As filed with the Securities and Exchange Commission on October 10, 2001
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ALBION AVIATION, INC.
(Name of registrant as specified in its charter)
Delaware 4512 33-0619254
(State or Jurisdiction of Primary SIC Code (IRS Employer
incorporation or organization) Identification No.)
24351 Pasto Road, #B Jehu Hand, President
Dana Point, California 92629 24351 Pasto Road, #B
(949) 489-2400; fax (949) 489-0034 Dana Point, California 92629
(Address, including zip code, and
telephone number, including area code (949) 489-2400
of Registrant's principal executive offices) (Name, address, including zip code,
and telephone
number, including area code, of agent for service
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this registration
statement.
If the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:[ ]
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share(1) Offering Price Registration Fee
Common Stock offered by
Selling Stockholders................ 1,018,000 $1.00 $ 1,018,000 $ 254.50
Total.................................. 1,018,000 $ 1,018,000 $ 254.50 (2)
(1) Estimated solely for purposes of calculating the registration fee.
The Registrant makes no representation as to the price at which its shares
may trade.
(2) Paid with initial filing.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
PROSPECTUS
ALBION AVIATION, INC.
1,018,000 Shares of Common Stock
(par value $.001)
The 1,018,000 shares of common stock, par value $.001 of Albion Aviation,
Inc., a Delaware corporation ("Albion") are offered by the Selling Stockholders
from time to time. See "Plan of Distribution." The expenses of the offering,
estimated at $8,000, will be paid by Albion. Albion will not receive any
proceeds from the sale of shares by the Selling Stockholders.
There is currently no trading market for the common stock. Albion has
applied for trading of the common stock on the Electronic Bulletin Board under
the proposed symbol "ALAV". There can be no assurance that the Electronic
Bulletin Board will accept the common stock for trading nor that there will ever
exist a broad trading market for the common stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PURCHASE OF THESE SECURITIES INVOLVES RISKS. See "Risk Factors" on page 4.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
The date of this prospectus is October _,
2001.
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No person has been authorized in connection with this offering to give any
information or to make any representation other than as contained in this
prospectus and, if given or made, that information or representation must not be
relied upon as having been authorized by Albion. This prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities covered by this prospectus in any state or other jurisdiction to any
person to whom it is unlawful to make that offer or solicitation in that state
or jurisdiction. Neither the delivery of this prospectus nor any sales made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of Albion since the date of this prospectus.
PROSPECTUS SUMMARY
The following is only a summary of the information, financial statements
and the notes included in this prospectus.
Albion
Albion Aviation, Inc. ("Albion") intends to engage in the business of a
charter air carrier under Part 135 of the Federal Aviation Regulations. Part 135
is similar to the rules which scheduled airlines must follow but less stringent.
Albion owns one aircraft, a Cessna 421 B ("aircraft"). The tail identification
number is N3AJ. This aircraft can carry 8 passengers. The Cessna 421 B is widely
used for charter and corporate services. It is pressured to fly in altitudes
over 30,000 feet.
We think we will base the aircraft at Orange County Airport in Orange
County California. With time we hope to acquire other aircraft if business
grows. Orange County is benefitting from a strong and growing economy. There are
5 other charter airlines operating out of Orange County, as well as 10
commercial airlines and two commuter airlines.
The market for charter services primarily consists of business executives
and wealthy individuals who do not wish to be bound by airline schedules. The
cost of chartering an aircraft similar to the aircraft is about $500 per hour.
This compares to hourly jet aircraft charter cost of $1,000 or $2,000 or more.
If several passengers are flown the cost per passenger can be less than business
or first class tickets. Although the aircraft is slower than a jet airliner's
typical speed of over 500 nautical miles per hour, on flights of one or two
hours duration the time differential is not material. The primary flight market
expected to be served is California, (San Diego, Los Angeles, Palm Springs,
Mammoth, San Francisco, Santa Barbara), Arizona (Phoenix) and Nevada (Las
Vegas.)
Albion has never received revenues and will not receive revenues until it
begins operations. Until we receive Part 135 authority (which is subject to
government approval) we can't begin operations. Although we think this will take
place in early 2002, it's difficult to predict when if at all this will happen
and so we may never receive revenues or make a profit.
The corporate offices of Albion are located at 24351 Pasto Road, Suite B,
Dana Point, California 92629, and its telephone number is (949) 489-2400.
The Offering
The offering is being made by the Selling Stockholders, who are offering
all of the shares which they own.
Securities Offered:......................1,018,000 shares of common stock.
Risk Factors.........The securities offered hereby involve a high degree of risk
and immediate substantial dilution and should not be
purchased by investors who cannot afford the loss of their
entire investment. See "Risk Factors."
Common Stock Outstanding(1) Before Offering:..... 1,018,000(1) shares
Common Stock Outstanding After Offering:......... 1,018,000(1) shares
NASD Electronic Bulletin Board Symbol (proposed)ALAV
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Risk Factors
The securities offered hereby are highly speculative and very risky.
Some of these risk factors follow. Before you buy consider the following risk
factors and the rest of this prospectus.
RISK FACTORS
The shares are a speculative investment and very risky. You should
especially consider these risk factors.
We have not had operations and we cannot predict future earnings, if any.
We have not done any business. Albion's only activity to date is buying
the aircraft and developing a business plan. There is no operating history for
an investor to evaluate. It might take several months to obtain our 135 permit.
Although we think there will be strong demand for our charter services, no one
really knows for sure. We will try to minimize overhead by hiring pilot and
maintenance people on an as needed basis, similar to other small charter
airlines. Even if we can obtain business, it can't be predicted when we will be
profitable, if ever.
We might need more capital to continue business, and our operations could be
adversely affected.
We may need significant capital for the expansion of our operations. We
believe we have sufficient cash to fund operations at least until April 30,
2002. However, we might need additional funds before then. If additional funds
are required, but cannot be raised, it will have an adverse effect upon
operations. To the extent that additional funds are obtained by the sale of
equity securities, the stockholders may sustain significant dilution. If
adequate capital is not available Albion will have to reduce or eliminate
planned activities, which could otherwise ultimately provide significant revenue
to Albion. Even if any additional financing is available on satisfactory terms,
it, nonetheless, could entail significant additional dilution of the equity
ownership of Albion to existing shareholders and the book value of their
outstanding shares.
There is lots of competition in the business, so we might not be able to obtain
enough customers or make a profit.
The domestic airline industry is fiercely competitive. Currently, any
carrier deemed fit by the U.S. Department of Transportation (DOT) is free to
operate chartered or scheduled passenger service between any two points within
the U.S. and its possessions. To most of its destinations Albion will face
competing service from at least one, and sometimes more than one, major domestic
airline including: America West Airlines, Continental Airlines, Delta Air Lines,
Southwest Airlines, Skywest Airlines, American Airlines and their affiliated
regional carriers as well as innumerable charter operators. There are five
charter operators known to Albion at Orange County Airport and they all are
longer established and might be better financed. Albion also competes,
particularly on shorter segments, with ground transportation. Competition could
make it difficult or impossible for us to obtain customers or to charge enough
for our services to earn an operating profit.
Government regulation significantly controls our operations and compliance will
cost us money noncompliance could halt operations.
The Airline Deregulation Act of 1978 eliminated most domestic economic
regulation of passenger and freight transportation. However, the DOT and the
Federal Aviation Administration (FAA) still exercise some regulatory authority
over air carriers. The DOT maintains jurisdiction over the approval of
international codeshare agreements, international route authorities and consumer
protection matters, including advertising, denied boarding compensation, baggage
liability and computer reservations systems.
The FAA regulates flying operations generally, including establishing
personnel, aircraft and security standards. As part of that oversight, the FAA
has implemented a number of requirements that Albion must incorporate into its
business. These matters relate to, among other things, inspection and
maintenance of aircraft, pilot training, and supervision. Albion must prove to
the FAA that it complies with Part 135 and other regulations before it can begin
operations. Noise restrictions exist at many airports including Orange County.
The aircraft complies with these restrictions if operated correctly. The FAA and
local airports can modify
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existing regulations or impose additional regulations. If we don't comply with
all regulations, the aircraft could be grounded, Albion could be fined, or its
operating activities could be significantly restricted or our costs of
operations would be too high to be competitive, if we can operate at all.
Management will in all likelihood make mistakes due to inexperience, and this
could affect the operating results.
We may never receive operating authority and may never be able to commence
operations.
The DOT and FAA have discretion over persons to whom operating
authority under Part 135 is given. We may never obtain operating authority. If
this happens we won't be able to operate our business and investors may not
realize any return on their investment.
