AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 14, 2003
REGISTRATION NO. 333-100431
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment 4 to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CAPITAL TECH, INC.
(Exact name of registrant as specified in its charter)
Colorado ###-##-####
(State of (Primary standard industrial (I.R.S. employer
Incorporation) classification code number) identification number)
8200 South Quebec Street, A-3 #125
Centennial, Colorado 80112
720-529-9293
(Address and telephone number of Registrant's
principal executive offices)
8200 South Quebec, A-3 #125
Centennial, Colorado 80112
720-529-9293
(Name, address, and telephone number of Agent for Service of Process)
Copies to:
Jody M. Walker, Esq.
7841 South Garfield Way
Littleton, CO 80122
(303) 850-7637
(303) 220-9902 - facsimile
Approximate Date of Commencement of Proposed Sale to the Public:
Effective date of this Registration Statement
If any of 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 1993, check the following box [x]
CALCULATION OF REGISTRATION FEE
Title of Each Class Amount of
Securities to be Shares to be Valuation Aggregate Registration
Registered Registered Per Share Valuation Fee
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Common Shares 2,000,000 $.25 $500,000 $250.00
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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
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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CAPITAL TECH, INC.
2,000,000 Common Shares
at $.25 per Common Share
There is no minimum offering amount or minimum investment amount.
We are a blank check company.
The common shares are being offered on a self underwritten basis by
Gary Rothwell and Richard Schreck, officers and directors of Capital
Tech.
This is our initial public offering and no public market current exists
for our securities. We have not applied to be listed on any trading
market or exchange.
The offering will terminate on December 31, 2004.
An investment in our securities involves high risk. Consider carefully
the risk factors beginning on page 8 in the prospectus.
Per
Common Share Total
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Public Price $.25 $500,000
Proceeds to Capital Tech $ .25 $500,000
Up to a 10% commissions will only be paid if a registered broker-dealer
sells our common shares.
Neither the Securities and Exchange Commission, nor any state
securities commission has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
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Summary of the Offering 5
Risk Factors 7
Extremely minority interest by new investors
We have no operating history
Our securities have no current market
We have no funds, management is not required to spend
any minimum amount of time on company business
You will not have access to your funds
There is no minimum offering amount
There is a disparity between the price paid by Ashley
Martinez and the offering price
Forward Looking Statements 8
Capital Tech 9
Use of Proceeds 13
Dilution 14
Plan of Operation 14
Market for Common Equity and
Related Stockholder Matters 18
Determination of Offering Price 18
Plan of Distribution 19
Management 20
Principal Shareholders 22
Indemnification 23
Certain Transactions 24
Description of Securities 24
Legal Matters 25
Reports 25
Financial Statements 27
5
Summary Of The Offering
Corporate History Capital Tech was originally incorporated under the
name Capital Tech.com, Inc. on March 28, 2000 under the laws of the
State of Colorado to provide consulting services that advise and
support Internet-related enterprises. On January 11, 2002, the name
of the corporation was changed to Capital Tech, Inc.
Capital Tech, Inc.'s principal executive and administrative offices are
located at 8200 S. Quebec Street, A-3, #125, Centennial, Colorado
80112. These offices consist of 250 square feet and are provided free
of charge by Gary Rothwell, an officer and director of Capital Tech.
Operations. We are deemed to be a blank check company subject to Rule
419. We are a development stage company. We may merge, make an
exchange of capital stock asset acquisition or other similar business
combination with an operating or development stage business.
We will not engage in any substantive commercial business immediately
following this offering and for an indefinite period of time following
this offering.
Outstanding
Securities. 2,090,000 common shares
The Offering. Up to 2,000,000 common shares
Offering termination. December 31, 2004
Arbitrary Offering Price. The aggregate offering price and number of
the common shares to be offered were arbitrarily determined by Capital
Tech.
Plan of Distribution. Richard Schreck and Gary Rothwell, our officers
and directors, are offering the common shares on a self-underwritten
basis.
Public Market. There is no public market for the common shares.
Use of Proceeds. Only 10% of the amount raised will not be required
to be escrowed. Capital Tech shall use the amounts raised as follows:
- Expenses relating to evaluation
of acquisition candidates 54% of amount raised
- Expenses relating to SEC reporting 30% of amount raised
- Offering expenses 16% of amount raised
Capital Tech will use the net proceeds of the offering not escrowed
over the next eighteen months.
Rule 419
Offering We are a blank check company. A blank check company is a
development stage company that has no specific business plan or purpose
or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity
or person; and is issuing penny stock. Generally, the term penny
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stock refers to a stock with a market price of less than $5.00 per
share. The offering is required to comply with the provisions of Rule
419 of the Securities Act of 1933
Rule 419 requires that we deposit all offering proceeds into an escrow
account, after deduction of cash paid for commissions, underwriting
expenses and dealer allowances, if any and amounts permitted to be
released to Capital Tech, provided that no deduction may be made for
underwriting commissions, underwriting expenses or dealer allowances
payable to an affiliate of Capital Tech and all securities issued in
connection with the offering into an escrow account until
- we execute an agreement for an acquisition;
- we file a post effective amendment to this registration
statement that
- discloses the information specified by the applicable
registration statement form and Industry Guides, including financial
statements of the registrant and the company acquired or to be acquired
and pro forma financial information required by the form and applicable
rules and regulations;
- discloses the results of the initial offering; and
- discloses the terms of the offering.
- within 5 days of the effective date of the registration
statement, we provide a copy of the prospectus to purchasers
- each purchaser shall have no fewer than 20 business days and nor
more than 45 business days from the effective date of the post-
effective amendment to notify Capital Tech that the purchase elects to
remain an investor. If Capital Tech has not received this written
notification by the 45th business day following the effective date of
the post-effective amendment, funds and interest or dividends, if any,
held in the escrow account shall be sent by first class mail or other
equally prompt means to the purchaser within five business days.;
- an acquisition is consummated within an 18-month time period;
and
- the value of the business or net assets acquired must equal 80%
of the maximum offering amount ($400,000); or
if an acquisition is not consummated in the 18-month time period, we
will return the funds held in the escrow account to you by first class
mail or equally prompt means within five business days following that
date.
Under Rule 419, Capital Tech may receive up to 10 percent of the
proceeds remaining after payment of underwriting commissions,
underwriting expenses and dealer allowances, exclusive of interest or
dividends or dividends, as we deposit proceeds into the escrow account.
Capital Tech intends to withhold 10 percent of the proceeds to assist
in finding an acquisition candidate, to pay a portion of the offering
expenses and to remain in compliance with the SEC filing requirements.
There are no plans, arrangements or understandings, preliminary or
otherwise, to merge or acquire the asets or business of an affiliate or
associate of any officer, director or promoter of Capital Tech.
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No Commitment to purchase Common Shares. No commitment by anyone
exists to purchase any of the common shares we are offering.
Risk Factors
1. Our principal shareholder, Ashley Martinez will own approximately
51% of the common shares after the offering. You will have an
extremely minority interest in Capital Tech.
There are currently 2,130,000 common shares outstanding. Ms. Martinez
owns 2,090,000 of those common shares or 98% of the total outstanding
common shares. Assuming we sell all of the 2,000,000 common shares,
Ashley Martinez will still own 50.61% of the common shares. You will
have an extreme minority interest in Capital Tech and will not be able
to influence the election of directors or other corporate matters.
2. We have no operating history and will not pursue any operations
until we locate a merger or acquisition candidate. You may lose your
entire investment.
Since our incorporation, we have not received any revenues. To date,
we have an accumulated deficit of $(2,423). We currently have no
working capital and we are dependent on advances from current officers
and directors to locate a merger or acquisition candidate and
consummate a merger or acquisition. Even if we do locate a merger or
acquisition candidate, we may never become profitable and you may lose
your entire investment.
