Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2 Filing Table of Contents
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SB-2/A — Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer Document Table of Contents
AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION
REGISTRATION STATEMENT NO. 333-92336
Securities and Exchange Commission
Washington D.C. 20549
AMENDMENT 4
FORM SB-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Sky Way Aircraft, Inc.
(Exact name of registrant as specified in its charter)
Nevada7389 48-1256417
(State of (Primary standard industrial (I.R.S. employer
Incorporation) classification code number) identification number)
6021 - 142nd Avenue North
Clearwater, FL33760
727.535.8211
(Address and telephone number of Registrant's
principal executive offices)
The registered office of this corporation is at
202 North Curry Street, Suite 100, City of Carson City, State of Nevada, 89703-4121
The resident agent is State Agent and Transfer Syndicate, Inc.
Telephone: 775.882.1031
(Name, address, and telephone number
of Agent for Service of Process)
Copies to:
Williams Law Group, P.A.
2503 W. Gardner Ct.
Tampa FL 33611
Phone: 813.831.9348
Fax: 813.832.5284
Approximate Date of Commencement of Proposed Sale
to the Public: Effective date of this Registration
Statement
If any of the securities being registered on this
Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act
of 1993, check the following box [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Class Amount of
Securities to be Shares to be Valuation Aggregate Registration
Registered Registered Per Share Valuation Fee
Common Shares 5,000,000 $17.50 $87,500,000 $8050.00
1
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
Sky Way Aircraft, Inc.
$87,500,000
5,000,000 Common Shares
At $17.50 per Common Share
There is no minimum offering amount.
The common shares are being offered on a self underwritten basis by Brent C.
Kovar and James Kent, officers and directors of Sky Way Aircraft.
Our offering will commence on the effective date of this prospectus and will
terminate no later than December 31, 2003.
This is our initial public offering and no public market current exists for our
securities. We have not applied to be listed on any trading market or exchange.
An investment in our securities is speculative and involves a high degree of
risk. Consider carefully the risk factors beginning on page 8 in the prospectus.
Since there is no minimum amount of shares that must be sold, the proceeds of
the offering may be $0 to $87,500,000. We may receive no proceeds.
Our officers and directors will sell the securities.
Neither the Securities and Exchange Commission, nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is March __, 2003.
2
TABLE OF CONTENTS
Summary........................................................................6
Risk Factors...................................................................9
Our poor financial condition raises substantial doubt about our
ability to continue as a going concern. You will be unable to
determine whether we will ever become profitable.......................9
Because our ability to continue as a going concern is in doubt
and we have no definitive plan in place that is capable of
removing the threat to the continuation of our business, we may
not be able to continue operations in the future.......................9
We have a limited operating history; because our planned growth
is contingent upon receiving additional funding, you will be
unable to evaluate whether our business will be successful.............9
If we are unable to obtain sufficient funds to close the
acquisition of assets from Claircom Communications Group,
Inc., dba AT&T Wireless Services, Aviation Communications
Division, we will not be able to implement our business plan,
and you may lose your entire investment...............................10
Because our agreement with Claircom Communications Group, Inc.,
dba AT&T Wireless Services, Aviation Communications Division does
not give us any rights to the ground stations, towers and related
equipment that was part of the Claircom Communications network,
if we do not obtain rights to the ground stations, equipment and
towers, we will not be able to implement our business plan............10
Because we require an FCC license for transmission of data
between the ground and airplanes, we may not be able to implement
our business plan.....................................................10
If signal receiving aircraft equipment currently in place is
removed or if we are unable to secure new installations in
additional aircraft, which will also require additional FCC
approval, we may not be able to implement our business plan...........10
If we do not secure transmission facilities and equipment to
transmit data between the from the towers to ground locations
for our airplane applications and between ground locations for
our homeland security applications, we may not be able to
implement our business plan...........................................10
If we do not complete our operations center, we will not be
able to implement our business plan...................................11
If we do not have the use of a secure data storage facility, we
will not be able to implement our business plan.......................11
Because our officers and directors are officers and directors
of Sky Way Global, our technology licensor, they are subject to
certain conflicts of interest which could reduce or eliminate
our revenues or cause us to cease operations..........................11
Because our wireless data transmission business depends upon
our licensed intellectual property rights, for which a patent has
been applied but has not been granted, our revenues may be
reduced...............................................................11
Because our wireless communication technology has not been
accepted by the public as an acceptable form of communication with
aircraft, we face significant barriers to acceptance of our
services..............................................................11
Because the wireless communication industry is subject to rapid
technological change, our technology could become outdated, which
could reduce our revenues.............................................11
We will depend on relationships with the airline industry and
applicable government agencies. If we cannot develop these
relationships, we will not be profitable and you may lose
your entire investment................................................12
Our vulnerability to security breaches, glitches and other
computer failures could harm ability to develop and retain
our customer base, which could reduce our revenues....................12
You will experience immediate dilution of at least $11.69 or
66.80% of your investment if we raise the entire offering amount
and at least $16.58 or 94.74% of your investment if we raise
only $10,000,000......................................................12
Because many of our competitors have financial, personnel and
other resources, including brand name recognition, substantially
greater than ours, we may not be able to compete effectively,
which could reduce our revenues.......................................12
Day-to-day management decisions are made by Brent Kovar,
president and James Kent, CEO AND CFO. If we lose the services
of Mr. Kovar or Mr. Kent, development of our business plan may
be slower than anticipated............................................12
Brent Kovar, president and James Kent, CEO AND CFO will devote
less than full time to our business, which may reduce our
revenues..............................................................12
Our management has significant control over stockholder matters,
which may affect the ability of minority stockholders to
influence our activities..............................................13
Because there is no minimum offering amount, we may not sell
sufficient common shares in this offering to complete our business
plan..................................................................13
3
The offering price of $17.50 per share has been arbitrarily setby our board of directors and accordingly does not indicate theactual value of our business..........................................13
Because there is not now and may never be a public market for
our common stock, investors may have difficulty in reselling their
shares. We may not meet the National Association of Securities
Dealers, Inc. BBX exchange listing requirements which may be
implemented in 2003 or thereafter, which may lead to increased
investment risk and inability to sell your shares.....................13
Because in the future, our stock may trade on the over-the-counter
bulletin board, our stockholders may have greater difficulty in
selling their shares when they want and for the price they want.......13
Because stocks traded on the bulletin board are usually thinly
traded, highly volatile, have fewer market makers and are not
followed by analysts, our stockholders may have greater
difficulty in selling their shares when they want and for
the price they want...................................................14
Certain Nevada corporation law provisions could prevent a
potential takeover of us which could adversely affect the market
price of our common stock or deprive you of a premium over the
market price..........................................................14
Use of Proceeds...............................................................21
Dilution......................................................................26
Plan of Operations............................................................28
Market for Common Equity and Related Stockholder Matters......................30
Determination of Offering Price...............................................32
Plan of Distribution..........................................................32
Directors, Executive Officers, Promoters, and Control Persons.................32
Executive Compensation........................................................34
Security Ownership of Certain Beneficial Owners and Management................34
Description of Property.......................................................35
Indemnification...............................................................35
Certain Relationships and Related Transactions................................35
Description of Securities.....................................................36
Legal Proceedings.............................................................37
Interest of Named Experts.....................................................37
Financial Statements..........................................................38
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.................................................................39
4
Summary
The prospectus summary contains a summary of all material terms of the
prospectus. You should carefully read all information in the prospectus,
including the financial statements and their explanatory notes, under the
Financial Statements section beginning on page F-1 prior to making an investment
decision. In addition, you should consult you tax, legal, or business advisor
before making an investment.
Our Organization
Sky Way Aircraft was incorporated on April 24, 2002 under the laws of the State
of Nevada. We are authorized to issue 40,000,000 shares of $.001 par value
common stock of which 10,000,000 shares are currently outstanding, after a
1.8516 for 1 share stock split authorized March 11, 2003. We are authorized to
issue 10,000,000 shares of $.001 par value preferred stock, of which no shares
are outstanding.
Our Business
Our principal executive and administrative offices are located at 6021 - 142nd
Avenue North, Clearwater, FL33760. Our phone number is 727.535.8211. This
facility will also house our research lab and engineering staff and a network
monitoring and operations center.
From our inception on April 24, 2002 to October 31, 2002, we incurred operating
losses of ($241,184) and had a net working capital deficiency of $241,184. In
addition, as of October 31, 2002, we had only $831 of current cash available.
Our cash resources of $831 are not sufficient to satisfy our cash requirements
over the next 12 months. We will need to secure a minimum of $1,000,000 to
satisfy such requirements, but we need an additional minimum of $3,400,000 to
finance our planned expansion in the next 12 months, which funds will be used
for asset acquisition and product development, and personnel. We will need an
additional approximately $600,000 to repay our advances from Sky Way Global,
Inc., an affiliate. In order to become profitable we may still need to secure
additional debt or equity funding. We hope to be able to raise funds from this
offering of our stock. However, we may not raise any funds from this offering.
We have no other source of funding identified. Our failure to raise funds in
this offering would impair and delay our ability to implement our business plan
and to repay advances from Sky Way Global.
Sky Way Aircraft was formed to utilize wireless data transmission software
technology developed by Sky Way Global, Inc., an affiliate, in certain
applications only. We can only use this technology in homeland security and
other applications in the aircraft industries. This technology is a software
program for data indexing, which is similar to data compression but which
mitigates data loss problems associated with compression. This technology
permits faster and less expensive transmission of data, video, voice and audio
between the ground and an airplane or other homeland security related ground
locations than using traditional, non-indexed data transmission mechanisms. This
is because indexed data takes up less transmission space, and thus travels
faster and costs less to transmit than non-indexed data transmission.
We currently have no customers. All of our products and services are in the
development stage and will require additional testing. In addition, we need to
develop our infrastructure and secure agreements with a number of third party
service providers in order to commence operations.
We are currently in the process of testing our technology in the transmission of
data between the ground and airplanes. We have demonstrated that video and
internet connection data can be transmitted between the ground and airplanes
using our technology. We are in the process of additional testing to refine
these communication links. We will not be able to finish testing until we obtain
the necessary funding.
When initial testing is completed, we anticipate that our technology will allow
customers to use our data transmission network for the following homeland
security and other types of uses in ground to aircraft to ground communications:
5
o Video link
o Internet Access
o Video link anti-terrorism applications.
o Remote control anti-terrorism applications.
o Monitor aircraft systems.
o Customer and entertainment services, including telephone and
audio/video on demand.
In the future, we anticipate that we will also be able to offer our customers
emergency communication networks that can be used for surveillance and
monitoring of chemical, biological, radiological, nuclear or other terrorist
attacks on locations such as
o Manufacturing plants
o Ports of entry
o Utility sites
o Oil and gas pipelines
o Airline and ship cargo containers
Sky Way Global has developed and tested this type of communications network in
Tampa Florida, although for consumer rather than homeland security uses.
However, before we can implement any of these services, we will also need:
o Transmission facilities and equipment to transmit between the ground
and airplanes
o FCC license for transmission between the ground and airplanes
o Transmission facilities and equipment to transmit between the towers
to ground locations for our airplane applications and between ground
locations for our homeland security applications
o Existing equipment in airplanes to remain in place and additional
equipment to installed in additional airplanes
o Development of a Network Operations and Monitoring Center
o An agreement with a secure facility for off-site data storage
License from and other relationships with Sky Way Global
As of March 11, 2003, following our stock split, we entered into an Amended and
Restated Software License and Services Agreement with Sky Way Global. Sky Way
Global granted to us license to use their patent pending software application
specified for our business operations in the following areas only, reserving to
Sky Way Global the right to license to others for other uses: homeland security
and other applications in the aircraft industries. In consideration of the grant
of the license, we issued Sky Way Global or its assigns 1,360 shares of our
common stock.
Technical support services will be provided as reasonably requested by us. We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
Engineering support services will be provided as reasonably requested by us. We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
The Agreement and application license granted under the Agreement shall continue
perpetually unless terminated, for example, if we issue more than 20% of our
then issued and outstanding common stock on a fully diluted basis in any 12
month period and such issuance directly or indirectly results in of if as a
result thereof there otherwise occurs a change in the majority of the board of
directors. Upon termination, we shall cease using, and shall return or destroy,
all copies of the applicable applications.
6
We and Sky Way Global have common officers, directors and beneficial principal
shareholders. As of the date of this registration statement, Sky Way Global has
advanced us approximately $597,000 under an oral agreement, due upon demand with
no interest.
Business of Sky Way Global
Sky Way Global LLC is a Nevada limited liability corporation formed in September
2000. It has had losses of $202,286.04 to date. As of February 28, 2003, it has
$264,420 in cash resources.
Sky Way Global provides wireless broadband internet service and private network
service not related to the homeland security monitoring and aircraft industry
applications to be provided by us. These services are based upon the same data
indexing technology licensed to us.
Sky Way Global currently provides wireless internet service to approximately 50
individual customers in Tampa, Florida. Sky Way Global has no other customers
other than us.
Asset Purchase Agreement
On January 16, 2003, we signed an Asset Purchase Agreement with Claircom
Communications Group, Inc., dba AT&T Wireless Services, Aviation Communications
Division to purchase ground station information, a restriction on selling
intellectual property until February 28, 2003 and certain network operations
center related equipment and software embedded in the equipment. As this date
has passed, Claircom is now free to sell this intellectual property. The price
was allocated $200,000 for the ground site information, $50,000 for the
restriction on Claircom's transfer of intellectual property, and $250,000 for
the equipment. $250,000 was paid upon execution for the ground site information
and the restriction on ability to sell the intellectual property and $250,000
cash is to be paid for the equipment by May 31, 2003. The agreement also
provides that the price for assignment and intellectual property consisting of
license rights to patents and applications for patents for the equipment used in
the aircraft will be an additional $1,000,000, subject to a final agreement
between the parties being negotiated. No agreement has been reached concerning
the acquisition of the intellectual property.