Nasdaq rules could make it hard to resell your shares.
Albion's common stock does not meet the current Nasdaq listing
requirements for the SmallCap(R) Market. Until Albion is able to satisfy
Nasdaq's requirements for listing, trading, if any, of the common stock will be
conducted on the NASD's OTC Bulletin Board, established for securities that do
not meet the Nasdaq SmallCap(R) Market listing requirements. Consequently, the
liquidity of Albion's securities could be impaired, not only in the number of
securities which could be bought and sold, but also through delays in the timing
of transactions, reduction in security analysts' and the news media's coverage
of Albion, and lower prices for Albion's securities than might otherwise be
attained.
Penny stock rules could make it hard to resell your shares.
The "penny stock" rules limit trading of securities not traded on
NASDAQ or a recognized stock exchange, or securities which do not trade at a
price of $5.00 or higher, in that brokers making trades in those securities must
make a special suitability determination for purchasers of the security, and
obtain the purchaser's consent prior to sale. The application of these rules may
make it difficult for purchasers in this offering to resell their shares.
We could issue more shares in the future without your permission, diluting your
ownership.
Albion's board of directors has the power, without the consent of the
shareholders, to issue additional shares of common stock or preferred stock for
the types of consideration permitted under the Delaware General Corporation Law.
Preferred stock may be issued with preferences or rights as to dividends, voting
or liquidation which are superior to those of holders of common stock. In view
of the large number of authorized but unissued shares of common stock
(18,982,000 shares as of the date of this prospectus) current shareholders are
subject to significant potential dilution in their ownership interest in Albion.
See "Description of Securities."
Economic conditions can affect our business and it is beyond our control.
The airline industry is affected by changes in international, national,
regional and local economic conditions as they impact the need and financial
ability to travel. Southern California is an international travel destination
since charter air travel is discretionary even for business travelers, adverse
economic conditions can be expected to affect demand for charter services more
than commercial carriers.
War or political instability, abroad or in the United States, can lead
to terrorism (or the threat thereof). Like any other air carrier, we might be
the target of terrorist attacks. Travelers might reduce air travel in response
to actual or threatened acts of terrorism against other air carriers as well.
Management control discourages takeovers and affects value.
Management owns 893,850 shares. Even after the offering is sold
management will be able to elect all
the board of directors and otherwise control Albion and its operations, and
investors will have little, if any
control over Albion's management. The concentration of control in management
will discourage takeover
attempts and the purchase of shares by persons who wish to acquire control of
Albion. See "Management."
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Management has limited experience and may make lots of mistakes and cause us to
lose money.
Management has very limited experience in managing aviation
enterprises, and is not expected to work full time and will not receive any
compensation for the near future. Instead management intends to hire qualified
personnel. We may not be able to find qualified personnel, especially in an
expanding economy. or we might not be able to afford to pay market rate salaries
or hourly compensation. Management will in all likelihood make mistakes due to
inexperience, and this could affect the operating results.
High gasoline prices can make our costs increase and affect profits.
Due to the competitive nature of the airline industry, in the event of
any increase in the price of fuel, there can be no assurance that we would be
able to pass on increased fuel prices to its customers by increasing charter
prices. We don't plan to engage in hedging for fuel prices when we only operate
one aircraft.
We could change the strategy we outline in this prospectus without your consent.
Although it has no current plan to do so, we may change our business
strategy in the future and may not pursue some of the goals stated herein.
ADDITIONAL INFORMATION
Albion has filed a registration statement under the Securities Act with
respect to the securities offered hereby with the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. This prospectus, which is a part of the
registration statement, does not contain all of the information contained in the
registration statement and the exhibits and schedules thereto, which are omitted
in accordance with the rules and regulations of the Commission. For further
information with respect to Albion and the securities offered, reference is made
to the registration statement, including all exhibits and schedules thereto,
which may be inspected and copied at the public reference facilities maintained
by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates during regular business hours. Statements contained in this
prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of any
contract or document filed as an exhibit to the registration statement, each of
those statements being qualified in its entirety by the reference to it in this
prospectus. Albion will provide, without charge upon oral or written request of
any person, a copy of any information incorporated by reference herein. This
request should be directed to Albion at 24351 Pasto Road, Suite B, Dana Point,
California 92629, telephone (949) 489- 2400.
Upon effectiveness of the registration statement Albion will be
required to file reports and other information with the Commission. All of those
reports and other information may be inspected and copied at the Commission's
public reference facilities described above. The Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address of
the Commission's site is http://www.sec.gov. In addition, Albion intends to make
available to its shareholders annual reports, including audited financial
statements and any other reports as Albion may determine.
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DIVIDEND POLICY
Albion has not paid any dividends on its common stock. Albion currently
intends to retain any earnings for use in its business, and therefore does not
anticipate paying cash dividends in the foreseeable future.
MARKET PRICE OF COMMON STOCK
Our common stock has never been traded. As of August 31, 2001, there
were approximately 112 record holders of common stock.
There are no warrants or options outstanding and no registration rights
have been granted. At the present time all 1,000,000 shares outstanding are
eligible to be sold under Rule 144, subject to volume limitations (10,000 shares
each 90 days) by each individual who is an "affiliate," which includes any
director or executive officer, or otherwise as defined under Rule 144.
PLAN OF OPERATION
We have made a plan of operations for the first 12 months after
receiving funding from the offering. In May 2001 we received net proceeds of
$90,000. Obtaining the 135 permit will cost $20,000, primarily for consultants
to write manuals for operating procedures. We plan to market our charter
services primarily to charter brokers or via the internet. Although using
brokers reduces our profitability, its more cost effective than employing our
own marketing department, and most charter operations rely on brokers. However,
$1,000 will be spent on brochures and $4,000 on other marketing expenses. The
proceeds of the sale of shares will cover the estimated fixed costs for eighteen
months. The variable costs of operation include fuel, oil and crew labor, which
will be paid solely from charter revenues. Crew will be hired on an hourly
basis, as needed when flights commence. The Cessna 421 is widely used for
charter work and the hourly operating costs are widely understood to be as
follows:
Crew 2 pilots (only one needed) $ 40
Fuel - 40 gallons per hour at $2.00 per gallon 80
Oil - 2 quarts per hour at $2.00 per quart 4
Air frame and Avionics - Parts Reserve 50
Engine Reserve (2 engines) 100
TOTAL $ 274
The price of charter flights are based upon hourly usage. In Southern
California the hourly charter rate for pressurized turbo props such as the
Aircraft is about $500.00, less a brokerage commission of 10%. The resulting
operating profit per hour is $176.00. Since annual fixed costs are estimated to
be $53,500 per year, the projected break even point is 303 hours flown per year.
The above assumptions are based upon current prices. The most volatile
cost is fuel. Fuel prices were at a record high in summer 2001 but they could go
still higher. If they do our profitability could be adversely affected. We don't
intend to engage in hedging for fuel prices while we only operate one aircraft.
Another assumption we have made is on maintenance expenses. These
expenses since the acquisition of the aircraft in October 1998 have been
$17,953, incurred $6,238 in fiscal 1998 and $11,715 in fiscal 1999. We have
budgeted only $10,000 for annual maintenance. We think that maintenance expenses
were higher than they will be in the future because in management's experience
any used airplane will incur high maintenance expenses when first purchased,
equal to 10-15% of the purchase price. Its commonly believed the initial high
expenses are due to deferred maintenance items on aircraft. However, we can't
forecast future maintenance expenses.
Other factors can also adversely affect operations. There has been an
abundant supply of pilots in the past. However, many airline pilots are near
retirement age and a pilot shortage could develop as commuter airlines hire
qualified pilots. Mechanical problems can delay or ground flights. Waiting for
parts or maintenance personnel can also ground the aircraft. Weather is
generally good in the our planned area of operations but bad weather can delay
or cancel flights. Also, currently Orange County Airport is closed to takeoffs
and landings from 11:00 pm to 7:00 am. This could limit flights.
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The aircraft was acquired on October 23, 1998 from an unrelated party,
an aircraft broker in Mississippi. The purchase price was $159,900, paid $16,000
in cash and $143,900 in debt financing from Greentree Financial. The loan is
payable over 7 years in monthly installments of $2,297, and the interest rate is
8.75%. Mr. Hand guaranteed the loan which financed the purchase of the aircraft.
As of September 30, 2000 the amount owed on the loan was $114,244. In the event
Albion defaults on the loan, Mr. Hand would be personally liable for any unpaid
balance, and he might have the right as guarantor to take posession of or sell
the aircraft.