3. Our securities have no current trading market and we cannot make a
market in our securities until we have consummated a merger or
acquisition, which can take up to 18 months, if at all. You will not
be able to liquidate your investment in the event of an emergency or
for any other reason unless an acquisition has occurred and an active
trading market has developed.
We do not have a public market for our common shares. Many states have
enacted statutes, rules and regulations limiting the sale of securities
of blank check companies in their jurisdictions. We cannot undertake
any efforts to cause a market to develop in our securities until we
consummate a merger or acquisition, which can take up to 18 months, if
at all. We cannot assure you that a public market will ever develop
even if we successfully locate a merger or acquisition candidate. You
will not be able to liquidate your investment in the event of an
emergency or for any other reason unless an acquisition has occurred.
4. If we cannot find a suitable merger or acquisition candidate, we
may not be able to commence operations and we will have to return your
investment.
We have no funds, management is not required to spend any minimum
amount of time on company business and our management decisions will
likely make decisions without detailed feasibility studies, independent
analysis or market surveys. We have not entered into any current
negotiations regarding an acquisition or merger. Even if we locate a
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suitable candidate, we may not be able to successfully commence
operations due to the other costs involved, such as costs involving
filing a post effective amendment, etc.
5. You may not have access to your funds after effectiveness of the
registration statement for up to 18 months.
No transfer or other disposition of the escrowed securities can be
permitted except in identified instances. For 18 months from the
effective date of the registration statement, you may not have access
to your funds. If a consummated acquisition has not occurred by a
date 18 months after the effective date of the initial registration
statement, the funds held in the escrow account will be returned within
five business days following that date.
6. There is no minimum offering amount. We may not have sufficient
funds to locate an acquisition candidate and you may lose your entire
investment.
We may not sell enough of the offering to obtain sufficient funds to
conduct any search for an acquisition candidate. If we are unable to
consummate an acquisition within the 18-month time frame, you will lose
up to 20% of your investment. The 20% that may be lost consists of up
to a 10% commission that may have been paid to your broker and the 10%
of the proceeds that will be withheld by Capital Tech. Even if we do
locate an acquisition candidate, we may never be profitable and you
could lose your entire investment.
7. There is a disparity in the price paid by Ashley Martinez and the
offering price. You will experience immediate dilution of your
investment.
Our principal shareholder, Ashley Martinez purchased common shares in
Capital Tech from Advanced Funding, an affiliate for $.001 compared to
the offering price of $.25. Immediately after the offering, the book
value per common share will be $.21 or 84% of your investment if we
raise $100,000 and $.14 or 56% if we raise the entire offering amount.
Forward-Looking Statements
The statements contained in this prospectus that are not historical
fact are forward-looking statements which can be identified by the use
of forward-looking terminology such as "believes," "expects," "may,"
- - - - "should," or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. We have made the
forward-looking statements with management's best estimates prepared in
good faith.
Because of the number and range of the assumptions underlying our
projections and forward-looking statements, many of which are effected
by significant uncertainties and contingencies that are beyond our
9
reasonable control, some of the assumptions inevitably will not
materialize and unanticipated events and circumstances may occur
subsequent to the date of this prospectus.
These forward-looking statements are based on current expectations, and
we will not update this information other than required by law.
Therefore, the actual experience of Capital Tech, and results achieved
during the period covered by any particular projections and other
forward-looking statements, should not be regarded as a representation
by Capital Tech, or any other person, that we will realize these
estimates and projections, and actual results may vary materially. We
cannot assure you that any of these expectations will be realized or
that any of the forward-looking statements contained herein will prove
to be accurate.
Capital Tech
Capital Tech's principal executive and administrative offices are
located at 8200 S. Quebec Street, A-3, #125, Centennial, Colorado
80112. These offices consist of 250 square feet and are provided free
of charge by Gary Rothwell, an officer and director of Capital Tech.
We are deemed to be a blank check company subject to Rule 419.
Although Capital Tech did not receive any material revenues, Capital
Tech provided consulting services that advise and support Internet-
related enterprises. We assisted in the reorganization of Internet-
related enterprises that have previously allocated funds for
development of technologies We are not currently affiliated with any
of these companies. Capital Tech has no employees and owns no real
estate. We do not intend to perform any further operations until a
merger or acquisition candidate is locates and a merger or acquisition
consummated. Capital Tech can be defined as a "blank check company"
whose sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity.
- - - - Capital Tech intends to seek to facilitate the eventual creation
of a public trading market in its outstanding securities. Capital
Tech's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses - - -.
The acquisition of a business opportunity may be made by purchase,
merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership.
Capital Tech has very limited capital, and it is unlikely that Capital
Tech will be able to take advantage of more than one such business
opportunity.
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Capital Tech intends to seek opportunities demonstrating the potential
of long-term growth as opposed to short-term earnings. At the present
time Capital Tech has not identified any business opportunity that it
plans to pursue, nor has Capital Tech reached any agreement or
definitive understanding with any person concerning an acquisition.
Our officers and directors have not previously been involved in
transactions involving a merger between an established company and a
"blank check company", but do have a number of contacts within the
field of corporate finance. As a result, they have had preliminary
contacts with representatives of numerous companies concerning the
general possibility of a merger or acquisition by a "blank check
company". However, none of these preliminary contacts or discussions
involved the possibility of a merger or acquisition transaction with
Capital Tech.
We anticipate that they will contact broker-dealers and other persons
with whom they are acquainted who are involved in corporate finance
matters to advise them of our existence and to determine if any
companies or businesses they represent have an interest in considering
a merger or acquisition with Capital Tech. Given the lack of working
capital, we will not be able to compensate these contacts. Any
finder's fees would have to be paid by the company we acquire, if at
all. As a result, our ability to locate a merger candidate may be
limited in scope.
No assurance can be given that Capital Tech will be successful in
finding or acquiring a desirable business opportunity, given the
limited funds that are expected to be available for acquisitions, or
that any acquisition that occurs will be on terms that are favorable to
Capital Tech or its stockholders.
Our search will be directed toward small and medium-sized enterprises
which have a desire to become public corporations and which are able to
satisfy, or anticipate in the reasonably near future being able to
satisfy, the minimum asset requirements in order to qualify shares for
trading on a stock exchange
Capital Tech anticipates that the business opportunities presented to
it will
- be recently organized with no operating history, or a history of
losses attributable to under-capitalization or other factors;
- be in need of funds to develop a new product or service or to
expand into a new market;
- be relying upon an untested product or marketing any business,
to the extent of its limited resources. This includes industries such
as service, finance, natural resources, manufacturing, high technology,
product development, medical, communications and others.
Our discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities,
economic conditions, and other factors. As a consequence of this
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registration of its securities, any entity, which has an interest in
being acquired by, or merging into Capital Tech, is expected to be an
entity that desires to become a public company and establish a public
trading market for its securities.
In connection with such a merger or acquisition, it is highly likely
that an amount of stock constituting control of Capital Tech would be
issued by Capital Tech or purchased from the current principal
shareholders of Capital Tech by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to result in substantial gains to them relative to their
purchase price for such stock. In Capital Tech's judgment, none of its
officers and directors would thereby become an "underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933, as amended.
The sale of a controlling interest by certain principal shareholders of
Capital Tech could occur at a time when the other shareholders of
Capital Tech remain subject to restrictions on the transfer of their
shares.
Depending upon the nature of the transaction, the current officers and
directors of Capital Tech may resign their management positions with
Capital Tech in connection with Capital Tech's acquisition of a
business opportunity.
In the event of such a resignation, Capital Tech's current management
would not have any control over the conduct of Capital Tech's business
following Capital Tech's combination with a business opportunity. We
anticipate that business opportunities will come to Capital Tech's
attention from various sources, including our officer and director, our
other stockholders, professional advisors such as attorneys and
accountants, securities broker-dealers, venture capitalists, members of
the financial community, and others who may present unsolicited
proposals.
