SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
REXADON CORPORATION
(Name of small business issuer in its charter)
Delaware 33-0619520
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
24351 Pasto Road, Suite B, Dana Point, California 92629
(Address of principal executive offices) (Zip Code)
(949) 489-2400
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, par value $.001
(Title of Class)
PART I
Item 1. Business
Background
Rexadon Corporation, a Delaware corporation (the "Company") was
incorporated on April 20, 1994. The Company has no operating history other than
organizational matters, and was formed specifically to be a "clean public shell"
and for the purpose of either merging with or acquiring an operating company
with operating history and assets. The Securities and Exchange Commission has
defined and designated these types of companies as "blind pools" and "blank
check" companies.
The primary activity of the Company will involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The Company has
not selected any company for acquisition or merger and does not intend to limit
potential acquisition candidates to any particular field or industry, but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry. The Company's plans are in the conceptual stage
only.
The executive offices of the Company are located at 24351 Pasto Road,
Suite B, Dana Point, California 92629. Its telephone number is (949) 489-2400.
Plan of Operation - General
The Company was organized for the purpose of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, acquire an
interest in one or more business opportunities presented to it by persons or
firms who or which desire to seek the perceived advantages of a publicly held
corporation. At this time,the Company has no plan, proposal, agreement,
understanding or arrangement to acquire or merge with any specific business or
company, and the Company has not identified any specific business or company for
investigation and evaluation. No member of Management or promotor of the Company
has had any material discussions with any other company with respect to any
acquisition of that company. Although the Company's Common Stock is currently
not freely tradeable, it will eventually become so under exemptions such as Rule
144 promulgated under the Securities Act of 1933. See "Description of
Securities." The Company will not restrict its search to any specific business,
industry or geographical location, and the Company may participate in a business
venture of virtually any kind or nature. The discussion of the proposed business
under this caption and throughout this Registration Statement is purposefully
general and is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Company intends to obtain funds in one or more private placements
to finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent on
the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. The officers and
directors of the Company have limited experience in the proposed business of the
Company. There can be no assurance that the Company will be able to raise any
funds in private placements. In any private placement, management may purchase
shares on the same terms as offered in the private placement. (See "Risk
Factors" and "Management").
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from another
(see "Risk Factors").
The Company may seek a business opportunity with a firm which only
recently commenced operations, or a developing company in need of additional
funds for expansion into new products or markets, or seeking to develop a new
product or service, or an established business which may be experiencing
financial or operating difficulties
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and is in the need for additional capital which is perceived to be easier to
raise by a public company. In some instances, a business opportunity may involve
the acquisition or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock. The Company may purchase assets and establish wholly owned
subsidiaries in various business or purchase existing businesses as
subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some industries,
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of a publicly traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other factors. Potentially available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management has adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may require that
Management or other stockholders of the Company sell all or a portion of their
shares to the acquired company, or to the principals of the acquired company. It
is anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company's Common Stock.
The Company's funds are not expected to be used for purposes of any stock
purchase from insiders. The Company shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all or a
portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However, management
believes that since the anticipated sales price will be less than market value,
that the potential of a stock sale by management will be a material factor on
their decision to enter a specific transaction.
The above description of potential sales of management stock is not
based upon any corporate bylaw, shareholder or board resolution, or contract or
agreement. No other payments of cash or property are expected to be received by
Management in connection with any acquisition.
The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it will use the
services of such persons.
The Company has, and will continue to have following the completion of
this offering, insufficient capital with which to provide the owners of business
opportunities with any significant cash or other assets. However, management
believes the Company will offer owners of business opportunities the opportunity
to acquire a controlling ownership interest in a public company at substantially
less cost than is required to conduct an initial public offering. The owners of
the business opportunities will, however, incur significant post-merger or
acquisition registration costs in the event they wish to register a portion of
their shares for subsequent sale. The Company will also incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity including the costs of preparing post-effective amendments, Forms
8-K, agreements and related reports and documents nevertheless, the officers and
directors of the Company have not conducted market research and are not aware of
statistical data which would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The Company does not intend to make any loans to any prospective merger
or acquisition candidates or to
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unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities for possible
acquisition will be referred by various sources, including its officers and
directors, professional advisers, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals.