We are a development stage company as that term is defined in
paragraphs 8 and 9 of SFAS No. 7. Our activities to date have been limited to
selection and purchase of an aircraft, aircraft maintenance, and development of
a business plan. Our auditors have included an explanatory paragraph in their
report on our financial statements, to the effect that there is substantial
doubt about Albion's ability to continue as a going concern. The factors for
this assessment include our lack of operating history or current revenues, the
nature of our business as a start up business, management's limited experience
and our limited funds Management believes that the funds raised by this offering
and funds provided by the majority shareholder will be sufficient to ensure
viability of the enterprise for at least 18 months following completion of this
offering. However, risks inherent in the business as discussed under the caption
"Risk Factors" may affect the outcome of Management's plans.
BUSINESS
General
Albion was incorporated in April 1994 in order to engage in the
aviation business. Management investigated the industry and decided to engage in
the charter airline business in particular, and management also evaluated what
kind of aircraft would be most suitable. Beginning in 1987 we started looking
for the right aircraft, and finally in October 1998 we acquired by purchase a
Cessna 421-B to use in proposed charter operations. The aircraft was purchased
by a wholly owned Nevada subsidiary, Svetlana Aviation, for a non-affiliated
aircraft broker in Mississippi for $159,900, paid $16,000 in cash and $143,900
in debt financing, Mr. Hand, our president, guaranteed the loan. All operations
are conducted by Svetlana Aviation, and Albion functions as a holding company.
However, for simplicity's sake we refer in this prospectus to the combined
enterprise as "Albion."
Albion's business plan is to offer aircraft charter service based at
Orange County Airport in Southern California. The Cessna 421B (Golden Eagle) was
selected because of its familiarity to the charter community, its pressurization
and speed. After some months of search Albion's current aircraft was acquired.
The aircraft then underwent a substantial maintenance program which required one
year. Finally, at the commencement of calendar 2000, the aircraft was ready to
be utilized. In the meantime Albion officers met with charter brokers and
aviation professionals to evaluate probable operating expenses, charter rates
and consumer demand. The aircraft is owned by a subsidiary, "Svetlana Aviation".
We plan to obtain our operating permit and conduct all operations in the name of
this subsidiary.
Charter Services
Orange County Airport served more than 7.4 million passengers in 1998,
according to airport management, and is the principal airport for Orange County
with more than 3 million population. Orange County enjoys a growing economy and
is also a popular tourist destination featuring Disneyland and some of
California's best beaches. We think that there is a growing market for aircraft
charter services in Orange County. The area is affluent. Pursuant to airport
rules the number of commercial and commuter flights is limited. Growing consumer
dissatisfaction with airline service, we think, will cause more and more
travelers to consider charter service. The cost of charter aircraft for flights
of one to two hour flights can be equivalent to the cost of first or business
class tickets, but the convenience and prestige of charter services can outweigh
the cost factor. Charter can be especially attractive for business travelers
with a busy schedule.
Operations
More detail on the operations aspects of a charter airline is provided
under the caption "Plan of Operations." You should read that section if you have
not already. We plan to commence service approximately six months after receipt
of proceeds of this offering.
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In brief, aircraft charter operations have to be carefully managed. The
aircraft does not generate any revenue unless it is flying for hire. Most
charter airlines don't engage in much advertising, but rely on charter brokers
or customer referrals. A potential customer usually requests information from a
charter broker on price, availability and types of aircraft, when the need for
services arises. Aircraft brokers receive a negotiable percentage of the charter
fee. Fees are based on hourly flight time, usually with a one or two hour
minimum.
Fixed expenses such as debt service, insurance, tiedown rental and some
minimum level of maintenance are incurred regardless of the hours flown.
However, most of the expenses are incurred only when the aircraft is being
operated, and include fuel and oil, crew expenses, maintenance and engine
reserves. Engine life is limited by FAA rules to fixed hours of total operation,
after which an engine must be replaced or overhauled. Maintenance expenses can
arise at any time and although difficult to predict are generally consistent
with each type of aircraft. With each hour of operation we are going to set
aside a fixed amount of cash for future engine overhauls, and another amount for
maintenance expenses.
Government Regulation
Before we can transport passengers for hire we must obtain
authorization under Part 135 of the Federal Aviation Regulations. Part 135
imposes various requirements relating to aircraft maintenance, pilot training,
inspections and maintenance of records, supervision and operations. These rules
have as their purpose the safety of the flying public. If we don't follow all
the requirements of Part 135, the FAA will ground the aircraft. The FAA is
continually striving to improve aviation safety, and it will from time to time
impose or modify regulations or how they are interpreted. Although the FAA can
and does evaluate the economic impact of changes in regulations, it views safety
as paramount and the FAA could adopt or change rules to the extent that it
renders our business not economically feasible.
The aircraft will be based at Orange County, where there are strict
noise limitations and a night curfew. Other airports can have similar
restrictions. If the aircraft is operated correctly it will satisfy those
requirements, but violation can bring fines or even the banishment of the
violating aircraft from the affected airport.
The Department of Transportation will need to be satisfied that Albion
is financially able to carry on its business. Generally three month's operating
expenses must be on hand. We believe our financial operating plan exceeds DOT
requirements.
We expect to begin the approval process with the FAA and DOT in fall
2001 upon completion of this offering and expect that about six months and
$20,000 in expenditures will be required for this process.
Competition
In general, we will compete with other modes of transport in a
traveling distance of 100 miles to 2000 miles, with most flight segments being
between 250 and 1000 miles. For smaller distances, automobile transport is less
costly and the time and comfort difference is minimal. For large distances jet
travel is as or nearly as economical and the time difference is greater. Our
main competition is commercial scheduled airline carriers. The competition
advantage of charter aircraft has in its ability to fly on demand, on the
customer's own schedule, with better comfort and prestige, and to be able to fly
to smaller airports where there is little or no scheduled service.
Within the charter industry itself we have five competitors known to us
at Orange County Airport. They all have more operating history and may likely be
better financed. Charter operations compete on price, level of service
availability, in increasing order or importance. We think by making our aircraft
available we will be able to acquire enough business.
Employees
As is typical in the industry we will pay pilots and maintenance
personnel on any hourly basis. We think we can find personnel without
difficulty, but it's possible that it will be increasingly difficult to find
experienced pilots if commercial airlines continue to expand hiring. The rate of
compensation is subject to pilot availability and could increase to an amount we
can't afford. The two officers serve without compensation at this time and will
only devote part time to the business until warranted by business.
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Properties
It is not necessary for us to have dedicated office space. We are using
the office space of our president. Since sales will be effected through brokers,
all that is needed is telephone availability and a place to keep records and a
checkbook. The amount of space is minimal.
MANAGEMENT
Directors and Executive Officers
The member of the Board of Directors of Albion serve until the next
annual meeting of stockholders, or until his successors have been elected. The
officer serves at the pleasure of the Board of Directors. The following is the
director and executive officer of Albion.
Jehu Hand, age 45, has been President and Chief Financial Officer of
Albion since its inception. 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. Hand & Hand incorporated as a law corporation in May 1994. 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. He is a registered principal (Series 7, 24 and 63) of
SoCal Securities, a broker-dealer and member of the National Association of
Securities Dealers, Inc. SoCal Securities will not participate in the offering
of the common stock, does not make a market in the securities of any company and
will not make a market in Albion's common stock. Mr. Hand was formerly a
director and president of Las Vegas Airlines, Inc., a Delaware corporation. In
1998 Las Vegas Airlines purchased a controlling interest in Las Vegas Airlines,
Inc., a Nevada corporation, engaged in Part 135 operations in Las Vegas. Shortly
after the acquisition Mr. Hand discovered that significant liabilities of the
Nevada company had not been disclosed that its liabilities greatly exceeded its
assets, and that its costs of doing business exceeded market price for its
flights and decided it was necessary to discontinue operations. Accordingly, in
mid December 1998 Las Vegas Airlines, Inc. notified the FAA that it would
discontinue all flight operations effective immediately. At this time the fleet
of leased planes was returned to the lessor, and receivables were used to pay
obligations to employees. Mr. Hand was never involved in the day to day
operations of the Nevada subsidiary.
Kimberly Peterson, age 35, has been corporate secretary since October
2000. She is self employed as a legal secretary. Prior to July 1999 she was
employed by Hand & Hand for more than five years.
