U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ECOSTRUCTURE CORPORATION
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(Name of Small Business Issuer in its charter)
Nevada 6770 58-2679116
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(State or Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
607 E Street, S.E.
Washington, D.C. 20003
(202) 544-6562
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(Address and telephone number of Registrant's principal executive offices and
principal place of business)
Ralph Kinkade
4063 Knoblock Road
Carson City, Nevada 89706
(775) 841-9735
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(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b)under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [x]
1
<table>
<caption>
CALCULATION OF REGISTRATION FEE
- --------------------- ----------------------- ------------------------- ------------------------- --------------------
Title of each Proposed Proposed
Class of Maximum Maximum Amount of
Securities to Amount to be Offering Price Aggregate Registration
be registered Registered per unit Offering price Fee
- --------------------- ----------------------- ------------------------- ------------------------- --------------------
Common stock 500,000 $0.10 per share (1) $50,000 $4.60
- --------------------- ----------------------- ------------------------- ------------------------- --------------------
</table>
The Company hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the Company shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- ------------------------------------------------
1 Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
2
Initial Public Offering:
Prospectus
ECOSTRUCTURE CORPORATION
500,000 shares of Common Stock
$0.10 per share
Registrant:
Ecostructure Corporation
607 E Street, S.E.
Washington, D.C. 20003
(202) 544-6562
Registrant's Attorney:
The O'Neal Law Firm, P.C.
Attn: William D. O'Neal
668 N. 44th Street
Suite 233
Phoenix, Arizona 85008
(602) 267-3855
(602) 267-7400 (fax)
The Offering:
Per Share Total
Public Price $0.10 $50,000
Offering Expenses(2) $0.00 $0.00
Proceeds to
The Company $0.10 $50,000
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering. The title of each class of securities to be registered is
Common Shares.
The amount to be registered is 500,000 shares.
This investment involves a high degree of Risk. You should purchase shares only
if you can afford a complete loss. Please consider carefully the risk factors
contained in this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
- ------------------------------------------------
2 Offering Expenses in the amount of approximately $22,000 are being paid out
of the pre-offering working capital of the Company, and not from the
proceeds of the offering.
3
The Company is conducting a "Blank Check" offering subject to Rule 419 of
Regulation C as promulgated by the U.S. Securities and Exchange Commission under
the securities act of 1933, as amended. The net offering proceeds, after
deduction for offering expenses (the offering expenses are being paid out of the
Company's pre-offering working capital, and not out of the proceeds of the
offering) and the securities to be issued to investors must be deposited in an
escrow account. While held in the escrow account, the deposited securities may
not be traded or transferred. Except for an amount up to 10% of the deposited
funds otherwise releasable under rule 419, the deposited funds and the deposited
securities may not be released until an acquisition meeting certain specified
criteria has been consummated and a sufficient number of investors reconfirm
their investment in accordance with the procedures set forth in rule 419.
4
TABLE OF CONTENTS
Page
PART I - Summary Information and Risk Factors........................... 6
Prospectus Summary...................................................... 6
The Offering............................................................ 6
Risk Factors............................................................ 6
Investors' Rights and Substantive Protections under Rule 419............ 9
Use of Proceeds........................................................ 11
Determination of Offering Price........................................ 11
Dilution............................................................... 11
Plan of Distribution................................................... 12
Legal Proceedings...................................................... 13
Directors, Executive Officers, Promoters and Control Persons........... 13
Security Ownership of Certain Beneficial Owners and Management......... 13
Description of Securities.............................................. 14
Interests of Named Experts and Counsel................................. 15
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities..................................................... 16
Description of Business................................................ 16
Management's Discussion and Analysis or Plan of Operation.............. 16
Description of Property................................................ 21
Certain Relationships and Related Transactions......................... 22
Market for Common Equity and Related Shareholder Matters............... 22
Dividend Policy........................................................ 22
Executive Compensation................................................. 22
Legal Matters.......................................................... 23
Transfer Agent......................................................... 23
Changes in and Disagreements with Accountants on Accounting and
Financial 24 Disclosures............................................ 23
PART II - Financial Statements......................................... 24
PART III - Information Not Required in Prospectus...................... 32
Recent Sales of Unregistered Securities................................ 32
Exhibits............................................................... 32
Undertakings........................................................... 32
Signatures............................................................. 33
5
PART I - SUMMARY INFORMATION AND RISK FACTORS
Prospectus Summary.
Corporate Information
Ecostructure Corporation (the "Company", "we", or "us") was incorporated under
the laws of the State of Nevada on December 22, 2003. The Company's current
address is 607 E Street, S.E. Washington, D.C. 20003. The Company's sole officer
and director is Mark Winstein. The Company is a blank check company subject to
Rule 419. The Company was organized as a vehicle to acquire or merge with
another business or company. The Company has no present plans, proposals,
agreements, arrangements or understandings to acquire or merge with any specific
business or company. Mr. Winstein, however, is always looking for potential
merger candidates.
The Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to Mr. Winstein, its sole
shareholder, the Company never commenced any operational activities. The Company
would be defined as a blank check "shell" company.
The Offering.
The Company is conducting a blank check offering pursuant to Rule 419. A maximum
of 500,000 shares and a minimum of 250,000 shares may be sold on a direct
participation offering basis. All of the proceeds from the sale of shares will
be placed in an interest-bearing escrow account by 12 o'clock noon of the fifth
business day after receipt thereof, until the sum of the minimum offering is
received. If less than $25,000 is received from the sale of the shares within
240 days of the date of this prospectus, all proceeds will be refunded promptly
to purchasers with interest and without deduction for commission or other
expenses. Subscribers will not be able to obtain return of their funds while in
escrow. There will be a minimum purchase of 5,000 shares at $500.
Risk Factors.
