROPERTIES
As of December 31, 1994, the Company's business office was located at 5650
Greenwood Plaza Blvd., Suite 216, Englewood, Colorado 8011, the office of Mr.
Gregory W. Skufca, its President, for which it pays no rent. The Company has no
other properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth the number of shares of the Registrant's $0.00001
par value common stock beneficially owned by (i) each person who, as of December
31, 1994, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) the individual Directors of the Registrant and
(iii) the Officers and Directors of the Registrant as a group. As of December
31, 1994, there were 2,052,500 common shares issued and outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2) CLASS
- ------------------- --------------------------- -----------
<S> <C> <C>
Gregory W. Skufca 1,500,000 73.1%
Gerald Loffredo 88,125 4.3%
All Officers and Directors 1,588,125 77.4%
as a Group (two persons)
</TABLE>
(1) All ownership is beneficial and on record, unless indicated otherwise.
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(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Directors and Executive Officers of the Company, their ages and present
positions held in the Company are as follows:
NAME AGE POSITION HELD
- ---- --- -------------
Gregory W. Skufca 33 President and Director
Gerald Loffredo 51 Secretary, Treasurer, and
Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
Messrs. Gregory W. Skufca and Gerald Loffredo should be considered
"parents" or "promoters" of the Company (as such terms are defined under the
Securities Act), inasmuch as Mr. Loffredo has taken significant initiative in
founding and organizing the business of the Company and because of the
shareholdings and control positions held by each in the Company.
GREGORY W. SKUFCA. Mr. Skufca has been the president and a director of the
Company since August, 1994, and has been the president of Financial
Communications Corp. (Financial Communications) since January, 1989. Mr. Skufca,
through Financial Communications, advises public and private investors, assists
in the obtaining and structuring of venture capital financing and assists
companies in their public relations. Previous to Financial Communications, Mr.
Skufca served as a loan officer and consultant with Skufca-Meyer Financial
Corp., Lakewood, Colorado, May, 1987, until January, 1989. Skufca-Meyer was a
small, privately-held Denver area lender specializing in residential mortgages
and corporate financing, but is no longer in business. From May, 1985, until
May, 1987, Mr. Skufca was employed as an independent sales representative with
Charles Milne and Associates, Denver, Colorado, a privately-held wholesale
office furniture and supply company. Previous to that he was employed as a new
home salesman with Skufca and Shelton Company, Denver, Colorado,, between
October, 1984, and May, 1985. This entity is also no longer in business. None
of these companies or any other company with which Mr. Skufca is affiliated will
provide services for the Company. There is no written policy of the Company to
this effect. However, Mr. Skufca has indicated his intention not to have any
company with which he is or has been
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associated, including, but not limited to Financial Communications Corp.,
provide services while he is an officer and director.
Mr. Skufca earned a bachelor's degree from the University of Colorado at
Boulder in 1980 and has attended numerous seminars in financial planning, real
estate, and marketing. He is also licensed with the NASD as a sales agent. Mr.
Skufca is currently devoting approximately 15 hours per month to the affairs of
the Company.
GERALD LOFFREDO. Mr. Loffredo has been an officer and a director of the
Company since 1989. He was employed by IBM from 1966 through 1991 in various
capacities, with the last being Engineering and Program Manager for
approximately 13 years. From 1991 to the present, he has been an Engineering
Manager with Storage Technology Corporation. He was a co-developer of a
subdivision of duplexes, an apartment complex, and individual homes in the
Austin, Texas area. He is a partner of CF & C, a private partnership which
develops oil and gas properties in Colorado. He has also acted as Vice President
of Princeton Oil and Gas, a private company which is in the business of acquisi-
tion and development of petroleum production opportunities in the Ohio Valley.
All are ventures which have been profitable. Mr. Loffredo has an undergraduate
degree in Mathematics, Physics, and Astronomy from the University of Illinois.
He has also done graduate work in Physics. He will devote approximately 10
hours per month to the affairs of the Company.