9
Executive Compensation
The following table sets forth the cash compensation of Albion's
executive officers and directors during each of the last three fiscal years. The
remuneration described in the table does not include the cost to Albion of
benefits which may be furnished to the named executive officers, including
premiums for health insurance and other benefits provided to the listed
individual that are extended in connection with the conduct of Albion's
business. The value of any benefits listed below cannot be precisely determined,
but the executive officers named below did not receive any other similar
compensation in the years set forth below.
Summary Compensation Table
ANNUAL COMPENSATION LONG TERM COMPENSATION
-
-
-
-
-
-
-
-
-
-
Name and Other Annual Awards Payouts All
Principal Position Year Salary Bonus Compensation Other
Restricted Options/ LTIP
Stock ($)SARs(#) Payouts ($)
Jehu Hand 1999 $0 0 0 0 0 0 0
President and CFO 1998 0 0 0 0 0 0
1997 0 0 0 0 0 0 0
10
PRINCIPAL SHAREHOLDERS
The following table sets forth information relating to the beneficial
ownership of Albion common stock as of the date of this prospectus by (I) each
person known by Albion to be the beneficial owner of more than 5% of the
outstanding shares of common stock (ii) each of Albion's directors and executive
officers, and (iii) the Percentage After Offering assumes the sale of the
maximum offering.
Percentage Percentage
Name and Address(1) Common Stock Before Offering After Offering
Jehu Hand 815,800(2) 80.1% --%
24351 Pasto Road, #B
Dana Point, California 92629
Kimberly Peterson 93,850 9.4% --%
18776 Fairfax Lane
Huntington Beach, California 92648
All officers and directors
as a group (2 persons) 909,650(2) 89.4% --%
(1) Unless otherwise noted below, Albion believes that all persons named in
the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them. For purposes hereof,
a person is deemed to be the beneficial owner of securities that can be
acquired by the listed person within 60 days from the date hereof upon
the exercise of warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is determined
by assuming that any warrants, options or convertible securities that
are held by the listed person (but not those held by any other person)
and which are exercisable within 60 days from the date hereof, have
been exercised.
(2) Includes 15,800 shares held of record by Brighton Capital, Inc., a
corporation controlled by Mr. Hand, and 800,000 shares held by Ecco
Petroleum Family Limited Partnership which is controlled by Mr.
Hand.
11
CERTAIN TRANSACTIONS
From time to time Mr. Hand has advanced operating expenses of Albion.
The cumulative expenses related to general administrative expenses of Albion
were $1,249 and $1,101 as of June 30, 2001, December 31, 2001 and December 31,
1999, respectively, and have been classified as related party payables. No
advances were made after September 30, 2000. The amount of $1,249 was
contributed to capital by Mr. Hand upon completion of the 2001 initial public
offering. Those expenses related to the purchase and maintenance of the aircraft
and other expenses of the operating subsidiary, Svetlana Aviation, have been
accounted for as contributions to capital, and were $30,063, $41,770 and
$30,909, for the nine months ended September 30, 2000 and the years ended
December 31, 1999 and 1998, respectively. No amounts were contributed after
September 30, 2000. Mr. Hand's contributions have consisted only of cash.
The aircraft was acquired on October 23, 1998 from an unrelated party,
an aircraft broker in Mississippi. The purchase price was $159,400, paid $16,000
in cash and $143,900 in debt financing from Greentree Financial. The loan is
payable over 7 years in monthly installments of $2,297, and the interest rate is
8.75%. Mr. Hand guaranteed the loan which financed the purchase of the aircraft.
As of June 30, 2001 the amount owed on the loan was $100,676. In the event
Albion defaults on the loan, Mr. Hand would be personally liable for any unpaid
balance, and he might have the right as guarantor to take posession of or sell
the aircraft.
12
SELLING STOCKHOLDERS
The shares of common stock of Albion offered by the Selling Stockholders
will be offered at market prices, as reflected on the National Association of
Securities Dealers Electronic Bulletin Board, or on the NASDAQ Small Cap Market
if the Common Stock is then traded on NASDAQ. It is anticipated that registered
broker-dealers will be allowed the commissions which are usual and customary in
open market transactions. There are no other arrangements or understandings with
respect to the distribution of the Common Stock. Except as noted, the Selling
Stockholders do not own any Common Stock except as registered hereby and will
own no shares after the completion of the offering. The relationship, if any,
between Albion and any Selling Stockholder is set forth below.
Shares Beneficially Percentage
Name and Address Owned Total Shares
Jehu Hand(1) 815,800 80.1 %
24351 Pasto Road, #B
Dana Point, California 92629
President of Albion
Kimberly Peterson 93,850 9.4 %
18776 Fairfax Lane
Huntington Beach, California 92648
Officer of Albion
Societe Financiere du Seujet, S.A.(2) 50,000 *
14 Quai du Seujet
Geneva, Switzerland CH-1201
Elizabeth Rodelli 50,000 *
24901 Dana Point Harbor Drive
Suite 200
Dana Point, California 92629
Lewis V. Sykes 625 *
7266 Rockridge Lane
Huntington Beach, CA 92648
Iwona Alami 25 *
25132 Sanoria St.
Laguna Niguel, CA 92677
Gregory D. Wilson 25 *
747 3rd Street
San Pedro, CA 90731
Ken Graham 25 *
13213 Ballestros
Chino, CA 91710
Sayoko Tanaka 25 *
26572 Briarwood Lane
San Juan Capistrano, CA 92675
Ten Foot Line(2) 25 *
1002 California St., #A
Huntington Beach, CA 92648
Michael Rovere(2) 25 *
1002 California St., #A
Huntington Beach, CA 92648
Diane Biagianti(2) 25 *
1002 California St., #A
Huntington Beach, CA 92648
Connie Ferree 50 *
2150 N. Tenaya Way
Bldg. 21
13
No. 1175
L.V., NV 89128
Shaun P. Mackin 25 *
1786 Harmony Way
Pitsburg, CA 94565
Angela Sykes 625 *
7266 Rockridge Lane
Huntington Beach, CA 92648
Vernon R. Gilbert 25 *
12131 Martha Ann Dr.
Los Alamitos, CA 90720
Richard B. Dunbar 125 *
15603 Edmore
Detroit, MI 48205
Desiree Royall 25 *
1408 Posada
Newport Beach, CA 92660
Barbara A. Royall 25 *
103 Greenfield Ave.
San Rafael, CA 94901
Jody Roberts 625 *
15871 Caltech Circle
Westminster, CA 92683
Jeffery A. Czerwinski 75 *
304 1/2 B. Main St.
Balboa, CA 92624
Doug Sillasen 625 *
401 Memphis Avenue
Huntington Beach, CA 92648
Debra Sillasen 625 *
401 Memphis Avenue
Huntington Beach, CA 92648
Janae Sykes 125 *
(Angela Sykes, Custodian)
7266 Rockridge Lane
Huntington Beach, CA 92648
Craig Kennedy 25 *
831 Via Casitas
Greenbrae, CA 94904
Marvin Anderson 25 *
104 N. 26th Ave.
Yakima, WA 98902-2811
Margaret Peschong 25 *
1425 Pebble Beach Road
Mitchell, SD 57301
Nanette J. Peschong 25 *
511 S. Main St., No. 2
Mitchell, SD 57301
T.H. Peschong 25 *
1425 Pebble Beach Road
Mitchell, SD 57301
Kenneth Graham 25 *
13213 Ballestros
14
Chino, CA 91710
Denise Graham 25 *
13213 Ballestros
Chino, CA 91710
Kenneth & Denise Graham 25 *
13213 Ballestros
Chino, CA 91710
Marie Gunsten 25 *
(Denise Graham, Custodian)
13213 Ballestros
Chino, CA 91710
Audrey Gunsten 25 *
(Denise Graham, Custodian)
13213 Ballestros
Chino, CA 91710
Mary K. Roberts 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Mary K. Peterson 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Kimberly Roberts 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Randall Peterson 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Taylor Peterson 25 *
(Kimberly Peterson, Custodian)
18776 Fairfax Lane
Huntington Beach, CA 92648
Debi K. P. Brandt 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Kevin Brandt 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Terance Brandt 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Connor Brandt 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Kimber Brandt 25 *
18776 Fairfax Lane
Huntington Beach, CA 92648
Kenna Brandt 25 *
(Debi Brandt, Custodian)
18776 Fairfax Lane
Huntington Beach, CA 92648
Kellyn Brandt 25 *
(Debi Brandt, Custodian)
18776 Fairfax Lane
Huntington Beach, CA 92648
15
Kira Brandt 25 *
(Debi Brandt, Custodian)
18776 Fairfax Lane
Huntington Beach, CA 92648
Brian James Paterson 25 *
24351 Pasto Road #B
Dana Point, CA 92629
Teresa Paterson 25 *
24351 Pasto Road #B
Dana Point, CA 92629
Keirstin Paterson 25 *
(Brian Paterson, Custodian)
24351 Pasto Road #B
Dana Point, CA 92629
Jacob Paterson 25 *
(Brian Paterson, Custodian)
24351 Pasto Road #B
Dana Point, CA 92629
Taylor Peterson 125 *
(Kimberly Peterson, Custodian)