The securities offered are highly speculative in nature and involve a high
degree of risk. They should be purchased only by persons who can afford to lose
their entire investment. Therefore, each prospective investor should, prior to
purchase, consider very carefully the following risk factors among other things,
as well as all other information set forth in this prospectus.
Due to a lack of financing and a lack of experience in the management positions,
the Company will be at a competitive disadvantage.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies that may be desirable target candidates for the Company. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company. Consequently, the
Company will be at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business combination. Moreover, the
Company will compete in seeking merger or acquisition candidates with numerous
other small public companies.
6
Risk Factors - continued
While seeking a business combination, Mr. Winstein anticipates devoting up to
twenty (20) hours per month to the business of the Company. Notwithstanding the
limited experience and time commitment of Mr. Winstein, loss of Mr. Winstein's
services would adversely affect development of the Company's business and its
likelihood of continuing operations. Furthermore, Mr. Winstein is not a
professional business analyst. Lack of experience will be a detriment to the
Company's efforts.
The Company has not identified a potential merger candidate as of yet. Investors
in the Company's securities will not be able to evaluate the merits or risks of
a potential merger candidate before they invest, nor can they be certain that a
merger candidate will be found.
The Company has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, any entity, and
has had no discussions of any kind with any potential merger, joint venture or
acquisition candidate. The Company may not be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Mr. Winstein has not identified any particular industry or specific
business within an industry for evaluations. Ultimately, Mr. Winstein will have
broad discretion in determining the specific business combination that will take
place. The Company has been in the developmental stage since inception and has
no operations to date. Other than issuing shares to its sole shareholder, Mr.
Winstein, the Company never commenced any operational activities. The Company
may not be able to negotiate a business combination on terms favorable to the
Company.
Investors will, however, have a chance to evaluate a merger candidate before a
proposed merger occurs pursuant to Rule 419. At this time, investors will
determine whether they wish to leave their investment or receive their
investment back. If they choose not to invest, they may still loose ten percent
(10%) of their initial investment.
The Company lacks any market research or marketing organization. The Company may
find it difficult to complete its business plan of acquiring or merging with a
target company.
The Company has neither conducted, nor have others made available to it, results
of market research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by the Company, there is no
assurance the Company will be successful in completing any such business
combination.
Potential determination by the SEC that the Company is an investment company
could cause significant registration and compliance costs under the Securities
Exchange Act of 1933.
In the event the Company engages in business combinations that result in the
Company holding passive investment interests in a number of entities, the
Company could be under regulation of the Investment Company Act of 1940. In such
event, the Company would be required to register as an investment company and
could be expected to incur significant registration and compliance costs. The
Company has obtained no formal determination from the Securities and Exchange
Commission as to the status of the Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject the Company to
material adverse consequences.
7
Risk Factors - continued
A successful merger or acquisition of the Company with another business entity
will, in all likelihood, result in a significant shift in control from the
Company's management to the merging company's management.
A business combination involving the issuance of the Company's common stock
will, in all likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may require
Mr. Winstein to sell or transfer all or a portion of the Company's common stock
held by him, or resign as the sole member of the board of directors of the
Company. The resulting change in control of the Company could result in removal
of Mr. Winstein and a corresponding reduction in or elimination of his
participation in the future affairs of the Company.
A successful merger or acquisition of the Company with another business entity
will, in all likelihood, result in a significant shift in control from the
Company's shareholders to the merging company's shareholders.
A business combination involving the Company and another business entity will,
in all likelihood, result in the Company issuing securities to shareholders of
the merging entity. The issuance of previously authorized and unissued common
stock of the Company would result in a reduction in percentage of shares owned
by the present and prospective shareholders of the Company. This would result in
a shift in control from the Company's shareholders to the merging company's
shareholders.
Many business decisions made by the Company can have major tax consequences and
associated risks that could hurt the value of an investment in the Company.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination the Company may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions. The
Company intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the target entity.
However, there can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition of both federal and
state taxes that may have an adverse effect on both parties to the transaction.
The Company's securities may be limited to only a few markets because of state
blue sky laws.
Because the securities registered hereunder have not been registered for resale
under the blue sky laws of any state, and the Company has no current plans to
register or qualify its shares in any state, the holders of such shares and
persons who desire to purchase them in any trading market that might develop in
the future, should be aware that there may be significant state blue sky
restrictions upon the ability of new investors to purchase the securities which
could reduce the size of the potential market. As a result of recent changes in
federal law, non-issuer trading or resale of the Company's securities is exempt
from state registration or qualification requirements in most states. However,
some states may continue to attempt to restrict the trading or resale of
blind-pool or blank-check securities. Accordingly, investors should consider any
potential secondary market for the Company's securities to be a limited one.
The Company's offering price is arbitrary and the value of the Company's
securities may never actually reach the offering price.
8
Risk Factors - continued
The offering price of the shares bears no relation to book value, assets,
earnings, or any other objective criteria of value. It has been arbitrarily
determined by Mr. Winstein. There can be no assurance that, even if a public
trading market develops for the Company's securities, the shares will attain
market values commensurate with the offering price.
The Company may not be able to raise the minimum $25,000 dollars in this
offering, resulting in the nullification of this offering.
The shares are offered by the Company on a direct participation offering basis.
No individual, firm or corporation has agreed to purchase or take down any of
the offered shares. The Company cannot and does not make any statement
guaranteeing that shares will be sold. If the minimum number of shares are not
sold, the Company's offering will be nullified resulting in the return of the
investors' money.
Investors' Rights and Substantive Protection Under Rule 419.