PREVIOUS BLANK CHECK OFFERINGS
Mr. Loffredo has not previously participated in Blank Check Offerings.
Mr. Skufca has participated in the following Blank Check Offerings:
Mr. Skufca served Marantha II, Inc. (Marantha), as a director and as
president from its inception on September 18, 1987, until July 12, 1988. This
entity is publicly-held, made an initial "blank check" offering substantially
similar to the offering being made by the Company and previously had a plan of
operation which was similar to the Company's. On July 12, 1988, this
corporation acquired, as a wholly-owned subsidiary, Equity Investors,, Inc.
("Equity"), which was then and continues to be engaged in the business of real
estate investment, management and related services. Upon effectiveness of the
acquisition, Marantha's name was changed to Equity Financial Group, Inc.
Concurrently, Marantha also changed its plan of operation so that there is no
longer any similarity to the Company's plan of operation. As of 1989, Mr.
Skufca has no affiliations whatsoever with Marantha.
Mr. Skufca accepted the positions of director and president of Parle'
International, Inc. (Parle), in April of 1988. Parle' completed an initial
public offering of its securities on a "blank check" basis to the public in
October of 1988 and acquired Vision Pictures, Inc. (Vision), a Los Angeles based
motion picture company in a share exchange during December
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of 1988. Upon consummation of the acquisition, Mr. Skufca resigned as an
officer, but remained a director of Parle'. He resigned in 1989 and has no
further affiliation.
Also in 1988, Mr. Skufca became the president and a director of Kiwi III
Ltd. (Kiwi), a corporation which previously adopted a plan of operation
substantially similar to the Company's. Kiwi conducted an initial public
offering of its securities on a "Blank Check" basis to the public and acquired
Beat the House Enterprises, Inc., a Las Vegas, Nevada, based manufacturer of
gaming devices in October of 1989 pursuant to a share exchange. Mr. Skufca
resigned as an officer of the corporation upon completion of the acquisition and
ceased all affiliations with this company in 1989.
Mr. Skufca served Focus V, Inc. (Focus), as a director and as president
until December of 1989, when he resigned as president and director. This entity
is publicly-held, made an initial "blank check" offering substantially similar
to the offering being made by the Company with this Prospectus, and had a plan
of operation which was similar to the Company's. In December of 1989, Focus
acquired Work Recovery Centers, Inc. (WRCI), a Tucson, Arizona, based
manufacturer and distributor of computerized work stations and assessment
centers for the workman' rehabilitation industry. Subsequent to the acquisition,
the name of Focus was changed to Work Recovery, Inc. Concurrently, Focus also
changed its plan of operation so that there is no longer any similarity to the
Company's plan of operation. Mr. Skufca has ceased all affiliations with Focus
as of 1990.
Mr. Skufca previously served Plantation Capital Corp. (Plantation) as a
director and as president/treasurer, and has served in these capacities from the
inception of the corporation in August of 1988 to 1990. He has had no
affiliation whatsoever with this company since 1990.
Mr. Skufca has disposed of all substantial ownership in each of the
foregoing companies. He owns between zero and less than 1% of the issued and
outstanding shares.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers and/or directors receive any compensation
for their respective services rendered to the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Registrant has generated revenues from operations. Any compensation will be
dependent upon a combination of factors, including the percentage of time a
person devotes to the business of the Registrant, experience, ability of the
Registrant to pay, and other items.
The Company has no retirement, pension, profit sharing, stock option,
insurance or other similar programs.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's business office have been located at 5650 Greenwood Plaza
Blvd., Suite 216, Englewood, Colorado 80111, the office of Mr. Gregory W.
Skufca, its President, for which it pays no rent. Otherwise, there have been no
related party transactions, or any other transactions or relationships required
to be disclosed pursuant to Item 404 of Regulation S-B.
ITEM 8. LEGAL PROCEEDINGS.