The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. It is not presently anticipated that the Company will
engage professional firms specializing in business acquisitions or
reorganizations.
The officers and directors of the Company are currently employed in
other positions and will devote only a portion of their time (not more than one
hour per week) to the business affairs of the Company, until such time as an
acquisition has been determined to be highly favorable, at which time they
expect to spend full time in investigating and closing any acquisition for a
period of two weeks. In addition, in the face of competing demands for their
time, the officers and directors may grant priority to their full-time positions
rather than to the Company.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or
under the supervision of the officers and directors of the Company (see
"Management"). Management intends to concentrate on identifying prospective
business opportunities which may be brought to its attention through present
associations with management. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operation, if any; prospects for the future; present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services or trades; name
identification; and other relevant factors. Officers and directors of each
Company will meet personally with management and key personnel of the firm
sponsoring the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and the
Company's shareholders must, therefore, depend on the ability of management to
identify and evaluate such risk. In the case of some of the opportunities
available to the Company, it may be anticipated that the promoters thereof have
been unable to develop a going concern or that such business is in its
development stage in that it has not generated significant revenues from its
principal business activities prior to the Company's participation. There is a
risk, even after the Company's participation in the activity and the related
expenditure of the Company's funds, that the combined enterprises will still be
unable to become a going concern or advance beyond the development stage. Many
of the opportunities may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by the Company and,
therefore, its shareholders.
The Company will not restrict its search for any specific kind of
business, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is currently impossible to predict the status of any business
in which the Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly traded, or may
seek other perceived advantages which the Company may offer.
Acquisition of Opportunities
4
In implementing a structure for a particular business acquisition, the
Company may become a party to a
merger, consolidation, reorganization, joint venture, franchise or licensing
agreement with another corporation or entity. It may also purchase stock or
assets of an existing business. On the consummation of a transaction, it is
possible that the present management and shareholders of the Company will not
be in control of the Company. In
addition, a majority or all of the Company's officers and directors may, as part
of the terms of the acquisition transaction, resign and be replaced by new
officers and directors without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
Federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's Common Stock may have a depressive effect on such
market. While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company, including investors in this offering, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which could result in
significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check reference of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
The manner in which each Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and desires of the
Company and other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the Company
which target company shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a lesser percentage ownership interest in the Company following
any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilative effect on the percentage of shares held
by the Company's then shareholders, including purchasers in this offering. (See
"Risk Factors).
The Company will not have sufficient funds (unless it is able to raise
funds in a private placement) to undertake any significant development,
marketing and manufacturing of any products which may be acquired. Accordingly,
following the acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing or obtain
funding from third parties, in exchange for which the Company would probably be
required to give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able either to obtain
additional financing or interest third parties in providing funding for the
further development, marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity the costs therefore incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate that
transaction may result in the loss of the Company of the related costs incurred.
5
Management believes that the Company may be able to benefit from the
use of "leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. No assurance can be given as to
the terms or the availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates because
the investment in the business opportunity held on a leveraged basis will only
be profitable if it generates sufficient revenues to cover the related debt and
other costs of the financing. Lenders from which the Company may obtain funds
for purposes of a leveraged buy-out may impose restrictions on the future
borrowing, distribution, and operating policies of the Company. It is not
possible at this time to predict the restrictions, if any, which lenders may
impose or the impact thereof on the Company.
Competition
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be a significant competitive disadvantage vis-a-vis the
Company's competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as
an issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading of securities. While the Company
does not intend to engage in such activities, the Company could become subject
to regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood the Company could be classified as an "investment company."
The Company intend to structure a merger or acquisition in such manner
as to minimize Federal and state tax consequences to the Company and to any
target company.
