UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the three months ending March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number: 333-85306
PUREZZA GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Florida 65-1129912
(State or other jurisdiction of (IRS Employer Identification)
incorporation)
936A Beachland Blvd, Suite 13
Vero Beach, FL 32963
(Address of principal executive offices)
(772) 231-7544
(Issuer's telephone number)
(772) 231-5947
(Issuer's fax number)
Previous Addresses:
800 West Cypress Creek Road, Suite 470
Ft. Lauderdale, FL 33309
24 Madison Road
Fairfield, NJ 07004
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check whether the issuer filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes [X] No [ ]
The number of shares of the issuer's common stock outstanding as of May 17, 2004
was 52,500,000 shares, par value $0.001 per share.
Transactional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements.
FORWARD LOOKING STATEMENT
Statements made in this Form 10-QSB (the "Quarterly Report") that are not
historical or current facts are "forward-looking statements" made pursuant to
the safe harbor provisions of Section 27A of the Securities Act of 1933, as
amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements often can be identified by the
use of terms such as "may", "will", "expect", "believe", "anticipate",
"estimate", "approximate", or "continue", or the negative thereof. Purezza
Group, Inc. (the "Company") intends that such forward-looking statements be
subject to the safe harbors for such statements. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. Any forward-looking statements represent
management's best judgment as to what may occur in the future. However,
forward-looking statements are subject to risks, uncertainties and important
factors beyond the control of the Company that could cause actual results and
events to differ materially from historical results of operations and events and
those presently anticipated or projected. These factors include adverse economic
conditions, entry of new and stronger competitors, inadequate capital and
unexpected costs. The Company disclaims any obligation subsequently to revise
any forward-looking statements to reflect events or circumstances after the date
of such statement or to reflect the occurrence of anticipated or unanticipated
events.
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDING MARCH 31, 2004
(UNAUDITED)
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDING MARCH 31, 2004
(UNAUDITED)
TABLE OF CONTENTS
Condensed Financial Statements:
Condensed Balance Sheet as of March 31, 2004 (unaudited)..............1
Condensed Statements of Operations for the three months ending
March 31, 2004 and 2003 and for the period from August 9, 2001
(inception) through March 31, 2004 (unaudited).......................2
Condensed Statements of Cash Flows for the three months ending
March 31, 2004 and 2003 and for the period from August 9,
2001 (inception) through March 31, 2004 (unaudited)..................3
Condensed Statement of Stockholders' Equity as of and for
period from August 9, 2001 (inception)
through March 31, 2004 (unaudited).................................. 4
Notes to Condensed Financial Statement (unaudited).....................5-10
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEET
MARCH 31, 2004
(UNAUDITED)
ASSETS
Current assets:
Cash and Cash Equivalents $ 226,702
Total Current assets $ 226,702
Computers and Equipment
Computers 4,074
Accumulated Depreciation (3,220)
Total Computers and Equipment 854
Total Assets $ 227,556
LIABILITIES AND STOCKHOLDERS' DEFICIT
Long-term debt:
Convertible Debenture Note Payable 600,000
Total Liabilities $ 600,000
Stockholders' Equity (deficit):
Common stock(100,000,000 shares authorized, 7,815
7,815,000 issued and outstanding)
Paid In Capital 326,707
Deficit Accumulated Development Stage (706,966)
Total Stockholders' Equity (Deficit) (372,444)
Total Liabilities and Stockholders' Equity $ 227,556
See accompanying notes to condensed financial statements.
-1-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 2004 AND 2003
AND FOR THE PERIOD FROM AUGUST 9, 2001 (INCEPTION) THROUGH
MARCH 31, 2004
(UNAUDITED)
August 9, 2001
Three Months Ending (Inception)
March 31, Through
2004 2003 March 31, 2004
----------- ----------- --------------
Revenue $ - $ - $ -
Operating expenses:
General and administrative
expenses 18,402 37,489 362,172
Professional fees 9,351 22,885 202,957
----------- ----------- -----------
Total operating expenses 27,753 60,374 565,129
----------- ----------- -----------
(Loss) from operations (27,753) (60,374) (565,129)
----------- ----------- -----------
Other income (expense):
Impairment of license - - (150,000)
Interest income 216 500 8,163
Interest expense (waiver) - (11,967) -
----------- ----------- -----------
Total other income (expense) 216 (11,467) (141,837)
----------- ----------- -----------
Net (loss) income $ (27,537) $ (71,841) $ (706,966)
=========== =========== ===========
Net(loss)income per share $ (0.01) $ (0.01) $ (0.09)
=========== =========== ===========
Weighted average number of
shares 7,815,000 7,815,000 7,815,000
=========== =========== ===========
See accompanying notes to condensed financial statements.