Deposit of Offering Proceeds and Securities
Rule 419 requires that the net offering proceeds, after deduction for
underwriting compensation and offering costs, and all securities to be issued be
deposited into an escrow or trust account (the "Deposited Funds" and "Deposited
Securities," respectively) governed by an agreement which contains certain terms
and provisions specified by the rule. Under Rule 419, the Deposited Funds and
Deposited Securities will be released to the Company and to investors,
respectively, only after Mr. Winstein has met the following three conditions:
First, the Company must execute an agreement for an acquisition(s) meeting
certain prescribed criteria; second, the Company must successfully complete a
reconfirmation offering which includes certain prescribed terms and conditions;
and third, the acquisition(s) meeting the prescribed criteria must be
consummated.
Prescribed Acquisition Criteria.
Rule 419 requires that before the Deposited Funds and the Deposited Securities
can be released, the Company must first execute an agreement(s) to acquire an
acquisition candidate(s) meeting certain specified criteria. The agreement must
provide for the acquisition of a business(es) or assets valued at not less than
80% of the maximum offering proceeds, but excluding underwriting commissions,
underwriting expenses and dealer allowances payable to non-affiliates. Once the
acquisition agreements meeting the above criteria have been executed, the
Company must successfully complete the mandated reconfirmation offering and
consummate the acquisitions(s).
Post-effective Amendment
Once the agreement(s) governing the acquisition(s) of a business(es) meeting the
above criteria has (have) been executed, Rule 419 requires the Company to update
the registration statement of which this prospectus is a part with a
post-effective amendment. The post-effective amendment must contain information
about: the proposed acquisition candidate(s) and its business(es), including
audited financial statements; the results of this offering; and the use of the
funds disbursed from the escrow account.
9
Post-effective Amendment - continued
The post-effective amendment must also include the terms of the reconfirmation
offer mandated by Rule 419. The offer must include certain prescribed conditions
which must be satisfied before the Deposited Funds and Deposited Securities can
be released from escrow.
Reconfirmation Offering
The reconfirmation offer must commence within five (5) business days after the
effective date of the post-effective amendment. Pursuant to Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account within five (5)
business days after the effective date of the post-effective amendment;
(2) Each investor will have no fewer than 20, and no more than 45, business
days from the effective date of the post-effective amendment to notify the
Company in writing that the investor elects to remain an investor;
(3) If the Company does not receive written notification from any investor
within 45 business days following the effective date, the pro rata portion of
the Deposited Funds (and any related interest or dividends) held in the escrow
account on such investor's behalf will be returned to the investor within five
business days by first class mail or other equally prompt means;
(4) The acquisition(s) will be consummated only if investors having
contributed 80% of the maximum offering proceeds elect to reconfirm their
investments; and
(5) If a consummated acquisition(s) has not occurred within 18 months from
the date of this prospectus, the Deposited Funds held in the escrow account
shall be returned to all investors on a pro rata basis within five business days
by first class mail or other equally prompt means.
Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released to the Company and
the investors, respectively, after:
(1) The Escrow Agent has received written certification from the Company
and any other evidence acceptable by the Escrow Agent that the Company has
executed an agreement for the acquisition (s) of a business(es) the value of
which represents at least 80% of the maximum offering proceeds and has filed the
required post-effective amendment, the post-effective amendment has been
declared effective, the mandated reconfirmation offer having the conditions
prescribed by Rule 419 has been completed, and the Company has satisfied all of
the prescribed conditions of the reconfirmation offer; and
(2) The acquisition(s) of the business(es) the value of which represents at
least 80% of the maximum offering proceeds is (are) consummated.
Escrowed Funds Not To Be Used For Salaries Or Reimbursable Expenses
No funds (including any interest earned thereon) will be disbursed from the
escrow account for the payment of salaries or reimbursement of expenses incurred
on the Company's behalf by Mr. Winstein. Other than the foregoing, there is no
limit on the amount of such reimbursable expenses, and there will be no review
of the reasonableness of such expenses by anyone other than Mr. Winstein. In no
10
Escrowed Funds Not To Be Used For Salaries Or Reimbursable Expenses - continued
event will the escrowed funds (including any interest earned thereon) be used
for any purpose other than implementation of a business combination.
Use of Proceeds.
Mr. Winstein estimates that the Company will receive net proceeds of
approximately $50,000 from our sale of 500,000 shares offered by us. This
estimate is based upon an offering price of $0.10 per share of common stock with
no deduction for estimated offering expenses as these costs are being paid out
of the Company's pre-offering working capital. We expect to use the net proceeds
of this offering for the following purposes:
Purpose Amount Percentage
- ------- ------- ----------
Business Acquisitions $45,000 90%
Working Capital & General $ 5,000 10%
Corporate Purposes
- ----------------------------------------------------------------
Total $50,000 100%
Mr. Winstein anticipates expending these funds for the purposes indicated above.
To the extent that expenditures are less than projected, the resulting balances
will be retained and used for general working capital purposes or allocated
according to the discretion of Mr. Winstein. Conversely, to the extent that such
expenditures require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other sources, including,
but not limited to, general working capital and/or external financing. The net
proceeds of this offering that are not expended immediately may be deposited in
interest or non - interest bearing accounts, or invested in government
obligations, certificates of deposit, commercial paper, money market mutual
funds, or similar investments.
Mr. Winstein may advance money to the Company or on behalf of the Company when
the need arises. There are no set limits to the maximum amount that Mr. Winstein
will advance or loan to the Company. However, the amount is obviously limited by
the resources of Mr. Winstein. Mr. Winstein anticipates that repayment would
come, if at all, from the acquisition of a target company. The advances would be
expected to be in an amount well below the minimum expected from any viable
operating business target.
Determination of Offering Price.
The offering price is not based upon the Company's net worth, total asset value,
or any other objective measure of value based upon accounting measurements. The
offering price was determined by Mr. Winstein and was determined arbitrarily
based upon the amount of funds needed by the Company to start-up the business,
and the number of shares Mr. Winstein, as the sole shareholder, was willing to
allow to be sold.