Employees
The Company's only employees at the present time are its officers and
directors, who will devote as much time as the Board of Directors determine is
necessary to carry out the affairs of the Company. (See "Management").
Item 2. Plan of Operation
See "Business" above.
Item 3. Description of Property
The Company shares space with its sole officer. The Company pays its
own charges for long distance
6
telephone calls and other miscellaneous secretarial, photocopying and similar
expenses.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group. The address of each person is care of the Company.
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
Jehu Hand 800,000 80.0%
Kimberly Peterson 93,850 9.4%
All officers and
directors as a group
(1 person) 800,000 80.0%
Item 5. Directors, Executive Officers, Promoters and Control Persons
The member of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until his successor(s) have been
elected. The officer serves at the pleasure of the Board of Directors.
Information as to the director and executive officer of the Company is as
follows.
Jehu Hand has been President, Chief Financial Officer and Secretary of
the Company 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 licensed real estate broker and a registered
principal (Series 7, 24 and 63) of SoCal Securities, a broker-dealer and member
of the National Association of Securities Dealers, Inc. He is also a director
and president of Las Vegas Airlines, Inc.
Conflicts of Interest
Certain conflicts of interest now exist and will continue to exist
between the Company and its officer and director due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its
management, and conflicts may develop in the future. The officer and director of
the Company holds similar positions with a number of companies engaged in the
same business as the Company. In the event a business opportunity is presented
to the management, he will present the opportunity to the Company and to these
companies in a random order of priority.
The Company has not established policies or procedures for the
resolution of current or potential conflicts
7
of interests between the Company, its officers and directors or affiliated
entities. There can be no assurance that management will resolve all conflicts
of interest in favor of the Company, and failure by management to conduct the
Company's business in the Company's best interest may result in liability to the
management. The officers and directors are accountable to the Company as
fiduciaries, which means that they are required to exercise good faith and
integrity in handling the Company's affairs. Shareholders who believe that the
Company has been harmed by failure of an officer or director to appropriately
resolve any conflict of interest may, subject to applicable rules of civil
procedure, be able to bring a class action or derivative suit to enforce their
rights and the Company's rights.
The Company has no arrangement, understanding or intention to enter
into any transaction for participating in any business opportunity with any
officer, director, or principal shareholder or with any firm or business
organization with which such persons are affiliated, whether by reason of stock
ownership, position as an officer or director, or otherwise.
The Company, by resolution of its Board of Directors and stockholders,
adopted a 1994 Stock Option Plan (the "Plan") on April 20, 1994. The Plan
enables the Company to offer an incentive based compensation system to
employees, officers and directors and to employees of companies who do business
with the Company.
In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries or employees of companies with which the Company does business
become participants in the Plan upon receiving grants in the form of stock
options or restricted stock. A total of 2,000,000 shares are authorized for
issuance under the Plan, of which no shares are issuable. The Company does not
intend to grant options until such time as a merger or acquisition has been
consummated. The Company may increase the number of shares authorized for
issuance under the Plan or may make other material modifications to the Plan
without shareholder approval. However, no amendment may change the existing
rights of any option holder.
Any shares which are subject to an award but are not used because the
terms and conditions of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any option may again be
used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.
Stock options may be granted as non-qualified stock options or
incentive stock options, but incentive stock options may not be granted at a
price less than 100% of the fair market value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market value of the
stock as of the date of grant. Restricted stock may not be granted under the
Plan in connection with incentive stock options.
Stock options may be exercised during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability, whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock acquired through the exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination of notes, cash and shares of the Company's common stock or a
combination thereof. Incentive stock options may only be issued to directors,
officers and employees of the Company.
Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant contains the AO feature and if a participant pays all or part of the
purchase price of the option with shares of the Company's common stock, then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the Company equal to the sum of the number of whole shares used by the
participant in payment of the purchase price and the number of whole shares, if
any, withheld by the Company as payment for withholding taxes. An AO may be
exercised between the date of grant and the date of expiration, which will be
the same as the date of expiration of the option to which the AO is related.