No legal proceedings of a material nature to which the Company is a party
were pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) PRINCIPAL MARKET OR MARKETS
The Company's securities have never been listed for trading on any
market and are not quoted at the present time. At the present time, the Company
does not know where secondary trading will eventually be conducted. The place of
trading, to a large extent, will depend upon the size of the Company's eventual
acquisition. To the extent, however, that trading will be conducted in the over-
the-counter market in the so-called "pink sheets" or the NASD's "Electronic
Bulletin Board," a shareholder may find it more difficult to dispose of or
obtain accurate quotations as to price of the Company's securities. In addition,
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock.
(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
As of the date hereof, a total of 2,052,500 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was approximately 35. All of the Company's
shareholders acquired their respective shares in the Company prior to 1990, with
the exception of Mr. Skufca, who acquired his shares in 1994 for cash at par
value. All of the issued and outstanding shares of the Company's common stock,
$0.00001 par value, were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended,
in that these were private offerings to individuals who was sophisticated
investors and received all pertinent information relative to these investments.
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(c) DIVIDENDS
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
were paid by the Company during the periods reported herein nor does the Company
anticipate paying dividends in the foreseeable future.
(d) THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless the Company can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that the Company's securities, for some period of time,
would be defined under that Act as a "penny stock." As a result, those who trade
in the Company's securities may be required to provide additional information
related to their fitness to trade the Company's shares. These requirements
present a substantial burden on any person or brokerage firm who plans to trade
the Company's securities and would thereby make it unlikely that any liquid
trading market would ever result in the Company's securities while the
provisions of this Act might be applicable to those securities.
(e) BLUE SKY COMPLIANCE
The trading of blank check companies may be restricted by the securities
laws ("Blue Sky" laws) of the several states. Management is aware that a number
of states currently prohibit the unrestricted trading of blank check companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for the shares of the Company and to make
resale of shares acquired by investors more difficult.
The impact of these Blue Sky laws is considered to be minimal since the
Company does not intend to qualify the Company's outstanding securities for
secondary trading in any state until such time as an acquisition or merger has
been consummated.
(f) INVESTMENT COMPANY ACT OF 1940
The Company does not intend to engage in any activities which would cause
it to be classified as an "investment company" under the Investment Company Act
of 1940, as amended. However, to the extent that the Company would inadvertently
become an investment company because of its activities, the Company would be
subjected to additional, costly and restrictive regulation.
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ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has not issued any of its common stock in the three year period
preceding the date of this Registration Statement, with the exception of Mr.
Skufca, who acquired his shares in 1994 for cash at par value. All of the shares
of common stock of the Registrant previously issued have been issued for invest-
ment purposes in a "private transaction" and are restricted securities as
defined under the Securities Act of 1933, as amended. These shares may not be
offered for public sale except if registered or pursuant to an exemption from
registration, such as Rule 144. The Company has issued stop transfer orders
concerning the transfer of certificates representing all the common stock issued
and outstanding.
ITEM 11. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $0.00001 per share, and 1,000,000 shares of Preferred Stock, par value
$0.10 per share, to have such preferences as the Board of Directors may
determine from time to time. On December 7, 1989, the Company did a one-for-
fifteen forward split of its common shares. On November 1, 1994, the Company did
a one-for-twenty reverse split of its common shares. As of December 31, 1994,
2,052,500 shares of Common Stock were issued and outstanding. As of the same
date, no Preferred Stock was issued or outstanding.
COMMON STOCK
The holders of Common Stock have one vote per share on all matters
(including election of Directors) without provision for cumulative voting.
Thus, holders of more than 50% of the shares voting for the election of
directors can elect all of the directors, if they choose to do so. The Common
Stock is not redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued, fully paid and
non-assessable. In the event of liquidation of the Company, the holders of
Common Stock will share equally in any balance of the Company's assets available
for distribution to them after satisfaction of creditors and the holders of the
Company's senior securities, whatever they may be. The Company may pay
dividends, in cash or in securities or other property when and as declared by
the Board of Directors from funds legally available therefor, but has paid no
cash dividends on its Common Stock.