Dilution.
Since the Company is a development stage company with no trading market,
dilution is not a factor at this time. However, if the Company moves forward on
its objectives, such dilution is bound to occur. At this point in time we are
unable to quantify the effect that this will have on the future stock price of
the Company's shares.
11
Plan of Distribution.
The Company will sell a minimum of 250,000 or a maximum of 500,000 shares of its
common stock with a par value $.001 per share to the public on a "best efforts"
basis. The minimum purchase required of an investor is $500.00. There can be no
assurance that any of these shares will be sold. If the minimum amount of shares
are not sold, all proceeds received in the offering will be refunded promptly.
The net proceeds to the Company will be $50,000 if all the shares offered are
sold. No commissions or other fees will be paid, directly or indirectly, by the
Company, or any of its principals, to any person or firm in connection with
solicitation of sales of the shares. Certain costs are to be paid in connection
with the offering out of the pre-offering working capital of the Company
The public offering price of the shares will be modified, from time to time, by
amendment to this prospectus, in accordance with changes in the market price of
the Company's common stock. These securities are offered by the Company subject
to prior sale and to approval of certain legal matters by counsel.
Mr. Winstein will be offering and selling shares on behalf of the Company.
Mr. Winstein will be relying on the safe harbor from broker-dealer registration
rule set out in Rule 3a4-1.
We have been informed by Mr. Winstein that:
o he is not subject to statutory disqualification as defined in Section
3(a) (39) of the Securities Exchange Act of 1934,
o he is not compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities, and,
o he is not an associated person of a broker or dealer.
Additionally, Mr. Winstein meets the conditions of part (a)(4)(iii) where
participation will be restricted to:
(A) Preparing any written communication or delivering such communication
through the mails or other means that does not involve oral solicitation by the
associated person of a potential purchaser; provided, however, that the content
of such communication is approved by a partner, officer or director of the
issuer;
(B) Responding to inquiries of a potential purchaser in a communication
initiated by the potential purchaser; provided, however, that the content of
such responses are limited to information contained in a registration statement
filed under the Securities Act of 1933 or other offering document; or
(C) Performing ministerial and clerical work involved in effecting any
transaction.
The Company anticipates that there will be no state registration of its
securities. Any sale of its securities will depend on exemptions under the Blue
Sky laws of states in which the securities are sold.
The Company will make available to each offeree, prior to any sale of the
shares, the opportunity to ask questions and receive answers from the Company
concerning any aspect of the investment and to obtain any additional information
contained in this Registration Statement, to the extent that the Company
12
Plan of Distribution - continued
possesses such information or can acquire it without unreasonable effort or
expense.
Each person desiring to subscribe to the shares must complete, execute,
acknowledge, and delivered to the Company a Subscription Agreement, which will
contain, among other provisions, representations as to the investor's
qualifications to purchase the common stock and his ability to evaluate and bear
the risk of an investment in the Company.
By executing the Subscription Agreement, the subscriber is agreeing that if the
Subscription Agreement is accepted by the Company, such a subscriber will be a
shareholder in the Company and will be otherwise bound by the Articles of
Incorporation and the Bylaws of the Company in the form attached to this
Prospectus.
Promptly, upon receipt of subscription documents by the Company, Mr. Winstein
will make a determination as to whether a prospective investor will be accepted
as a shareholder in the Company. Mr. Winstein may reject a subscriber's
Subscription Agreement for any reason. Subscriptions will be rejected for
failure to conform to the requirements of this Prospectus (such as failure to
follow the proper subscription procedure), insufficient documentation, over
subscription to the Company, or such other reasons other as Mr. Winstein
determines to be in the best interest of the Company.
If a subscription is rejected, in whole or in part, the subscription funds, or
portion thereof, will be promptly returned to the prospective investor without
interest by depositing a check (payable to said investor) in the amount of said
funds in the United States mail, certified returned - receipt requested.
Subscriptions may not be revoked, cancelled, or terminated by the subscriber,
except as provided herein.
Legal Proceedings.
The Company is not a party to any pending legal proceedings and, to the best of
Mr. Winstein's knowledge, no such action by or against the Company has been
threatened.
Director, Executive Officer, Promoters and Control Persons.
Mr. Winstein is currently the sole officer, director, and shareholder of the
Company. He has held his position since the Company's inception on December 22,
2003. Mr. Winstein shall serve for a term ending on December 21, 2004. There are
no other persons which can be classified as a promoter or controlling person of
the Company. Mr. Winstein has not been involved in legal proceedings that would
impair his ability to perform his duties as Officer and Director.
Other Blank Check Activities
Mr. Winstein has never been an officer, director or shareholder in any other
blank check company nor participated in any previous blank check offering or
activities.
Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Prospectus, the
outstanding shares of common stock of the Company owned of record or
beneficially by each person who owned of record, or was known by the Company to
own beneficially, more than 5% of the Company's common stock, and the name and
shareholdings of Mr. Winstein.
13
Security Ownership of Certain Beneficial Owners and Management - continued
Title of Class Name of Beneficial Amount and Nature Percent
Owner (3) of Beneficial Of Class
Owner (4)
Common Stock Mark Winstein 5,000,000 100%
President, Secretary, Treasurer, and Director: Mark Winstein, 44 years of age,
is the sole Officer and Director of The Company. Mr. Winstein has served as a
Director, Secretary and Treasurer since the inception of the Company on December
22, 2003. His current term as a Director expires, subject to re-election, on
December 21, 2004. Mr. Winstein is currently the founder/ CEO and a director of
Ecostructure Corporation, a Washington D.C. corporation formed in 2001, engaged
in the business of environmental consulting. From 1990 through 2000, Mr.