We intend to utilize funds from this offering to complete the purchase of the
equipment and intellectual property. We have no other source of funds to
complete the purchase identified.
The Offering
We are offering up to a maximum of 5,000,000 common shares at $17.50 per share.
There is no minimum amount of securities that must be sold in this offering and
accordingly, no minimum amount of proceeds that will be raised. Investors may
end up holding shares in a company that has not raised sufficient proceeds from
the offering to continue operations and has an illiquid market for their shares.
The offering will terminate on or before December 31, 2003. Our officers and
directors are offering the common shares on a self- underwritten basis.
There is no minimum offering amount and no escrow account has been established.
All proceeds from this offering will be deposited directly into our operating
account There is no public market for our common shares.
Use of Proceeds
We will use the net proceeds of the offering over the next twelve months to
commence operations, repay debt to affiliates, fund the asset purchase and for
working capital.
7
Risk Factors
Our poor financial condition raises substantial doubt about our ability to
continue as a going concern. You will be unable to determine whether we will
ever become profitable.
From our inception on April 24, 2002 to October 31, 2002, we incurred operating
losses of ($241,184) and had a net working capital deficiency of $241,184. In
addition, as of October 31, 2002, we had only $831 of current cash available.
Our cash resources of $831 are not sufficient to satisfy our cash requirements
over the next 12 months. We will need to secure a minimum of $1,000,000 to
satisfy such requirements, but we need an additional minimum of $3,400,000 to
finance our planned expansion in the next 12 months, which funds will be used
for asset acquisition and product development, and personnel. We will need an
additional approximately $600,000 to repay our advances from Sky Way Global,
Inc., an affiliate. In order to become profitable we may still need to secure
additional debt or equity funding. We hope to be able to raise funds from this
offering of our stock. However, we may not raise any funds from this offering.
We have no other source of funding identified. Our failure to raise funds in
this offering would impair and delay our ability to implement our business plan
and to repay advances from Sky Way Global.
Because our ability to continue as a going concern is in doubt and we have no
definitive plan in place that is capable of removing the threat to the
continuation of our business, we may not be able to continue operations in the
future.
Our ability to continue as a going concern is dependent on our ability to raise
funds to implement our planned development; however we may not be able to raise
sufficient funds to do so. Our independent auditors have indicated that there is
substantial doubt about our ability to continue as a going concern over the next
twelve months. Other than this offering, in which we may not raise any funds, we
have no definitive plan in place that is capable of removing the threat to the
continuation of our business. Our poor financial condition could inhibit our
ability to achieve our business plan, because we are currently operating at a
substantial loss with no operating history and revenues, an investor cannot
determine if we can remain in business or will ever become profitable.
We have a limited operating history; because our planned growth is contingent
upon receiving additional funding, you will be unable to evaluate whether our
business will be successful.
Our business development is contingent upon raising debt or equity funding. We
have no sources of funding other than this offering identified. You must
consider the risks, difficulties, delays and expenses frequently encountered by
development stage companies in our business, which have little or no operating
history, including whether we will be able to overcome the following challenges:
o Inability to raise necessary revenue to operate for the next 12 months
or thereafter
o Advertising and marketing costs that may exceed our current estimates
o Unanticipated development expenses
o Our ability to generate sufficient revenues to offset the substantial
costs of operating our business
Because significant up-front expenses, including advertising, sales, and other
expenses are required to develop our business, we anticipate that we may incur
losses until revenues are sufficient to cover our operating costs. Future losses
are likely before our operations become profitable. As a result of our lack of
operating history, you will have no basis upon which to accurately forecast our:
o Total assets, liabilities, and equity
o Total revenues
o Gross and operating margins
o Labor costs
8
Accordingly, the proposed business plans described in this prospectus may not
either materialize or prove successful and we may never be profitable. Also, you
have no basis upon which to judge our ability to develop our business and you
will be unable to forecast our future growth.
If we are unable to obtain sufficient funds to close the acquisition of assets
from Claircom Communications Group, Inc., dba AT&T Wireless Services, Aviation
Communications Division, we will not be able to implement our business plan, and
you may lose your entire investment.
A key part of our business plan involves the acquisition of certain network
assets from Claircom Communications Group, Inc., dba AT&T Wireless Services,
Aviation Communications Division. We need to secure $250,000 in additional funds
prior to May 31, 2003 to close this acquisition. Further, we must secure an
additional $1,000,000 to secure certain patent rights. Under the agreement,
Claircom is now free to sell this intellectual property to our competitors. We
have no source of funds to finance this required amount identified. If we do not
secure the necessary funds, we may not be able to implement our business plan
and you may lose your entire investment.
Because our agreement with Claircom Communications Group, Inc., dba AT&T
Wireless Services, Aviation Communications Division does not give us any rights
to the ground stations, towers and related equipment that was part of the
Claircom Communications network, if we do not obtain rights to the ground
stations, equipment and towers, we will not be able to implement our business
plan.
Our agreement with Claircom Communications Group, Inc., dba AT&T Wireless
Services, Aviation Communications Division does not give us any rights to the
ground stations, towers and related equipment that was part of the Claircom
Communications network. If we do not obtain rights to the ground stations,
equipment and towers, we will not be able to implement our business plan. Of the
162 tower sites in the system, we will have to negotiate separate agreements
with approximately 150 separate owners. We have not yet commenced any formal
negotiations with these owners. We cannot predict, when, if ever, we will
acquire these rights.
Because we require an FCC license for transmission of data between the ground
and airplanes, we may not be able to implement our business plan.
The Claircom Communications network operated in the private frequency band of
850MHz to 859MHz range. The Claircom Communications' FCC license has expired and
we are in the process of applying for this license. If we do not secure this
license, we will not be able to implement our business plan.
If signal receiving aircraft equipment currently in place is removed or if we
are unable to secure new installations in additional aircraft, which will also
require additional FCC approval, we may not be able to implement our business
plan.
There is certain equipment related to the network installed in approximately
1700 commercial and 800 corporate airplanes that is used to send and receive
ground signals in the aircraft. In order to implement our business plan, we need
this equipment to stay in place. This equipment is owned by the aircraft owners
and can be removed at will. In addition, in order to implement our business
plan, we will have to acquire comparable equipment and enter into agreements
with aircraft owners to have this equipment installed. Although we believe we
can acquire additional equipment to be installed in aircraft in the future, we
have not entered into any negotiations to acquire this equipment. We have not
commenced negotiations with any aircraft owners to install our equipment. We
cannot predict, when, if ever, we will acquire this equipment or enter into
these agreements. In addition, we anticipate that we will require further
certifications or approvals from the FCC for new equipment to be installed on
airplanes in the future.
If we do not secure transmission facilities and equipment to transmit data
between the from the towers to ground locations for our airplane applications
and between ground locations for our homeland security applications, we may not
be able to implement our business plan.
We currently are negotiating but have no agreements for transmission or data
between the from the towers to ground locations for our airplane applications
and between ground locations for our homeland security applications. If we do
not secure such facilities and equipment, we may not be able to implement our
business plan.
9
If we do not complete our operations center, we will not be able to implement
our business plan.
An operations center, under development and anticipated to be completed in
September 2003, pending receipt of financing, will be located in Clearwater,
Florida and will provide 24 hour monitoring, recording and network management
needed for the network. The operations center will provide all the facilities,
fiber, and support services needed to meet the surveillance, monitoring and
operational requirements for a nationwide network. We cannot implement our
business plan if we do not complete our planned operations center.
If we do not have the use of a secure data storage facility, we will not be able
to implement our business plan.
We will need to enter into an agreement with a third party for secure storage of
data transmitted through our network. We have no agreement in place for this
service and we cannot predict when, if ever, we will enter into an agreement for
secure data storage. We cannot implement our business plan if we do not obtain
an agreement with a secure data storage facility.
Because our officers and directors are officers and directors of Sky Way Global,
our technology licensor, they are subject to certain conflicts of interest which
could reduce or eliminate our revenues or cause us to cease operations.
Our officers and directors are officers and directors of Sky Way Global, our
technology licensor. The agreement may be terminated as follows: Sky Way Global
may terminate the Agreement or any application license upon written notice if we
materially breach the Agreement and fail to correct the breach within thirty
days following written notice specifying the breach. In addition Sky Way Global
may immediately and without penalty terminate this agreement if we issue more
than 20% of our then issued and outstanding common stock on a fully diluted
basis in any 12 month period and such issuance directly or indirectly results in
of if as a result thereof there otherwise occurs a change in the majority of the
board of directors. Upon termination, we shall cease using, and shall return or
destroy, all copies of the applicable applications. Accordingly, our officers
and directors are subject to certain conflicts of interest which could eliminate
our revenues or cause us to cease operations. We have no provisions in place for
dealing with these conflicts.
Because our wireless data transmission business depends upon our licensed
intellectual property rights, for which a patent has been applied but has not
been granted, our revenues may be reduced.
There is currently only a patent pending on our licensed technology. We cannot
terminate our license agreement even if a patent is not granted. The patent may
not be granted, in which case competitors could utilize our licensed technology
to compete with us, which could reduce our revenues.
Because our wireless communication technology has not been accepted by the
public as an acceptable form of communication with aircraft, we face significant
barriers to acceptance of our services.
Our business involves the use of wireless technology to communicate with
aircraft. The use wireless broadband technology using our indexing technology is
relatively new form by which to provide these type services. Traditionally,
these communications are done much as traditional cell phone technology, which
lacks our broadband and indexing technology. Potential customers may perceive
these traditional methods of communication as being more reliable than our newer
technology. Accordingly, we face significant barriers to overcome the consumer
preferences of traditionally used technology for the type of services that we
offer.
Because the wireless communication industry is subject to rapid technological
change, our technology could become outdated, which could reduce our revenues.
The wireless communications industry is subject to rapid technological change.
The use wireless broadband technology using our indexing technology could become
outdated. Unless our licensed technology were then able to be changed to keep up
with developments in the industry, customers could switch to alternative
technologies and our revenues could be reduced
10
We will depend on relationships with the airline industry and applicable
government agencies. If we cannot develop these relationships, we will not be
profitable and you may lose your entire investment.
We do not currently have any relationships within the airline industry.
Development and distribution of our services will be highly dependent on
establishing relationships with aviation/aerospace product and service providers
as well as airlines, air charter companies, and corporate flight departments
specific to our business plan. The airline industry's current financial
condition has caused airlines and related service providers to postpone, and in
some cases, cancel new technology investments. The aftermath of September 11,2001 has had a negative effect on the airline industry's financial condition.
Our operations may never become profitable if we cannot establish the necessary
relationships to distribute our services.
Our vulnerability to security breaches, glitches and other computer failures
could harm ability to develop and retain our customer base, which could reduce
our revenues.
We are an wireless communications service provider. The secure transmission of
confidential information over public networks is a critical element of our
operations. A party who is able to circumvent security measures could
misappropriate proprietary information or cause interruptions in our operations.
If we are unable to prevent unauthorized access to our users' information and
transactions, our customer relationships will be harmed. Although we intend to
implement industry-standard security measures, these measures may not prevent
future security breaches. Heavy stress placed on our systems could cause systems
failures or operation of our systems at unacceptably low speeds. These
operational problems could reduce our revenues.
You will experience immediate dilution of at least $11.69 or 66.80% of your
investment if we raise the entire offering amount and at least $16.58 or 94.74%
of your investment if we raise only $10,000,000.
Immediately after the offering, if we raise the entire amount, the book value
per common share will decrease by $11.69 or 66.80% less than the offering price.
If we only raise 25% of the total offering amount, the book value per common
share will decrease by $15.58 or 89.03% less than the offering price.
Because many of our competitors have financial, personnel and other resources,
including brand name recognition, substantially greater than ours, we may not be
able to compete effectively, which could reduce our revenues.
The wireless data transmission industry is highly competitive. Many of our
current and potential competitors have financial, personnel and other resources,
including brand name recognition, substantially greater than ours, as well as
other competitive advantages over us. This could reduce our revenues.
Day-to-day management decisions are made by Brent Kovar, president and James
Kent, CEO AND CFO. If we lose the services of Mr. Kovar or Mr. Kent, development
of our business plan may be slower than anticipated.
The success of our business is dependent upon the expertise of Brent Kovar,
president and James Kent, CEO AND CFO, who will continue to control our
day-to-day business affairs after this offering. Because Brent Kovar, president
and James Kent, CEO AND CFO are essential to our operations, you must rely on
their management decisions. We have not entered into any agreement with them
that would prevent them from leaving us, nor have we obtained any key man life
insurance relating to them. If we lose their services, we may not be able to
hire and retain another president or CEO AND CFO. As a result, the loss of any
of these individual's services could reduce our revenues.
Brent Kovar, president and James Kent, CEO AND CFO will devote less than full
time to our business, which may reduce our revenues.
Brent Kovar, president devotes approximately 60% of his time and James Kent, CEO
AND CFO devotes approximately 90% of his time to our business. They may not be
able to devote the time necessary to our business to assure successful
implementation of our business plan. Further, they are is subject to a conflict
of interest as to whether to spend their time on our or other's activities,
including that of our affiliate, Sky Way Global.