-2-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDING MARCH 31, 2004 AND 2003
AND FOR THE PERIOD FROM AUGUST 9, 2001 (INCEPTION) THROUGH
MARCH 31, 2004
(UNAUDITED)
For the
period
From August 9,
2001
(Inception)
Three Months Ending Through
March 31, March 31,
2004 2003 2004
--------- --------- ------------
Cash flows from operating activities:
Net (loss) $ (27,537) $ (71,841) $(706,966)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock issued for services - - 100
Depreciation expense 214 884 1,909
Impairment of license - - 150,000
Increase (decrease) in:
Accounts payable - - -
Accrued expenses - 6,300 -
Accrued interest (waiver) - 11,967 -
Adjustments 427 - 700
--------- --------- ---------
Net cash used in operating
activities: (26,896) (52,690) (554,257)
--------- --------- ---------
Cash flows from investing activities:
Purchase of license 0 0 (150,000)
Purchase of computer 0 0 (4,074)
--------- --------- ---------
Net cash used in investing activities 0 0 (154,074)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock 0 0 338,658
Repurchase of common stock 0 0 (3,625)
Proceeds from convertible debenture 0 0 600,000
--------- --------- ---------
Net cash provided by financing
activities 0 0 935,033
--------- --------- ---------
Net increase (decrease) in cash (26,896) (52,690) 226,702
Cash and Cash Equivalents,
beginning of period 253,598 476,717 -
--------- --------- ---------
Cash and Cash Equivalents,
end of period $ 226,702 $ 424,027 $ 226,702
========= ========= =========
See accompanying notes to condensed financial statements.
-3-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of Purezza Group, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary to make the
interim financials not misleading have been included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the years ending December 31,
2003 and 2002. Operating results for the three months ending March 31, 2004 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2004.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the financial statements and notes for the years ending
December 31, 2003 and 2002, previously filed.
NOTE 2 - NATURE OF BUSINESS
Purezza Group, Inc. (the Company) is a Florida chartered development stage
corporation, which as of March 31, 2004 conducted business in Ft. Lauderdale,
Florida but as of April 23, 2004 moved its offices to Vero Beach, Florida. See
Note 9, Subsequent Events. The Company was incorporated on August 9, 2001 to
market a product called Phoslock. Phoslock is a patented product that
efficiently removes phosphorus and other oxyanions in natural and industrial
waters and wastewater streams.
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES
Use of estimates
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the statements of
financial condition and revenues and expenses for the year then ended. Actual
results may differ significantly from those estimates.
-4-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 3 - SUMMARY OF ACCOUNTING POLICIES, CONTINUED
Start-up costs
Costs of start-up activities, including organization costs, are expensed as
incurred, in accordance with Statement of Position (SOP) 98-5.
Net Loss per share
Basic loss per weighted average common share is computed by dividing the net
loss by the weighted average number of common shares outstanding during the
period.
Stock Compensation For Services Rendered
The Company may issue shares of common stock in exchange for services rendered.
The costs of the services are valued according to generally accepted accounting
principles and will be charged to operations.
Revenue Recognition
Revenue from product sales will be recognized at the time the sale is made.
Property and Equipment
All property and equipment are recorded at cost and depreciated over their
estimated useful lives, generally three, five or seven years, using the
straight-line method. Upon sale or retirement, the costs and related accumulated
depreciation are eliminated from their respective accounts, and the resulting
gain or loss is included in the results of operations. Repairs and maintenance
charges which do not increase the useful lives of the assets are charged to
operations as incurred. Depreciation expense was $214 and $884 for the three
months ending March 31, 2004 and 2003, respectfully.
Fair Value of Financial Instruments
The Company's financial instruments consist entirely of cash in bank and a
convertible debenture note. The carrying amounts of such financial instruments,
as reflected in the balance sheet, approximate the estimated fair value of the
accounts as of March 31, 2004 and 2003. The estimated fair value is not
necessarily indicative of the amounts the Company could realize in a current
market exchange or of future earnings or cash flows.
-5-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 4 - MANAGEMENT'S PLANS
PROPOSED OPERATIONS
Following the subsequent events(discussed in Note 9), the Company has no
material assets or liabilities and has no active business operations.
Nevertheless, management believes that it may be able to recover some value for
its shareholders by the adoption and implementation of a plan to seek,
investigate and, if the results of such investigation warrants, effect a
business combination with a suitable privately held company that has both
business history and operating assets. Our potential success will be primarily
dependent on the efforts and abilities of our new management team, who will have
virtually unlimited discretion in searching for, negotiating and entering into a
business combination transaction.