18776 Fairfax Lane
Huntington Beach, CA 92648
Richard K. Solosky 25 *
15871 Caltech Cir.
Westminster, CA 92683
Mary L. Roberts-Solosky 25 *
15871 Caltech Cir.
Westminster, CA 92683
Scott R. Roberts 25 *
15871 Caltech Cir.
Westminster, CA 92683
Kristen J. Roberts 25 *
15871 Caltech Cir.
Westminster, CA 92683
James S. Roberts 25 *
15871 Caltech Cir.
Westminster, CA 92683
Delone H. Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
Delone Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
Dee Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
Rulon Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
Brad Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
Todd Peterson 25 *
8392 Carnegie Avenue
Westminster, CA 92683
16
Mark Spragg 50 *
14621 Oak Ave.
Irvine, CA 92714
Mark Peterson 25 *
318 20th Street
Huntington Beach, CA 92648
Jolene Peterson 25 *
318 20th Street
Huntington Beach, CA 92648
M.D. Peterson 25 *
318 20th Street
Huntington Beach, CA 92648
J.H. Peterson 25 *
318 20th Street
Huntington Beach, CA 92648
Jolene Hadley 25 *
318 20th Street
Huntington Beach, CA 92648
Roy Harward 25 *
3485 Summerhill
Salt Lake City, UT 84121
Brian Cowley 25 *
4378 Burgess Drive
Sacramento, CA 95838
Charles Allan Hall 25 *
2100 S. 336th St., #K-6
Federal Way, WA 98003
Kristen Hall 25 *
2100 S. 336th St., #K-6
Federal Way, WA 98003
Janice E. Johnson 50 *
26002 McNatt Ct.
Lake Forest, CA 92630
Graig G. Johnson 25 *
26002 McNatt Ct.
Lake Forest, CA 92630
Lunetta J. Peterson 50 *
91 Fuente
R.S.M., CA 92688
Cliff J. Peterson 25 *
91 Fuente
R.S.M., CA 92688
Michael E. Bever 50 *
540 Olden Way Rd.
Toppenish, WA 98948
Marian L. Bever 50 *
540 Olden Way Rd.
Toppenish, WA 98948
Michael & Marian Bever 50 *
540 Olden Way Rd.
Toppenish, WA 98948
Ryan Bever 50 *
(Michael Bever, Custodian)
540 Olden Way Rd.
17
Toppenish, WA 98948
Matthew Bever 50 *
(Michael Bever, Custodian)
540 Olden Way Rd.
Toppenish, WA 98948
Rebekah Bever 50 *
(Michael Bever, Custodian)
540 Olden Way Rd.
Toppenish, WA 98948
Richard M. Cobabe 25 *
17 Weeping Wood
Irvine, CA 92714
Christine L. Cobabe 25 *
17 Weeping Wood
Irvine, CA 92714
Richard L. Cobabe, Jr. 25 *
(Christine Cobabe, Custodian)
17 Weeping Wood
Irvine, CA 92714
Matthew M. Cobabe 25 *
(Christine Cobabe, Custodian)
17 Weeping Wood
Irvine, CA 92714
Shayla C. Cobabe 25 *
(Christine Cobabe, Custodian)
17 Weeping Wood
Irvine, CA 92714
Kanneth J. Cobabe 25 *
(Christine Cobabe, Custodian)
17 Weeping Wood
Irvine, CA 92714
Richard M. Peterson 25 *
22001 Oak Grove
Mission Viejo, CA 92692
Patti J. Peterson 25 *
22001 Oak Grove
Mission Viejo, CA 92692
Paul Thomas 25 *
5855 W. 95th #9
Los Angeles, CA 90045
Steven B. Morris 50 *
417 32nd
Manhattan Beach, CA 9026
Leann Michele Bouzidin 25 *
318 20th Street
Huntington Beach, CA 92648
Henrique Carlos Pinguelo 25 *
318 20th Street
Huntington Beach, CA 92648
R. Christopher Rhody 25 *
24351 Pasto Road, #B
Dana Point, CA 92629
William P. Hunt 25 *
24351 Pasto Road, #B
Dana Point, CA 92629
18
Dana S. Thomsen 50 *
2000 Westown Pky.
Apt. 7
W. Des Moines, IA 50265
Lori E. Jarvis 25 *
26 Deerfield
Irvine, CA 92714
Joel E. Hand 25 *
3930 Montefrio Court
San Diego, CA 92130
Kristen Hand 25 *
3930 Montefrio Court
San Diego, CA 92130
Joel Hand CUST Z.C. Hand 25 *
3930 Montefrio Court
San Diego, CA 92130
Kellie Hand 25 *
2365 South East Regner
Gresham, Oregon 97080
Cool Serve Corporation(4) 2,200 *
Logiskiy Tract
Minsk, Belarus
TOTAL 1,018,000 11.4%
* Less than 1%
(1) Includes 15,800 shares owned by virture of Mr. Hand's control of
Brighton Capital, Inc. and 800,000 shares owned by the Ecco
Petroleum Family Partnership, a limited partnership contolled by him.
(2)This corporation is controlled by Riccardo Mortara.
(3) Ten Foot line is owned by Michael Rovere, who is the husband of Diane
Biagianti (4) Controlled by Alexander Sosnovsky.
PLAN OF DISTRIBUTION
Albion has applied to have its shares of common stock registered on the
NASD's Electronic Bulletin Board. Albion anticipates once the shares are
trading on the Electronic Bulletin Board the selling stockholders will sell
their shares directly into any market created. The prices the selling
stockholders will receive will be determined by the market conditions. The
shares may be sold by the selling stockholders, as the case may be, from time to
time, in one or more transactions. Albion does not intend to enter into any
arrangements with any securities dealers concerning solicitation of offers to
purchase the shares.
Commissions and discounts paid in connection with the sale of the shares by
the selling stockholders will be determined through negotiations between them
and the broker-dealers through or to which the securities are to be sold and may
vary, depending on the broker-dealers fee schedule, the size of the transaction
and other factors. The separate costs of the selling stockholders will be borne
by them. The selling stockholders and any brokerbroker dealer or agent that
participates with the selling stockholders in the sale of the shares by them may
be deemed an "underwriter" within the meaning of the Securities Act, and any
commissions or discounts received by them and any profits on the resale of
shares purchased by them may be deemed to be underwriting commissions under the
Securities Act.
19
DESCRIPTION OF SECURITIES
Common Stock
Albion's Articles of Incorporation authorizes the issuance of 20,000,000
shares of common stock, $.001 par value per share, of which 1,018,000 shares
were outstanding as of August 31, 2001. Albion has no plans to sell additional
shares of common stock at this time, but reserves the right to do so to meet
future operating requirements. Holders of shares of common stock are entitled to
one vote for each share on all matters to be voted on by the stockholders.
Holders of common stock have no cumulative voting rights. Holders of shares of
common stock are entitled to share ratably in dividends, if any, as may be
declared, from time to time by the Board of Directors in its discretion, from
funds legally available therefor. In the event of a liquidation, dissolution or
winding up of Albion, the holders of shares of common stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities and
the liquidation preference to holders of preferred stock. Holders of common
stock have no preemptive rights to purchase Albion's common stock. There are no
conversion rights or redemption or sinking fund provisions with respect to the
common stock. The shareholders have already approved a reverse or forward stock
split as may be also approved by the board of directors, but we don't
contemplate any stock split at present.
Preferred Stock
Albion's Articles of Incorporation authorize the issuance of 1,000,000
shares of preferred stock, $.001 par value, of which no shares of preferred
stock are outstanding.