Winstein served as the co-founder and director of Save America's Forests located
in Washington, D.C. From 1984-1990, Mr. Winstein was the founder and president
of Energy Saving Equipment Company located in St. Louis, Missouri. In 1982, Mr.
Winstein earned a B.A degree in Asian Studies from Washington University in St.
Louis, Missouri.
Description of Securities.
General description.
The securities being offered are shares of common stock. The Articles of
Incorporation authorize the issuance of 25,000,000 shares of common stock, with
a par value of $.001. The holders of the shares: (a) have equal ratable rights
to dividends from funds legally available therefore, when, as, and if declared
by Mr. Winstein; (b) are entitled to share ratably in all of the assets of the
Company available for distribution upon winding up of the affairs of the
Company; (c) do not have preemptive subscription or conversion rights and there
are no redemption or sinking fund applicable thereto; and (d) are entitled to
one non- cumulative vote per share on all matters on which Mr. Winstein may vote
at all meetings of shareholders. These securities do not have any of the
following rights: (a) cumulative or special voting rights; (b) preemptive rights
to purchase in new issues of shares; (c) preference as to dividends or interest;
(d) preference upon liquidation; or (e) any other special rights or preferences.
In addition, the shares are not convertible into any other security. There are
no restrictions on dividends under any loan other financing arrangements or
otherwise. See a copy of the Articles of Incorporation and Bylaws of the
Company, attached as Exhibit 3.1 and Exhibit 3.2, respectively, to this Form SB-
2. As of the date of this Form SB-2, the Company has 5,000,000 shares of common
stock outstanding.
- ------------------------------------------------
3 Mr. Winstein does not have the right to acquire shares within sixty days
from options, warrants, rights, conversion privilege, or similar
obligations.
4 Mr. Winstein has sole voting and investment power over his shares.
14
Non-Cumulative Voting
The holders of shares of common stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of director, can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
Upon the completion of this Offering (assuming the maximum amount of the
Offering is subscribed), the Company shall have issued and outstanding a total
of 5,500,000 shares of its common stock.
Interest of Named Experts and Counsel.
No named expert or counsel was hired on a contingent basis. No named expert or
counsel will receive a direct or indirect interest in the small business issuer.
No named expert or counsel was a promoter, underwriter, voting trustee,
director, officer, or employee of the small business issuer.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities.
Mr. Winstein will not have personal liability to the Company or any of its
stockholders for monetary damages for breach of fiduciary duty as Mr. Winstein
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit the liability of Mr.
Winstein (i) for any breach of Mr. Winstein's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under applicable
Sections of the Nevada Revised Statutes, (iv) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes or, (v) for any
transaction from which Mr. Winstein derived an improper personal benefit. The
By-laws provide for indemnification of Mr. Winstein and employees of the Company
in most cases for any liability suffered by them or arising out of his
activities as director, officer, and employees of the Company if they were not
engaged in willful misfeasance or malfeasance in the performance of his or her
duties; provided that in the event of a settlement the indemnification will
apply only when Mr. Winstein approves such settlement and reimbursement as being
for the best interests of the Company. The Bylaws, therefore, limit the
liability of directors to the maximum extent permitted by Nevada law (Section
78.751).
Mr. Winstein is accountable to the Company as a fiduciary, which means he is
required to exercise good faith and fairness in all dealings affecting the
Company. In the event that a shareholder believes the officers and/or directors
have violated their fiduciary duties to the Company, the shareholder may,
subject to applicable rules of civil procedure, be able to bring a class action
or derivative suit to enforce the shareholder's rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management.
Shareholders who have suffered losses in connection with the purchase or sale of
their interest in the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from The
Company.
15
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities - continued
The Company undertakes the following:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the Act") may be permitted to Mr. Winstein 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.
The name of the sole promoter of the Company is Mark Winstein as disclosed
elsewhere in this Form SB-2. Except for the 5,000,000 shares of the common stock
of the Company initially issued to Mr. Winstein for a cash investment of
$22,000, no promoter has received anything of value from the Company.
Description of Business.
Ecostructure Corporation was incorporated on December 22, 2003, under the laws
of the State of Nevada, to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The Company
has been in the developmental stage since inception and has no operations date.
Other than issuing shares to its original sole shareholder, the Company never
commenced any operational activities.
Managements' Discussion and Analysis or Plan of Operation.
Plan of Operation
The Company intends to seek to acquire assets or shares of an entity actively
engaged in business that generates revenues, in exchange for its securities. The
Company has no particular acquisitions in mind and has not entered into any
negotiations regarding such an acquisition. Neither Mr. Winstein nor any
promoters or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility of an
acquisition or merger between the Company and such other company as of the date
of this registration statement.
While the Company will attempt to obtain audited financial statements of a
target entity, there is no assurance that such audited financial statements will
be available. Mr. Winstein does intend to obtain certain assurances of value of
the target entity's assets prior to consummating such a transaction, with
further assurances that an audited statement would be provided within
seventy-five (75) days after closing of such a transaction. Closing documents
relative thereto will include representations that the value of the assets
conveyed to or otherwise so transferred will not materially differ from the
representations included in such closing documents.
The Company is filing this registration statement on a voluntary basis because
the primary attraction of the Company as a merger partner or acquisition vehicle
will be its status as an SEC reporting company. Any business combination or
transaction will likely result in an increase in the authorized capital of the
Company and a significant issuance of shares and substantial dilution to present
stockholders of the Company.
The Articles of Incorporation of the Company provides that the Company may
indemnify Mr. Winstein for liabilities, which can include liabilities arising
under the securities laws. Therefore, assets of the Company could be used or
attached to satisfy any liabilities subject to such indemnification.
16
Managements' Discussion and Analysis or Plan of Operation - continued
Conflicts of Interest
The Company has no full time employees. Mr. Winstein has agreed to allocate a
portion of his time to the activities of the Company, without compensation. Mr.