Management believes that the selection of a business opportunity will be complex
and extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries and shortages of available capital, our
new management team believes that there are numerous privately held companies,
seeking the perceived benefits may include facilitating debt financing or
improving the terms on which additional equity may be sought, providing
liquidity for the principals of the business, creating a means for providing
stock incentives or similar benefits to key employees, providing liquidity for
all stockholders and other factors.
NOTE 5 - COMMITMENTS
As of March 31, 2004 the Company was obligated to pay royalty payments pursuant
to its license agreement for the use of the Company's product, Phoslock. The
Company's license agreement was with Integrated Mineral Technology Pty Ltd.
(Integrated), an Australian entity, which has also been a shareholder of the
Company since the early organizational stage of the Company. Royalty payments
due for the year 2003 had previously been waived by Integrated.
Future minimum royalty payments under the agreement were to be as follows:
2004 843,750
2005 1,260,000
2006 1,260,000
2007 1,260,000
Thereafter 20,160,000
-----------
Total $24,783,750
===========
However, as part of the asset transfer to Purezza Marketing Inc. ("PMI"), the
license agreement was transferred and assigned to PMI as of April 21, 2004.
Integrated accepted and agreed to such transfer and assignment of license
agreement to PMI. See Note 9, Subsequent Events - License Agreement.
-6-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 6 - DEBENTURE NOTE PAYABLE
During the quarter ending September 30, 2003, debenture note holder, Gregory A.
Nagel, waived the accrued interest payable on the debenture note. The interest
on the debenture note was waived through May, 2004. The Note was satisfied in
full on April 22, 2004, subsequent to the balance sheet date. See Note 9,
SUBSEQUENT EVENTS - DEBENTURE NOTE.
NOTE 7 - PHOSLOCK PRODUCT CHANGE
As of March 31, 2004, the Company in conjunction with its licensor arranged for
the production of a consistent Phoslock product. A granulation plant is now
under construction in Kunming, China, which will produce Phoslock for
distribution to all licensees. The Corporation's former president, Leonard M.
Perle, who recently resigned due to health reasons and product consultant, Dr.
Clifford Buntin, of the University of Southern California, along with special
international cooperation from our Australian shareholders and licensor, were
able to formulate a granule Phoslock product which is a vast improvement over
the slurry product.
All Phoslock license holders will be able to take delivery, commencing in May,
2004, of the new granule Phoslock. The new Phoslock should be economically
superior, as it is a dry product which can be more easily produced, stored,
shipped, and used. The previous slurry product was 80% water, making it less
efficient to handle.
As of April 21, 2004 the Phoslock product line was discontinued by the Company
and transferred to PMI as part of the Company's transfer of the license
agreement with Integrated to PMI. See Note 9, SUBSEQUENT EVENTS.
-7-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 8 - OPTIONS
During the quarter ending December 31, 2003, the Corporation issued
options to purchase common stock as follows:
to Larry Legel, former President, Chief Executive Officer, Chief Administrative
Officer, Director, Secretary, Treasurer and Chief Financial Officer, in the
amount of 150,000 options at a strike price of $0.10 per share. The options may
be exercised at any time for five years. The option date is October 20, 2003.
The expiration date is October 20, 2008. The options were issued to
Director/Officer in consideration for services rendered, and in anticipation of
future services to be rendered.
to Sanzari Family Trust, in the amount of 250,000 options at a strike price of
$1.00 per share. The options may be exercised at any time for three years. The
option date is October 27, 2003. The expiration date is October 27, 2006. The
options were issued in consideration of the option holder providing working
capital to the Corporation.
to TJP Management, Inc., in the amount of 250,000 options at a strike price of
$1.00 per share. The options may be exercised at any time for three years. The
option date is October 27, 2003. The expiration date is October 27, 2006. The
options were issued in consideration of the option holder providing working
capital to the Corporation.
to Gregory A. Nagel, in the amount of 1,000,000 options at a strike price of
$1.00 per share. The options may be exercised at any time for five years. The
option date is November 5, 2003. The expiration date is November 5, 2006. The
options were issued in consideration of the option holder providing working
capital to the Corporation.
The compensation costs for the above transactions were immaterial.
NOTE 9 - SUBSEQUENT EVENTS
DEBENTURE NOTE
In a stock for debt transaction dated April 23, 2004, the $600,000 Debenture
Note Payable was satisfied in full by the issuance of 37,185,000 shares of the
Company's common stock to International Equities Group, Inc. (IEG), the holder
of the Debenture Note.