Albion's Board of Directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of the series. Albion considers it desirable to have preferred stock available
to provide increased flexibility in structuring possible future acquisitions and
financings and in meeting corporate needs which may arise. If opportunities
arise that would make desirable the issuance of preferred stock through either
public offering or private placements, the provisions for preferred stock in
Albion's Articles of Incorporation would avoid the possible delay and expense of
a shareholder's meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result, however, in a series
of securities outstanding that will have preferences with respect to dividends
and liquidation over the common stock which would result in dilution of the
income per share and net book value of the common stock. Issuance of additional
common stock pursuant to any conversion right which may be attached to the terms
of any series of preferred stock may also result in dilution of the net income
per share and the net book value of the common stock. The specific terms of any
series of preferred stock will depend primarily on market conditions, terms of a
proposed acquisition or financing, and other factors existing at the time of
issuance. Therefore, it is not possible at this time to determine in what
respect a particular series of preferred stock will be superior to Albion's
common stock or any other series of preferred stock which Albion may issue. The
Board of Directors may issue additional preferred stock in future financings,
but has no current plans to do so at this time.
The issuance of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of Albion.
Albion intends to furnish holders of its common stock annual reports
containing audited financial statements and to make public quarterly reports
containing unaudited financial information.
Transfer Agent
The transfer agent for the common stock is Colonial Stock Transfer
Corporation, 455 East 400 South, Suite 100, Salt Lake City, Utah 84111 and its
telephone number is (801) 355-5740.
LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for Albion
by Hand & Hand, a law corporation, Dana Point, California. The principal of Hand
& Hand beneficially owns 815,800 shares of common stock.
20
EXPERTS
The audited financial statements included in this Prospectus as of
December 31, 1999 and 1998 have been audited by Tanner & Co., independent
certified public accountants, to the extent and for the periods set forth in
their report thereon and are included in reliance upon that report given upon
the authority of that firm as experts in accounting and auditing.
INDEMNIFICATION
Albion has adopted provisions in its articles of incorporation and bylaws
that limit the liability of its directors and provide for indemnification of its
directors and officers to the full extent permitted under the Delaware General
Corporation Law ("DGCL"). Under Albion's articles of incorporation, and as
permitted under the Delaware General Business Act, directors are not liable to
Albion or its stockholders for monetary damages arising from a breach of their
fiduciary duty of care as directors. Those provisions do not, however, relieve
liability for breach of a director's duty of loyalty to Albion or its
stockholders, liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, liability for transactions
in which the director derived as improper personal benefit or liability for the
payment of a dividend in violation of Delaware law. Further, the provisions do
not relieve a director's liability for violation of, or otherwise relieve Albion
or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of Albion where indemnification will be
required or permitted. Albion is not aware of any threatened litigation or
proceeding that may result in a claim for indemnification by any director or
officer.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of Albion pursuant to the foregoing provisions, or otherwise, Albion has
been advised that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against the above described
liabilities (other than the payment by Albion of expenses incurred or paid by a
director, officer or controlling person of Albion in the successful defense of
any action, suit or proceeding) is asserted by any director, officer or
controlling person in connection with the securities being registered, Albion
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 Securities Act and will be governed by the final adjudication
of that issue.
21
15ALBION AVIATION, INC.
(A Development Stage Company) Consolidated Financial Statements December 31,
1999 and 1998 (audited) and September 30, 2000 (unaudited)
ALBION AVIATION, INC.
(A Development Stage Company)
Index
-------------------------------------------------------------------------------------------------------------------
Page
Independent auditors' report F-2
Consolidated Balance sheet F-3
Consolidated Statement of operations F-4
Consolidated Statement of stockholders' equity F-5
Consolidated Statement of cash flows F-6
Notes to consolidated financial statements F-7
-------------------------------------------------------------------------------------------------------------------
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Albion Aviation, Inc.
We have audited the accompanying consolidated balance sheet of Albion Aviation,
Inc., (a development stage company) as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the years then ended and the cumulative amounts from April
20, 1994 (date of inception) to December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Albion Aviation,
Inc., (a development stage company) at December 31, 1999 and 1998 and the
results of their operations and their cash flows for the years then ended and
cumulative amounts from April 20, 1994 (date of inception) to December 31, 1999
in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses and
has an accumulated deficit. These conditions raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
TANNER & CO.
Salt Lake City, Utah
June 9, 2000
F-2
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Balance Sheet
-------------------------------------------------------------------------------------------------------------------
September 30,
2000 December 31,
---------------------------------------------
Assets (Unaudited) 1999 1998
---------------------------------------------
Current assets - cash $ 2,297$ $ -
Aircraft, net of accumulated depreciation of
$54,523 and $34,534, and $4,442, respectively 105,377 125,366 155,458
---------------------------------------------
Total assets $ 107,674$ 125,366$ 155,458
---------------------------------------------
----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
Related party payables $1,249 $ 1,101$ 468
Current portion of long-term debt 18,290 17,132 15,702
---------------------------------------------
Total current liabilities 19,539 18,233 16,170
---------------------------------------------
Long-term debt 95,954 109,819 126,950
---------------------------------------------
Stockholders' (deficit) equity:
Preferred stock; $.001 par value; 1,000,000
shares - - -
authorized; no shares issued and outstanding
Common stock; $.001 par value; 20,000,000
shares authorized; 1,000,000 shares issued
and outstanding 1,000 1,000 1,000
Additional paid-in capital 102,757 72,694 30,924
Deficit accumulated during the
development stage (111,576) (76,380) (19,586)
---------------------------------------------
Total stockholders' (deficit) equity (7,819) (2,686) 12,338
---------------------------------------------
Total liabilities and stockholders'
(deficit) equity $ 107,674$ 125,366$ 155,458
---------------------------------------------
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-3
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Operations
-------------------------------------------------------------------------------------------------------------------
Cumulative
Nine Amounts
Months Ended September 30, Years Ended Since
------------------------------
2000 1999 December 31, Inception
--------------------------
(Unaudited) (Unaudited) 1999 1998 (Unaudited)
---------------------------------------------------------------------
Revenue $ $ - $ - $ - $ - -
---------------------------------------------------------------------
Costs and expenses:
General and administrative expenses 26,312 34,828 44,932 17,076 79,455
Interest expense 8,884 9,981 11,862 1,394 32,121
---------------------------------------------------------------------
35,196 44,809 56,794 18,470 111,576
---------------------------------------------------------------------
Loss before income taxes (35,196) (44,809) (56,794) (18,470) (111,576)
Income taxes - current - - - - -
---------------------------------------------------------------------
Net loss $ (35,196$ (44,809$ (56,794$ (18,470$ (111,576)
---------------------------------------------------------------------
Loss per share - basic and diluted $ $ (.02) $ (.04) $(.06) (.02)
---------------------------------------------------------------------
Weighted average common shares -
basic and diluted 1,000,000 1,000,000 1,000,000 1,000,000
---------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-4
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Stockholders' (Deficit) Equity
April 20, 1994 (Date of Inception)
Through September 30, 2000 (Unaudited)
-------------------------------------------------------------------------------------------------------------------
Additional
Preferred Stock Common Stock Paid-In Accumulated
-------------------------------------------
Shares Amount Shares Amount Capital Deficit Total
--------------------------------------------------------------------------------
Balance, April 20, 1994 -$ - -$ $ - $ - $ - -
Shares issued for cash - - 1,000,000 1,000 15 - 1,015
Net loss - - - - - (144) (144)
--------------------------------------------------------------------------------
Balance, December 31, 1994 - - 1,000,000 1,000 15 (144) 871
Net loss - - - - - (338) (338)
--------------------------------------------------------------------------------
Balance, December 31, 1995 - - 1,000,000 1,000 15 (482) 533
Net loss - - - - - (320) (320)
--------------------------------------------------------------------------------
Balance, December 31, 1996 - - 1,000,000 1,000 15 (802) 213
Net loss - - - - - (314) (314)
--------------------------------------------------------------------------------
Balance, December 31, 1997 - - 1,000,000 1,000 15 (1,116) (101)
Contributions to capital - - - - 30,909 - 30,909
Net loss - - - - - (18,470) (18,470)
--------------------------------------------------------------------------------
Balance, December 31, 1998 - - 1,000,000 1,000 30,924 (19,586) 12,338
Contributions to capital - - - - 41,770 - 41,770
Net loss - - - - - (56,794) (56,794)
--------------------------------------------------------------------------------
Balance, December 31, 1999 - - 1,000,000 1,000 72,694 76,380 2,686
Contributions to
capital (unaudited) - - - - 30,063 - 30,063
Net loss (unaudited) - - - - - (35,196) (35,196)
--------------------------------------------------------------------------------
Balance, September 30,
2000 (unaudited) -$ -1,000,000$ 1,000$ 102,757$ (111,576$ (7,819)
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-5
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
-------------------------------------------------------------------------------------------------------------------
Nine Cumulative
Months Ended Amounts
September 30, Years Ended Since
---------------------------
2000 1999 December 31, Inception
--------------------------
(Unaudited) (Unaudited) 1999 1998 (Unaudited)
------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (35,196$ (44,809$ (56,794$ (18,470$ (111,576)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 19,989 19,989 30,092 4,701 55,538
Increase in
related party payables 148 633 633 108 1,249
------------------------------------------------------------------
Net cash used in
operating activities (15,059) (24,187) (26,069) (13,661) (54,789)
------------------------------------------------------------------
Cash flows from investing activities:
Purchase of aircraft - - - (16,000) (16,000)
Organization costs - - - - (1,015)
------------------------------------------------------------------
Net cash used in
investing activities - - - (16,000) (17,015)
------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on long-term debt (12,707) (12,989) (15,701) (1,248) (29,656)
Contributions to capital 30,063 37,176 41,770 30,909 102,742
Issuance of common stock - - - - 1,015
------------------------------------------------------------------
Net cash provided by
financing activities 17,356 24,187 26,069 29,661 74,101
------------------------------------------------------------------
Net increase in cash 2,297 - - - 2,297
Cash, beginning of period - - - - -
------------------------------------------------------------------
Cash, end of period $ 2,297$ $ - $ - $ - 2,297
------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-6
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. Organization
and
Summary of
Significant
Accounting
Policies
Organization
The Company was organized under the laws of the state of Delaware on April 18,
1994 (date of inception). The Company has not commenced planned principal
operations and purposes to seek business ventures which will allow for long-term
growth. Further, the Company is considered a development stage company as
defined in SFAS No. 7. Its principal activities since inception have consisted
of the offer and sale of common stock and the purchase of a commercial airplane,
financed by long-term debt. The Company intends to engage in the charter air
carrier business. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Unaudited Information
In the opinion of management, the accompanying unaudited financial statements
for the nine month periods ended September 30, 2000 and 1999 contain all
adjustments (consisting only of normal recurring items) necessary to present
fairly the results of operations and cash flows for the Company for the nine
month periods ended September 30, 2000 and 1999.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and
its consolidated subsidiary. All significant intercompany balances and
transactions have been eliminated.