Stock appreciation rights and/or restricted stock may be granted in
conjunction with, or may be unrelated
8
to stock options. A stock appreciation right entitles a participant to receive a
payment, in cash or common stock or a combination thereof, in an amount equal to
the excess of the fair market value of the stock at the time of exercise over
the fair market value as of the date of grant. Stock appreciation rights may be
exercised during a period of time fixed by the Committee not to exceed ten years
after the date of grant or three years after death or disability, whichever is
later. Restricted stock requires the recipient to continue in service as an
officer, director, employee or consultant for a fixed period of time for
ownership of the shares to vest. If restricted shares or stock appreciation
rights are issued in tandem with options, the restricted stock or stock
appreciation right is canceled upon exercise of the option and the option will
likewise terminate upon vesting of the restricted shares.
Item 6. Executive Compensation
No compensation is paid or anticipated to be paid by the Company until
an acquisition is made.
On acquisition of a business opportunity, current management may resign
and be replaced by persons associated with the business opportunity acquired,
particularly if the Company participates in a business opportunity by effecting
a reorganization, merger or consolidation. If any member of current management
remains after effecting a business opportunity acquisition, that member's time
commitment will likely be adjusted based on the nature and method of the
acquisition and location of the business which cannot be predicted. Compensation
of management will be determined by the new board of directors, and shareholders
of the Company will not have the opportunity to vote on or approve such
compensation.
Directors currently receive no compensation for their duties as
directors.
Item 7. Certain Relationships and Related Transactions
Not applicable.
Item 8. Description of Securities
Common Stock
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of common stock, $.001 par value per share, of which 1,000,000
shares were outstanding as of June 30, 1999. 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 the Company, the holders of shares of common stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion rights or redemption or sinking
fund provisions with respect to the common stock. All of the outstanding shares
of common stock are fully paid and non-assessable. The Company's Certificate of
Incorporation authorizes the Board of Directors to effect a forward or reverse
stock split without stockholder approval. Company stockholders have approved a
forward stock split and a name change, with the terms of the forward stock split
and the new name to be decided by the Board of Directors.
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of preferred stock, $.001 par value, of which no shares are
issued and outstanding. The Company currently has no plans to issue any
preferred stock. The Company'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 such series. The preferred stock, if and when issued, may carry rights
superior to those of common stock, however, no preferred stock may be issued
with rights equal or senior to the preferred stock without the consent of a
majority of the holders of preferred stock.
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The Company 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 the
Company's Certificate 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 certain 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 the Company's common stock or any other series of preferred stock
which the Company may issue. The Board of Directors does not have any specific
plan for the issuance of preferred stock at the present time and does not intend
to issue any preferred stock, except on terms which it deems to be in the best
interest of the Company and its shareholders.
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 the Company. Further, certain provisions of Delaware law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. While such provisions are intended to enable the Board of Directors to
maximize stockholder value, they may have the effect of discouraging takeovers
which could be in the best interest of certain stockholders. There is no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future.
Shares Eligible for Future Sale
Of the outstanding shares of the Company, all but 200,000 shares are
subject to resale restrictions and, unless registered under the Securities Act
of 1933 (the "Act") or exempted under another provision of the Act, will be
ineligible for sale in the public market. Sales may be made after one year from
their acquisition based upon Rule 144.
In general, under Rule 144 as currently in effect a person (or persons
whose shares are aggregated) who has beneficially owned shares privately
acquired or indirectly from the Company or from an Affiliate, for at least one
year, or who is an Affiliate, is entitled to sell within any three-month period
a number of such shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock (approximately 4,000 shares) or
the average weekly trading volume in the Company's Common Stock during the four
calendar weeks immediately preceding such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
at any time during the 90 days preceding a sale, and who has beneficially owned
shares for at least one year, is entitled to sell all such shares under Rule 144
without regard to the volume limitations, current public information
requirements, manner of sale provisions, or notice requirements.