TRANSFER OF ASSETS TO PUREZZA MARKETING, INC.
On April 23, 2004 the Company transferred all of its assets to PMI. Concurrently
with this transfer, the Company distributed on a pro rata basis all of its stock
ownership in PMI to the holders of its common stock (the "Distribution"). As a
result of this transfer and the Distribution, PMI will operate independently
from the Company and as a successor to the Company's business and operations.
-8-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 9 - SUBSEQUENT EVENTS, CONTINUED
TRANSFER OF SHARES TO KEATING REVERSE MERGER FUND, LLC
On April 23, 2004, IEG sold 37,185,000 shares of the Company's common stock
owned by it to Keating Reverse Merger Fund, LLC. (KRM Fund) for an aggregate
purchase price of $350,000. On April 26, 2004, KRM Fund purchased 5,000,000
shares of common stock from the Company for an aggregate purchase price of
$50,000. As of May 17, 2004 KRM Fund owned 42,185,000 shares, 80.35% of the
Company's common stock and the other shareholders of the Company owned
10,315,000 shares, or 19.65% of its common stock. See Form 8-K/A filed on May
14, 2004 for the pro forma effects of the transfer of the assets and debt to
equity conversion.
SHARES ISSUED FOR SERVICES RENDERED
On April 2, 2004, the Company cancelled 900,000 shares of common stock issued to
its former President, Leonard M. Perle, who resigned for health reasons. On
April 2, 2004, the Company issued 900,000 shares of common stock to Larry Legal
as executive compensation for services rendered having a fair value of $9,000.
During April 2004, the Company cancelled 800,000 shares of common stock
previously issued to Pro Finishes, Inc. for marketing services. The Company
issued 800,000 shares of common stock to IEG during April 2004 as compensation
for marketing services rendered having a fair value of $8,000.
On April 26, 2004, 2,000,000 shares of the Company's common stock was issued to
Kevin R. Keating, the new President of the company as executive compensation for
services rendered. The fair value of the services rendered was $20,000.
On April 26, 2004, 500,000 shares of the Company's common stock was issued to
Bertrand T. Unger for consulting services rendered. The fair value of the
services rendered was $5,000.
CHANGES IN BOARD OF DIRECTORS, OFFICERS, AND COMPANY ADDRESS
In connection with KRM Fund's acquisition of the Company's shares, Larry Legel
resigned as chairman of the Company's Board of Directors and as its President
and Kevin R. Keating was nominated to serve as a Director and as the Company's
President, Secretary and Treasurer. Concurrently, the principal executive office
of the company was moved to 936A Beachland Blvd., Suite 13, Vero Beach, FL
32963.
LICENSE AGREEMENT
On April 20, 2004 a royalty payment became due on the required fixed payment
pursuant to the License Agreement. The Company had been negotiating an amendment
to the aforesaid license agreement. The license and the related liability were
transferred to PMI, as of April 21, 2004. The Company no longer has the license
agreement nor does it owe any royalty payments to the licensor.
-9-
PUREZZA GROUP, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTHS ENDING
MARCH 31, 2004
(UNAUDITED)
NOTE 9 - SUBSEQUENT EVENTS
LICENSE AGREEMENT
On April 21, 2004, the Phoslock License Agreement and the related liability to
pay royalties to Integrated were transferred from the Company to PMI and the
Company discontinued its Phoslock line of business.
At the time the transfers were made, the license agreement was being
renegotiated. Pursuant to that agreement, a fixed royalty payment would have
been due April 20, 2004 but that payment was not going to be paid because other
issues concerning the license agreement were unresolved. Upon the transfer, the
Company no longer has the license nor does it owe any royalty payments to the
licensor. Since the original cost of the license had already been expensed in a
prior year and the previously required royalty payments had been waived through
2003, there is no effect on the balance sheet as of March 31, 2004 due to the
transfer.
As of April 21, 2004 there is no future liability under the license agreement
and the Company is no longer liable for $24,783,750 in future royalty
commitments as stated under Note 5, COMMITMENTS.
-10-
ITEM 2-- Management's Discussion and Analysis or Plan of Operation
The Company was incorporated under the laws of the State of Florida on August 9,
2001 for the purpose of marketing Phoslock, a patented product which
efficiently removes phosphorus and other oxyanions in natural and industrial
waters and wastewater streams.
In December 2003, the Company's President resigned due to health reasons and in
March 2004, management determined that the Company did nor have sufficient
financial nor personal resources to market and commercially exploit Phoslock.
Accordingly, on April 23, 2004 the Company discontinued the Phoslock product
line and transferred to its wholly owned subsidiary, Purezza Marketing, Inc.
