Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Sylvanus Corporation
Incorporated in the State of Florida. SIC: 7389 EIN: 59-3386335
Executive offices: 2180 Park Avenue, North, Suite 100, Winter Park,
Florida. (407) 628-2900
Intended Principal place of business: 2180 Park Avenue, North, Suite
100, Winter Park, Florida.
Registered Agent: Charles J. Champion, Jr., 2180 Park Avenue, North,
Suite 100, Winter Park, Florida.
(407) 628-2900
Approximate date of proposed sale to the public: January 31,
1998.
Calculation of Registration Fee:
Class of Dollar Maximum Proposed Maximum Amount
of
Securities Amount Offering Price Aggregate offering
Registration
Registered Registered Per Unit Price Fee
Common stock $290,000.00 $10.00 $290,000.00
$100.00
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 the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
Page 1 of 47
1<PAGE>
Registration Statement Cross Reference Sheet
Page
Front of Form SB-2 Registration Statement 1
This Cross Reference Sheet 2
Outside Front page of Prospectus 3
Inside Front Cover Page of Prospectus 4
Outside Back Cover Page of Prospectus 5
Summary 6
Risk Factors 7
Use of Proceeds 10
Offering Price 11
Dilution and Concentration 12
Plan of Distribution 13
Legal Proceedings 13
Legal Matters 13
Directors, Executive Officers, Promoters and Control Persons 13
Security Ownership of Certain Beneficial Owners and Management 15
Description of Securities 15
Interest of Experts and Named Counsel 15
Description of Business 15
Plan of Operation 15
Description of Property 16
Certain Relationships and Related Transactions 17
Market for Common Equity and Related Stockholder Matters 18
Executive Compensation 18
Financial Statements (audited annual statements for FY 1996) 19
Financial Statements (unaudited interim statements 3rd Qtr 1997) 26
Indemnification of Officers and Directors 33
Other Expenses of Issuance and Distribution 33
Recent Sales of Unregistered Securities 33
Index of Exhibits 33
Exhibit (3)(i) Articles of Incorporation 34
Exhibit (3)(ii) By Laws 36
Exhibit (5) Legal Opinion 40
Exhibit (23) Consent of Counsel 40
Exhibit (10) Compensation Agreement 42
Exhibit (23) Consent of Experts 43
Exhibit (27) Financial Data Schedule 45
Exhibit (99) Affidavit of President of Corporation 46
Undertakings 47
Signatures 47
2<PAGE>
PROSPECTUS
29,000 Shares
$10.00 per share
Sylvanus Corporation
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR ANY
SECURITIES OF THE CORPORATION AND NO ASSURANCE CAN BE GIVEN THAT A
PUBLIC MARKET WILL DEVELOP FOLLOWING THE SALE OF SHARES. THE OFFERING
PRICE HAS BEEN ARBITRARILY DETERMINED BY THE CORPORATION.
(see "RISK FACTORS")
Sylvanus Corporation (the "Corporation" or the "Company"), a
Florida corporation, hereby offers up to 29,000 shares of its common
stock (the "Shares") at a purchase price of $10 per share (the
"Offering"). (See "DESCRIPTION OF SECURITIES")
This Offering is being self-underwritten by the issuer. There
is no minimum number of shares necessary and no escrow of funds
collected for any shares sold. (see "PLAN OF DISTRIBUTION") Upon sale
of any shares, the Corporation shall be entitled to receive the proceeds
of such sales, which may prove inadequate to fund the needs of the
Corporation. (see "RISK FACTORS")
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY ANYONE WHO
CANNOT AFFORD THE LOSS OF HIS ENTIRE INVESTMENT.
(See "RISK FACTORS" and "DILUTION")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S.