Winstein expects to organize other companies of a similar nature and with a
similar purpose as the Company. Consequently, there are potential inherent
conflicts of interest in acting as the Company's officer and director. Insofar
as Mr. Winstein is engaged in other business activities, he anticipates that he
will only devote a minor amount of time to the affairs of the Company. The
Company does not have a right of first refusal pertaining to opportunities that
come to Mr. Winstein's attention insofar as such opportunities may relate to our
proposed business operations.
While Mr. Winstein has no prior affiliation with any blank check companies as of
the date of this Registration Statement, a conflict may arise in the event that
another blank check company with which Mr. Winstein is affiliated is formed and
actively seeks a target company. It is anticipated that target companies will be
located for us and other blank check companies in chronological order of the
date of formation of such blank check companies or, in the case of blank check
companies formed on the same date, alphabetically. However, any blank check
companies with which Mr. Winstein is, or may be, affiliated may differ from us
in certain items such as place of incorporation, number of shares and
stockholders, working capital, types of authorized securities, or other items.
It may be that a target company may be more suitable for or may prefer a certain
blank check company formed after us. In such case, a business combination might
be negotiated on behalf of the more suitable or preferred blank check company
regardless of date of formation.
The terms of a business combination may include such terms as Mr. Winstein
remaining as a director or officer of the Company. The terms of the business
combination may provide for a payment by cash or otherwise to Mr. Winstein for
the purchase or retirement of all or a part of his common stock of the Company
by a target company or for services rendered incident to or following a business
combination. Mr. Winstein would directly benefit from such employment or payment
and may influence Mr. Winstein's choice of a target company.
There are no binding guidelines or procedures for resolving potential conflicts
of interest. Failure by Mr. Winstein to resolve conflicts of interest in favor
of us could result in Mr. Winstein incurring liability to us. However, any
attempt by stockholders to enforce a liability of Mr. Winstein to us would most
likely be prohibitively expensive and time consuming.
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business 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. Management anticipates that it will
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See Item F/S,
"Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
17
General Business Plan - continued
The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly - owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
The primary method the Company will use to find potential merger or acquisition
candidates will be the personal efforts of Mr. Winstein and the exploitation of
his substantial network of business contacts.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, Mr. Winstein believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders and other factors.
Business opportunities may be available 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.
The Company has, and will continue to have, no significant capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, Mr. Winstein believes the Company will be able to offer owners
of acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or 10-KSB's,
agreements and related reports and documents. The Securities Exchange Act of
1934 (the "34 Act"), specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which include
providing audited financial statements to be included within the numerous
filings relevant to complying with the 34 Act.
Nevertheless, Mr. Winstein has not conducted market research and is not aware of
statistical data that would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the Mr. Winstein, who is not a professional business analyst.
Mr. Winstein intends to concentrate on identifying preliminary prospective
business opportunities that may be brought to his attention through his present
associations.
18
General Business Plan - continued
In analyzing prospective business opportunities, Mr. Winstein will consider such
matters as:
o the available technical, financial and managerial resources,
o working capital and other financial requirements,
o history of operations, if any,
o prospects for the future,
o nature of present and expected competition,
o the quality and experience of management services which may be
available and the depth of that management,
o the potential for further research, development, or exploration,
o specific risk factors not now foreseeable but which may be anticipated
to impact the proposed activities of the Company;
o the potential for growth or expansion; the potential for profit,
o the perceived public, recognition or acceptance of products, services,
or trades,
o name identification; and other relevant factors.
Mr. Winstein will meet personally with management and key personnel of 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 merger with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Mr. Winstein, while not especially experienced in matters relating to the new
business of the Company, will rely upon his own efforts in accomplishing the
business purposes of the Company. It is not anticipated that any outside
consultants or advisors will be utilized by the Company to effectuate its
business purposes described herein.
However, if the Company does retain such an outside consultant or advisor, any
cash fee earned by such party will need to be paid by the prospective
merger/acquisition candidate, as the Company has no cash assets with which to
pay such obligation. There have been no discussions, understandings, contracts
or agreements with any outside consultants and none are anticipated in the
future.
The Company will not restrict its search for any specific kind of firms, but may
acquire a venture that is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer.
However, the Company does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business opportunity until
such time as the Company has successfully consummated such a merger or
acquisition. The Company also has no plans to conduct any offerings under
Regulation S.
Acquisition of opportunities
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
19
Acquisition of opportunities - continued
it is probable that the present management and shareholders of the Company will
no longer be in control of the Company. In addition, Mr. Winstein may, as part
of the terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders.
It is anticipated that the Company's sole shareholder, Mr. Winstein, may
actively negotiate or otherwise consent to the purchase of a portion of his
common stock as a condition to, or in connection with, a proposed merger or
acquisition transaction.
The policy set forth in the preceding sentence is based on the understanding
between the Company and Mr. Winstein, and he is not aware of any circumstances
under which this policy would change while he is still officer and director of
the Company. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter.
If such registration occurs, of which there can be no assurance, it will be
undertaken by the surviving entity after the Company has successfully
consummated a merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, the Company will not attempt to
register any additional securities. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the value of the
Company's securities in the future, if such a market develops, of which there is
no assurance.
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 368a or 351 of the Internal Revenue Code (the "Code").
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which target
company shareholders would acquire in exchange for all of 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
substantially 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
dilutive effect on the percentage of shares held by the Company's then
shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto.
20
Acquisition of opportunities - continued
Also, they will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties prior
to and after such closing, will outline the manner of bearing costs, including
costs associated with the Company's attorneys and accountants, will set forth
remedies on default and will include miscellaneous other terms.