PREFERRED STOCK
Under the Articles of Incorporation, the Board of Directors has the
authority to issue Preferred Stock and to fix and determine its series, relative
rights and preferences to the fullest extent permitted by the laws of the State
of Colorado and such Articles of Incorporation. As of the date of this
Registration Statement, no shares of Preferred Stock are issued or
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outstanding. The Board of Directors has no plan to issue any Preferred Stock in
the foreseeable future.
DIVIDEND POLICY
The Company has never declared nor paid dividends on its Common Stock and
does not intend to do so in the foreseeable future.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation authorize the Board of Directors,
on behalf of the Company and without shareholder action, to exercise all of the
Company's powers of indemnification to the maximum extent permitted under the
applicable statute. Title 7 of the Colorado Revised Statutes, 1986 Replacement
Volume ("CRS"), as amended, permits the Company to indemnify its directors,
officers, employees, fiduciaries, and agents as follows:
Section 7-109-102 of CRS permits a corporation to indemnify such persons
for reasonable expenses in defending against liability incurred in any legal
proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best interests;
and
(2) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful.
A corporation may not indemnify such person under this Section 7-109-102 of CRS:
(a) In connection with a proceeding by or in the right of the corporation
in which such person was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging that such person
derived an improper benefit, whether or not involving action in an official
capacity, in which proceeding such person was adjudged liable on the basis that
he or she derived an improper personal benefit.
14
<PAGE>
Unless limited by the Articles of Incorporation, and there are not such
limitations with respect to the Company, Section 7-109-103 of CRS requires that
the corporation shall indemnify such a person against reasonable expenses who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay reasonable fees in
advance of final disposition of the proceeding if:
(a) Such person furnishes to the corporation a written affirmation of the
such person's good faith belief that he or she has met the Standard of Conduct
described in Section 7-109-102 of CRS;
(b) Such person furnishes the corporation a written undertaking, executed
personally or on person's behalf, to repay the advance if it is ultimately
determined that he or she did not meet the Standard of Conduct in Section 7-109-
102 of CRS; and
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification.
Under Section 7-109-106 of CRS, a corporation may not indemnify such
person, including advanced payments, unless authorized in the specific case
after a determination has been made that indemnification of such person is
permissible in the circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific affirmation and
undertaking required under the statute. The required determinations are to be
made by a majority vote of a quorum of the Board of Directors, utilizing only
directors who are not parties to the proceeding. If a quorum cannot be ob-
tained, the determination can be made by a majority vote of a committee of the
Board, which consists of at least two directors who are not parties to the
proceeding. If neither a quorum of the Board nor a committee of the Board can
be established, then the determination can be made either by the Shareholders or
by independent legal counsel selected by majority vote of the Board of
Directors.
The corporation is required by Section 7-109-110 of CRS to notify the
shareholders in writing of any indemnification of a director with or before
notice of the next shareholders' meeting. Under Section 7-109-105 of CRS, such
person may apply to any court of competent jurisdiction for a determination that
such person is entitled under the statute to be indemnified from reasonable
expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also indemnify and
advance expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent than the foregoing indemnification provisions, if
not inconsistent with public policy, and if provided for in the corporation's
bylaw, general or specific action of the Board of Directors,
15
<PAGE>
or shareholders, or contract. Section 7-109-108 of CRS permits the corporation
to purchase and maintain insurance to pay for any indemnification of reasonable
expenses as discussed herein.
The indemnification discussed herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, any Bylaw, agreement, vote of shareholders, or disinterested
directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 13. FINANCIAL STATEMENTS.
For financial information, please see the financial statements
included at Item 15 and hereby incorporated by this reference and made a part
hereof.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company did not have any disagreements on accounting and financial
disclosures with its accounting firm during the reporting period.
ITEM 15. FINANCIAL STATEMENT AND EXHIBITS.
The following financial information is filed as part of this report:
(1) FINANCIAL STATEMENTS
16
<PAGE>
(2) SCHEDULES
The financial statements schedules listed in the
accompanying index to financial statements are filed as a
part of this annual report.