Investment Company Act and Other Regulation
Capital Tech may participate in a business opportunity by purchasing,
trading or selling the securities of such business. Capital Tech does
not, however, intend to engage primarily in such activities.
Specifically, Capital Tech intends to conduct its activities so as to
avoid being classified as an investment company under the Investment
Company Act of 1940, and therefore to avoid application of the costly
and restrictive registration and other provisions of the Investment
Act, and the regulations promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
investment company, and it excludes any entity that does not engage
primarily in the business of investing, reinvesting or trading in
securities, or that does not engage in the business of investing,
owning, holding or trading investment securities defined as all
12
securities other than government securities or securities of majority-
owned subsidiaries the value of which exceeds 40% of the value of its
total assets excluding government securities, cash or cash items.
Capital Tech intends to implement its business plan in a manner that
will result in the availability of this exception from the definition
of investment company. As a result, Capital Tech's participation in
a business or opportunity through the purchase and sale of investment
securities will be limited.
Capital Tech's plan of business may involve changes in our capital
structure, management, control and business, especially if we
consummates a reorganization as discussed above. Each of these areas
is regulated by the Investment Act, in order to protect purchasers of
investment company securities. Since Capital Tech will not register as
an investment company, stockholders will not be afforded these
protections.
Any securities which Capital Tech might acquire in exchange for our
common stock will be restricted securities within the meaning of the
Securities Act of 1933. If Capital Tech elects to resell such
securities, such sale cannot proceed unless a registration statement
has been declared effective by the Securities and Exchange Commission
or an exemption from registration is available. Section 4(1) of the
Act, which exempts sales of securities not involving a distribution,
would in all likelihood be available to permit a private sale.
Although the plan of operation does not contemplate resale of
securities acquired, if such a sale were to be necessary, Capital Tech
would be required to comply with the provisions of the Act to effect
such resale. An acquisition made by Capital Tech may be in an industry
that is regulated or licensed by federal, state or local authorities.
Compliance with such regulations can be expected to be a time-consuming
and expensive process.
Competition
Capital Tech expects to encounter substantial competition in its
efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than Capital Tech and will therefore be in a
better position than Capital Tech to obtain access to attractive
business opportunities. Capital Tech also will experience competition
from other public blind pool companies, many of which may have more
funds available than does Capital Tech.
Employees
Capital Tech is a development stage company and currently has no
employees. Management of Capital Tech expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a need
13
to engage any full-time employees so long as it is seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision whether
or not to acquire or participate in specific business opportunities.
Although there is no current plan with respect to its nature or amount,
we may pay or accrue remuneration for the benefit of, Capital Tech's
officers prior to, or at the same time as the completion of a business
acquisition
Use of Proceeds
The proceeds not in escrow are to be utilized over an eighteen-month
period.
$500,000 $100,000
Raised Raised
---------- --------
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Gross Proceeds $500,000 $100,000
Amount immediately available
to Capital Tech $ 50,000 $ 10,000
Expenses relating to
Evaluation of acquisition
Candidates 26,822 5,000
Expenses relating to
SEC reporting 15,000 2,000
Offering expenses 8,178 3,000
--------- --------
Proceeds used
before acquisition 50,000 10,000
--------- --------
Proceeds to be escrowed $450,000 $ 90,000
If $100,000 is raised, the officers and directors have orally agreed to
pay the $5,178 in offering expenses remaining after using the $3,000
available to Capital Tech.
If less than $100,000 is raised, our officers and directors have orally
agreed to provide the funds necessary to pay the expenses of the
offering of $8,178 and attempt to locate an acquisition candidate.
Any amounts available for expenses immediately will be used to locate
an acquisition candidate.
The officers and directors have verbally agreed to provide funds to
cover the offering expenses, SEC reporting requirements and a minimal
search for an acquisition candidate not covered by the available funds
through a no interest loan to Capital Tech, repayable only if an
acquisition is made.
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The proceeds not held in the escrow account after payment of the
offering expenses will be used in the following order of priority.
- to pay for business, legal and accounting due diligence expenses
incurred in connection with evaluation of prospective business
combinations, and
- for general and administrative expenses, including legal and
accounting fees and administrative support expenses incurred in
connection with our reporting obligations with the SEC.
No portion of the proceeds will be paid to officers, directors, their
affiliates or associates for expenses of the offering. No portion of
the proceeds not held in the escrow account will be used to acquire
assets or finance the acquisitions of other businesses.
Dilution
Persons purchasing common shares in this offering will suffer a
substantial and immediate dilution to the net tangible book value of
their common shares below the public offering price.
The following table illustrates the per common share dilution as of the
date of this prospectus, which may be experienced by investors upon
reaching the levels as described below.
Assuming $100,000 raised
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Offering price $.25
Net tangible book value per common share before offering $0.00
Increase per Share attributable to investors $0.04
-----
Pro Forma net tangible book value per common
share after offering $.04
----
Dilution to investors $.21
Dilution as a percent of offering price 84%
Assuming $500,000 raised
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Offering price $.25
Net tangible book value per common share before offering $0.00
Increase per Share attributable to investors $0.11
-----
Pro Forma net tangible book value per common
share after offering $.11
-----
Dilution to investors $.14
Dilution as a percent of offering price 56%
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Further Dilution. We may issue additional restricted common shares
pursuant to private business transactions. Any sales under Rule 144
after the applicable holding period may have a depressive effect upon
the market price of our common shares and investors in this offering
upon conversion.
Plan of Operation
Capital and Source of Liquidity. All of the initial working capital
has been obtained from the sale of common shares to the current
officers, directors and principal shareholder and loans of $3,659 from
Advanced Funding, a prior shareholder no longer affiliated with Capital
Tech. Advanced Funding locates and identifies various funding sources
for its clients wishing to obtain loans against its receivables, obtain
short term, interim capital or venture capital, etc. This balance to
Advanced Funding was repaid in full during the year ended December 31,
2001.
During October 2001. Capital Tech received a $22,000 cash advance from
Advanced and repaid expenses Advanced Funding paid in favor of Capital
Tech relating to an offering pursuant to Rule 504 of Regulation D
amounting to $15,000.
During the year ended December 31, 2002, Advanced Funding paid expenses
in behalf of Capital Tech amounting to $3,500 and Capital Tech repaid
$1,000 in cash to Advanced Funding. The net balance due to Advanced
Funding at December 31, 2002 amounted to $9,500.
For the six months ended June 30, 2003 and 2002, Capital Tech did not
pursue any investing activities.
For the six months ended June 30, 2003 and 2002 and the years ended
December 31, 2002 and 2001, Capital Tech did not pursue any investing
activities.
For the six months ended June 30, 2003, Capital Tech received a loan
from a related party of $2,000 resulting in net cash provided by
financing activities of $2,000.
For the six months ended June 30, 2002 and for the year ended December
31, Capital Tech did not pursue any financing activities.
For the year ended December 31, 2002, Capital Tech repaid prior related
party loans of $1,000 resulting in net cash used in financing
activities of $1,000.
For the year ended December 31, 2001, Capital Tech received loans from
Advanced Funding, then a related party, of $22,000 and repaid the
related party $18,634 resulting in net cash provided by financing
activities. As a result, net cash provided by financing activities for
the year ended December 31, 2001 was $3,366.
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We currently have no working capital and will rely on loans from our
officers and directors to continue operations until completion of the
offering. Capital Tech requires these additional loans and proceeds
from this offering to expand our current and strategic business plans.
On a long-term basis, liquidity is dependent on commencement of
operation and receipt of revenues, additional infusions of capital, and
debt financing. Capital Tech believes that related party loans and
proceeds from this offering in the short term will allow Capital Tech
to increase its marketing and sales efforts and thereafter result in
revenue and greater liquidity in the long term. However, there can be
no assurance that Capital Tech will be able to obtain additional equity
or debt financing in the future, if at all.