11
Our management has significant control over stockholder matters, which may
affect the ability of minority stockholders to influence our activities.
Collectively, our officers and directors beneficially own all of our outstanding
common stock. As such, our officers and directors control the outcome of all
matters submitted to a vote by the holders of our common stock, including the
election of our directors, amendments to our certificate of incorporation and
approval of significant corporate transactions. Additionally, our officers and
directors could delay, deter or prevent a change in our control that might be
beneficial to our other stockholders.
Because there is no minimum offering amount, we may not sell sufficient common
shares in this offering to complete our business plan.
Any funds received from the sale of common shares will be immediately available
to us. There is no escrow account or minimum offering amount that must be raised
before funds can be released. We may not raise sufficient funds to continue
operations. Investors may end up holding shares in a company that has not raised
sufficient proceeds from the offering to continue operations.
The offering price of $17.50 per share has been arbitrarily set by our board of
directors and accordingly does not indicate the actual value of our business.
The offering price of $17.50 per share is not based upon earnings or operating
history, does not reflect the our actual value, and bears no relation to our
earnings, assets, book value, net worth or any other recognized criteria of
value. No independent investment banking firm has been retained to assist in
determining the offering price for the shares. Accordingly, the offering price
should not be regarded as an indication of any future market price of our stock.
Because there is not now and may never be a public market for our common stock,
investors may have difficulty in reselling their shares. We may not meet the
National Association of Securities Dealers, Inc. BBX exchange listing
requirements which may be implemented in 2003 or thereafter, which may lead to
increased investment risk and inability to sell your shares.
Our common stock is currently not quoted on any market. No market may ever
develop for our common stock, or if developed, may not be sustained in the
future. Accordingly, our shares should be considered totally illiquid, which
inhibits investors ability to resell their shares.
If this Registration Statement is approved by the Securities and Exchange
Commission, we plan to apply to have our common stock quoted on the
Over-the-Counter Bulletin Board; however, the National Association of Securities
Dealers has proposed to the Securities and Exchange Commission that the
Over-the-Counter Bulletin Board be phased out beginning in 2003 and eliminated
thereafter, to be replaced with the BBX exchange. If this occurs, we may not
meet the new exchange listing requirements, including the requirement to have
one hundred round lot shareholders, and a float of 200,000 shares, one
independent director and an audit committee. Should we fail to meet the new
exchange requirements, you may lose your entire investment.
Because in the future, our stock may trade on the over-the-counter bulletin
board, our stockholders may have greater difficulty in selling their shares when
they want and for the price they want.
The over-the-counter bulletin board is separate and distinct from the Nasdaq
stock market. The bulletin board does not operate under the same rules and
standards as the Nasdaq stock market, including for example order handling
rules. The absence of these rules and standards may make it more difficult for a
stockholder to obtain execution of an order to trade and to obtain the price
they wanted for a trade. This means our shareholders may not be able to sell
their shares when they want for a price they want.
12
Because stocks traded on the bulletin board are usually thinly traded, highly
volatile, have fewer market makers and are not followed by analysts, our
stockholders may have greater difficulty in selling their shares when they want
and for the price they want.
Investors may have greater difficulty in getting orders filled because it is
anticipated that if our stock trades on a public market, it initially will trade
on the over-the-counter bulleting board rather than on Nasdaq. Investors' orders
may be filled at a price much different than expected when an order is placed.
Trading activity in general is not conducted as efficiently and effectively as
with Nasdaq-listed securities.
Investors must contact a broker dealer to trade bulletin board securities.
Investors do not have direct access to the bulletin board service. For bulletin
board securities, there only has to be one market maker.
Bulletin board transactions are conducted almost entirely manually. Because
there are no automated systems for negotiating trades on the bulletin board,
they are conducted via telephone. In times of heavy market volume, the
limitations of this process may result in a significant increase in the time it
takes to execute investor orders. Therefore, when investors place market orders
- an order to buy or sell a specific number of shares at the current market
price - it is possible for the price of a stock to go up or down significantly
during the lapse of time between placing a market order and getting execution.
Because bulletin board stocks are usually not followed by analysts, there may be
lower trading volume than for Nasdaq-listed securities.
Sales of our common stock under Rule 144 could reduce the price of our stock.
As of March 11, 2003, following our stock split, there are 10,000,000 Shares of
our common stock held by affiliates that Rule 144 of the Securities Act of 1933
defines as restricted securities. No Shares have been sold pursuant to Rule 144
of the Securities Act of 1933, however as of April 24, 2004, 5,400,000 of these
shares held by affiliates are eligible for resale under 144, with the remainder
eligible March 1, 2004.
Once this registration statement is effective, the shares purchased in this
offering will be freely tradable without restrictions under the Securities Act
of 1933, except for any shares held by our affiliates, which will be restricted
by the resale limitations of Rule 144 under the Securities Act of 1933. The
availability for sale of substantial amounts of common stock under Rule 144
could reduce prevailing market prices for our securities.
We are authorized to issue preferred stock which, if issued, may reduce the
market price of the common stock.
Our directors are authorized by our articles of incorporation to issue up to
10,000,000 shares of preferred stock without the consent of our shareholders.
Our preferred stock, if issued, may rank senior to common stock with respect to
payment of dividends and amounts received by shareholders upon liquidation,
dissolution or winding up. Our directors will set such preferences. The issuance
of such preferred shares and the preferences given the preferred shares, do not
need the approval of our shareholders. The existence of rights, which are senior
to common stock, may reduce the price of our common shares. We do not have any
plans to issue any shares of preferred stock at this time.
Certain Nevada corporation law provisions could prevent a potential takeover of
us which could adversely affect the market price of our common stock or deprive
you of a premium over the market price.
We are incorporated in the State of Nevada. Certain provisions of Nevada
corporation law could adversely affect the market price of our common stock.
Because Nevada corporation law requires board approval of a transaction
involving a change in our control, it would be more difficult for someone to
acquire control of us. Nevada corporate law also discourages proxy contests
making it more difficult for you and other shareholders to elect directors other
than the candidates nominated by our board of directors.
13
FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus that are not historical fact are
forward-looking statements that which can be identified by the use of
forward-looking terminology such as "believes,""expects,""may,""will,""should," or "anticipates" or the negative thereof or other variations, thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. We have made the forward-looking statements with management's
best estimates prepared in good faith.
Because of the number and range of the assumptions underlying our projections
and forward-looking statements, many of which are effected by significant
uncertainties and contingencies that are beyond our reasonable control, some of
the assumptions inevitably will not materialize and unanticipated events and
circumstances may occur subsequent to the date of this prospectus.
These forward-looking statements are based on current expectations, and we will
not update this information other than required by law. Therefore, the actual
experience of Sky Way Aircraft, and results achieved during the period covered
by any particular projections and other forward-looking statements, should not
be regarded as a representation by Sky Way Aircraft, or any other person, that
we will realize these estimates and projections, and actual results may vary
materially. We cannot assure you that any of these expectations will be realized
or that any of the forward-looking statements contained herein will prove to be
accurate.
Business
Our principal executive and administrative offices are located at 6021 - 142nd
Avenue North, Clearwater, FL33760. Our phone number is 727.535.8211.
From our inception on April 24, 2002 to October 31, 2002, we incurred operating
losses of ($241,184) and had a net working capital deficiency of $241,184. In
addition, as of October 31, 2002, we had only $831 of current cash available.
Our cash resources of $831 are not sufficient to satisfy our cash requirements
over the next 12 months. We will need to secure a minimum of $1,000,000 to
satisfy such requirements, but we need an additional minimum of $3,400,000 to
finance our planned expansion in the next 12 months, which funds will be used
for asset acquisition and product development, and personnel. We will need an
additional approximately $600,000 to repay our advances from Sky Way Global,
Inc., an affiliate. In order to become profitable we may still need to secure
additional debt or equity funding. We hope to be able to raise funds from this
offering of our stock. However, we may not raise any funds from this offering.
We have no other source of funding identified.
Sky Way Aircraft was formed to utilize wireless data transmission software
technology developed by Sky Way Global, Inc., an affiliate. This technology will
be used in homeland security and other applications in the aircraft industries.
This technology is a software program for data indexing, which is similar to
data compression but which mitigates data loss problems associated with
compression. This technology permits faster and less expensive transmission of
data, video, voice and audio between the ground and an airplane or other
homeland security related ground locations than using traditional, non-indexed
data transmission mechanisms. This is because indexed data takes up less
transmission space, and thus travels faster and costs less to transmit than
non-indexed data transmission.
We currently have no customers. All of our products and services are in the
development stage and will require additional testing. In addition, we need to
develop our infrastructure and secure agreements with a number of third party
service providers in order to commence operations.
14
Product and Service Testing
We are currently in the process of testing our technology in the transmission of
data between the ground and airplanes. In order to provide uninterrupted
coverage to airborne aircraft, the signal will be passed from ground station to
ground station where the signal will actually be provided by two ground stations
simultaneously. As the signal weakens from the first ground station and
strengthens to the second ground station, the second ground station will take
over providing the primary signal to the aircraft.
Based upon our tests at 35,000 feet, data transmission coverage is estimated to
be within a radius of 300 miles from any ground based antenna. These preliminary
tests indicate that with the installation of a permanently installed external
antenna and computer systems, an increase in bandwidth to 12- 15 Mbps is
possible. Although our competition might be able to communicate at the same
speed, they lack our data integration technology such that they would have to
utilize such greater bandwidth that communication would be significantly less
economically feasible. Sky Way Global's engineering tests have demonstrated that
a maximum of 10-12 Mbps would be required to transport all the required aircraft
data and that the 300 air mile coverage that would be provided if we secure the
rights to utilize the towers of the Claircom Communication's network would be
sufficient to support most aircraft-related applications of our potential
customers.
Our tests have demonstrated that video and internet connection data can be
transmitted between the ground and airplanes using our technology. We are in the
process of additional testing to refine these communication links. We anticipate
that we will need and additional $500,000 for research and development and
$600,000 to complete this testing. If funds are available, we anticipate that
the testing will be completed in September 2003. This development and testing is
being done for us by Sky Way Global. We intend reimburse Sky Way Global for
these costs from the proceeds of this offering.
Aircraft Industry
Our potential customers include the airline companies as well as service
providers to airline companies who need to utilize data transmission
capabilities in connection with products or services they offer or may in the
future offer to the commercial aircraft industry.
When fully developed, we anticipate that customers will be able to utilize our
technology and network to implement the following services:
Video Link Anti-Terrorism and other applications. A video link can be used to
monitor activities in the cockpit and cabin of the aircraft. The video feed can
be viewed in real time or stored and viewed as needed. This video link could
also be used for passenger and employee security identification.
In addition to anti-terrorism applications, a two-way video feed could assisting
crewmembers or on-board medical or other personnel in emergency situations. Our
technology allows for real-time video up to 30 frames per second, with multiple
camera video surveillance systems that can provide both zoom and pan options
cover all areas from the cockpit to cabin, which can be utilized while the
airplane is airborne or on the tarmac.
Remote Control Anti-Terrorism applications. A remote control from the ground
could be used to fly a plane from the ground. It could also be coupled with the
capability of releasing a sleeping agent as a deterrent against terrorists
injuring passengers or destroying the aircraft.
Monitor aircraft systems. Our technology provides an interface to digital flight
data recorder and other data capture equipment onboard the aircraft, thereby
alerting operations of potential maintenance issues prior to the aircraft
landing and reaching its destination. It could also obviate the need to find the
"black boxes" or to capture this data on planes that don't have a black box in
case of a crash.
15
Customer and entertainment services. These services include:
o Internet access
o telephone services
o videos on demand
o audio on demand
o online shopping
o other in-flight entertainment services.
As a result of the events of September 11, 2001, there has been increased focus
on products and service that relate to aviation security. The current financial
situation within the aviation business has, however, weakened this market in the
short term. Sky Way Aircraft must build relationships with aerospace service
providers who are capable of integrating the Sky Way Global technology into
their current and future applications.
Customers will have to provide their own equipment to provide these products and
services, as our services will be limited to data transmission only. We have not
commenced any testing on these applications and will not be able to do so until
we obtain the funding necessary for the testing. We anticipate that we will need
and additional $600,000 to complete this testing. If funds are available, we
anticipate that the testing will be completed in September 2003. This
development and testing will also be done for us by Sky Way Global.
Homeland Security
When developed, we anticipate that we will also be able to offer our customers
emergency communication networks that can be used for surveillance and
monitoring of chemical, biological, radiological, nuclear or other terrorist
attacks on locations such as
o Manufacturing plants
o Ports of entry
o Utility sites
o Oil and gas pipelines
o Airline and ship cargo containers
Sky Way Global has developed and tested this type of communications network in
Tampa Florida, although for consumer rather than homeland security uses.
As a result of the events of September 11, 2001, there has been increased focus
on products and service that relate to homeland security. Sky Way Aircraft must
build relationships with homeland security monitoring service providers who are
capable of integrating the Sky Way Global technology into their current and
future applications.
Customers will have to provide their own equipment to provide these products and
services, as our services will be limited to data transmission only.