Sales of substantial amounts of the Common Stock of the Company in the
public market could adversely affect prevailing market prices.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholders Matters
(a) Market Information
The Company's Common Stock is not currently trading and is not
expected to trade in the foreseeable future.
10
(b) Holders
As of June 30, 1999, there were approximately 111 holders of
Company common stock.
(c) Dividends
The Company has not paid any dividends on its common stock.
The Company currently intends to retain any earnings for use in its business,
and therefore does not anticipate paying cash dividends in the foreseeable
future.
Item 2. Legal Proceedings
Not applicable.
Item 3. Changes in and Disagreements with Accountants
Not Applicable.
Item 4. Recent Sales of Unregistered Securities
There have been no issuances of securities for the past three years.
Item 5. Indemnification of Directors and Officers
The Company has adopted provisions in its certificate 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 the Company's Certificate of
Incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to the Company 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 the Company 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 the Company 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 the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that may result in a claim for indemnification by any director or
officer.
PART F/S
The following financial statements are included herein:
Independent Auditors' Report
Balance Sheet at June 30, 1999
Statement of Operations for the period inception (April 20, 1994) to
June 30, 1999 and the two years ended June 30, 1999
Statement of Stockholders' Equity
Statement of Cash Flows for the period inception (April 20, 1994) to
June 30, 1999 and the two years ended June 30, 1999
Notes to Financial Statements
11
PART III
Item 1. Index to Exhibits.
The following exhibits required by Part III of Form 1-A are
filed herewith:
Exhibit No. Document Description
2. Charter and Bylaws
2.1. Articles of Incorporation(1)
2.2 Bylaws(1)
6. Material Contracts
6.1. 1994 Stock Option Plan(1)
(1) Filed herewith
12
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: August 11, 1999 REXADON CORPORATION
By:
Jehu Hand
President
REXADON CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1999 AND 1998
AND
INDEPENDENT AUDITORS' REPORT
REXADON CORPORATION
(A Development Stage Company)
Table of Contents
Independent Auditors' Report 1
Financial Statements
Statements of Financial Position 2
Statements of Operations 3
Statement of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Rexadon Corporation
We have audited the statements of financial position of Rexadon Corporation ( a
development stage company) as of June 30, 1999 and 1998, and the related
statements of operations,
changes in stockholders'
equity and cash flows for the years then ended and cumulative for the period
April 20, 1994 (date of inception) through June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our 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
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rexadon Corporation (a
development stage company) as of June 30, 1999 and 1998, and the results of its
operations, changes in stockholders' equity and cash flows for the period April
20, 1994 (date of inception) through June 30, 1999, in conformity with generally
accepted accounting principles.
THURMAN SHAW & CO. L
Bountiful, Utah
July 1, 1999
1
REXADON CORPORATION
(A Development Stage Company)
Statements of Financial Position
June 30, 1999 and 1998
1999 1998
------------- ---------
ASSETS
Current assets-cash $ - $ -
------------- -----------
Other assets
Organization costs, net of accumulated
amortization of $1,015 and $858 - 157
------------- --------------
Total assets $ - $ 157
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 108 $ -
Accounts payable - related party 993 468
------------- --------------
Total current liabilities 1,101 468
------------- --------------
Stockholders' 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
Additional paid-in capital 15 15
Accumulated deficit during the development stage (2,116) (1,326)
------------- --------------
Total stockholders' equity (1,101) (311)
------------- --------------
Total liabilities and stockholders' equity $ - $ 157
============= ==============
See accompanying notes to financial statements
2
REXADON CORPORATION
(A Development Stage Company)
Statements of Operations
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
-------------- ------------- ---------
Revenues $ - $ - $ -
-------------- ------------- -----------
Operating expenses
General and administrative 633 108 1,101
Amortization 157 204 1,015
-------------- ------------- --------------
Total operating expenses 790 312 2,116
-------------- ------------- --------------
Net (loss) $ (790) $ (312) $ (2,116)