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE U.S. SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting Proceeds to
discounts and issuer
Price to public commissions
Per share $10.00 $0.00 $10.00
Total minimum $0.00 $0.00 $0.00
Total maximum $290,000.00 $0.00 $290,000.00
(See accompanying note on next page)
The shares are offered by the issuer subject to receipt and
acceptance, the approval of certain legal matters by counsel and prior
sale when, as, and if issued. The issuer reserves the right to
withdraw, cancel, or modify the Offering without notice and to reject
any order in whole or in part. It is expected that delivery of
certificates representing the shares will be made against payment
therefor in Winter Park, Florida on or about
January 31, 1998.
The date of this Prospectus is , 1998.
3<PAGE>
Notes to Table of Proceeds
Note: Other estimated expenses of the Offering are as follows:
Registration fees $100
State taxes and fees $1,000
Printing expenses $1,000
Accounting fees $1,000
Legal fees $2,000
Available Information
The Corporation is not a reporting company under any federal or
state law but may become subject to reporting requirements as a result
of this Offering.
Reports to Stockholders
The Corporation intends to furnish all information to the
stockholders which is required by law. Annual reports, financial
statements and any other kind of report to stockholders shall be
provided to stockholders only to the extent which may be required by
law. However, the Board of Directors may change the Corporation's
reporting and disclosure policies at any time.
4<PAGE>
29,000 Shares
Sylvanus Corporation
Prospectus
The date of this Prospectus is , 1998.
Table of Contents
Page
Front page of Prospectus 1
Notes to Table of Proceeds 2
Available Information 2
Reports to Stockholders 2
Summary 3
Risk Factors 4
Use of Proceeds 7
Offering Price 8
Dilution and Concentration 9
Plan of Distribution 10
Legal Proceedings 10
Legal Matters 10
Directors, Executive Officers, Promoters and Control Persons 10
Security Ownership of Certain Beneficial Owners and Management 12
Interest of Experts and Named Counsel 12
Description of Securities 12
Description of Business 12
Plan of Operation 12
Description of Property 13
Certain Relationships and Related Transactions 14
Market for Common Equity and Related Stockholder Matters 15
Executive Compensation 15
Financial Statements (audited annual statements for FY 1996) 16
Financial Statements (unaudited interim statements 3rd Qtr 1997) 23
Table of Contents 24
No dealer, salesman or any other person has been authorized to give any
information or to make any representations not contained in this
Prospectus in connection with the offer made hereby. If given or made,
such information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an
offer of any securities other than the securities to which it relates or
an offer to any person in any jurisdiction in which such an offer would
be unlawful. Any material modification of the offering will be
accomplished by means of an amendment to the registration statement.
Until ________ ____, 1998 (90 days after the date of this
Prospectus), all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation
of dealers to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
5<PAGE>
Summary
The following summary is qualified in its entirety by the more
detailed information and financial statements, including notes thereto,
appearing elsewhere in this Prospectus. Each prospective purchaser of
the Company's securities is urged to read this Prospectus in its
entirety.
The Corporation seeks to become a liquidator. It will specialize
in buying surplus inventory or other items of value in situations where
a good price can be obtained due to circumstances where the seller is
highly motivated to get rid of the inventory. Examples of some possible
sources of inventory are "going out of business" sales, discontinued
lines of merchandise, slow selling excess inventory, used equipment,
obsolete equipment, and recyclable waste products. Other examples are
"perishable" commodities including unsold media advertising, unsold
airplane tickets, unsold hotel rooms, unsold apartment leases or unsold
telephone long distance minutes.
The Corporation is a "start-up" business meaning that it has
little or no business activities or capital at the present time. The
proceeds of this Offering will be used to pay overhead expenses and
acquire inventory (see "Use of Proceeds"). The company will attempt to
liquidate the inventory and use the proceeds to acquire additional
inventory. The Company will attempt to make a profit by buying its
inventory from motivated sellers at favorable prices and then reselling
the products at higher prices.
The principal offices of the Company are located at 2180 Park
Avenue, North, Suite 100, Winter Park, Florida 32789 and its telephone
number is (407) 628-2900.