As stated here-in-above, the Company will not acquire or merge with any entity
which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 34 Act. Included
in these requirements is the affirmative duty of the Company to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable).
If such audited financial statements are not available at closing, or within
time parameters necessary to insure the Company's compliance with the
requirements of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents may provide that the proposed
transaction will be voidable, at the discretion of the present management of the
Company.
Mr. Winstein has agreed that he will advance to the Company any additional funds
which the Company needs for operating capital and for costs in connection with
searching for or completing an acquisition or merger. Mr. Winstein has also
agreed that such advances will be made interest free without expectation of
repayment unless the owners of the business that the Company acquires or merges
with agree to repay all or a portion of such advances.
There is no dollar cap on the amount of money that Mr. Winstein will advance to
the Company. The Company will not borrow any funds from anyone for the purpose
of repaying advances made by the Mr. Winstein.
Mr. Winstein has passed a resolution which prohibits the Company from completing
an acquisition or merger with any entity in which any of Mr. Winstein or his
affiliates or associates serve as officer or director or hold any ownership
interest. Mr. Winstein is not aware of any circumstances under which this
policy, through his own initiative may be changed.
Competition
The Company will remain an insignificant participant among the firms that engage
in the acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company. In view of the
Company's combined extremely limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors.
Description of Property.
The Company currently owns no property. President Mark Winstein's office
facilities serve as the office for the Company. This address is 607 E Street,
S.E., Washington, D.C. 20003.
21
Competition - continued
Certain Relationships and Related Transactions.
There are no relationships, transactions, or proposed transactions to which the
Company was or is to be a party, in which any of the named persons set forth in
Item 404 of Regulation SB had or is to have a direct or indirect material
interest.
Market for Common Equity and Related Stockholder Matters.
The shares have not previously been traded on any securities exchange. At the
present time, there are no assets available for the payment of dividends on the
shares.
Dividend Policy
The Company does not currently intend to pay cash dividends. The Company's
proposed dividend policy is to make distributions of its revenues to its
stockholders when Mr. Winstein deems such distributions appropriate. Because the
Company does not intend to make cash distributions, potential shareholders would
need to sell their shares to realize a return on their investment. There can be
no assurances of the projected value of the shares, nor can there be any
guarantees of the success of the Company.
A distribution of revenues will be made only when, in the judgment of Mr.
Winstein it is in the best interest of the Company's stockholders to do so. Mr.
Winstein will review, among other things, the investment quality and
marketability of the securities considered for distribution; the impact of a
distribution of the investee's securities on its customers, joint venture
associates, management contracts, other investors, financial institutions, and
the Company's internal management, plus the tax consequences and the market
effects of an initial or broader distribution of such securities.
Executive Compensation.
(a) Mr. Winstein is not receiving any remuneration at this time.
(b) There are no annuity, pension or retirement benefits proposed to be
paid to Mr. Winstein, or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Company.
(c) No remuneration is proposed to be in the future directly or indirectly
by the Company to Mr. Winstein under any plan that is presently existing.
22
Legal Matters.
The Company has retained William D. O'Neal, Esq., as legal counsel for the
Company. The address is: The O'Neal Law Firm, P.C., 668 North 44th Street, Suite
233, Phoenix, Arizona 85008. Mr. O'Neal has no involvement with the day-to-day
activities of the Company.
Transfer Agent.
The Company intends to engage the services of First American Transfer Company,
1717 East Bell Road, #2, Phoenix, Arizona 85022; (602) 485-1346 Fax (602)
788-0423.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
There have been no changes in accountants or disagreements with Shelley Int'l
C.P.A. our present accountants on financial disclosure.
23
PART II - FINANCIAL STATEMENTS
SHELLEY INTERNATIONAL CPA
-------------------------
161 E. 1st. St. #1
Mesa, AZ 85201
(480) 461-8301
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
-------------------------------------------------
To the Board of Directors/Audit Committee
Ecostructure Corporation
I have audited the accompanying balance sheet of Ecostructure Corporation
(a development stage Nevada corporation) as of December 31, 2003 and the related
statements of operations, stockholders' equity, and cash flows for the period
from December 22, 2003 (inception) to December 31, 2003. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ecostructure Corporation as
of December 31, 2003 and the related statements of operations, stockholders'
equity, and cash flows for the period from December 22, 2003 (inception) to
December 31, 2003 in conformity with United States generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is new and has no
operations or revenues. The lack of operations raises substantial doubt about
the Company's ability to continue as a going concern. See Note 3 for more
details. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Shelley International CPA
January 9, 2004
Mesa, Arizona
24
ECOSTRUCTURE CORPORATION
Balance Sheet
(a development stage company)
as of December 31, 2003
ASSETS
Cash 0
--------
Total Current Assets 0
--------
Other Assets 0
--------
Total Assets 0
--------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable 0
--------
Total Current Liabilities 0
--------
Stockholders' Equity
Common Stock, authorized
25,000,000 shares, issued and
outstanding 5,000,000 shares,
par value $0.001 5,000
Additional Paid in Capital 17,000
Deficit accumulated during development stage (22,000)
--------
Total Stockholders' Equity 0
--------
Total Liabilities and Stockholders' Equity 0
--------
The accompanying notes are an integral part of these statements
25
ECOSTRUCTURE CORPORATION
Statement of Operations
(a development stage company)
For the period from December 22, 2003 (inception) to December 31, 2003
Revenue 0
-----------
Expenses
Legal and Accounting 22,000
-----------
Total Expenses (22,000)
-----------
Income before Taxes (22,000)
Provision for Income Taxes 0
-----------
Net (Loss) (22,000)
-----------
Primary and Diluted Earnings per Share a
-----------
Weighted Average Number of Shares 5,000,000
-----------
a = less than $0.01
The accompanying notes are an integral part of these statements
26