Results of Operations. For the six months ended June 30, 2003 and
2002, Capital Tech did not receive any revenues from operations.
For the six months ended June 30, 2003, Capital Tech had expenses of
$2,024 consisting of professional fees of $1,950 and other expenses of
$74.
For the six months ended June 30, 2002, Capital Tech had expenses of
$567 consisting of professional fees of $550 and other expenses of $17.
For the year ended December 31, 2002, Capital Tech did not receive any
revenues from operations and incurred expenses of $8,642 during that
period. The increase in professional fees to $8,019 relates to legal
and accounting fees for the preparation of this offering. Consulting
expense-related party decreased from $3,366 in 2001 to $250 in 2002 due
to a shift in the focus of operations. Other expenses were $373 for
the year ended December 31, 2002.
For the year ended December 31, 2001, Capital Tech did not receive any
revenues from operations and incurred expenses of $3,484 during that
period.
Expenses for the year ended December 31, 2001, Capital Tech had
consulting expense - related party of $3,366 and other expenses of
$118.
Plan of Operation. Capital Tech is in the development stage and has
not conducted any operations to date or received any operating
revenues. Capital Tech can satisfy our cash requirements in the next
24-36 months if we can successfully complete this offering or through
loans from our officers and directors.
For the current fiscal year, Capital Tech anticipates incurring a loss
as a result of expenses associated with registration under the
Securities Exchange Act of 1934, and expenses associated with locating
and evaluating acquisition candidates. Capital Techs anticipates that
until a business combination is completed with an acquisition
candidate, we will not generate revenues other than interest income,
and may continue to operate at a loss after completing a business
combination, depending upon the performance of the acquired business.
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Need for Additional Financing
The proceeds not held in the escrow account after payment of the
offering expenses will be used for the evaluation of acquisition
candidates, expenses relating to SEC reporting and offering expenses in
the following order of priority.
- to pay for business, legal and accounting due diligence expenses
incurred in connection with evaluation of prospective business
combinations.
The expenses relating evaluation of acquisition candidates will consist
of:
- telephone ($1,500)
- travel and lodging ($5,000)
- legal fees re: document review and preparation ($12,500)
- accounting fees ($6,000)
- other miscellaneous due diligence expenses ($1,822)
General and administrative expenses incurred in connection with our
reporting obligations with the SEC.
- legal ($7,500)
- accounting fees ($5,000)
- administrative support expenses ($2,500)
- for expenses related to the offering to nonaffiliates ($8,178)
If $100,000 is raised, the officers and directors have orally agreed to
pay the $6,178 in offering expenses remaining after using the $2,000
available to Capital Tech.
If less than $100,000 is raised, our officers and directors have orally
agreed to provide the funds necessary to pay the expenses of the
offering of $8,178 and attempts to locate an acquisition candidate.
Any amounts available for expenses immediately will be used to locate
an acquisition candidate.
The officers and directors have verbally agreed to provide funds to
cover the offering expenses, SEC reporting requirements and a minimal
search for an acquisition candidate not covered by the available funds
through a no interest loan to Capital Tech, repayable only if an
acquisition is made.
No portion of the proceeds will be paid to officers, directors, their
affiliates or associates for expenses of the offering.
Capital Techs believes that our existing capital will not be sufficient
to meet Capital Tech's cash needs, including the costs of compliance
with the continuing reporting requirements of the Securities Exchange
Act of 1934, as amended, for a period of approximately one year.
Accordingly, in the event Capital Tech is able to complete a business
combination during this period, it anticipates that our existing
capital will not be sufficient to allow us to accomplish the goal of
completing a business combination. Capital Tech will depend on
additional advances from stockholders.
18
We cannot assure you that the available funds will ultimately prove to
be adequate to allow it to complete a business combination, and once a
business combination is completed, Capital Tech's needs for additional
financing are likely to increase substantially. Management and other
stockholders have not made any commitments to provide additional. We
cannot assure you that any additional funds will be available to
Capital Tech to allow us to cover our expenses. Even if Capital
Tech's cash assets prove to be inadequate to meet Capital Tech's
operational needs, Capital Tech might seek to compensate providers of
services by issuances of stock in lieu of cash.
We do not expect to purchase or sell any significant equipment, engage
in product research or development and do not expect any significant
changes in the number of employees.
Market for Common Equity and
Related Stockholder Matters
At the present time, there is no market for our common shares.
We have three holders of record.
Since inception we have not paid any dividends. We intend to use any
profits for operations and do not intend to pay dividends.
If the trading price of our common stock is less than $5.00 per share,
trading in the common stock would also be subject to the requirements
of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers
who recommend low-priced securities to persons other than established
customers and accredited investors must satisfy special sales practice
requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the purchaser's
written consent prior to the transaction.
SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock", including the delivery, prior to
any penny stock transaction, of a disclosure schedule explaining the
penny stock market and its associated risks. These requirements
severely limit the liquidity of the common stock in the secondary
market because few broker or dealers are likely to undertake compliance
activities. Generally, the term penny stock refers to a stock with a
market price of less than $5.00 per share. A market in our stock may
never develop due to these restrictions.
Determination of Offering Price
The offering price of the common shares were arbitrarily determined by
Capital Tech without any consideration of the actual value of our
company or what the market might pay for our stock.
19
Plan of Distribution
Plan of Distribution. The common shares are being offered on a self
underwritten basis by Gary Rothwell and Richard Schreck, officers and
directors of Capital Tech. Although they are associated persons of us
as that term is defined in Rule 3a4-1 under the Exchange Act, they are
deemed not to be a broker for the following reasons:
- They are not subject to a statutory disqualification under the
Exchange Act at the time of their participation in the sale of our
securities.
- They will not be compensation for their participation in the
sale of our securities by the payment of commission or other
remuneration based either directly or indirectly on transactions in
securities.
- They are not an associated person of a broker or dealer at the
time of their participation in the sale of our securities.
As of the date of this prospectus, no broker has been retained by us
for the sale of securities being offered. In the event a broker who
may be deemed an underwriter is retained by us, an amendment to our
registration statement will be filed.
Management, principal shareholders or their affiliates may not acquire
common shares in the offering.
Rule 419 Requirements. SEC rules require that we deposit all offering
proceeds into an escrow account, after deduction of cash paid for
commissions, underwriting expenses and dealer allowances, if any and
amounts permitted to be released to Capital Tech, provided that no
deduction may be made for underwriting commissions, underwriting
expenses or dealer allowances payable to an affiliate of Capital Tech
and all securities issued in connection with the offering into an
escrow account until
- we execute an agreement for an acquisition;
- we file a post effective amendment to this registration
statement that
- discloses the information specified by the the applicable
registration statement form and Industry Guides, including financial
statements of the registrant and the company acquired or to be acquired
and pro forma financial information required by the form and applicable
rules and regulations;
- discloses the results of the initial offering; and
- discloses the terms of the offering.
- within 5 days of the effective date of the registration
statement, we provide a copy of the prospectus to purchasers
- each purchaser shall have no fewer than 20 business days and nor
more than 45 business days from the effective date of the post-
effective amendment to notify Capital Tech that the purchase elects to
remain an investor. If Capital Tech has not received this written
notification by the 45th business day following the effective date of
20
the post-effective amendment, funds and interest or dividends, if any,
held in the escrow account shall be sent by first class mail or other
equally prompt means to the purchaser within five business days.;
- an acquisition is consummated within an 18-month time period;
and
- the value of the business or net assets acquired must equal 80%
of the maximum offering amount ($400,000); or
if an acquisition is not consummated in the 18-month time period, we
will return the funds held in the escrow account to you by first class
mail or equally prompt means within five business days following that
date.