6<PAGE>
Risk Factors
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. ONLY THOSE PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT SHOULD CONSIDER PURCHASING THESE SECURITIES. PROSPECTIVE
INVESTORS, PRIOR TO MAKING AN INVESTMENT DECISION, SHOULD CAREFULLY READ
THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS REFERRED TO
HEREIN, THE FOLLOWING RISK FACTORS:
Inadequate Planning
The company has no business plan other than the brief plan
outlined in the Plan of Operations section of this document (see "PLAN
OF OPERATION"). Management does not have any experience in the field in
which the company plans to do business. The company has not yet engaged
in any business activity at all. The only steps management has taken on
behalf of the company are actions related to incorporation and this
public offering of the company's securities. Due to the capital
intensive nature of the company's business, management intends to wait
until some capital has been raised before beginning operations of the
company. Management has not identified any particular sources of
inventory or potentially income producing assets which might be targeted
for acquisition and does not have any plans on how such inventories or
assets might be located. Management does not have any plans on how
inventories of other assets, if acquired, might be sold at any price and
has not identified any market of potential buyers. Management does not
have any plans on how potentially income producing equipment or other
assets, if acquired, could be operated, what market might be served
thereby or how or to whom to market leasable assets, if any are
acquired.
Management has done virtually none of the detailed planning normally
involved in starting a business and essentially plans to "wing it".
Management has not even completed a basic cash flow analysis or any
financial projections whatsoever. This approach is unheard of in a
public offering and is generally considered foolish, incompetent and
unwise in any business endeavor. There are no facts or circumstances
which justify management's self-confidence in cavalierly embarking on a
start-up business in an unfamiliar industry with no capital, no
experience, no existing business activity, and no real plan of how to do
it. Nonetheless, that is what management intends to do.
Undercapitalization
There is no minimum Offering amount and it is possible that not
all the securities will be sold. This will result in the Company being
undercapitalized. Undercapitalization could cause the Company to have
insufficient funds to cover overhead expenses and result in the complete
loss of the stockholders' investments. This risk is made worse by the
fact that management plans to proceed with the venture regardless of how
much or how little capital is available to the Company. It is also
quite possible that the Company will be undercapitalized even if the
Offering is sold out. The amount of the Offering is less than the
Company needs because the Company's management has doubts about whether
it can sell even the amount of stock in this Offering due to the
Company's high risk, capital intensive nature and the fact that it is a
start-up with inexperienced management.
Need for Additional Financing
The Company is very likely to need additional financing. The
Company has made no arrangements to obtain such financing and is very
unlikely to be able to obtain any additional financing on any terms.
Broad Discretion in Application of Proceeds
The management of the Company has broad discretion to adjust the
application and allocation of the proceeds of this offering in order to
address changed circumstances and opportunities. As a result of the
foregoing, the success of the Company will be substantially dependent
upon the discretion and judgment of the management of the Company with
respect to the application and allocation of the net proceeds hereof.
See "Use of Proceeds."
7<PAGE>
Dilution and Concentration
There is a high risk of extreme dilution and also potential risks
of concentration. See "Dilution and Concentration" section below.
Stock Price Volatility
Due to the nature of the Company's business, it is highly likely
that the price of its stock will be very volatile. While the Company
remains small, its prospects for success or failure may be significantly
affected by individual transactions which may in turn radically affect
the stock price. Furthermore, the Company is likely to be extremely
thinly traded if a secondary market in the Company's securities develops
at all. This further contributes to stock price volatility.
Arbitrary Offering Price
There has been no prior public market for the Company's
securities. The price to the public of the shares offered hereby has
been arbitrarily determined by the Company and bears no relationship to
the Company's earnings, book value or any other recognized criteria of
value. The offering price is $10.00 per share despite the fact that the
Company has absolutely no earnings, no profits and virtually no assets
or book value, nor any other indication that it is worth anything at
all.