ECOSTRUCTURE CORPORATION
Statement of Stockholders' Equity
(a development stage company)
From December 22, 2003 to December 31, 2003
<table>
<caption>
Common Stock Paid in Accumulated Total
Shares Amount Capital Deficit Equity
------------------ ---------- ------------ ---------
Balance, December 22, 2003 0 0 0 0 0
Initial capitalization
Sale of common stock 5,000,000 5,000 17,000 22,000
Net Loss (22,000) (22,000)
------------------ ---------- ------------ ---------
Balance, December 31, 2003 5,000,000 5,000 17,000 (22,000) 0
------------------ ---------- ------------ ---------
</table>
The accompanying notes are an integral part of these statements
27
ECOSTRUCTURE CORPORATION
Statement of Cash Flows
(a development stage company)
for the period from December 22, 2003 to December 31, 2003
Cash from Operations
Net Loss (22,000)
Changes in Receivable or Payables 0
----------
Cash (Used) by Operations (22,000)
----------
Cash Used for Investing 0
----------
Sale of Common Stock 22,000
---------
Cash Provided by Financing 22,000
---------
Net Change in Cash 0
Beginning Cash 0
----------
Ending Cash 0
----------
Supplemental Cash Flow Information
Taxes Paid
Year 2003 $0
Interest Paid
Year 2003 $0
The accompanying notes are an integral part of these statements
28
ECOSTRUCTURE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. GENERAL ORGANIZATION AND BUSINESS Ecostructure Corporation (the Company)
was incorporated under the laws of the state of Nevada on December 22, 2003. The
Company has one sole officer, director and shareholder. The Company is a blank
check company subject to Rule 419. The Company was organized to acquire or merge
with another business or company. The officer is currently looking for potential
merger candidates but currently has none.
The Company has been in the development stage since inception and has no
operations to date. Other than issuing shares to the sole shareholder there have
been no operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The Company has no assets or debt as of December 31, 2003. The relevant
accounting policies and procedures are listed below.
Accounting Basis
The basis is generally accepted accounting principles.
Earnings per Share
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity.
The Company has not issued any options or warrants or similar securities since
inception.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
Income Taxes
The provision for income taxes is the total of the current taxes payable and the
net of the change in the deferred income taxes. Provision is made for the
deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Stock Based Compensation
The Company accounts for its stock based compensation based on provisions in
SFAS No. 123, Accounting for Stock-Based Compensation which utilizes the fair
method for the valuation of its securities given as compensation.
Advertising
Advertising is expensed when incurred. There has been no advertising during the
periods.
29
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES - continued
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the normal course of business.
However the Company has no current source of revenue, nor operations. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek a suitable merger
candidate which would supply the needed cash flow.
NOTE 4. STOCKHOLDERS' EQUITY
Common Stock
On December 22, 2003 (inception) the Company issued 5,000,000 shares of its
$0.001 par value common stock to it sole shareholder for $22,000. This has been
the structure from that time until the present.
NOTE 5 RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Most office
services are provided without charge by the president who lives in Washington
D.C. Such costs are immaterial to the financial statements and accordingly, have
not been reflected therein. Some expenses, as explained above, were reimbursed.
The officer(s) and director(s) of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has not
formulated a policy for the resolution of such conflicts.
NOTE 6 PROVISION FOR INCOME TAXES
The Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total
deferred tax asset is $4,840, which is calculated by multiplying a 22% estimated
tax rate by the items making up the deferred tax account, organization costs of
$22,000,. The total valuation allowance is a comparable $4,840.
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PROVISION FOR INCOME TAXES - continued
The provision for income taxes is comprised of the net changes in deferred taxes
less the valuation account plus the current taxes payable as shown in the chart
below.
Net changes in Deferred Tax Benefit less than
valuation account 0
Current Taxes Payable 0
-----------
Net Provision for Income Taxes 0
-----------
NOTE 7 REVENUE AND EXPENSES
The Company currently has no operations and no revenue.
NOTE 8 SUBSEQUENT EVENTS
The Company is currently filing papers to conduct a blank check offering subject
to Rule 419 of Regulation C. This offering is still in the preparation process
and has not been filed or approved as of the report date. This offering calls
for the sale of 500,000 shares of common stock at a price of $0.10 per share. If
completed, the sale will net the Company $50,000.
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PART III - INFORMATION NOT REQUIRED IN PROSPECTUS
Recent Sales of Unregistered Securities.
Other than the 5,000,000 shares issued to Mark Winstein, the Company's sole
officer and director, for $22,000 in cash, there have been no sales of
unregistered securities to date.
Exhibits.
Index to Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Exhibit Name
--------- ------------
3.1 Articles of Incorporation filed December 22, 2003
3.2 Bylaws
5.1 Opinion of Counsel
23.1 Consent of Independent Accountants
Undertakings.
The Company undertakes to include in a post-effective amendment any material
changes that may effect this registration statement subsequently, including the
naming of its underwriters in connection with at the market offerings.
If in the future the Company decides to offer the securities to existing
shareholders under warrants and rights and if any securities are re-offered to
the public and/or underwriters with modification, the Company will file a
post-effective amendment.
If the offering is to be done in the future with competitive bidding, the
Company will use its best efforts to distribute to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus as
contained in the registration statement, together with any supplements and file
an amendment to the registration statement reflecting the result of the bidding,
the terms of the re-offering and related matters, unless we decide that there
will be no further public offering of such securities.
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Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Scottsdale, in the State of Arizona.
ECOSTRUCTURE CORPORATION
By: /s/ Mark Winstein
- ------------------------------
Mark Winstein
President and Director
Dated: January 15, 2004
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following person in the capacity and on
the date stated.
By: /s/ Mark Winstein
- -----------------------------
Mark Winstein
President and Director
Dated: January 15, 2004
33