("PMI") all of its assets and operations in exchange for PMI's assumption of,
and indemnifications of the Company from, all of the Company's liabilities and
obligations (the "Transfer"). Following the Transfer, all of the shares of PMI's
common stock, held by the Company were distributed (the "Distribution") to the
holders of the Company's common stock. As a result of the Transfer and the
Distribution, PMI now operates independently from the Company and as a successor
to the Company's business and operations.
Plan of Operations
Since that Transfer and Distribution and after a change in control and
management, the Company's objective has been to acquire a company that will have
experienced management and opportunities for growth in exchange for its
securities.
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 advantages of an Issuer who has
complied with the Securities Exchange Act of 1934 ("1934 Act"). The Company
will not restrict its search to any specific business, industry, or geographical
location, and 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 may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
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 purpose. The Company
may acquire assets end establish wholly owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
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, management believes that there are numerous
firms seeking the benefits of an Issuer who has complied with the 1934 Act. Such
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes), for all shareholders, and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. The Company has, and will continue to have,
limited capital with which to provide the owners of business opportunities with
any significant cash or other assets. However, management believes the Company
will be able to offer owners of acquisition candidates the opportunity to
acquire a controlling ownership interest in an Issuer who has complied with the
1934 Act without incurring the cost and time required to conduct an initial
public offering.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of the Company. Management intends to
concentrate on identifying preliminary prospective business opportunities which
may be brought to its attention through present associations of the Company's
officers and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such matters as the
available technical, financial and managerial resources; working capital and
other financial requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that management;
the potential for further research, development or exploration; specific risk
factors not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth for expansion; the
potential for profit; the public recognition of acceptance of products, services
or trades; name identification; and other relevant factors. Officers and
directors of the Company expect to interview and/or meet with management and key
personnel of the business opportunity as part of their investigation. To the
extent possible, the Company intends to uti1ize written reports and
investigation to evaluate the above factors, the Company will not acquire or
merge with any company for which audited financial statements cannot be obtained
within a reasonable period of time after closing of the proposed transaction.
Acquisition 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,
it is probable that the present management and shareholders of the Company will
no longer be in control of the Company. In addition, the Company's directors
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 or may sell their
stock in 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.
-11-
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under application 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 an inactive company. 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 on the
Company's securities in the future, if such 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 368(a)(l) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80 percent or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company would retain
less than 20 percent of the issued and outstanding shares of the surviving
entity, which would result in significant dilution in the equity of such
shareholders.
As part of the Company's investigation, the officers and directors of the
Company expect to interview and/or meet with management and key personnel, may
visit and inspect material facilities, obtain independent analysis of
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise. The
manner in which the Company participates in an opportunity will depend on the
nature of the opportunity, the respective needs and desires of the Company and
other parties, the management of the opportunity and the relative negotiation
strength of the Company and such other management.
With respect to any merger or acquisition and 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 assets and expectations of growth. 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, 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 herein 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 1934 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 1934
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 Company may fail to satisfy the reporting requirements under the 1934 Act
which may cause the Company's shares to no longer be eligible for trading and
quotation of the over-the-counter Bulletin Board.
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ITEM 3 Controls and Procedures
As of March 31, 2004, to the extent applicable to a dormant company, the Company
carried out an evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures (as defined in Exchange Act
Rule 13a-l4(c) and 15d-14(o)). Based upon that evaluation, the Chief Executive
and Financial Officer concluded that the Company's disclosure controls and
procedures are effective.
There are no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the evaluation.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings - None
ITEM 2 - Changes in Securities - None
ITEM 3 - Defaults upon Senior Securities - None
ITEM 4 - Submission of Matters to a Vote of Security Holders - None
ITEM 5 - Other Information
ITEM 6 - Exhibits and Reports on 8-K.
(a) Exhibits
Exhibit # Exhibit Title
31 Certification pursuant to Rule 13a-14(a) and 15d-14(a)
32 Certification pursuant to Section 1350 of Title 18 of
the United States Code
(b) Reports on Form 8-K
The following current reports on Form 8-K were filed during the quarter ended
March 31, 2004:
1. Form 8-K dated March 30, 2004, reporting a Change in Control and
Disposition of Assets.
2. Form 8-K dated May 14, 2004 filing certain Exhibits prepared in
connection with the Change in Control.
3. Form 8-K dated May 17, 2004, filing Pro Forma Financial Information
relating to the Disposition of Assets.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized,
PUREZZA GROUP, INC
By: /s/ KEVIN R. KEATING
--------------------------------------
Name: Kevin K, Keating
Title: Chief Executive Officer
Dated: July 23, 2004
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