Actions Needed to Implement Our Business Plan
In addition to completing our testing, before we can implement any of our
planned services, we will also need:
o Transmission facilities and equipment to transmit between the ground
and airplanes
o FCC license for transmission between the ground and airplanes
o Transmission facilities and equipment to transmit between the towers
to ground locations for our airplane applications and between ground
locations for our homeland security applications
o Existing equipment in airplanes to remain in place and additional
equipment to installed in additional airplanes
o Development of a Network Operations and Monitoring Center
o An agreement with a secure facility for off-site data storage
16
Transmission facilities and equipment to transmit data between the ground and
airplanes. As a first step in acquiring this capability, we have entered into an
asset purchase agreement with Claircom Communications Group, Inc., dba AT&T
Wireless Services, Aviation Communications Division. The agreement was for us to
purchase ground station information, a restriction on selling intellectual
property until February 28, 2003 and certain network operations center related
equipment and software embedded in the equipment. As this date has passed,
Claircom is now free to sell this intellectual property. The price was allocated
$200,000 for the ground site information, $50,000 for the restriction on
Claircom's transfer of intellectual property, and $250,000 for the equipment.
$250,000 was paid upon execution for the ground site information and the
restriction on ability to sell the intellectual property and $250,000 cash is to
be paid for the equipment by May 31, 2003. The agreement also provides that the
price for assignment and intellectual property consisting of license rights to
patents and applications for patents for the equipment used in the aircraft will
be an additional $1,000,000, subject to a final agreement between the parties
being negotiated. No agreement has been reached concerning the acquisition of
the intellectual property.
We intend utilize funds from this offering to complete the purchase of the
equipment and intellectual property. We have no other source of funds to
complete the purchase identified.
The agreement does not give us any rights to the ground stations, towers and
related equipment that was part of the Claircom Communications network. If we do
not obtain rights to the ground stations, equipment and towers, we will not be
able to implement our business plan. Of the 162 tower sites in the system, we
will have to negotiate separate agreements with approximately 150 separate
owners. We have not yet commenced any formal negotiations with these owners. We
cannot predict, when, if ever, we will acquire these rights.
FCC license for transmission of data between the ground and airplanes. The
Claircom Communications network operated in the private frequency band of 850MHz
to 859MHz range. The Claircom Communications' FCC license has expired and we are
in the process of applying for this license.
Transmission facilities and equipment to transmit data between the from the
towers to ground locations for our airplane applications and between ground
locations for our homeland security applications. We currently are negotiating
but have no agreements for transmission or data between the from the towers to
ground locations for our airplane applications and between ground locations for
our homeland security applications.
Aircraft equipment. There is certain equipment related to the network installed
in approximately 1700 commercial and 800 corporate airplanes that is used to
send and receive ground signals in the aircraft. In order to implement our
business plan, we need this equipment to stay in place. This equipment is owned
by the aircraft owners and can be removed at will. In addition, in order to
implement our business plan, we will have to acquire comparable equipment and
enter into agreements with aircraft owners to have this equipment installed.
Although we believe we can acquire additional equipment to be installed in
aircraft in the future, we have not entered into any negotiations to acquire
this equipment. We have not commenced negotiations with any aircraft owners to
install our equipment. We cannot predict, when, if ever, we will acquire this
equipment or enter into these agreements. In addition, we anticipate that we
will require further certifications or approvals from the FCC for new equipment
to be installed on airplanes in the future.
Operations Center. An operations center, under development and anticipated to be
completed in September 2003, pending receipt of $700,000 in financing, will be
located in Clearwater, Florida and will provide 24 hour monitoring, recording
and network management needed for the network. The operations center will
provide all the facilities, fiber, and support services needed to meet the
surveillance, monitoring and operational requirements for a nationwide network.
Secure Data Storage Facility. We will need to enter into an agreement with a
third party for secure storage of data transmitted through our network. We have
no agreement in place for this service and we cannot predict when, if ever, we
will enter into an agreement for secure data storage.
17
License from Sky Way Global
As of March 11, 2003, following our stock split, we entered into an Amended and
Restated Software License and Services Agreement with Sky Way Global. Sky Way
Global granted to us license to use their patent pending software application
specified for our business operations in the following areas only, reserving to
Sky Way Global the right to license to others for other uses: homeland security
and other applications in the aircraft industries. We may not relicense, rent or
lease the applications. Sky Way Global retained all title, copyright and other
proprietary rights in the applications. In consideration of the grant of the
license, we issued Sky Way Global or its assigns 1,360 shares of our common
stock.
Technical support services will be provided as reasonably requested by us. . We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
Engineering support services will be provided as reasonably requested by us. We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
This Agreement and application license granted under the Agreement shall
continue perpetually unless terminated as specified below. We may terminate any
application license at any time. Sky Way Global may terminate the Agreement or
any application license upon written notice if we materially breach the
Agreement and fail to correct the breach within thirty days following written
notice specifying the breach. In addition Sky Way Global may immediately and
without penalty terminate this agreement if we issue more than 20% of our then
issued and outstanding common stock on a fully diluted basis in any 12 month
period and such issuance directly or indirectly results in of if as a result
thereof there otherwise occurs a change in the majority of the board of
directors. Upon termination, we shall cease using, and shall return or destroy,
all copies of the applicable applications.
We and Sky Way Global have common officers, directors and principal
shareholders. Because our officers are also officers and stockholders of Sky Way
Global, we will essentially be paying technical support and engineering fees to
our officers and directors for these services.
Business of Sky Way Global
Sky Way Global LLC is a Nevada limited liability corporation formed in September
2000. It has had losses of $202,286.04 to date. As of February 28, 2003, it has
$264,420 in cash resources.
Sky Way Global provides wireless broadband internet service and private network
service not related to the homeland security monitoring and aircraft industry
applications to be provided by us. These services are based upon the same data
indexing technology licensed to us. This technology was licensed to OSDNA, Inc.
by Mr. Kovar, our president in January 2001 for sum of $1.00 and was then
licensed to Sky Way Global by OSDNA in June 2001 for the sum of $1.00. Mr. Kovar
has indicated the purpose for licensing his technology to Sky Way Global was to
have the technology owned in a corporation rather than by an individual. The
reason for the license to Sky Way Aircraft was that Sky Way Global and its
principals only wanted to license some but not all of the uses of the technology
to another corporation, reserving in Sky Way Global the right to license other
non-competitive uses to other users.
Sky Way Global currently provides wireless internet service to approximately 50
individual of customers in Tampa, Florida. Sky Way Global has no other customers
other than us.
In addition to licensing technology to us, at October 31, 2002, Sky Way Aircraft
owes Sky Way Global a total of $242,015. The advances bear no interest and are
due on demand. Sky Way Global recently made the initial $250,000 payment to
Claircom Communications Group on behalf of Sky Way Aircraft through an advance
to us with no interest or specific payback terms. In addition, Sky Way Global
has advanced $105,000 in escrow concerning the lease of Sky Way Aircraft's
property. There is no written agreement concerning these advances. Sky Way
Global has no obligation or commitment to provide us with additional funds.
18
Marketing
All of our marketing efforts are currently being conducted by our officers and
directors. We contemplate establishing an in-house sales force in the future,
but we have not developed any plans as to how we would develop this sales force.
Research and Development
Research and development from inception to October 31, 2002 totaled $162,448 and
included $51,038 in personnel costs, $22,500 in equipment rental costs and
$88,910 in other research and development activities.
Competition
The wireless data transmission industry is highly competitive. We believe that
the principal competitive factors affecting our business will be pricing levels
and clear pricing policies, customer service, and to a lesser extent the variety
of services offered. Our ability to compete effectively will depend upon our
continued ability to maintain high quality, market-driven services at prices
generally equal to or below those charged by our competitors. To maintain our
competitive posture, we believe that we must be in a position to reduce our
prices in order to meet reductions in rates, if any, by others. Any such
reductions could reduce our revenues. Many of our current and potential
competitors have financial, personnel and other resources, including brand name
recognition, substantially greater than those, as well as other competitive
advantages over us.
Connexion by Boeing and Tenzing currently offer similar products and services to
the airlines but are satellite based and more expensive. In addition, their
technology is more limited in its throughput than ours and thus does not
currently allow for a full range of services that can be provided by utilizing
our technology. However, these competitors have long-standing relationships with
potential customers that we lack.
In the homeland security area, we will compete with other land based and
wireless transmission providers. Many large and small telecommunications and
related companies currently provide this service. However, our data indexing
technology provides for less bandwidth utilization which we believe will allow
us to provide services at a lower cost than these competitors.
Government Regulation
The Claircom Communications network operated in the private frequency band of
850MHz to 859MHz range. The Claircom Communications FCC license has expired and
we are in the process of applying for this license. The on-board equipment that
will be used to communicate with the aircraft are components that have already
been approved either by the FAA or certified individually by the manufacturer.
We anticipate that we will require further certifications and/or approvals will
be required from the FCC for new equipment to be installed on airplanes in the
future.
Employees
As of February 28, 2003, we had 4 part-time employees, of which 2 are
management, 1 of which is sales and 1 of which is administrative. None of our
employees are represented by a collective bargaining agreement. We believe that
we enjoy good relationships with our employees.
19
Use of Proceeds
Assuming $1,000,000, $5,000,000 $10,000,000, $20,000,000, $30,000,000,
$40,000,000, $50,000,000, $60,000,000, $70,000,000, $80,000,000 and $87,500,000
of the common shares are sold, the net proceeds of the offering will be used as
set forth in the following tables. We may not raise sufficient capital to begin
our operations.
Assuming Assuming
$1,000,000 raised % $5,000,000 raised %
Gross proceeds $1,000,000 100.00% $5,000,000 100.00%
Offering expenses 72,608 7.26% 72,608 1.45%
---------- ---------- ---------- ----------
Net proceeds $927,392 92.74% $4,927,392 98.55%
Lease office space and
related construction 93,738 9.37% 93,738 1.87%
Office equipment and
furniture 46,870 4.69% 46,870 .94%
Utilities and services 18,748 1.87% 18,748 .37%
Licenses 28,122 2.81% 28,122 .56%
Marketing 177,478 17.75% 127,478 2.55%
Advertising 140,609 14.06% 90,609 1.81%
Hiring of executive and
corporate support personnel 140,609 14.06% 90,609 1.81%
Continue inflight testing and
analysis 140,609 14.06% 140,609 2.81%
Commence hiring and training
of installation and testing
teams 140,609 14.06% 90,609 1.81%
Repay Global Debt 50,000 1.0
Research & Development (Global) 50,000 1.0
Asset Purchase Payment 150,000 3.0
Asset Purchase Patent Rights 250,000 5.0
Upgrade research and development
and operations center - - 762,522 15.25%
Purchase, install and test
ground monitoring equipment - - 712,522 14.25%
Commence hiring and training
of monitoring teams - - 699,912 14.00%
Lease Tower facility &
co-location sites 1-30 - - 762,522 15.25%
Aircraft equipment purchase,
installation and text - - 762,522 15.25%
Total Expended $ 927,392 92.74% $4,927,392 98.55%
20
Assuming
$87,500,000 raised %
Gross proceeds $87,500,000 100.00%
Offering expenses 72,608 .08%
---------- ----------
Net proceeds $87,427,392 99.92%
Lease International office
space and 2,000,000 2.29%
Office equipment and
furniture 46,870 .05%
Utilities and services 18,748 .02%
Licenses 28,122 .03%
Marketing/Advertising 4,268,087 4.88%
Hiring of executive and
corporate support personnel 2,000,000 2.29%
Research & Development (Global) 900,000 1.03%
Continue in-flight testing and
analysis 1,100,000 1.26%
Hiring and training of
installation and testing
teams 8,752,400 10.00%
International operations center 8,752,400 10.00%
Purchase, install and test
ground monitoring equipment 9,171,491 10.48%
Commence hiring and training
of monitoring teams 9,171,491 10.48%
Lease International Sites 8,093,539 9.25%
Aircraft equipment purchase,
installation and test 29,124,244 33.28%
International Anti-Terrorism
Network 4,000,000 4.57%
---------- ----------
Total Expended 87,427,392 99.92%
If we raise less than $1,000,000, we shall utilize the proceeds on a pro rata
basis on the areas listed above.
If we do not raise even minimal funds, our officers and directors have verbally
agreed to provide the funds necessary to maintain operations, not to exceed
$20,000. These amounts are planned to be through an advance to us that would
bear no interest and would be due on demand.
The actual allocation of funds will depend on Sky Way Aircraft's success and
growth. If results do not meet our requirements, we will reallocate the proceeds
among the other contemplated uses of proceeds, as prudent business practices
dictate.
Pending application by Sky Way Aircraft of the net proceeds of this offering,
such proceeds may be invested in short-term, interest-bearing instruments.
Dilution
Persons purchasing common shares in this offering will suffer a substantial and
immediate dilution to the net tangible book value of their common shares below
the public offering price.
The following table illustrates the per common share dilution as of the date of
this prospectus, which may be experienced by investors upon reaching the levels
as described below.
25
Assuming $1,000,000 raised and a total of 10,057,143 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors .09
Pro Forma net tangible book value per common
share after offering .07
Dilution to investors $17.43
Dilution as a percent of offering price 99.6%
Assuming $5,000,000 raised and a total of 10,285,715 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors .48
-------
Pro Forma net tangible book value per common
share after offering .46
-------
Dilution to investors $17.04
Dilution as a percent of offering price 97.37%
Assuming $10,000,000 raised and a total of 10,571,429 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors .94
-------
Pro Forma net tangible book value per common
share after offering .92
-------
Dilution to investors $16.58
Dilution as a percent of offering price 94.74%
Assuming $20,000,000 raised and a total of 11,142,857 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors 1.79
-------
Pro Forma net tangible book value per common
share after offering 1.77
-------
Dilution to investors $15.73
Dilution as a percent of offering price 89.89%
26
Assuming $30,000,000 raised and a total of 11,714,286 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors 2.55
-------
Pro Forma net tangible book value per common
share after offering 2.53
-------
Dilution to investors $14.97
Dilution as a percent of offering price 85.54%
Assuming $87,500,000 raised and a total of 15,000,000 common shares outstanding
Offering price $17.50
Net tangible book value per common share before offering $(.02)
Increase per Share attributable to investors 5.83
Pro Forma net tangible book value per common -------
share after offering 5.81
-------
Dilution to investors $11.69
Dilution as a percent of offering price 66.80%
Further Dilution. We may issue additional restricted common shares pursuant to
private business transactions. Any sales under Rule 144 after the applicable
holding period may have a depressive effect upon the market price of our common
shares and investors in this offering upon conversion.