Cash and Cash Equivalents
Cash equivalents are generally comprised of certain highly liquid investments
with maturities of less than three months.
Aircraft
The Company's aircraft is carried at cost. Maintenance and repairs, including
overhauls, were charged to operating expenses as they are incurred. The aircraft
is depreciated on a straight-line basis over the estimated useful life of 6
years.
---------------------------------------------------------------------------
F-7
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Continued
------------------------------------------------------------------------------
1. Organization
and
Summary of
Significant
Accounting
Policies
Continued
Use of Estimates in the Preparation of Financial Statements The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
2. Going
Concern
The accompanying consolidated financial statements have been prepared on a
going-concern basis, which contemplates profitable operations and the
satisfaction of liabilities in the normal course of business. There are
uncertainties that raise substantial doubt about the ability of the Company to
continue as a going concern. As shown in the consolidated statement of
operations, the Company has had no revenues from operations, and reported a net
losses in all periods since inception.
The Company intends to fund start-up costs during the next twelve months with
the capital contributions from related parties, however, such related parties
are not obligated under any agreement to contribute such funds.
The Company's ability to continue as a going concern is dependent upon
management's ability to secure additional debt or equity financing. The Company
is currently seeking to sell 50,000 shares of common stock for $250,000 of which
$50,000 will be used to pay commissions and expenses of the offering. There is
no guarantee that the Company will be successful in securing this equity
financing or other forms of financing. There is also no guarantee that, if
successful, such financing will be sufficient to fund necessary start up costs
and sustain operations upon commencement of such operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
-----------------------------------------------------------------------------
F-8
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
3. Long-term
Debt
In October 1998, the Company entered into a note agreement, with a financing
company, in the amount of $143,900, due in monthly installments of $2,297,
including interest at 8.75%, secured by aircraft and personal guarantee of an
officer of the Company, and maturing in November 2005. The total proceeds and
cash of $16,000 were used to purchase used aircraft for a total purchase price
of $159,900. The note balance outstanding at December 31, 1999 and 1998 was
$126,951 and $142,652, respectively.
Future maturities of the note payable are as follows:
Years Ending December 31: Amount
-----------------
2000 $ 17,132
2001 18,693
2002 20,396
2003 22,254
2004 24,281
Thereafter 24,195
-----------------
$ 126,951
-----------------
4. Income
Taxes
The difference between income taxes at statutory rates and the amount presented
in the financial statements is a result of the following:
Cumulative
Years Ended Amounts
December 31, Since
-------------------------
1999 1998 Inception
---------------------------------------
Income tax benefit at statutory
rate $ 8,000$ 3,000$ 14,000
Change in valuation allowance (8,000) (3,000) (14,000)
---------------------------------------
$ $ $ -
---------------------------------------
-------------------------------------------------------------------------------
F-9
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Continued
----------------------------------------------------------------------------
4. Income
Taxes
Continued
Deferred tax assets are as follows:
December 31,
-----------------------------------
1999 1998
-----------------------------------
Operating loss carryforwards $ 14,000$ 6,000
Valuation allowance (14,000) (6,000)
-----------------------------------
$ $ - -
-----------------------------------
The Company has net operating loss carryforwards of approximately $76,000, which
begin to expire in the year 2009. The amount of net operating loss carryforward
that can be used in any one year will be limited by significant changes in the
ownership of the Company and by the applicable tax laws which are in effect at
the time such carryforwards can be utilized.
5. Related
Party
Transactions
At December 31, 1999 and 1998, the Company owed the Company's president and
majority shareholder $1,101 and $468, respectively. The advances are unsecured,
non-interest bearing and have no specific repayment terms.
During the years ended December 31, 1999 and 1998 the Company's
president/majority shareholder made capital contributions of cash of $41,770 and
$30,909, respectively.
6. Supplemental
Cash Flow
Information
During the year ended December 31, 1998, the Company acquired aircraft in
exchange for long-term debt of $143,900.
Actual amounts paid for interest and income taxes are as follows:
Nine Months Ended Cumulative
September 30, Years Ended Amounts
------------------------
2000 1999 December 31, Since
--------------------
(Unaudited) (Unaudited) 1999 1998 Inception
-------------------------------------------------------
Interest $ 8,884$ 9,981$ 11,862$ 1,394$ 19,348
-------------------------------------------------------
Income taxes $ $ - $ - $- $ - -
-------------------------------------------------------
-----------------------------------------------------------------------------
F-10
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Continued
-------------------------------------------------------------------------------
7. Recent
Accounting
Pronounce-
ments
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective date of FASB
Statement No. 133." SFAS 133 establishes accounting and reporting standards for
derivative instruments and requires recognition of all derivatives as assets or
liabilities in the statement of financial position and measurement of those
instruments at fair value. SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. The Company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the Company.
8. Sale of Stock
The Company is seeking to sell 50,000 shares of common stock for $250,000 of
which $50,000 will be used to pay commissions and expenses of the offering.
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Balance Sheet
December 31, June 30,
2000 2001
(unaudited)
Assets
Current assets - cash $ 7,549 $ 20,728
Aircraft, net of accumulated
depreciation of $61,184 and $74,509 98,716 85,391
Asset held for sale -- 55,000
Total Assets $ 106,265 $ 161,119
Liabilities and Stockholders' Deficit
Current liabilities:
Related party payables $ 1,249 $ --
Current portion of
long-term debt 18,558 19,526
Total current liabilities 19,807 19,526
Long-term debt 92,746 81,150
Stockholders' deficit:
Preferred stock; $.001 par value;
1,000,000 shares authorized; no
shares issued and outstanding -- --
Common stock; $.001 par value;
20,000,000 shares authorized;
1,000,000 and 1,018,000 shares
issued and outstanding 1,000 1,018
Additional paid-in capital 112,757 203,988
Deficit accumulated during the
development stage (120,045) (144,563)
Total stockholders' deficit $ (6,288) $ 60,443
Total liabilities and
stockholders' deficit $ 106,265 $ 161,119
See accompanying notes to consolidated financial
statements.
F-13
ALBION AVIATION, INC.