Escrow Account. Pursuant to Rule 419, Capital Tech has established an
escrow account at Arapahoe Bank & Trust, 7777 E. Arapahoe Road,
Centennial, Colorado 80112, 303-770-5100, an insured depository
institution. The deposit account records will provide that funds in
the escrow account are held for the benefit of the purchasers named and
the records of the escrow agent, maintained in good faith and in the
regular course of business, will show the name and interest of each
party to the account.
Funds held in escrow may be released to Capital Tech and securities may
be delivered to the purchaser identified on the deposited securities
only at the same time as or after:
- the escrow agent has received a signed representation from
Capital Tech, together with other evidence acceptable to the escrow
agent, that the requirements of Rule 419 as described above have been
met; and
- consummation of an acquisition meeting the requirements of Rule
419 as described above.
Offering Period. The offering period will commence on the date of this
prospectus and will terminate on December 31, 2004.
Management
Executive Officers and Directors
Our executive officers and directors and their business experience
follows:
Name Position Period Served
<s> <c> <c>
Richard Schreck, age 47 President/Treasurer/Director Inception to
present
Gary Rothwell, age 63 Vice President/Secretary June 2002
Director present
21
Resumes:
Richard Schreck. Mr. Schreck has been president, secretary-treasurer
and a director of Capital Tech since its inception. He is a real
estate broker with a wide variety of contacts and financial knowledge
in the real estate business. Since October 2000, he has been a vice
president for Fuller and Company, a real estate brokerage firm in
Denver, Colorado. Prior to that, he was associated with Grubb &
Ellis, a real estate broker firm from 1992 until he joined Fuller and
Company. From 1996 to 1999, he was also a director of Centennial Banc
Share Corp., a public mortgage company. Mr. Schreck obtained a
bachelor's degree in organizational behavior from Miami University in
1973. Mr. Schreck has not been involved with any other blank check
companies.
Gary Rothwell. Mr. Rothwell has been vice president, secretary and
director of Capital Tech since June 2002. Mr. Rothwell has been
secretary, treasurer and a director of Email Mortgage, Inc. (currently
Advanced Healthcare Technologies, Inc.) since its inception in March
2000 and remained a director of Advanced Healthcare Technologies, Inc.
since the change in control in September 2002 to present. Email
Mortgage provided lender direct pricing and convenience by facilitating
the mortgage process in matching the borrower with an appropriate
wholesale bank, plus gives the personal attention and service that
would be gotten from a mortgage broker. Mr. Rothwell has been
involved in various aspects of the home mortgage business for over 20
years. In 1977, he was the president and founder of G & E builders,
Inc., an enterprise focused on the building, marketing and sale of
custom homes. In 1983 he was issued a Series 7; general securities,
and a Series 24; general securities principals license.
In 1990, he became the sales manager for Yorkshire Real Estate. His
duties included the hiring and training of real estate agents,
advertising, public relations and real estate loan applications, with
follow through from origination to closing.
Mr. Rothwell has been the owner of Tiffany Real Estate since 1993.
Tiffany Real Estate is a full service real estate company dedicated to
providing customers with a complete program to fit their needs when
buying a home.
In 1997, Mr. Rothwell began working in the residential mortgage lending
business. He has worked with lenders such as:
- - Service Mortgage Corp
- - Total Mortgage Professionals
- - Mortgage Processing Services, and
- - Mortgage 2000
He has been president of Merit Mortgage Corp. since 1997. Mr.
Rothwell has not been involved with any other blank check companies.
Mr. Schreck and Mr. Rothwell will only be required work part time (20
hours per week) for Capital Tech.
22
Remuneration. To date, no compensation has been paid to the officers
of Capital Tech. Upon successful completion of the offering, we will
enter into written employment agreements with our current officers and
key employees yet to be named.
None of our officers and/or directors has received any compensation for
their respective services rendered unto us. They all have agreed to act
without compensation. As of the date of this registration statement,
we have no funds available to pay directors. Further, none of the
directors are accruing or will accrue any compensation pursuant to any
agreement with us.
Employee Incentive Stock Option Plan. The shareholders and the
directors, at their organizational meeting, adopted an employee
incentive stock option plan pursuant to the regulations of the Internal
Revenue Service. The plan provides for a pool of authorized, but
unissued common shares to be reserved for issuing to key executives,
employees and consultants pursuant to the plan. Up to 1,000,000
options may be granted. The board of directors plans to elect a
compensation committee to award the options from time to time.
Committee members may not be grantees while serving.
Principal Shareholders
The following sets forth the beneficial ownership of the common stock
of Capital Tech by each of Capital Tech's directors and executive
officers, and as a group. The beneficial owner has sole voting and
investment power with respect to the Securities indicated.
There are currently 2,130,000 common shares outstanding.
The following tabulates holdings of common shares of Capital Tech (on a
fully diluted basis) by each person who, at the date of this
prospectus, holds of record or is known by management to own
beneficially more than 5.0% of the common shares and, in addition, by
all directors and officers of Capital Tech individually and as a group.
Percentage of
Number & Class Common Shares
Name and Address of Shares Prior to offering After
offering
<s> <c> <c> <c>
Richard Schreck 20,000 .94% .48%
8200 S. Quebec Street
A-3, #125
Centennial CO 80112
Gary Rothwell 20,000 .94% .48%
8200 South Quebec Street,
A-3 #125
Centennial, Colorado 80112
23
All Directors & Officers
as a group (2 persons) 40,000 1.88% .96%
Ashley Martinez 2,090,000 98.12% 50.61%
115 East Main
Lawrence, Colorado 84632
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security, whether through a
contract, arrangement, understanding, relationship, or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned.
Ms. Martinez, Mr. Schreck, Mr. Rothwell, Jerry Burden, Advanced
Funding, Inc. and Ashley Martinez would be deemed to be promoters of
Capital Tech.
We do not know of any arrangements, including any pledge by any
personnel, which would result in a change of control of Capital Tech.
Indemnification
Our bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the
Securities Act of 1933. The Colorado Corporation Code allow a company
to indemnify its officers, directors, employees, and agents from any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances.
Indemnification may only occur if a determination has been made that
the officer, director, employee, or agent acted in good faith and in a
manner, which such person believed to be in the best interests of the
company. A determination may be made by the shareholders; by a majority
of the directors who were not parties to the action, suit, or
proceeding confirmed by opinion of independent legal counsel; or by
opinion of independent legal counsel in the event a quorum of directors
who were not a party to such action, suit, or proceeding does not
exist.
Provided the terms and conditions of these provisions under Colorado
law are met, officers, directors, employees, and agents of Capital Tech
may be indemnified against any cost, loss, or expense arising out of
any liability under the '33 Act. Insofar as indemnification for
liabilities arising under the '33 Act may be permitted to directors,
officers and controlling persons of Capital Tech. Capital Tech has
been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and is,
therefore, unenforceable.
24
Certain Transactions
Current officers, directors and promoters paid cash of $.001 per common
share
Richard Schreck 20,000 common shares
Gary Rothwell 20,000 common shares
Advanced Funding 2,090,000 common shares
Ashley Martinez purchased the 2,090,000 common shares from Advanced
Funding in January 2002 for $.001 per common share.
Richard Schreck, Gary Rothwell, Advanced Funding and Ashley Martinez
would be deemed to be promoters of Capital Tech, Inc.
Other than compensation amounts, if any, to be received by Richard
Schreck or Gary Rothwell as officers and directors, no assets, services
or other consideration are to be received by each promoter, directly or
indirectly from Capital Tech.
Additionally, other than the amounts paid for common shares described
above or services provided by Mr. Schreck and Mr. Rothwell as officers
and directors, no assets, services or other consideration have been
received or are to be received by Capital Tech.