Plan of Operations
Sky Way Aircraft was formed to utilize wireless data transmission software
technology developed by Sky Way Global, Inc., an affiliate. This technology will
be used in homeland security and other applications in the aircraft industries.
This technology is a software program for data indexing, which is similar to
data compression but which mitigates data loss problems associated with
compression. This technology permits faster and less expensive transmission of
data, video, voice and audio between the ground and an airplane or other
homeland security related ground locations than using traditional, non-indexed
data transmission mechanisms. This is because indexed data takes up less
transmission space, and thus travels faster and costs less to transmit than
non-indexed data transmission.
We are currently in the process of testing our technology in the transmission of
data between the ground and airplanes. We have demonstrated that video and
internet connection data can be transmitted between the ground and airplanes
using our technology. We are in the process of additional testing to refine
these communication links. We are also in the process of developing our homeland
security applications.
We currently have no customers. All of our products and services are in the
development stage and will require additional testing. In addition, we need to
develop our infrastructure and secure agreements with a number of third party
service providers in order to commence operations.
27
Results of Operations
We had no revenues for the period from inception on April 24, 2002 through the
end of the period ended October 31, 2002.
We had the following expenses for the following periods:
Six months ended October 31, 2002
General and administrative expenses for the six months ended October 31, 2002
totaled $46,511 and included $20,000 of consulting fees and $20,138 of general
office expenditures. Research and development for the six months ended October31, 2002 totaled $162,448 and included $51,038 in personnel costs, $22,500 in
equipment rental costs and $88,910 in other research and development activities.
Three months ended October 31, 2002
General and administrative expenses for the three months ended October 31, 2002
totaled $29,887 and included $20,000 of consulting fees and $9,559 of general
office expenditures. Research and development for the three months ended October31, 2002 totaled $69,848 and included $29,438 in personnel costs, $6,500 in
equipment rental costs and $33,910 in other research and development activities.
Future Plans
We plan to accomplish the following in the future. We need additional funds to
finance our business development in the next 12 months, as set forth below, but
we are not committed to make any of these expenditures. We have no source of
these funds identified. We hope to be able to raise additional funds from an
offering of our stock in the future. However, this offering may not occur, or if
it occurs, may not raise the desired funding. If we fail to secure adequate
funds to accomplish the objectives outlined below, we will be able to conduct
only limited operations. However, we believe that if we secure the required
funding on a timely basis, we can accomplish these objectives within the
projected time frames.
------------------------------------ ----------------------------- --------------------------- -------------------
EVENT OR MILESTONE TIME FRAME FOR IMPLEMENTATION METHOD OF ACHIEVEMENT ESTIMATED COST
[Low/High]
------------------------------------ ----------------------------- --------------------------- -------------------
Complete Claircom Purchase Agreement May 31, 2003 Obtain funding $1,250,000
------------------------------------ ----------------------------- --------------------------- -------------------
Lease, activate and upgrade tower April 1, 2003 - June 30, 2003 Contact owners and complete $600,000 - $850,000
network negotiations; conduct site
survey
------------------------------------ ----------------------------- --------------------------- -------------------
Identify, test and upgrade equipment April 1, 2003 - June 30, 2003 Identify airlines, execute $500,000 - $650,000
in aircraft agreement, secure
installation service
------------------------------------ ----------------------------- --------------------------- -------------------
Build out and equip operations April 1, 2003 - June 30, 2003 Construct and test all $300,000 - $450,000
center operations
------------------------------------ ----------------------------- --------------------------- -------------------
Complete research and testing of June 1, 2003 - August 31, Continue research and $250,000 - $400,000
aircraft network 2003 testing
------------------------------------ ----------------------------- --------------------------- -------------------
Hire additional employees to operate March 1, 2003 - August 31, Interview and hire $500,000 - $650,000
network 2003
------------------------------------ ----------------------------- --------------------------- -------------------
Total Low - $3,400,000
Total High - $4,250,000
28
Other than the proceeds of this offering, we have no sources of financing
identified. Even if we identify sources for such financing:
o Additional financing may not be available on commercially reasonable
terms or available at all
o Additional financing may result in dilution to existing and future
equity holders; and
o If we issue debt instruments, we will be subject to increased debt
obligations that will impose a greater financial strain upon our
operations.
If we do not secure the required funding from this offering additional
financing, the major expansion planned milestones may not be achieved within the
anticipated time period, if at all. We believe that future plans will be
achieved if we receive the necessary funding. If only partial funding is
received, we will modify our expansion plan as set forth in Use of Proceeds.
Furthermore, in the event that the level of funding is less that we have
anticipated, this may also result in a delay in our ability to generate revenues
or a reduced amount of revenues being generated.
Liquidity and Capital Resources
From our inception on April 24, 2002 to October 31, 2002, we incurred operating
losses of ($241,184) and had a net working capital deficiency of $241,184. In
addition, as of October 31, 2002, we had only $831of current cash available. Our
cash resources of $831 are not sufficient to satisfy our cash requirements over
the next 12 months. We will need to secure a minimum of $1,000,000 to satisfy
such requirements, but we need an additional minimum of $3,400,000 to finance
our planned expansion in the next 12 months, which funds will be used for asset
acquisition and product development, and personnel. We will need an additional
approximately $500,000 to repay our advances from Sky Way Global. In order to
become profitable we may still need to secure additional debt or equity funding.
We hope to be able to raise funds from this offering of our stock. However, we
may not raise any funds from this offering. We have no other source of funding
identified. Our failure to raise funds in this offering would impair and delay
our ability to implement our business plan and to repay advances from Sky Way
Global.
In addition to licensing technology to us, at October 31, 2002, Sky Way Aircraft
owes Sky Way Global a total of $242,015. The advances bear no interest and are
due on demand. Sky Way Global recently made the initial $250,000 payment to
Claircom Communications Group on behalf of Sky Way Aircraft through an advance
to us with no interest or specific payback terms. In addition, Sky Way Global
has advanced $105,000 in escrow concerning the lease of Sky Way Aircraft's
property. There is no written agreement concerning these advances. Sky Way
Global has no obligation or commitment to provide us with additional funds.
Other than described above, we do not expect to purchase any plant or
significant equipment. If the offering is successful, we do not expect immediate
significant changes in the number of employees to conduct operations.
We may experience problems; delays, expenses, and difficulties sometimes
encountered by an enterprise in Sky Way Aircraft's stage of development, many of
which are beyond our control. These include, but are not limited to,
unanticipated problems relating to the development of the system, production and
marketing problems, additional costs and expenses that may exceed current
estimates, and competition.
Market for Common Equity and Related Stockholder MattersMarket Information
There is no established public trading market for our securities. No market
exists for our securities and a regular trading market may not develop, or if
developed, may not be sustained. A shareholder in all likelihood, therefore,
will not be able to resell his or her securities should he or she desire to do
so when eligible for public resales. Furthermore, it is unlikely that a lending
institution will accept our securities as pledged collateral for loans unless a
regular trading market develops. We have no plans, proposals, arrangements, or
understandings with any person with regard to the development of a trading
market in any of our securities.
29
Penny Stock Considerations
If our shares trade at less than $5.00 per share, they will become "penny
stocks" as that term is generally defined in the Securities Exchange Act of 1934
to mean equity securities with a price of less than $5.00. Our shares thus will
be subject to rules that impose sales practice and disclosure requirements on
broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to
anyone other than an established customer or accredited investor must make a
special suitability determination regarding the purchaser and must receive the
purchaser's written consent to the transaction prior to the sale, unless the
broker-dealer is otherwise exempt. Generally, an individual with a net worth in
excess of $1,000,000 or annual income exceeding $100,000 individually or
$300,000 together with his or her spouse is considered an accredited investor.
In addition, under the penny stock regulations the broker-dealer is required to:
o Deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Securities and Exchange
Commissions relating to the penny stock market, unless the
broker-dealer or the transaction is otherwise exempt;
o Disclose commissions payable to the broker-dealer and our registered
representatives and current bid and offer quotations for the
securities;
o Send monthly statements disclosing recent price information
pertaining to the penny stock held in a customer's account, the
account's value and information regarding the limited market in
penny stocks; and
o Make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction, prior to conducting any penny
stock transaction in the customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their
attempt to sell shares of our common stock, which may affect the ability of
selling shareholders or other holders to sell their shares in the secondary
market and have the effect of reducing the level of trading activity in the
secondary market. These additional sales practice and disclosure requirements
could impede the sale of our securities, if our securities become publicly
traded. In addition, the liquidity for our securities may be decreased, with a
corresponding decrease in the price of our securities. Our shares in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.
Holders
As of the date of this registration statement, we had one holder of record of
our common stock. We have one class of common stock outstanding and no
preferred stock outstanding.
Reports to Shareholders
As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission.
Where You Can Find Additional Information
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 with respect to the common stock in this offering. This
prospectus, which constitutes a part of the registration statement, does not
contain all the information set forth in the registration statement. For further
information about us and the shares of common stock to be sold in the offering,
please refer to the registration statement and the exhibits and schedules
thereto. The registration statement and exhibits may be inspected, without
charge, and copies may be obtained at prescribed rates, at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The registration statement and other information filed
with the SEC is also available at a web site maintained by the SEC at
http://www.sec.gov.
30
Determination of Offering Price
The offering price of the common shares were arbitrarily determined by Sky Way
Aircraft based on how much funding was needed and what percentage of Sky Way
Aircraft current shareholders would retain after the offering without any
consideration of the actual value of our company or what the market might pay
for our stock.
Plan of Distribution
Sky Way Aircraft offering. The common shares are being offered by Brent C. Kovar
and James Kent, officers and directors of Sky Way Aircraft. Consequently, there
may be less due diligence performed in conjunction with this offering than would
be performed in an underwritten offering. Although they are associated persons
of us as that term is defined in Rule 3a4-1 under the Exchange Act, they are
deemed not to be a broker for the following reasons:
- They are not subject to a statutory disqualification under the
Exchange Act at the time of their participation in the sale of our
securities.
- They will not be compensated for their participation in the sale of
our securities by the payment of commission or other remuneration
based either directly or indirectly on transactions in securities.
- They are not an associated person of a broker or dealer at the time
of their participation in the sale of our securities.
Any officer or director involved with the distribution of the stock will act in
reliance on and in compliance with Rule 3a4-1.
As of the date of this prospectus, no broker has been retained by us for the
sale of securities being offered. In the event we retain a broker who may be
deemed an underwriter; an amendment to our registration statement will be filed.
Management, principal shareholders or their affiliates may not acquire common
shares in the offering.
No Minimum Offering Amount or Escrow Account. There is no minimum offering
amount and therefore, no escrow account has been established. Any funds received
from the offering will be deposited directly into the operating account of Sky
Way Aircraft.
Directors, Executive Officers, Promoters, and Control PersonsExecutive Officers and Directors
The board of directors elects our executive officers annually. A majority vote
of the directors who are in office is required to fill vacancies. Each director
shall be elected for the term of one year, and until his successor is elected
and qualified, or until his earlier resignation or removal. There are no family
relationships between any of the directors and executive officers, except that
Joy Kovar is the mother of Brent Kovar. Our directors and executive officers are
as follows:
31
----------------- -------- ------------------------ ---------------
Name Age Position Served Since
----------------- -------- ------------------------ ---------------
James S. Kent 64 CEO and Director July 2002
CFO February 2003
----------------- -------- ------------------------ ---------------
Brent Kovar 35 President and Director April 2002
----------------- -------- ------------------------ ---------------
Joy Carson Kovar 66 Secretary and Director April 2002
----------------- -------- ------------------------ ---------------
Mr. Kent has been CEO and Director since July 2002 and CFO since February 2003.
He has been director of business operations for Sky Way Global since 2000. From
1998 to 1999, Mr. Kent served as director of operations for Satellite Access
Systems, Inc., a satellite services company where he was responsible for the
day-to-day operations. From 1997 to 1998 he served as a senior management
consultant for Booz, Allen & Hamilton, a government contractor and
national/international business consulting firm providing program and financial
management services to the U. S. Government. From 1980 to 1997, Mr. Kent served
in various government contract management positions providing financial and
program management services supporting national communications and intelligence
projects for the Department of Defense, National Security Agency, and Department
of the Navy.
Mr. Kovar has been President and Director since inception. In addition, as
president and director of research and development and engineering, Mr. Kovar
founded Sky Way Global in 2000, a high speed broadband wireless service company.
From 1996 to 2000, Mr. Kovar served as the executive vice president and director
of research and development for Satellite Access Systems, a satellite services
company. In 1990, Mr. Kovar founded PC, Ltd., a company that produced
specialty-designed remote controlled arm and RF/communications related products,
and until 1996, he served as president and director of new product engineering.