============== ============= ==============
Net (loss) per share $ - $ - $ -
============== ============= ===========
Weighted average number of
shares outstanding 1,000,000 1,000,000 1,000,000
============== ============= ==============
See accompanying notes to financial statements
3
REXADON CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From Inception (April 20, 1994) Through June 30, 1999
Accumulated
Deficit
Common StockAdditional During the
Paid-In Development
Shares Amount Capital Stage Total
Issuance of common stock
for cash, April 20, 1994 1,000,000 $ 1,000 $ 15 $ - $ 1,015
Net (loss) - - - (42) (42)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1994 1,000,000 1,000 15 (42) 973
Net (loss) - - - (338) (338)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1995 1,000,000 1,000 15 (380) 635
Net (loss) - - - (320) (320)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1996 1,000,000 1,000 15 (700) 315
Net (loss) - - - (314) (314)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1997 1,000,000 1,000 15 (1,014) 1
Net (loss) - - - (312) (312)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1998 1,000,000 1,000 15 (1,326) (311)
Net (loss) - - - (790) (790)
------------- -------------- ------------- -------------- -------------
Balances at June 30, 1999 1,000,000 $ 1,000 $ 15 $ (2,116) $ (1,101)
============= ============== ============= ============== =============
See accompanying notes to financial statements
4
REXADON CORPORATION
(A Development Stage Company)
Statements of Cash Flows
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
-------------- ------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (790) $ (312) $ (2,116)
Add item not requiring the use
of cash - amortization 157 204 1,015
Increase in accounts payable 633 108 1,101
-------------- ------------- --------------
Net cash flows from operating activities - - -
-------------- ------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs - - (1,015)
-------------- ------------- --------------
Net cash flows from investing activities - - (1,015)
-------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - 1,015
-------------- ------------- --------------
Net cash flows from financing activities - - 1,015
-------------- ------------- --------------
Net increase (decrease) in cash - - -
Cash balance at beginning of period - - -
-------------- ------------- -----------
Cash balance at end of period $ - $ - $ -
============== ============= ===========
See accompanying notes to financial statements
5
REXADON CORPORATION
(A Development Stage Company)
Notes to Financial Statements
Years Ended June 30, 1999 and 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware
on April 20, 1994, for the
purpose of seeking out business opportunities, including acquisitions.
The Company is in the
development stage and will be very dependent on the skills, talents,
and abilities of management to
successfully implement its business plan. Due to the Company's lack of
capital, it is likely that the
Company will not be able to compete with larger and more experienced
entities for business
opportunities which are lower risk and are more attractive for such
entities. Business opportunities
in which the Company may participate will likely be highly risky and
speculative. Since inception,
the Company's activities have been limited to organizational matters.
Organizational costs are
amortized on a straight-line basis over five years.
2. CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less
to be cash equivalents.
3. RELATED PARTY TRANSACTIONS
The Company currently receives the use of office space free of charge
from an officer of the
Company. The fair market value of the office space in the same
geographic region is $20 per month.
4. INCOME TAXES
The fiscal year end of the Company is June 30th and an income tax
return has not been filed.
However, if an income tax return had been filed, the Company would
have a net operating loss carry
forward of $2,116 that would begin expiring in the year 2009.
5. STOCK OPTION PLAN
The Company has stock option plans for directors, officers, employees,
advisors, and employees of
companies that do business with the Company, which provide for
non-qualified and qualified stock
options. The Stock Option Committee of the Board determines the option
price which cannot be less
than the fair market value at the date of the grant or 110% of the
fair market value if the Optionee
holds 10% or more of the Company's common stock. The price per share
of shares subject to a Non-
Qualified Option shall not be less than 85% of the fair market value
at the date of the grant. Options
generally expire either three months after termination of employment,
or ten years after date of grant
(five years if the optionee holds 10% or more of the Company's common
stock at the time of grant).
No options have been granted under the plan.
6