Acquisition of Assets with Stock
Large amounts of shares in the Company which are not included in
the Offering may be used to acquire inventory. This poses great risks
of dilution. (see "Dilution and Concentration") Some of the shares
included in this Offering may also be used to acquire assets deemed
useful to the Company if the Offering is not sold out in the first
twenty days following the commencement of the Offering. This also poses
a risk of dilution.
Stock Price Deterioration
The Company plans to acquire at least some of its inventory with
the Company's stock. Many of the sellers of such inventory will place
little or no value on the assets they may give up to obtain the stock.
Other sellers of such inventory may be under extreme cash flow
pressures. In the above cases, or otherwise, stockholders in the
Company who trade inventory to the Company for stock are likely to
attempt to liquidate large blocks of the Company's stock in short
periods of time. Due to the above mentioned circumstances, such
stockholders may be willing to endure substantial losses in order to
liquidate their holdings. This kind of selling activity is very likely
to cause substantial and continuing deterioration of the price of the
Company's stock. Since the Company may engage in ongoing transactions
of this nature, the price of the Company's stock may never recover and
in fact deteriorate at an accelerating rate as new inventory
acquisitions are made by the Company with its stock at depressed stock
prices. New stockholders obtaining such depressed stock will probably
also attempt to liquidate their holdings, heedless of losses, continuing
and probably accelerating the downward trend. At some point, if such a
trend develops and continues, it is possible that other stockholders
will lose confidence in the Company or anticipate further stock price
deterioration and sell their holdings. While there can be no certainty
that the stock price will go down, the risk of stock price deterioration
is extremely high. Investors should be prepared to see the stock price
go down and keep going down indefinitely. Even stockholders
contemplating trading assets for stock who might be happy to get pennies
on the dollar for their assets or their stock should be warned that the
stock price deterioration may be far greater than expected and such
deterioration may cause any secondary market that may exist to evaporate
without warning leaving the Company's stockholders without any means of
obtaining any value at all for their stock.
No Dividends
The Company can make no assurances that the future operations of
the Company will result in any revenues or will be profitable. If the
operations of the Company do become profitable, the Company plans to
retain much or all of its earnings in order to finance future operations
of the Company. Therefore, the Company has no plans to pay any
dividends. While this policy may be changed by the board of directors
at any time, the
8<PAGE>
fact that the Company will probably be undercapitalized and face chronic
cash flow shortages makes the possibility of any dividends remote at
best.
Inexperienced Management
Management has absolutely no experience whatsoever in the
liquidation business, which is intended to be the Company's primary, if
not sole, activity. Since qualified and experienced management is one
of the key factors in the success of any business, this weakness alone
is sufficient to make the Company's stock exceedingly risky.
Inadequate Management
Mr. Williamson is only obligated to work for the Company on a
part-time basis. (See "Executive Compensation") Also, the Company may
contract with other companies or individuals to carry out some or all of
the business operations of the Company on the Company's behalf. These
arrangements may be wholly inadequate to carry out any or sufficient
business operations to prevent insolvency of the Company. Also,
inadequate management exacerbates the danger of all the other risks the
Company faces. Risks which might be handled or avoided by management
may bankrupt the Company if there is not adequate management paying
attention to the affairs of the Company.
Risks of a Start-Up Venture
Many statistical studies show that the overwhelming majority of
all start-up businesses fail. The Company is a start-up business. The
Company has never conducted any business and is not now engaged in any
business activity. The Company will start its business operations after
this Offering begins but there is a high probability that such
operations will not be profitable and the Company will fail causing the
Company's stock to become worthless.
Liability and Lack of Insurance
The business operations of the Company will necessarily involve
the potential for incurring unforeseen liabilities for damages. A
particular problem exists because the liquidation business frequently
requires liquidators to deal in products which the liquidators have no
familiarity with. This poses a risk of miscommunicating the nature of
the products to potential buyers, inability to accurately judge product
quality and the possibility of liability for personal injury. The
Company does not carry any liability insurance and has no plans to
acquire such insurance.