Jerry Burden controls Advanced Funding an entity that has advanced
funds to us and has paid expenses on our behalf. Mr. Burden is not
affiliated with Capital Tech but Mr. Burden is the trustee of the
former majority shareholder of Advanced Healthcare Technologies,
Inc. (formerly Email Mortgage, Inc., an entity in which Gary
Rothwell is a director.
During the year ended December 31, 2000, Advanced Funding, Inc.
advanced $3,209 in cash to Capital Tech and paid expenses in behalf of
Capital Tech aggregating $450. The balance was repaid in full during
the year ended December 31, 2001.
During the year ended December 31, 2002, Advanced Funding, Inc. paid
expenses in behalf of Capital Tech amounting to $3,500 and Capital Tech
repaid $1,000 in cash to Advanced Funding, Inc. The net balance due to
the affiliate at December 31, 2002 amounted to $9,500.
During the six months ended June 30, 2003, Capital Tech received $2,000
from Advanced Funding, Inc. working capital purposes and had an
outstanding balance to Advanced Funding, Inc. of $11,500 at June 30,
2003.
We do not intend to enter into transactions with any other businesses
Mr. Burden is affiliated with. No amounts are to be paid to Mr.
Burden.
25
Description of Securities
Capital Tech is authorized to issue 100,000,000 common shares, $.001
par value per share and 10,000,000 preferred shares, $.001 par value
per share. As of the date hereof, there are 2,130,000 common shares
outstanding and no preferred shares outstanding.
Holders of common shares of Capital Tech are entitled to cast one vote
for each share held at all shareholders meetings for all purposes.
There are no cumulative voting rights. Upon liquidation or
dissolution, each outstanding common share will be entitled to share
equally in the assets of Capital Tech legally available for
distribution to shareholders after the payment of all debts and other
liabilities. Common shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or
purchase additional common shares in the event of a subsequent
offering. All outstanding common shares are, and the shares offered
hereby will be when issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the board
of directors to declare dividends out of any funds legally available
therefore. Capital Tech has not paid dividends to date and it is not
anticipated that any dividends will be paid in the foreseeable future.
The board of directors initially may follow a policy of retaining
earnings, if any, to finance the future growth of Capital Tech.
Accordingly, future dividends, if any, will depend upon our need for
working capital and its financial conditions at the time.
Preferred Stock. Capital Tech is authorized to issue 10,000,000
shares of preferred stock, par value of $.001.
Authorized stock may be issued from time to time without action by the
stockholders for such consideration as may be fixed from time to time
by the Board of Directors, and shares so issued, the consideration for
which have been paid or delivered, shall be deemed fully paid stock and
the holder of such shares shall not be liable for any further payment
thereon.
The capital stock of Capital Tech, after the amount of the subscription
price or par value has been paid in full shall be non-assessible.
There are not anti-takeover provisions that may have the affect of
delaying or preventing a change in control.
Transfer Agent. Corporate Stock Transfer located in Denver, Colorado
acts as the transfer agent for Capital Tech.
Legal Matters
All legal matters with respect to the issuance of the securities
offered hereby will be passed upon by the law firm of Jody M. Walker,
Littleton, Colorado.
26
There is no litigation pending or, to our knowledge, threatened to
which the property of Capital Tech is subject or to which Capital Tech
may be a party. No such proceedings are known to be contemplated by
governmental authorities or any other parties.
Reports to Security Holders.
Pursuant to the Rules and Regulations of the Securities and Exchange
Commission, we will provide our Investors with Annual Reports
containing audited financial statements, together with Quarterly
Reports containing unaudited financial statements and Interim Reports
containing information regarding relevant information about the
operations of Capital Tech.
The public may read and copy any materials we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.S., Washington, D.C.
20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
27
Capital Tech, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2003
(Unaudited)
ASSETS
------
Current assets: 2003
----------
Cash $ 156
----------
Total current assets 156
----------
$ 156
==========
STOCKHOLDERS' EQUITY
--------------------
Current liabilities:
Accounts payable $ 3,969
----------
Total current liabilities 3,969
Loans from related parties 11,500
Stockholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized, no shares
issued and outstanding -
Common stock, $.001 par value,
100,000,000 shares authorized, 2,110,000
shares issued and outstanding 2,110
Additional paid in capital 180
(Deficit) accumulated during
development stage (17,603)
----------
(15,313)
----------
$ 156
==========
See accompanying notes to financial statements.
28
Capital Tech, Inc.
(A Development Stage Company)
Statement of Operations
Six Months Ended June 30, 2003 and 2002
For the Period From Inception (March 28, 2000) to June 30, 2003
(Unaudited)
Period From
Six Months Ended Inception To
June 30, June 30,
2003 2002 2003
---------- ---------- ----------
<s> <c> <c> <c>
Operating expenses:
Professional fees $ 1,950 $ 550 $ 12,825
Consulting expense - related party - - 3,616
Web site design expense - related party - - 667
Other expenses 74 17 584
---------- ---------- ----------
2,024 567 17,691
---------- ---------- ----------
Other income and expense:
Interest income 2 6 88
---------- ---------- ----------
(Loss from operations) and net (loss) $ (2,022) $ (561) $ (17,603)
========== ========== ==========
Per share information:
Basic and diluted (loss) per common share $ (0.00) $ (0.00) $ (0.01)
========== ========== ==========
Weighted average shares outstanding 2,110,000 2,110,000 2,110,000
========== ========== ==========
See accompanying notes to financial statements.
29
Capital Tech, Inc.
(A Development Stage Company)
Statement of Cash Flows
Six Months Ended June 30, 2003 and 2002
For the Period From Inception (March 28, 2000) to June 30, 2003
(Unaudited)
Period From
Six Months Ended Inception To
June 30, June 30,
2003 2002 2003
---------- ---------- ----------
<s> <c> <c> <c>
Net income (loss) $ (2,022) $ (561) $ (17,603)
Adjustments to reconcile net income to net
cash provided by operating activities:
Expenses paid by related party - - 3,950
Changes in assets and liabilities:
Increase in accounts payable - 550 3,969
---------- ---------- ----------
Total adjustments - 550 7,919
---------- ---------- ----------
Net cash provided by (used in)
operating activities (2,022) (11) (9,684)
Cash flows from financing activities:
Common stock sold for cash - - 2,290
Loans from related party 2,000 - 27,209
Repayment of related party loans - (1,016) (19,659)
---------- ---------- ----------
Net cash provided by (used in)
financing activities 2,000 (1,016) 9,840
---------- ---------- ----------
Increase (decrease) in cash (22) (1,027) 156
Cash and cash equivalents,
beginning of period 178 2,336 -
---------- ---------- ----------
Cash and cash equivalents,
end of period $ 156 $ 1,309 $ 156
========== ========== ==========
See accompanying notes to financial statements.
30
Capital Tech, Inc.
Notes to Unaudited Financial Statements
June 30, 2003
Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions incorporated in
Regulation SB of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring adjustments and accruals) considered necessary for a
fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The
accompanying financial statements should be read in conjunction with the
Company's financial statements for the year ended December 31, 2002
included elsewhere herein.
Basic loss per share was computed using the weighted average number of
common shares outstanding.
During the six months ended June 30, 2003, the Company received $2,000
from a related party for working capital purposes and had an outstanding
balance to the related party of $11,500 at June 30, 2003.
31
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Capital Tech, Inc.
(A Development Stage Company)
We have audited the balance sheet of Capital Tech, Inc. as of December
31, 2002, and the related statements of operations, changes in
stockholders' equity, and cash flows for the two years then ended and
for the period from inception (March 28, 2000) to December 31, 2002.