From 1987 to 1989, he was associated with Jacobs Engineering, an national
engineering company in Pasadena, California. From 1986 to 1987, Mr. Kovar worked
with Falcon Communications as a wireless communications engineer. Mr. Kovar
earned a Bachelor of Science degree from Devry Institute and is currently
pursuing seminars and programs with a goal of masters degree.
Mrs. Kovar has been Secretary and Director since inception. She started working
for Sky Way Global in 2000 as vice president of corporate services responsible
for administrative support, human relations and accounting services. Her early
experience in personnel work was gained during 1957 to 1960 for the Department
of Agriculture and later with the Air Force in 1963 and 1964. In 1960, Mrs.
Kovar started Communication Skills Laboratory, in Pasadena, California. She
conducted classes for hundreds of business people. From 1964 to 1993, Mrs. Kovar
worked in the field of education. In addition to classroom experience she worked
in school administration, including Federal programs for improvement and State
of California team for school inspection. She completed a Bachelor of Arts at
Arizona State University in 1957 and a Masters of Arts in 1978 at Redlands
University, California with postgraduate work at UCLA.
Brent Kovar, president devotes approximately 60% of his time and James Kent, CEO
and CFO, devotes approximately 90% of his time to our business. Joy Kovar,
secretary, devotes approximately 20% of her time to our business.
Directors serve for a one-year term. Our bylaws currently provide for a board
of directors comprised of a minimum of one director.
Board Committees
We currently have no compensation committee or other board committee performing
equivalent functions. Currently, all members of our board of directors
participate in discussions concerning executive officer compensation.
Legal Proceedings
Except as set forth above, no officer, director, or persons nominated for such
positions, promoter or significant employee has been involved in legal
proceedings that would be material to an evaluation of our management.
Executive CompensationExecutive Compensation
The following table sets forth summary information concerning the compensation
received for services rendered to us during the fiscal year ended April 30, 2002
respectively by our Chief Executive Officer and President.
--------------------- --------------- ---------- -------------- ------------------
Name Position Year Salary Dollar Value of
Stock-Based
Compensation
--------------------- --------------- ---------- -------------- ------------------
Brent Kovar President 2002 0 $3,530
--------------------- --------------- ---------- -------------- ------------------
We have no written employment agreements with any officer. We have no oral or
other agreement to pay or accrue compensation for them.
No other annual compensation, including a bonus or other form of compensation;
and no long-term compensation, including restricted stock awards, securities
underlying options, LTIP payouts, or other form of compensation, were paid to
Mr. Kovar during these periods.
Board Compensation
Members of our Board of Directors do not receive cash compensation for their
services as Directors, although some Directors are reimbursed for reasonable
expenses incurred in attending Board or committee meetings.
Security Ownership of Certain Beneficial Owners and Management
The following tables set forth the ownership, as of the date of this
registration statement, of our common stock by each person known by us to be the
beneficial owner of more than 5% of our outstanding common stock, our directors,
and our executive officers and directors as a group. To the best of our
knowledge, the persons named have sole voting and investment power with respect
to such shares, except as otherwise noted. There are not any pending or
anticipated arrangements that may cause a change in control.
-------------------------------------- --------------------------- -------------------- --------------------
Name and Address Number of Shares of Percentage before Percentage after
Common Stock offering offering
-------------------------------------- --------------------------- -------------------- --------------------
KH-01 Ventures(1) 10,000,000 100% 67%
121 6th Street East
Tierra Verde, FL33715
-------------------------------------- --------------------------- -------------------- --------------------
All directors and named executive 10,000,000 100% 67%
officers as a group
(3 persons) (1)
-------------------------------------- --------------------------- -------------------- --------------------
(1) KH-01 Ventures is controlled by Brent Kovar, president and director,
and Joy Kovar, secretary and director, who are beneficial owners of
these shares. Joy Kovar is the mother of Brent Kovar. 4,600,000
shares were assigned to KH-01 by Sky Way Global, an affiliate.
Although we were a party to certain agreements for which we were to issue an
additional 2,100,000 shares to two entities in exchange for certain services to
be rendered, because the agreed-upon services were not rendered, we have not
physically issued and do not intend to issue these additional shares.
32
This table is based upon information derived from our stock records. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, it believes that each of the shareholders named
in this table has sole or shared voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based upon
shares of common stock outstanding as of March 11, 2003, after a 1.8516 for 1
share stock split authorized March 11, 2003.
Description of Property
Our principal executive and administrative offices are located at 6021 - 142nd
Avenue North, Clearwater, FL33760. Our phone number is 727.535.8211. This
facility will also house our research lab and engineering staff and a network
monitoring and operations center.
This space of 78,000 square feet is being rented for $46,366.67 per month from
ECI Telcom, Inc. until March 31, 2003. The parties are currently negotiating a
lease for this space If the parties do not reach a final agreement by that date,
we will be required to relocate unless we secure an additional extension. Our
offices are in good condition and are sufficient to conduct our operations.
We do not intend to renovate, improve, or develop properties. We are not subject
to competitive conditions for property and currently have no property in insure.
We have no policy with respect to investments in real estate or interests in
real estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
Indemnification
The Nevada Revised Statutes allow a company to indemnify its officers,
directors, employees, and agents from any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, except under certain circumstances.
Indemnification may only occur if a determination has been made that the
officer, director, employee, or agent acted in good faith and in a manner, which
such person believed to be in the best interests of the company. A determination
may be made by the shareholders; by a majority of the directors who were not
parties to the action, suit, or proceeding confirmed by opinion of independent
legal counsel; or by opinion of independent legal counsel in the event a quorum
of directors who were not a party to such action, suit, or proceeding does not
exist.
Provided the terms and conditions of these provisions under Nevada law are met,
officers, directors, employees, and agents of Sky Way Aircraft may be
indemnified against any cost, loss, or expense arising out of any liability
under the '33 Act. Insofar as indemnification for liabilities arising under the
'33 Act may be permitted to directors, officers and controlling persons of Sky
Way Aircraft. Sky Way Aircraft has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable.
Certain Relationships and Related Transactions
Family Relationships. Joy Kovar is the mother of Brent Kovar and Glenn Kovar is
the father of Brent Kovar.
Costs and Services. During April 2002, Sky Way Aircraft issued 5,400,000 shares
of common stock to KH-01, an entity controlled by Brent Kovar, Joy Kovar and
Glenn Kovar, promoters, officers/shareholders of Sky Way Aircraft or entities
related to them for payment of organization costs of $1,870 and non- cash
services rendered valued at $3,530.
License with Sky Way Global. As of March 11, 2003, following our stock split, we
entered into an Amended and Restated Software License and Services Agreement
with Sky Way Global. Sky Way Global granted to us license to use their patent
pending software application specified for our business operations in the
following areas only, reserving to Sky Way Global the right to license to others
for other uses: homeland security and other applications in the aircraft
industries. In consideration of the grant of the license, we issued Sky Way
Global or its assigns 1,360 shares of our common stock.
33
Technical support services will be provided as reasonably requested by us. We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
Engineering support services will be provided as reasonably requested by us. We
shall pay Sky Way Global a fee for these services, at hourly rates consistent
with what Sky Way Global determines in good faith that we could obtain from
independent third party providers for comparable services.
Advances. Sky Way Global, an entity under common control, paid $26,725 for
consulting services rendered to us as part of a consulting agreement. On May 1,2002, Sky Way Global advanced Sky Way Aircraft cash of $1,000. Sky Way Aircraft
has used office space, supplies, personnel, equipment, etc. of Sky Way Global.
Sky Way Global has paid all of the costs and provides a billing to us for its
share. Sky Way Global has billed Sky Way Aircraft a total of $214,290 for
expenses during the six months ended October 31, 2002. At October 31, 2002, Sky
Way Aircraft owes Sky Way Global a total of $242,015. The advances bear no
interest and are due on demand.
Sky Way Global recently made the initial $250,000 payment to Claircom
Communications on behalf of Sky Way Aircraft through an interest free loan to us
with no interest or specific payback terms.
Description of SecuritiesCommon Stock
We are authorized to issue 40,000,000 shares of $.001 par common stock. There
are currently 10,000,000 of common stock, after a 1.8516 for 1 share stock split
authorized March 11, 2003, held of record by 1 stockholder.
All shares of common stock outstanding are, and the common stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and non-assessable.
Each share of common stock entitles the holder to one vote, either in person or
by proxy, at meetings of shareholders. The holders are not permitted to vote
their shares cumulatively. Accordingly, the shareholders of our common stock who
hold, in the aggregate, more than fifty percent of the total voting rights can
elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of the such directors. The vote of
the holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by the board of directors out of funds legally available. We
have not paid any dividends since our inception, and we presently anticipate
that all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions. Upon our
liquidation, dissolution or winding up, the holders of our common stock will be
entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities.
There are not any provisions in our Articles of Incorporation or our by-laws
that would prevent or delay change in our control.
34
Preferred Stock
We are authorized to issue 10,000,000 shares of $.001 par preferred stock. No
shares of preferred stock are outstanding.
We presently have no plans to issue any shares of preferred stock. However,
preferred stock may be issued with preferences and designations as the board of
directors may from time to time determine. The board may, without stockholders
approval, issue preferred stock with voting, dividend, liquidation and
conversion rights that could dilute the voting strength of our common
stockholders and may assist management in impeding an unfriendly takeover or
attempted changes in control.
There are no restrictions on our ability to repurchase or reclaim our preferred
shares while there is any arrearage in the payment of dividends on our preferred
stock.
Dividends
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by our board of directors out of funds legally available.
Holders of preferred stock are not entitled to receive dividends. We have not
paid any dividends since our inception and presently anticipate that all
earnings, if any, will be retained for development of our business. Any future
disposition of dividends will be at the discretion of our Board of Directors and
will depend upon, among other things, our future earnings, operating and
financial condition, capital requirements, and other factors.
Transfer Agent
State Agent and Transfer Syndicate, Inc. located in Carson City, Nevada will act
as the transfer agent for Sky Way Aircraft.
Legal Proceedings
We are not aware of any pending or threatened legal proceedings in which we are
involved.
Interest of Named Experts
Our Financial Statements as of April 30, 2002 and for the period from inception
(April 24, 2002) to April 30, 2002 included in this registration statement and
prospectus have been audited by Pritchett, Siler & Hardy, P.C., independent
auditors, as stated in their report appearing herein, have been so included in
reliance upon the report of such firm as experts in accounting and auditing.
The legality of the shares offered under this registration statement is being
passed upon by Williams Law Group, P.A., Tampa FL. We have agreed to retain the
principal of Williams Law Group, M. T. Williams, Esq., individually, to assist
us in 1934 Act filings for a period of one year following the effectiveness of
this registration statement and have agreed to issue to him individually 25,000
shares of our common stock for providing these services.
35
SKY WAY AIRCRAFT INC.[A Development Stage Company]CONTENTS
PAGE
Independent Auditors' Report F-1
Balance Sheet, April 30, 2002 F-2
Statement of Operations, from inception on
April 24, 2002 through April 30, 2002 F-3
Statement of Stockholders' Equity, from inception
on April 24, 2002 through April 30, 2002 F-4
Statement of Cash Flows, from inception on
April 24, 2002 through April 30, 2002 F-5
Notes to Financial Statements F-6 - F-9
INDEPENDENT AUDITORS' REPORT
Board of Directors
SKY WAY AIRCRAFT INC.
Tampa, Florida
We have audited the accompanying balance sheet of Sky Way Aircraft Inc. [a
development stage company] at April 30, 2002 and the related statements of
operations, stockholders' equity and cash flows for the period from inception on
April 24, 2002 through April 30, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Sky Way Aircraft Inc. [a
development stage company] as of April 30, 2002 and the results of its
operations and its cash flows for the period from inception on April 24, 2002
through April 30, 2002, in conformity with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company was only recently formed, has incurred losses since its
inception and has no on-going operations. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. Management's
plans in regards to these matters are also described in Note 5. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
PRITCHETT, SILER & HARDY, P.C.May 8, 2002
Salt Lake City, Utah
F-1
SKY WAY AIRCRAFT INC.[A Development Stage Company]BALANCE SHEET
ASSETSApril 30,2002
___________
CURRENT ASSETS:
Cash $ -
___________
Total Current Assets -
___________
OTHER ASSETS:
Deferred stock offering costs 28,825
Technology license agreement -
___________
Total Other Assets 28,825
___________
$ 28,825
___________
LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:
Advances from related party $ 26,725
___________
Total Current Liabilities 26,725
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
40,000,000 shares authorized,
7,500,000 shares issued and
outstanding 7,500
Capital in excess of par value -
Deficit accumulated during the
development stage (5,400)
___________
Total Stockholders' Equity 2,100
___________
$ 28,825
___________
The accompanying notes are an integral part of this financial statement.
F-2
SKY WAY AIRCRAFT INC.[A Development Stage Company]STATEMENT OF OPERATIONS
From Inception
on April 24,2002 Through
April 30,2002
_____________
REVENUE $ -
EXPENSES:
General and administrative 5,400
_____________
LOSS BEFORE INCOME TAXES (5,400)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $ (5,400)
_____________
LOSS PER COMMON SHARE $ (.00)
_____________
The accompanying notes are an integral part of this financial statement.