Liquidation Losses
It is likely that despite management's efforts and estimates,
inventory may not be able to be sold at a profit. Management will
probably face situations in which, due to management error, seller
misrepresentations, expiration of time, damage, vandalism, changing
market conditions or other reasons, the Company will buy inventory and
be unable to liquidate it at a profit. Since the Company will probably
remain undercapitalized indefinitely, the survival of the Company
depends upon rolling its inventory frequently. Storage and other
overhead costs preclude waiting for market conditions to improve. For
these reasons, the Company may often have to sell its own inventory at a
loss. If this happens too often or if the losses are too great on even
one transaction, the Company could become insolvent as a result. It is
entirely possible, due to the difficulty of assessing the value of
various potential inventory items that management error could result in
the Company buying inventory items which cannot be sold at all at any
price and may even cost money to dispose of. Due to the likelihood of
undercapitalization of the Company and the fact that the Company will
try to purchase inventory at wholesale whenever possible, it is likely
that management will from time to time invest substantially all of the
Company's capital base in one type of inventory. The Company may even
borrow additional money to make large wholesale purchases. If any one
such purchase turns out to be unsalable, the Company will be instantly
bankrupt with no possibility of recovering from such an error. The
likelihood of such a mistake occurring is relatively high. This is an
extremely high risk business.
9<PAGE>
Storage Costs
Many types of inventory the Company may acquire will require
storage and incur storage costs. These ongoing storage costs place the
Company under time pressure to liquidate its inventory in relatively
short periods of time. If stored inventory is not sold promptly, sooner
or later, storage costs alone will prevent the Company from realizing
any profit on such stored inventory. Ongoing storage costs alone may
prompt management to sell inventory at a loss to avoid the storage
costs. Such losses could cause a decline in stock price or, if large
enough, could bankrupt the Company.
Transaction Costs
Due to the nature of the Company's intended business, it is
difficult to tell in advance whether a potential inventory item can be
sold at a profit. One of the factors which will affect this is
transaction costs. While management may find an opportunity to buy
inventory at below market prices, the transaction costs involved in the
acquisition and subsequent liquidation may reduce or eliminate any
profit on an otherwise promising transaction. Transaction costs may
even exceed the profit margin, resulting in a loss. Transaction costs
may be incurred when the Company is acquiring or attempting to liquidate
inventory items which are unsalable. This will also result in a loss.
Transaction costs on many types of transactions are very difficult to
predict in advance.
Substantial Competition
There are many other individuals and companies engaged in the
business of liquidating unwanted assets. Many of these competitors
specialize in particular kinds of products and are likely to have far
more expertise at liquidating those kinds of products than the Company
will have.
Businesses in the United States and elsewhere which are engaged in
the liquidation business are characterized by intense and substantial
competition. Almost all of the companies with which the Company intends
to compete are substantially larger and have substantially greater
resources than the Company. It is also likely that other competitors
will emerge in the future. The Company will compete with companies that
have greater market recognition, greater resources and broader
capabilities than the Company. As a consequence, there is no assurance
that the Company will be able to successfully compete in the
marketplace.
Minimal Potential for Gain
Although there is a tendency to associate high returns with high
risk, the high levels of risk associated with the securities offered
herein should in no way be taken as any indication that there is any
possibility of high potential yields. While it is impossible to predict
what the results of investing in the Company's stock will be, management
expects that it is likely that the stock price, if a market for the
stock develops at all, will drop or remain level, not rise. The nature
of the Company's business is such that profits are expected to be low or
at best moderate relative to the amount of capital tied up in inventory.
Therefore it is exceedingly unlikely that the stock price will perform
well if it goes up at all.