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 auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and 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 Capital
Tech, Inc. as of December 31, 2002, and the results of its operations
and cash flows for the two years then ended and for the period from
inception (March 28, 2000) to December 31, 2002, in conformity with
generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Dillon, Colorado
May 20, 2003
32
Capital Tech, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 2002
ASSETS-
------
Current assets: 2002
----------
Cash $ 178
----------
Total current assets 178
----------
$ 178
==========
STOCKHOLDERS' EQUITY
--------------------
Current liabilities:
Accounts payable $ 3,969
----------
Total current liabilities 3,969
Loans from related parties 9,500
Stockholders' equity:-
Preferred stock, $.01 par value,
10,000,000 shares authorized, no shares-
issued and outstanding -
Common stock, $.001 par value,-
100,000,000 shares authorized, 2,110,000
shares issued and outstanding 2,110
Additional paid in capital 180
(Deficit) accumulated during development stage (15,582)
----------
(13,292)
----------
$ 178
==========
See accompanying notes to financial statements.
33
Capital Tech, Inc.
(A Development Stage Company)
Statement of Operations
Years Ended December 31, 2002 and 2001
For the Period From Inception (March 28, 2000) to December 31, 2002
Period From
Year Ended Inception To
December 31, December 31,
2002 2001 2002
---------- ---------- ----------
Operating expenses:
Professional fees $ 8,019 $ - $ 10,875
Consulting expense - related party 250 3,366 3,616
Web site design expense - related
party - - 667
Other expenses 373 118 510
---------- ---------- ----------
8,642 3,484 15,668
---------- ---------- ----------
Other income and expense:
Interest income 15 64 86
---------- ---------- ----------
(Loss from operations) and net
(loss) $ (8,627) $ (3,420) $ (15,582)
========== ========== ==========
Per share information:
Basic and diluted (loss) per
common share $ (0.00) $ (0.00) $ (0.01)
========== ========== ==========
Weighted average shares
outstanding 2,110,000 2,110,000 2,110,000
========== ========== ==========
See accompanying notes to financial statements.
34
Capital Tech, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period From Inception (March 28, 2000) to December 31, 2002
Deficit
Additional Accumulated
Common Stock Paid-in During Develop
ACTIVITY Shares Amount Capital -ment Stage Total
---------- -------- ---------- ---------- ----------
<s> <c> <c> <c> <c> <c>
Shares issued for cash
March 2000 @ $.001 2,090,000 $ 2,090 $ - $ - $ 2,090
March 2000 @ $.01 20,000 20 180 - 200
Capital contribution by
shareholder - - - - -
Net (loss) for the period
ended December 31, 2000 - - - (3,535) (3,535)
--------- -------- ---------- --------- ----------
Balance, December 31, 2000 2,110,000 2,110 180 (3,535) (1,245)
Net (loss) for the period
ended December 31, 2001 - - - (3,420) (3,420)
--------- -------- ---------- ---------- ----------
Balance, December 31, 2001 2,110,000 2,110 180 - (6,955) (4,665)
Net (loss) for the period
ended December 31, 2002 - - - (8,627) (8,627)
--------- -------- ---------- ---------- ----------
Balance, December 31, 2002 2,110,000 $ 2,110 $ 180 $ (15,582) $ (13,292)
========= ======== ========== ========== ==========
See accompanying notes to financial statements.
35
Capital Tech, Inc.
(A Development Stage Company)
Statement of Cash Flows
Years Ended December 31, 2002 and 2001
For the Period From Inception (March 28, 2000) to December 31, 2002
Period From
Year Ended Inception To
December 31, December 31,
2002 2001 2002
---------- ---------- ----------
Net income (loss) $ (8,627) $ (3,420) $ (15,581)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Expenses paid by related party 3,500 - 3,950
Changes in assets and liabilities:
Increase in accounts payable 3,969 - 3,969
---------- ---------- ----------
Total adjustments 7,469 - 7,919
---------- ---------- ----------
Net cash provided by (used in)-
operating activities (1,158) (3,420) (7,662)
Cash flows from financing activities:
Common stock sold for cash - - 2,290
Loans from related party- - 22,000 25,209
Repayment of related party loans (1,000) (18,634) (19,659)
---------- ---------- ----------
Net cash provided by (used in)
financing activities (1,000) 3,366 7,840
---------- ---------- ----------
Increase (decrease) in cash (2,158) (54) 178
Cash and cash equivalents,
beginning of period 2,336 2,390 -
---------- ---------- ----------
Cash and cash equivalents, end
of period $ 178 $ 2,336 $ 178
========== ========== ==========
See accompanying notes to financial statements.
36
Capital Tech, Inc.
(A Development Stage Company)
Statement of Cash Flows
Years Ended December 31, 2002 and 2001
For the Period From Inception (March 28, 2000) to December 31, 2002
Period From
Year Ended Inception To
December 31, December 31,
2001 2000 2001
---------- ---------- ----------
Supplemental cash flow information:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
See accompanying notes to financial statements.
37
Capital Tech, Inc.
Notes to Financial Statements
December 31, 2002
Note 1. Organization and Summary of Significant Accounting Policies.
The Company was incorporated in Colorado on March 28, 2000 and began
operations on May 11, 2000. The Company's activities to date have been
limited to organization and capital formation. The Company is a "blank
check company" and has not yet determined the nature of its business
activities. The Company has chosen December 31st as the end of its
fiscal year.
Revenue Recognition:
Revenue is recognized at the time the service is performed.
Loss per share:
Basic Earnings per Share ("EPS") is computed by dividing net income
available to common stockholders by the weighted average number of
common stock shares outstanding during the year. Diluted EPS is
computed by dividing net income available to common stockholders by the
weighted-average number of common stock shares outstanding during the
year plus potential dilutive instruments such as stock options and
warrants. The effect of stock options on diluted EPS is determined
through the application of the treasury stock method, whereby proceeds
received by the Company based on assumed exercises are hypothetically
used to repurchase the Company's common stock at the average market
price during the period. Loss per share is unchanged on a diluted
basis since the assumed exercise of common stock equivalents would have
an anti-dilutive effect.
Cash:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months
or less to be cash equivalents.
Estimates:
The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from these estimates
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and cash
equivalents and accounts payable. The carrying amounts of these
financial instruments approximate fair value because of their short-
term maturities. Financial instruments that potentially subject the
Company to a concentration of credit risk consist principally of cash.
During the year the Company did not maintain cash deposits at financial
institutions in excess of the $100,000 limit covered by the Federal
Deposit Insurance Corporation. The Company does not hold or issue
financial instruments for trading purposes nor does it hold or issue
interest rate or leveraged derivative financial instruments
38
Intangible Assets and Long Lived Assets:
The Company makes reviews for the impairment of long-lived assets and
certain identifiable intangibles whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Under SFAS No. 121, an impairment loss would be
recognized when estimated future cash flows expected to result from the
use of the asset and its eventual disposition is less than its carrying
amount. No such impairment losses have been identified by the Company
for the period ended December 31, 2002.
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard No. 123
(FAS 123), Accounting for Stock-Based Compensation beginning with the
Company's first quarter of 1996. Upon adoption of FAS 123, the Company
continued to measure compensation expense for its stock-based employee
compensation plans using the intrinsic value method prescribed by APB
No. 25, Accounting for Stock Issued to Employees. Stock based
compensation paid by the Company during the period ended December 31,
2002 is disclosed in Note 3.
New Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board issued SFAS No.
146, Accounting for Costs Associated With Exit or Disposal Activities
(SFAS 146), which is required to be adopted for such activities
initiated after December 31, 2002. SFAS 146 establishes accounting
rules for recognizing certain costs associated with exit or
restructuring activities that are not associated with new business
combinations or disposal activities covered by FASB Statement No. 144.
Management believes that the adoption of SFAS No. 146 will have no
impact on the Company for the year ended December 31, 2002.
Note 2. Stockholders' Equity.