(A Development Stage Company)
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Operations
Cumulative
Three Months Ended Six Months Ended Amounts
June 30, June 30, Since
2001 2000 2001 2000 Inception
(unaudited)(unaudited) (unaudited) (unaudited)(unaudited)
Revenue $-- $ -- $-- $ -- $--
Costs and expenses:
General and administrative
expenses 9,297 6,752 18,837 15,148 115,087
Interest expense 2,385 3,345 5,681 6,092 29,476
$ 11,682 $ 10,097 $ 24,518 $ 21,240 $ 144,563
Loss before income taxes $ (11,682) $ (10,097) $ (24,518) $ (21,240) $(144,563)
Income taxes - current -- -- -- -- --
Net loss $ (11,682) $ (10,097) $ (24,518) $ (21,240)$ (144,563)
Loss per share -
basic and diluted $ (.01) $ (.01) $ (.02) $ (.02)
Weighted average common
shares - basic and diluted 1,012,000 1,000,000 1,006,000 1,000,000
See accompanying notes to consolidated financial
statements.
F-14
ALBION AVIATION, INC.
(A Development Stage Company)
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
Six Months ended June 20, 2001 (unaudited)
Additional
Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit Total
--------------------------------------------------------------------------------
Balance, December 31, 2000 - - 1,000,000 1,000 112,757 (120,045) (6,288)
Contributions to
capital (unaudited) - - - - 1,249 - 1,249
Sale of Shares in public
offering (unaudited) - - - 18 89,982 90,000
Net loss (unaudited) - - - - - (24,518)(24,518)
--------------------------------------------------------------------------------
Balance, June 30,
2001 (unaudited) -$ -1,000,000$ 1,018$ 203,988$ (144,563) $ 60,443
--------------------------------------------------------------------------------
See accompanying notes to consolidated financial
statements.
F-15
ALBION AVIATION, INC.
(A Development Stage Company)
ALBION AVIATION, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
Cumulative
Six Months Ended Amounts
June 30, Since
2001 2000 Inception
(unaudited) (unaudited)(unaudited)
Cash flows from operating activities:
Net loss $ (24,518) $ (21,240) $(144,563)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 13,325 13,325 75,524
Increase in related party payables -- 148 1,249
Net cash used in
operating activities (11,193) (7,767) (67,792)
Cash flows from investing activities:
Purchase of aircraft (55,000) -- (71,000)
Organization costs -- -- (1,015)
Net cash used in
investing activities (55,000) -- (72,015)
Cash flows from financing activities:
Principal payments on long-term debt (10,628) (8,380) (43,224)
Contributions to capital -- 26,004 112,742
Issuance of common stock 90,000 -- 91,015
Net cash (used in) provided by
financing activities 79,372 17,624 160,533
Net (decrease) increase in cash 13,179 9,857 20,728
Cash, beginning of period 7,549 -- --
Cash, end of period $ 20,728 $ 9,857 $ 20,728
See accompanying notes to consolidated financial
statements.
F-16
ALBION AVIATION, INC.
(A Development Stage Company)
ALBION AVIATION, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2001
1. Interim Financial Statements
The accompanying financial statements are unaudited, but in the opinion of
the management of the Company, contain all adjustments, consisting of only
normal recurring accruals, necessary to present fairly the financial
position at June 30, 2001, the results of operations for the three and six
months ended June 30, 2001 and 2000, and the cash flows for the six months
ended June 30, 2001 and 2000.
Reference is made to the Company's Form 10-KSB for the year ended December
31, 2000. The results of operations for the three and six months ended June
30, 2001 are not necessarily indicative of the results of operations to be
expected for the full fiscal year ending December 31, 2001.
2. Related Party Transactions
At June 30, 2001 and December 31, 2000, the Company owed the Company's
president and majority shareholder $0 and $1,249, respectively. The
advances are unsecured, non-interest bearing and have no specific repayment
terms. The advance of $1,249 were forgiven and contributed to capital on
the close of the public offering.
3. Public Offering
In February 2001, the Company's initial public offering of its common
stock, registered on Form SB-2, was declared effective by the Securities
and Exchange Commission. The Company registered 50,000 shares of common
stock for sale at $5.00 per share. In May 2001 18,000 shares of common
stock were sold for net proceeds of $90,000.
4. Purchase of Aircraft
The Company purchased an additional aircraft to be held for sale in May
2001 for $55,000.
No dealer, salesman or other person is authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offer made hereby, and, if given or made, that information
or representations must not be relied upon as having been authorized by Albion.
This Prospectus does not constitute an offer to sell or a solicitation to an
offer to buy the securities offered hereby to any person in any state or other
jurisdiction in which that offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
Until ____________, 2001, all dealers that effect transations in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
TABLE OF CONTENTS
Page
Prospectus Summary.......................... 2
Risk Factors................................ 3
Use of Proceeds............................. 5
Additional Information...................... 6
Dividend Policy............................. 6
Market Price of Common Stock................ 6
Plan of Operation........................... 7
Business.................................... 8
Management.................................. 10
Principal Shareholders...................... 12
Certain Transactions........................ 13
Selling Stockholders........................ 13
Plan of Distribution........................ 13
Description of Securities................... 14
Legal Matters............................... 14
Experts..................................... 15
Indemnification............................. 15
Financial Statements........................ 16
ALBION AVIATION, INC.
1,018,000 SHARES
PROSPECTUS
October __, 2001
ALBION AVIATION, INC.
PART II
Item 24. Indemnification of Directors and Officers.
Albion has adopted provisions in its articles of incorporation and
bylaws that limit the liability of its directors and provide for indemnification
of its directors and officers to the full extent permitted under the Delaware
General Corporation Law. Under Albion's articles of incorporation, and as
permitted under the Delaware General Corporation Law, directors are not liable
to Albion or its stockholders for monetary damages arising from a breach of
their fiduciary duty of care as directors. Such provisions do not, however,
relieve liability for breach of a director's duty of loyalty to Albion or its
stockholders, liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, liability for transactions
in which the director derived as improper personal benefit or liability for the
payment of a dividend in violation of Delaware law. Further, the provisions do
not relieve a director's liability for violation of, or otherwise relieve Albion
or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of Albion where indemnification will be
required or permitted. Albion is not aware of any threatened litigation or
proceeding that may result in a claim for indemnification by any director or
officer.
Item 25. Other Expenses of Issuance and Distribution.
Filing fee under the Securities Act of 1933 $ 254.50
Printing and engraving(1) $ 300.00
Auditing Fees(1) $ 3,000.00
NASD Filing Fees $ 500.00
Miscellaneous(1) $ 3,945.50
TOTAL $ 8,000.00
(1) Estimates
Item 26. Recent Sales of Unregistered Securities.
Not Applicable.
Item 27. Exhibits and Financial Schedules
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(1)
3.2 Articles of Amendment(1)
3.3 Bylaws(1)
5. Opinion of Hand & Hand as to legality of securities being registered.(3)
10. Material Contracts
10.1 Loan Agreement with Greentree Financial(2)
10.2 Funding Agreement between Jehu Hand and the Issuer(2)
21. Subsidiaries of the small business issuer-Svetlana Aviation, a
Nevada corporation, is
the only subsidiary. It does business under the name Svetlana Aviation.
23. Consents of Experts and Counsel
23.1 Consent of Tanner & Co.(3)
23.2 Consent of Hand & Hand included in Exhibit 5 hereto
27. Financial Data Schedule(3)
All other Exhibits called for by Rule 601 of Regulation S-B are not
applicable to this
filing.
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or because
the required information is included in the financial statements or notes
thereto.
(1) Filed with original registration statement, file no. 333-46672.
(2) Filed with amendment no. 1
(3) Filed herewith.
Item 28. Undertakings.
(a) The undersigned small business issuer hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(I) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii)
Reflect in the prospectus any facts or events which, individually or together
represent a fundamental change in the information in the registration statement;
(iii)
Include any material or changed information the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities as at that time to be the initial
bona fide offering thereof.
(3) File a post effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(d) To provide to the underwriter at the Closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as may be required by the underwriter to permit prompt delivery to each
purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer 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 small business issuer 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 small business
issuer will, unless in the opinion of its counsel that 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.
(f) The undersigned small business issuer hereby undertakes that it will:
(1) For purposes of determining any liability under the
Securities Act that the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time the Commission declared it effective.
(2) For the purpose of determining any liability under the
Securities Act, that each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it meets all the requirements for filing on Form SB-2
and has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Dana
Point, State of California on September30, 2001.
ALBION AVIATION, INC.
By: /s/ Jehu Hand
Jehu Hand
President
In accordance with the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed by the following persons in
the capacities indicated on September 30, 2001.
By: /s/ Jehu Hand President, Chief Financial Officer and Director
Jehu Hand (principal executive officer and principal
accounting and financial officer)