F-3
SKY WAY AIRCRAFT INC.[A Development Stage Company]STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON APRIL 24, 2002
THROUGH APRIL 30, 2002
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
__________________ ___________________ Excess of Development
Shares Amount Shares Amount Par Value Stage
_______ _______ _________ _______ _________ ___________
BALANCE, April 24, 2002 - $ - - $ - $ - $ -
Issuance of 7,500,000 shares of common stock
at $.001 per share for payment of organization
costs of $1,870 and services rendered valued
at $5,630 including $2,100 which has been
classified as deferred stock offering costs and
$3,530 which has been classified as general
and administrative expense, April 2002 - - 7,500,000 7,500 - -
Net loss for the period ended April 30, 2002 - - - - - (5,400)
_______ _______ _________ _______ _________ ___________
BALANCE, April 30, 2002 - $ - 7,500,000 $ 7,500 $ - $ (5,400)
_______ _______ _________ _______ _________ ___________
The accompanying notes are an integral part of this financial statement.
F-4
SKY WAY AIRCRAFT INC. [A Development Stage Company]STATEMENT OF CASH FLOWS
From Inception
on April 24,2002 Through
April 30,2002
_____________
Cash Flows From Operating Activities:
Net loss $ (5,400)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Non-cash services rendered for stock 5,400
Changes in assets and liabilities -
_____________
Net Cash Provided (Used) by Operating Activities -
_____________
Cash Flows From Investing Activities -
_____________
Net Cash Provided (Used) by Investing Activities -
_____________
Cash Flows From Financing Activities:
Advances from related party 26,725
Payments of stock offering costs (26,725)
_____________
Net Cash Provided (Used) by Financing Activities -
_____________
Net Increase (Decrease) in Cash -
Cash at Beginning of Period -
_____________
Cash at End of Period $ -
_____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period from inception on April 24, 2002 through April 30, 2002:
In connection with its organization, the Company issued 7,500,000
shares of common stock for organizational costs of $1,870 and services
rendered valued at $5,630, or $.001 per share.
The accompanying notes are an integral part of this financial statement.
F-5
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Sky Way Aircraft Inc. ("the Company") was organized under the
laws of the State of Nevada on April 24, 2002. The Company plans to provide
security and other services for the airlines industry through applications of
its licensed high-speed, broadband wireless technology. The Company has not yet
generated any revenues from its planned principal operations and is considered a
development stage company as defined in Statement of Financial Accounting
Standards No. 7. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Stock Offering Costs - Costs related to proposed stock offerings are deferred
and will be offset against the proceeds of the offering in capital in excess of
par value. In the event a stock offering is unsuccessful, the costs related to
the offering will be written-off directly to expense.
Organization Costs - Organization costs, which reflect amounts expended to
organize the Company, were expensed as incurred.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
[See Note 6].
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amount of
revenues and expenses during the reported period. Actual results could differ
from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142, "Goodwill and
Other Intangible Assets", SFAS No. 143, "Accounting for Asset Retirement
Obligations", and SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", were recently issued. SFAS No. 141, 142, 143 and 144 have no
current applicability to the Company or their effect on the financial statements
would not have been significant.
NOTE 2 - CAPITAL STOCK
Preferred stock - The Company has authorized 10,000,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and to be
issued in such series as determined by the Board of Directors. No shares were
issued and outstanding at April 30, 2002.
F-6
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO FINANCIAL STATEMENTSNOTE 2 - CAPITAL STOCK [Continued]
Common Stock - The Company has authorized 40,000,000 shares of common stock with
a par value of $.001. During April 2002, in connection with its organization,
the Company issued 7,500,000 shares of its previously authorized but unissued
common stock at $.001 per share for payment of organization costs of $1,870 and
non-cash services valued at $5,630 including $2,100 which has been classified as
deferred stock offering costs and $3,530 which has been classified as general
and administrative expense.
NOTE 3 - INCOME TAXESThe Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". SFAS No. 109
requires the Company to provide a net deferred tax asset/liability equal to the
expected future tax benefit/expense of temporary reporting differences between
book and tax accounting methods and any available operating loss or tax credit
carryforwards.
The Company has available at April 30, 2002 unused operating loss carryforwards
of approximately $5,400 which may be applied against future taxable income and
which expire in 2022. The amount of and ultimate realization of the benefits
from the operating loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the Company, and other
future events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards, the Company
has established a valuation allowance equal to the tax effect of the loss
carryforwards and, therefore, no deferred tax asset has been recognized for the
loss carryforwards. The net deferred tax assets are approximately $800 as of
April 30, 2002 with an offsetting valuation allowance of the same amount,
resulting in a change in the valuation allowance of approximately $800 during
the period from inception on April 24, 2002 through April 30, 2002.
NOTE 4 - RELATED PARTY TRANSACTIONS
Advances - Sky Way Global, LLC, an entity under common control, paid $26,725 for
consulting services rendered to the Company as part of a consulting agreement
[See Note 7]. The advances bear no interest and are due on demand.
Management Compensation - During April 2002, the Company issued 5,400,000 shares
of common stock to officers/shareholders of the Company or entities related to
them for payment of organization costs of $1,870 and non-cash services rendered
valued at $3,530. The Company has not paid any cash compensation to any officer
or director of the Company.
Office Space - The Company has not had a need to rent office space. An officer
of the Company is allowing the Company to use his address, as needed, at no
expense to the Company.
F-7
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO FINANCIAL STATEMENTS
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company
was only recently formed, has incurred losses since its inception and has no
on-going operations. These factors raise substantial doubt about the ability of
the Company to continue as a going concern. In this regard, management is
proposing to raise any necessary additional funds not provided by operations
through loans or through additional sales of its common stock. There is no
assurance that the Company will be successful in raising this additional capital
or achieving profitable operations. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
NOTE 6 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
From Inception
on April 24,2002 Through
April 30,2002
____________
Loss from operations available to
common shareholders (numerator) $ (5,400)
____________
Weighted average number of common
shares outstanding used in loss per share
for the period (denominator) 7,500,000
____________
Dilutive loss per share was not presented, as the Company had no common stock
equivalent shares for all periods presented that would affect the computation of
diluted loss per share.
NOTE 7 - COMMITMENTS
Licensing Agreement - The Company entered into a ten-year licensing agreement
with Sky Way Global, LLC ("Global"), an entity under common control. The Company
is to pay a royalty fee of 5% of gross sales for the exclusive right to use
Global's high-speed, broadband wireless technology for the aircraft industry.
The royalty fee will be adjusted every six months, but is limited to 30% of
gross sales. The agreement is renewable in five-year increments with mutual
consent.
Consulting Agreement - At the time of its organization, the Company entered into
an agreement with a consultant who was to provide assistance related to fund
raising and future stock offerings. The consultant received 1,500,000 shares of
common stock valued at $1,500. The consultant also received cash payments of
$26,725 from Sky Way Global, LLC for his services [See Note 4]. The payments
have been classified as deferred stock offering costs.
F-8
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS
Loan - On May 1, 2002, Sky Way Global, LLC, an entity under common control,
advanced the Company $1,000. The advance bears no interest.
Proposed Stock Offering - The Company is proposing to make a public offering of
2,500,000 shares of its previously authorized but unissued common stock. This
offering is proposed to be registered with the Securities and Exchange
Commission on Form SB-2. An offering price of $17.50 per share has been
arbitrarily determined by the Company. The offering will be managed by Company
management, who will receive no sales commissions or other compensation in
connection with the offering, except for reimbursement of expenses actually
incurred on behalf of the Company in connection with the offering. Offering
costs are estimated to be approximately $63,000. At April 30, 2002, the Company
had deferred $28,825 of consulting services rendered related to the proposed
stock offering which will be offset against the proceeds of the offering in
capital in excess of par value. Of the $28,825 of deferred stock offering costs,
$2,100 was paid by issuing 2,100,000 shares of common stock.
F-9
SKY WAY AIRCRAFT INC.[A Development Stage Company]
CONTENTS
PAGE
Unaudited Condensed Balance Sheets,
October 31, 2002 and April 30, 2002 F-2
Unaudited Condensed Statements of Operations, for
the three and six months ended October 31, 2002
and from inception on April 24, 2002 through
October 31, 2002 F-3
Unaudited Condensed Statements of Cash Flows,
for the six months ended October 31, 2002 and
from inception on April 24, 2002 through
October 31, 2002 F-4
Notes to Unaudited Condensed Financial Statements F-5 - F-9
SKY WAY AIRCRAFT INC.[A Development Stage Company]UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
October 31, April 30,
2002 2002
___________ ____________
CURRENT ASSETS:
Cash $ 831 $ -
___________ ____________
Total Current Assets 831 -
___________ ____________
OTHER ASSETS:
Deferred stock offering costs 34,325 28,825
Technology license agreement - -
___________ ____________
Total Other Assets 34,325 28,825
___________ ____________
$ 35,156 $ 28,825
___________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Advances from related party $ 242,015 $ 26,725
___________ ____________
Total Current Liabilities 242,015 26,725
___________ ____________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
40,000,000 shares authorized,
7,500,000 shares issued and
outstanding 7,500 7,500
Capital in excess of par value - -
Deficit accumulated during the
development stage (214,359) (5,400)
___________ ____________
Total Stockholders' Equity (Deficit) (206,859) 2,100
___________ ____________
$ 35,156 $ 28,825
___________ ____________
Note: The balance sheet of April 30, 2002 was taken from the audited financial
statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-2
SKY WAY AIRCRAFT INC.[A Development Stage Company]UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
From inception
For the Three For the Six on April 24,
Months Ended Months Ended 2002 through
October 31, October 31, October 31,
2002 2002 2002
______________ ______________ ______________
REVENUE $ - $ - $ -
______________ ______________ ______________
EXPENSES:
General and administrative 29,887 46,511 51,911
Research and development 69,848 162,448 162,448
______________ ______________ ______________
Total Expenses 99,735 208,959 214,359
______________ ______________ ______________
LOSS BEFORE INCOME TAXES (99,735) (208,959) (214,359)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
______________ ______________ ______________
NET LOSS $ (99,735) $ (208,959) $ (214,359)
______________ ______________ ______________
LOSS PER COMMON SHARE $ (.01) $ (.03) $ (.03)
______________ ______________ ______________
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-3
SKY WAY AIRCRAFT INC.[A Development Stage Company]UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
From inception
For the Six on April 24,
Months Ended 2002 through
October 31, October 31,
2002 2002
_____________ _____________
Cash Flows From Operating Activities:
Net loss $ (208,959) $ (214,359)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Non-cash services rendered for stock - 5,400
Changes in assets and liabilities - -
_____________ _____________
Net Cash (Used) by Operating Activities (208,959) (208,959)
_____________ _____________
Cash Flows From Investing Activities - -
_____________ _____________
Net Cash Provided (Used) by Investing Activities - -
_____________ _____________
Cash Flows From Financing Activities:
Advances from related party 215,290 242,015
Payments of stock offering costs (5,500) (32,225)
_____________ _____________
Net Cash Provided by Financing Activities 209,790 209,790
_____________ _____________
Net Increase (Decrease) in Cash 831 831
Cash at Beginning of Period - -
_____________ _____________
Cash at End of Period $ 831 $ 831
_____________ _____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period from inception on April 24, 2002 through October 31, 2002:
In connection with its organization, the Company issued 7,500,000
shares of common stock for organizational costs of $1,870 and
services rendered valued at $5,630, or $.001 per share.
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-4
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Sky Way Aircraft Inc. ("the Company") was organized under the
laws of the State of Nevada on April 24, 2002. The Company plans to provide
security and other services for the airlines industry through applications of
its licensed high-speed, broadband wireless technology. The Company has not yet
generated any revenues from its planned principal operations and is considered a
development stage company as defined in Statement of Financial Accounting
Standards No. 7. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Condensed Financial Statements - The accompanying financial statements have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
October 31, 2002 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
in the United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's April 30, 2002
audited financial statements. The results of operations for the periods ended
October 31, 2002 are not necessarily indicative of the operating results for the
full year.
Fiscal Year - The Company's fiscal year-end is April 30th.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Intangible Assets - The Company accounts for its intangible assets in accordance
with Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets".
Stock Offering Costs - Costs related to proposed stock offerings are deferred
and will be offset against the proceeds of the offering in capital in excess of
par value. In the event a stock offering is unsuccessful, the costs related to
the offering will be written-off directly to expense.
Organization Costs - Organization costs, which reflect amounts expended to
organize the Company, were expensed as incurred.
Research and Development - Research and development costs are expensed as
incurred. For the six months ended October 31, 2002, research and development
costs amounted to $162,448.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
[See Note 6].
F-5
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amount of
revenues and expenses during the reported period. Actual results could differ
from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142, "Goodwill and
Other Intangible Assets", SFAS No. 143, "Accounting for Asset Retirement
Obligations", SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections", SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities", and
SFAS No. 147, "Acquisitions of Certain Financial Institutions - an Amendment of
FASB Statements No. 72 and 144 and FASB Interpretation No. 9", were recently
issued. SFAS No. 141, 142, 143, 144, 145, 146 and 147 have no current
applicability to the Company or their effect on the financial statements would
not have been significant.
NOTE 2 - CAPITAL STOCK
Preferred stock - The Company has authorized 10,000,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and to be
issued in such series as determined by the Board of Directors. No shares were
issued and outstanding at October 31, 2002 and April 30, 2002.
Common Stock - The Company has authorized 40,000,000 shares of common stock with
a par value of $.001. During April 2002, in connection with its organization,
the Company issued 7,500,000 shares of its previously authorized but unissued
common stock at $.001 per share for payment of organization costs of $1,870 and
non-cash services valued at $5,630 including $2,100 which has been classified as
deferred stock offering costs and $3,530 which has been classified as general
and administrative expense.