Use of Proceeds
The net proceeds to be raised in this offering will be used for
compensation to management, general and administrative expenses, labor
and facilities overhead, marketing, legal and accounting services,
acquisition of inventory, and other direct and indirect costs of
carrying out the Corporation's business. On an interim basis some
portion of the proceeds may be invested in financial instruments.
Priority 1
The first priority of any funds raised will be to pay for general
and administrative expenses and other direct and indirect costs of
carrying out the Corporation's business for which management has
allocated up to $9,900 of the proceeds of this offering.
10<PAGE>
Priority 2
The second priority of any funds raised will be to pay for
acquisition of inventory for which management has allocated up to
$255,000 of the proceeds of this offering.
Priority 3
The third priority of any funds raised will be to pay for
marketing expenses for which management has allocated up to $20,000
of the proceeds of this offering.
Offering Expenses $5,100 1.8%
General and Administrative $9,900 3.4%
Inventory Acquisition $255,000 87.9%
Marketing $20,000 6.9%
$290,000 100.0%
In the event that less than the maximum amount of shares are sold
in the first twenty (20) days after sales of shares as part of this
Offering begin, management will reduce the amount allocated to
priorities 1 and 3 to as small an amount as management deems prudent
considering such amount of funds actually raised and reasonable
expectations of further cash flows including but not limited to further
sales of shares under this Offering or subsequent offerings and
management may allocate funds in excess of such amount to priority 2.
Also, in the event that less than the maximum amount of shares are sold
in the first twenty (20) days after sales of shares as part of this
Offering begin, management may solicit and accept non-cash payments for
some or all of the securities registered as part of this Offering.
Purpose of This Offering:
The primary purpose of this offering is to raise funds to cover
short-term overhead expenses and to acquire an inventory which can be
liquidated. The inventory may consist of anything which management
believes it can liquidate for cash or trade for salable inventory items.
Retirement of Debt:
If the Corporation does not receive the full proceeds of this
Offering in time to fully fund its planned operations, management
expects to incur debts which may be retired with the proceeds of this
offering, or with company stock in private transactions or future public
offerings. These debts may include, but are not limited to, deferred
compensation of management, purchase money mortgages from the sellers of
the real estate acquired, bridge loans, and any short term credit
extended by vendors or sellers of inventory items. The amount and terms
of such loans cannot be reliably predicted in advance.
Acquisition of Inventory
The Company has not identified any specific items of inventory to
be acquired. Due to the nature of the business, opportunities to buy
suitable inventory at low prices will necessarily be of short duration.
Any opportunities which might be available at the time this prospectus
is being written are unlikely to still be available after the offering.
Therefore, management will seek out specific acquisition opportunities
only after the Offering has begun.
Offering Price
The price at which the Corporation's shares are being offered has
been arbitrarily determined by the Corporation and bears no relationship
to the Corporation's assets, book value, net worth or other economic or
recognized criteria of value and in no event should it be regarded as an
indication of any future market price of the shares. Since the Company
is a start-up venture and has virtually no assets, no cash flow, no good
will value and no ongoing business activities, most, if not all,
recognized criteria of value would show the securities to be worth
nothing.
11<PAGE>
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR ANY
SECURITIES OF THE CORPORATION AND NO ASSURANCE CAN BE GIVEN THAT A
PUBLIC MARKET WILL DEVELOP FOLLOWING THE SALE OF SHARES. THE OFFERING
PRICE HAS BEEN ARBITRARILY DETERMINED BY THE CORPORATION.
Dilution and Concentration
No one has purchased any shares at any price less than the price
to the public in this Offering and no one has any warrants, options or
other contractual rights to purchase any shares at any price less than
the price to the public in this Offering.
There is a high probability of immediate and substantial dilution.