(3) EXHIBITS
The exhibits listed on the accompanying index to financial
statements are filed as part of this annual report.
17
<PAGE>
SIGNATURES
In accordance with Section 12 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.
Knight Natural Gas, Inc.
Dated: 5-10-96 By: /s/ Gregory W. Skufca
- -------------- ----------------------------------
Gregory W. Skufca
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL AND ACCOUNTING OFFICER
Dated: 5-10-96 By: /s/ Gerald Loffredo
-------------- ---------------------------------------
Gerald Loffredo
Treasurer
SECRETARY
Dated: 5-10-96 By: /s/ Gerald Loffredo
-------------- ---------------------------------------
Gerald Loffredo
Secretary
<PAGE>
KNIGHT NATURAL GAS, INC.
FINANCIAL STATEMENTS
with
Independent Auditors' Report
For the Period January 1, 1993 (Inception)
through December 31, 1994
<PAGE>
KNIGHT NATURAL GAS, INC.
TABLE OF CONTENTS
PAGE
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-4
Statement of Shareholder's Equity F-5
Notes to the Financial Statements F-6 - F-7
<PAGE>
[KISH - LEAKE & ASSOCIATES, P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Knight Natural Gas, Inc. (a
Developmental Stage Company), at December 31, 1994, and the related statement of
operations, shareholders' equity, and cash flows for the year ended
December 31, 1994 and 1993 and the period January 1, 1993 (Inception) through
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Knight Natural Gas, Inc. at
December 31, 1994 and the results of its operations and its cash flows for the
year ended December 31, 1994 and 1993 and the period January 1, 1993 (Inception)
through December 31, 1994 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
enterprise. The deficiency in working capital as of December 31, 1994 raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.
/s/ Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
February 10, 1995
F-1
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
December
NOTES 31, 1994
-------- -----------
<S> <C> <C>
ASSETS - Cash $924
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES $ 0
----------
SHAREHOLDERS' EQUITY 1,2
Common Stock, $.00001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding 2,052,500 Shares 21
Capital Paid In Excess Of
Par Value Of Common Stock 418,949
Preferred Stock, $.10 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares 0
Retained Deficit Prior To January 1, 1993 (417,421)
Deficit Accumulated During
The Development Stage (625)
----------
TOTAL SHAREHOLDERS' EQUITY 924
----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $924
----------
----------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-2
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Statement Of Operations
<TABLE>
<CAPTION>
January
1, 1993
(Inception)
Through
December December December
NOTES 31, 1994 31, 1993 31, 1994
-------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Revenue $0 $0 $0
--------- ---------- ----------
Expenses:
Office 195 180 375
Professional 94 156 250
--------- ---------- ----------
Total 289 336 625
Net (Loss) ($289) ($336) ($625)
--------- ---------- ----------
Net (Loss) Per Common Share 1 ($0.00) ($0.00) ($0.00)
--------- ---------- ----------
Weighted Average Common Shares
Outstanding 2 722,500 552,500 772,500
--------- ---------- ----------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-3
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Statement Of Cash Flows
<TABLE>
<CAPTION>
January
1, 1993
(Inception)
Through
December December December
NOTES 31, 1994 31, 1993 31, 1994
-------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Net (Loss) Accumulated
During The Development Stage (289) (336) (625)
Stock Issued Not For Cash 15 0 15
--------- ---------- ----------
Cash Flows From Operations (274) (336) (610)
--------- ---------- ----------
Cash Flows From Investing Activities:
Cash Flows From Investing Activities:
Cash Flows From Financing Activities:
Contributions Of Capital 0 0 0
--------- ---------- ----------
Cash Flows From Financing 0 0 0
--------- ---------- ----------
Net (Decrease) In Cash (274) (336) (610)
Cash At Beginning Of Period 1,198 1,534 1,534
--------- ---------- ----------
Cash At End Of Period $924 $1,198 $924
--------- ---------- ----------
Summary Of Non-Cash Investing And Financing Activities:
1,500,000 Shares Issued For Service @ $.00001 Per Share $15
----------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-4
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
<TABLE>
<CAPTION>
Deficit
Capital Accumulated
Number Of Paid In Number Of During The
Common Common Excess Of Preferred Preferred Retained Development
Notes Shares Stock Par Value Shares Stock Deficit Stage Total
--------- ----------- --------- ------------ --------- --------- --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance At January 1, 1993 552,500 $6 $418,949 0 0 ($417,421) 0 $1,534
Net (Loss) December 31, 1993 (336) (336)
---------- ------ --------- ----- ----- --------- ------- ------
Balance At December 31, 1993 552,500 6 418,949 0 0 (417,421) (336) $1,198
Issuance Of Common Stock: 1,2
November 1, 1994 - Services @
$.00001 per Share 1,500,000 15 0 15
Net (Loss) December 31, 1994 (289) (289)
---------- ------ --------- ----- ----- --------- ------- ------
Balance At December 31, 1994 2,052,500 $21 $418,949 0 0 ($417,421) ($625) $924
---------- ------ --------- ----- ----- --------- ------- ------
---------- ------ --------- ----- ----- --------- ------- ------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-5
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Notes to Financial Statements
FOR THE PERIOD JANUARY 1, 1993 (INCEPTION) THROUGH DECEMBER 31, 1994
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
On September 19, 1985 Knight Natural Gas, Inc. (the Company) was incorporated
under the laws of Colorado, for the purpose of gas exploration. In December
1989 the Company ceased operations in the oil and gas business. On January 1,
1993 the Company's new management decided to search for a merger or acquisition
candidate and therefore has entered into the development stage.
Developmental Stage:
The Company is currently in the developmental stage and has no significant
operations to date.
Income Taxes:
In 1988 the Company, with the consent of its shareholders, elected to have its
income taxes under section 1372 of the Internal Revenue Code which provides
that, in lieu of corporation income taxes, the shareholders are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision or
liability for Federal or State income taxes is included in these financial
statements.
Statement of Cash Flows:
For purposes of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest and taxes for the years ended December 31, 1994 and 1993
was $-0-.
F-6
<PAGE>
Knight Natural Gas, Inc.
(A Development Stage Company)
Notes to Financial Statements
FOR THE PERIOD JANUARY 1, 1993 (INCEPTION) THROUGH DECEMBER 31, 1994
Net (Loss) Per Common Share:
The net (loss) per common share is computed by dividing the net (Loss) for the
period by the weighted average number of shares outstanding at December 31, 1993
and 1994.
NOTE 2 - CAPITAL STOCK AND CAPITAL IN EXCESS OF PAR VALUE
Common Stock:
The Company had authorized 100,000,000 shares of $.00001 par value common stock
and 1,000,000 shares of $.10 par value, nonvoting preferred stock.
On January 1, 1993, the Company had issued 9,450,000 shares of common stock.
On November 1, 1994, the Company's Board of Directors approved a 20 to 1 reverse
split and then issued 1,500,000 shares of common stock for services valued @
$.00001 per share.
NOTE 3 - RELATED PARTY EVENTS
The Company maintains its principal offices in space provided by a shareholder
on a rent free basis. The office is located at 5650 Greenwood Plaza Blvd.
Suite 216 Englewood, CO 80111.
NOTE 4 - SUBSEQUENT EVENTS
The Company will be filing a form 10SB with the Securities and Exchange
Commission.
F-7
<PAGE>
[KISH - LEAKE & ASSOCIATES, P.C. LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this form 10-SB of our report dated February 10,
1995 relating to the financial statements of Knight Natural Gas, Inc. for the
period January 1, 1993 (Inception) to December 31, 1994.
/s/ Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
May 8, 1996
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
EXHIBITS
TO
Knight Natural Gas, Inc.
<PAGE>
INDEX TO EXHIBITS
Exhibit Page or
Number Description Cross Reference
- ---------- --------------- ---------------
* 3A Articles of Incorporation
* 3B Articles of Amendment
* 3C Bylaws
* Previously filed.