NOTE 3 - INCOME TAXESThe Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". SFAS No. 109
requires the Company to provide a net deferred tax asset/liability equal to the
expected future tax benefit/expense of temporary reporting differences between
book and tax accounting methods and any available operating loss or tax credit
carryforwards.
F-6
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - INCOME TAXES [Continued]The Company has available at October 31, 2002 unused operating loss
carryforwards of approximately $72,000 which may be applied against future
taxable income and which expire in various years through 2023. The amount of and
ultimate realization of the benefits from the operating loss carryforwards for
income tax purposes is dependent, in part, upon the tax laws in effect, the
future earnings of the Company, and other future events, the effects of which
cannot be determined. Because of the uncertainty surrounding the realization of
the loss carryforwards, the Company has established a valuation allowance equal
to the tax effect of the loss carryforwards and, therefore, no deferred tax
asset has been recognized for the loss carryforwards. The net deferred tax
assets are approximately $10,800 and $800 as of October 31, 2002 and April 30,2002, respectively, with an offsetting valuation allowance of the same amount,
resulting in a change in the valuation allowance of approximately $10,000 during
the six months ended October 31, 2002.
NOTE 4 - RELATED PARTY TRANSACTIONS
Advances - Sky Way Global, LLC ("Global"), an entity under common control, paid
$26,725 for consulting services rendered to the Company as part of a consulting
agreement [See Note 7]. On May 1, 2002, Global advanced the Company cash of
$1,000. The Company has used office space, supplies, personnel, equipment, etc.
of Global. Global has paid all of the costs and provides a billing to the
Company for its share. Global has billed the Company a total of $214,290 for
expenses during the six months ended October 31, 2002. At October 31, 2002, the
Company owes Global a total of $242,015. The advances bear no interest and are
due on demand.
Management Compensation - In April 2002, the Company issued 5,400,000 shares of
common stock to officers/shareholders of the Company or entities related to them
for payment of organization costs of $1,870 and non-cash services rendered
valued at $3,530. The Company has not paid any cash compensation to any officer
or director of the Company.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company
was only recently formed, has incurred losses since its inception, has current
liabilities in excess of current assets and has not yet commenced planned
principal operations. These factors raise substantial doubt about the ability of
the Company to continue as a going concern. In this regard, management is
proposing to raise any necessary additional funds not provided by operations
through loans or through additional sales of its common stock. There is no
assurance that the Company will be successful in raising this additional capital
or achieving profitable operations. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
F-7
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
From inception
For the Three For the Six on April 24,
Months Ended Months Ended 2002 through
October 31, October 31, October 31,
2002 2002 2002
_____________ _____________ _______________
Loss from operations available to
common shareholders (numerator) $ (99,735) $ (208,959) $ (214,359)
_____________ _____________ _______________
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) 7,500,000 7,500,000 7,500,000
_____________ _____________ _______________
Dilutive loss per share was not presented, as the Company had no common stock
equivalent shares for all periods presented that would affect the computation of
diluted loss per share.
NOTE 7 - COMMITMENTS
Licensing Agreement - The Company entered into a ten-year licensing agreement
with Sky Way Global, LLC ("Global"), an entity under common control. The Company
is to pay a royalty fee of 5% of gross sales for the exclusive right to use
Global's high-speed, broadband wireless technology for the aircraft industry.
The royalty fee will be adjusted every six months, but is limited to 30% of
gross sales. The agreement is renewable in five-year increments with mutual
consent.
Consulting Agreement - At the time of its organization, the Company entered into
an agreement with a consultant who was to provide assistance related to fund
raising and future stock offerings. The consultant received 1,500,000 shares of
common stock valued at $1,500. The consultant also received cash payments of
$26,725 from Sky Way Global, LLC for his services [See Note 4]. The payments
have been classified as deferred stock offering costs.
NOTE 8 - SUBSEQUENT EVENTS
Proposed Stock Offering - The Company is proposing to make a public offering of
5,000,000 shares of its previously authorized but unissued common stock. This
offering is proposed to be registered with the Securities and Exchange
Commission on Form SB-2. An offering price of $17.50 per share has been
arbitrarily determined by the Company. The offering will be managed by Company
management, who will receive no sales commissions or other compensation in
connection with the offering, except for reimbursement of expenses actually
incurred on behalf of the Company in connection with the offering. Offering
costs are estimated to be approximately $73,000. At October 31, 2002, the
Company had deferred $34,325 of fees and consulting services rendered related to
the proposed stock offering which will be offset against the proceeds of the
offering in capital in excess of par value. Of the $34,325 of deferred stock
offering costs, $2,100 was paid by issuing 2,100,000 shares of common stock.
F-8
SKY WAY AIRCRAFT INC.[A Development Stage Company]NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS [Continued]Asset Purchase Agreement - On January 16, 2003, the Company signed an Asset
Purchase Agreement with Claircom Communications Group, Inc. ["Claircom"] to
purchase certain network equipment and information about ground-site lease
contacts for $500,000. The agreement calls for $250,000 cash to be paid upon
execution and $250,000 cash to be paid by May 30, 2003. Sky Way Global, an
entity under common control, made the initial $250,000 payment on behalf of the
Company. The agreement also prohibited Claircom from assigning certain patent
rights to third parties until February 28, 2003.
Stock Issuance - On February 20, 2003, the Company signed an agreement with
Michael T. Williams, Esq. to issue 25,000 shares of common stock in exchange for
legal services. The agreement provides for the stock to be registered with the
Securities and Exchange Commission on Form S-8.
Stock Cancellation and Contingency - In March 2003, the Company's Board of
Directors approved to cancel 2,100,000 shares of common stock that had been
accounted for as issued to consultants in April 2002. Management claims that
consideration was not received for the stock. Although the certificates
representing these shares were not delivered, the possibility exists that the
consultants may demand delivery of the shares pursuant to agreements with the
Company.
Stock Split - On March 11, 2003, the Company's Board of Directors approved a
1.8516-for-1 forward stock split.
Amended and Restated Software License and Services Agreement and Stock Issuance
- On March 11, 2003, the Company signed an Amended and Restated Software License
and Services Agreement with Sky Way Global ["Global"], an entity under common
control, to replace the Company's previous License Agreement. The new agreement
grants to the Company use of certain software applications and source code for
homeland security and other applications in the aircraft and other industries.
The new agreement calls for the Company to issue 1,360 shares of post-split
common stock to Global. The agreement has an indefinite term but may be
cancelled by the Company at any time. Global may cancel the agreement if either
the Company fails to correct a breach of the agreement following 30 days written
notice or the Company issues more than 20% of its outstanding stock within any
twelve-month period and such issuance directly or indirectly results in, or if
there otherwise occurs, a change in the majority of the Company's Board of
Directors.
F-9
PRELIMINARY PROSPECTUS
SKY WAY AIRCRAFT, INC.
Dated _____________, 2003
$87,500,000
5,000,000 Common Shares
At $17.50 per Common Share
There is no minimum offering amount.
The common shares are being offered on a self underwritten basis by Brent C.
Kovar and James Kent, officers and directors of Sky Way Aircraft.
Our offering will commence on the effective date of this prospectus and will
terminate no later than December 31, 2003. Since there is no minimum amount of
shares that must be sold, the proceeds of the offering may be $0 to $87,500,000.
We may receive no proceeds.
Our officers and directors will sell the securities.
Our common stock is not now listed on any national securities exchange, the
NASDAQ stock market or the Over the Counter Bulletin
Board.
Dealer Prospectus Delivery Obligation
Until _________ (90 days from the date of this prospectus) all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
37
Part II
Information Not Required in Prospectus
Item 24. Indemnification of Directors and Officers
The Nevada Revised Statutes grants to us the power to indemnify the officers and
directors of Sky Way Aircraft, under certain circumstances and under certain
conditions and limitations as stated therein, against all expenses and
liabilities incurred by or imposed upon them as a result of suits brought
against them as such officers and directors if they act in good faith and in a
manner they reasonably believe to be in or not opposed to the best interests of
Sky Way Aircraft and, with respect to any criminal action or proceeding, have no
reasonable cause to believe their conduct was unlawful.
Our bylaws provide as follows:
Sky Way Aircraft shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of Sky Way Aircraft, by reason of the
fact that he is or was a director, officer, employee, fiduciary or agent of Sky
Way Aircraft or is or was serving at the request of Sky Way Aircraft as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in the best interest of Sky Way Aircraft, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in the best interest of
Sky Way Aircraft and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Sky Way Aircraft shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action or
suit by or in the right of Sky Way Aircraft to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee, or agent
of Sky Way Aircraft or is or was serving at the request of Sky Way Aircraft as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorney fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in the best interest of Sky Way Aircraft; but no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to us unless and only to the extent that the court
in which such action or suit was brought determines upon application that,
despite the adjudication of liability, but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
To the extent that a director, officer, employee, fiduciary or agent of Sky Way
Aircraft has been successful on the merits in defense of any action, suit, or
proceeding referred to in the first two paragraphs of this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorney fees) actually and reasonably incurred by him in
connection therewith.
Any indemnification under the first two paragraphs of this Article VII (unless
ordered by a court) shall be made by Sky Way Aircraft only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, fiduciary or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in said first two
paragraphs. Such determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, or, if such quorum is not obtainable or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion or by the shareholders.
38
Expenses (including attorney fees) incurred in defending a civil or criminal
action, suit, or proceeding may be paid by Sky Way Aircraft in advance of the
final disposition of such action, suit, or proceeding as authorized in this
Article VII upon receipt of an undertaking by or on behalf of the director,
officer, employee, fiduciary or agent to repay such amount unless it is
ultimately determined that he is entitled to be indemnified by Sky Way Aircraft
as authorized in this Article VII.
The indemnification provided by this Article VII shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under the
Articles of Incorporation, any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, fiduciary or agent and shall
inure to the benefit of heirs, executors, and administrators of such a person.
A corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, fiduciary or agent of Sky Way Aircraft or
who is or was serving at the request of Sky Way Aircraft as a director, officer,
employee, fiduciary or agent of another corporation, partnership, joint venture,
trust, or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as such,
whether or not Sky Way Aircraft would have the power to indemnify him against
such liability under the provisions of this Article VII.
Item 25. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the common stock
being registered hereunder other than underwriting commissions and expenses are
estimated below.
Registration fee $ 15,107.75
Printing expenses 5,000.00
Accounting fees and expenses 5,000.00
Legal fees and expenses 32,500.00
State securities law fees
and expenses 5,000.00
Miscellaneous expenses 10,000.00
------------
Total $ 72,607.75
============
Item 26. Recent Sales of Unregistered Securities
During April 2002, Sky Way Aircraft issued 5,400,000 common shares to KH-01, an
entity controlled by Brent Kovar and Joy Kovar, officers and directors of Sky
Way Aircraft and Glenn Kovar for payment of organization costs of $1,870 and
non-cash services rendered valued at $3,530 or $.001 per common share. These
shares were split 1.8516 for 1 share as of March 11, 2003
1360 shares issued to assigns of Sky Way Global under amended license agreement
as of March 11, 2003, following our stock split. We valued these shares at
$23,800 or $17.50 per share for financial statement purposes based upon the
share price in this offering.
The above issuances of common shares were made to sophisticated individuals
pursuant to an exemption from registration under Sec. 4(2) of the Securities Act
of 1933.
Although we were a party to certain agreements for which we were to issue an
additional 2,100,000 shares to two entities in exchange for certain services to
be rendered, because the agreed-upon services were not rendered, we have not
physically issued and do not intend to issue these additional shares.
39
Item 27. Exhibit Index.
(3) Articles of Incorporation dated April 24, 2002
(3.1) Bylaws
(4) Specimen certificate for common stock
(5) Consent and Opinion of Williams Law Group, P.A. regarding legality
of securities registered under this Registration Statement and to
the references to such attorney in the prospectus filed as part of
this Registration Statement *
(10) License Agreement with Sky Way Global
(10.1) Asset Purchase Agreement with Claircom Communications
(10.2) Amended and Restated License Agreement with Sky Way Global *
(23) Consent of Pritchett, Siler & Hardy, P.C.
*Filed herewithItem 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation form the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any additional or changed material information on the plan of
distribution.
(2) That, for the purpose of determining any liability under the Securities Act,
we shall treat each such post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time shall be deemed to be the initial bona fide offering.
40
(3) To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Clearwater Florida, as
of the 11th of March 2003.
Sky Way Aircraft, Inc.
---------------------------- -------------------------- -------------------------- --------------------------
Title Name Date Signature
---------------------------- -------------------------- -------------------------- --------------------------
Principal Executive Officer Brent C. Kovar 3-11-2003 /s/Brent C. Kovar
---------------------------- -------------------------- -------------------------- --------------------------
Principal Accounting James Kent 3-11-2003 /s/James Kent
Officer
---------------------------- -------------------------- -------------------------- --------------------------
Principal Financial Officer James Kent 3-11-2003 /s/James Kent
---------------------------- -------------------------- -------------------------- --------------------------
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
---------------------------- -------------------------- -------------------------- --------------------------
SIGNATURE NAME TITLE DATE
---------------------------- -------------------------- -------------------------- --------------------------
/s/Brent C. KovarBrent C. Kovar Director 3-11-2003
---------------------------- -------------------------- -------------------------- --------------------------
/s/Joy KovarJoy Kovar Director 3-11-2003
---------------------------- -------------------------- -------------------------- --------------------------
/s/James KentJames Kent Director 3-11-2003
---------------------------- -------------------------- -------------------------- --------------------------