During May 2000, the Company issued 2,090,000 shares of it's restricted
common stock for cash to an entity controlled by an individual who
also controls an entity that has made cash and other advances to the
Company. The shares were valued at $.001 per share for an aggregate of
$2,090.
During May 2000, the Company issued 20,000 shares of common stock to an
officer of the Company for cash aggregating $200.
Note 3. Commitments and contingencies
The officers and directors of the Company are involved in other
business activities and may become involved in other business
activities in the future. Such business activities may conflict with
the activities of the Company. The Company has not formulated a policy
for the resolution of any such conflicts that may arise.
39
Note 4. Income Taxes
Deferred income taxes may arise from temporary differences resulting
from income and expense items reported for financial accounting and tax
purposes in different periods. Deferred taxes are classified as current
or non-current, depending on the classifications of the assets and
liabilities to which they relate. Deferred taxes arising from temporary
differences that are not related to an asset or liability are
classified as current or non-current depending on the periods in which
the temporary differences are expected to reverse. The Company had no
significant deferred tax items arise during any of the periods
presented.
The Company has not provided for income taxes during the years ended
December 31, 2002 and 2001 as a result of operating losses. The
Company has a net operating loss carryforward at December 31, 2002 of
approximately $15,000 which will expire if unused in 2022. The Company
has fully reserved the deferred tax asset (approximately $2,250) that
would arise from the loss carryforward since the Company cannot predict
a level of operations that would assure the utilization of the loss in
future periods. The reserve increased by $1,200 during the year ended
December 31, 2002.
Note 5. Related Party Transactions
An individual who controls the entity that owns the majority of the
Company's outstanding common stock also controls an entity that has
advanced funds to the Company and has paid expenses in behalf of the
Company.
During the year ended December 31, 2000, the entity advanced $3,209 in
cash to the Company and paid expenses in behalf of the Company
aggregating $450. The balance was repaid in full during the year ended
December 31, 2001.
During October 2001 the Company received a $22,000 cash advance from an
affiliated Company and paid expenses if favor of the affiliate
amounting to $15,000. The net balance due to the affiliate at December
31, 2001 amounted to $7,000.
During the year ended December 31, 2002, the entity paid expenses in
behalf of the Company amounting to $3,500 and the Company repaid $1,000
in cash to the entity. The net balance due to the affiliate at
December 31, 2002 amounted to $9,500.
40
Part II
Information Not Required in Prospectus
Item 24. Indemnification of Directors and Officers
The Colorado Corporation Code grants to Capital Tech the power to
indemnify the officers and directors of Capital Tech, under certain
circumstances and under certain conditions and limitations as stated
therein, against all expenses and liabilities incurred by or imposed
upon them as a result of suits brought against them as such officers
and directors if they act in good faith and in a manner they reasonably
believe to be in or not opposed to the best interests of Capital Tech
and, with respect to any criminal action or proceeding, have no
reasonable cause to believe their conduct was unlawful.
Our bylaws provide as follows:
Capital Tech shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of Capital
Tech, by reason of the fact that he is or was a director, officer,
employee, fiduciary or agent of Capital Tech or is or was serving at
the request of Capital Tech as a director, officer, employee, fiduciary
or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses (including attorney fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
the best interest of Capital Tech and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in the best interest of Capital Tech and,
with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
41
Capital Tech shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of Capital Tech to procure a judgment
in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of Capital Tech or is or was serving at the
request of Capital Tech as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorney fees) actually and
reasonably incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in the best interest of Capital Tech; but no
indemnification shall be made in respect of any claim, issue, or matter
as to which such person has been adjudged to be liable for negligence
or misconduct in the performance of his duty to Capital Tech unless and
only to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses
which such court deems proper.
To the extent that a director, officer, employee, fiduciary or agent of
Capital Tech has been successful on the merits in defense of any
action, suit, or proceeding referred to in the first two paragraphs of
this Article VII or in defense of any claim, issue, or matter therein,
he shall be indemnified against expenses (including attorney fees)
actually and reasonably incurred by him in connection therewith.
Any indemnification under the first two paragraphs of this Article VII
(unless ordered by a court) shall be made by Capital Tech only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee, fiduciary or agent
is proper in the circumstances because he has met the applicable
standard of conduct set forth in said first two paragraphs. Such
determination shall be made by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, or, if such quorum is not obtainable or
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or by the shareholders.
Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by Capital Tech in
advance of the final disposition of such action, suit, or proceeding as
authorized in this Article VII upon receipt of an undertaking by or on
behalf of the director, officer, employee, fiduciary or agent to repay
such amount unless it is ultimately determined that he is entitled to
be indemnified by Capital Tech as authorized in this Article VII.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled under the Articles of Incorporation, any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, and any
procedure provided for by any of the foregoing, both as to action in
his official capacity and as to action in another capacity while
42
holding such office, and shall continue as to a person who has ceased
to be a director, officer, employee, fiduciary or agent and shall inure
to the benefit of heirs, executors, and administrators of such a
person.
A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, fiduciary or agent
of Capital Tech or who is or was serving at the request of Capital Tech
as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not
Capital Tech would have the power to indemnify him against such
liability under the provisions of this Article VII.
Item 25. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the common
stock being registered hereunder other than underwriting commissions
and expenses are estimated below.
Registration fee $ 250.00
Printing expenses 5,000.00
Accounting fees and expenses 5,000.00
Legal fees and expenses 20,000.00
State securities law fees
and expenses 5,000.00
Stock Transfer Escrow Agent Fees 1,500.00
Miscellaneous expenses 2,000.00
---------
Total $38,750.00
==========
Item 26. Recent Sales of Unregistered Securities
Since inception, Capital Tech issued 2,090,000 common shares for
consideration of $.001 per common share to:
Advanced Funding 2,090,000 common shares
Jerry Burden controls Advanced Funding. Mr. Burden is not affiliated
with Capital Tech but Mr. Burden is the trustee of the majority
shareholder of Email Mortgage, Inc., an entity in which Gary Rothwell
is an officer and director.
In January 2002, Advanced Funding sold its common shares to Ashley
Martinez for $.001 per common share.
In May 2000, Richard Schreck, an officer paid cash of $.001 per common
share.
Richard Schreck 20,000 common shares
43
In the second quarter of 2002, Capital Tech issued 20,000 common shares
for consideration of $.001 per common share to Gary Rothwell.
All of the above issuances of common shares were made to sophisticated
individuals pursuant to an exemption from registration under Sec. 4(2)
of the Securities Act of 1933.
Item 27. Exhibit Index.
(3) Articles of Incorporation dated
March 28, 2000 incorporated
by reference to Form SB-2
(3.1) Bylaws incorporated by
reference to Form SB-2
(4) Specimen certificate for common
stock
(5) Consent and Opinion of Jody M.
Walker regarding legality of
securities registered under
this Registration Statement
and to the references to
such attorney in the
prospectus filed as part of
this Registration Statement
(10) Escrow Agreement with Arapahoe Bank &
Trust dated July 9, 2003
(23) Consent of James E. Scheifley &
Associates, Inc.
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation form the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any additional or changed material information on the
plan of distribution.
44
(2) That, for the purpose of determining any liability under the
Securities Act, we shall treat each such post-effective amendment as a
new registration statement of the securities offered, and the offering
of the securities at that time shall be deemed to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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.
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in Denver,
Colorado, as of the 9th of July 2003.
Capital Tech, Inc.
By /s/ Richard Schreck
------------------------
Richard Schreck
President and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated and each of the
undersigned persons, in any capacity, hereby severally constitutes a
majority of the Board of Directors.
Signature Title Date
- --------- ------ -----
<s> <c> <c>
/s/ Richard Schreck
- ---------------------- CEO, CFO, Controller July 9, 2003
Richard Schreck and Director
/s/ Gary Rothwell
- ---------------------- Secretary/Vice President July 9, 2003
Gary Rothwell and Director