This is exacerbated by the fact that if the Offering is not sold out
within the first twenty (20) days, management plans to attempt to trade
the unsold shares directly for inventory or to pay the Company's
expenses. Management also plans to use stock which is not part of this
Offering to acquire inventory, other assets or to pay the Company's
expenses. Since the Company's Articles of Incorporation authorize the
issuance of up to one hundred million (100,000,000) shares, the
potential for dilution is extremely high. Management may not always get
full value for the stock, resulting in dilution of value as well as
dilution of ownership for the remaining stockholders. Management also
will likely be faced with a cash flow shortage which may persist
throughout the life of the Company and which will put management under
pressure to obtain inventory for stock. This pressure is likely to
cause management to agree to unfavorable prices in order to acquire
inventory for stock and ease any cash flow crisis or crises which may
develop. The existence of the Company may even depend upon management
giving away vastly disproportionate amounts of stock for inventory.
This may occur immediately and continue into the foreseeable future. Of
course, such practices will result in devastating dilution of both value
and ownership percentage of the existing shareholders. It is also quite
possible that such tactics will dilute the existing shareholders without
preserving the Company from insolvency and the shareholders will lose
most or all of their investment as a result. It is also the stated
intention of management to issue stock in excess of the amount of this
Offering either registered or in private transactions exempt from
registration. This may result in additional dilution. Furthermore,
stock which is not registered is likely to be deemed less valuable than
fully registered free-trading shares. Therefore, management is likely
to be unable to obtain full price for such shares in any private
transactions exempt from registration. This will result in additional
dilution of both value and ownership percentage.
Another reason dilution may occur is that the Corporation may re-
acquire its own stock in the public market and otherwise, either for
cash or non-cash assets. This may be done to liquidate non-cash assets
or for other reasons. If non-cash assets are involved, there is a risk
of overvaluation either due to error or due to decisions by management
that the goal to be accomplished by the transactions are worth the cost
to the remaining stockholders. Even if the Corporation acquires its own
stock with cash, there is a serious risk that the Corporation will
overvalue its own stock, posing a substantial and continuing risk of
dilution to the remaining stockholders. Failure to correct the
overvaluation will cause the dilution to be compounded by each
subsequent acquisition of the Corporation's stock causing greater and
greater dilution in a geometric progression with potentially disastrous
results to the remaining stockholders. Transactions by the Corporation
acquiring or selling its own stock may cause a drop in stock price or
even a wildly disproportionate drop in stock price which may cause
further dilution due to the effect of the price drop on pending and
continuing transactions including but not limited to purchase of non-
cash assets with stock, the purchase of stock for cash, and the purchase
of stock with non-cash assets.
It is worth noting that acquisitions, if any, by the Corporation
of its own stock, and other activities, may result in concentration of
value instead of dilution of value in common stock shares, but this also
can pose risks and unforeseen circumstances to stockholders.
Concentration poses a particular hazard to anyone engaged in trading of
stock options and anyone who engages in "short sales" of the
Corporation's stock. Concentration also may benefit some stockholders
more than others. This may occur if a stockholder sells stock back to
the Corporation whether for cash or more particularly for non-cash
assets. In this case, management views its obligation to the
Corporation as a whole to take precedence over its concerns for any
particular stockholder and may attempt to purchase the stock for as low
a price as possible. If management is able to obtain the stock at below
its market value or exchange non-cash assets at a high value, management
may do so, causing
12<PAGE>
concentration rather than dilution. While this concentration is
beneficial to the other stockholders, it does not benefit the
stockholder engaging in the transaction which caused the concentration
and, in fact, occurs at his expense.
The Company may make additional public Offerings. Future
Offerings may be made at lower stock prices than the prices in this
Offering, posing an extreme dilution risk to anyone considering buying
stock as part of this Offering.
Plan of Distribution
This Offering is being self-underwritten by the issuer with no
minimum. There will be no escrow account and proceeds of sales of the
Securities will be immediately available to the Company. This is the
Company's first public offering of any kind. Sales of shares in this
offering are to be made by the officers of the company. The board of
directors is not expected to play any role in this public offering.
During the first twenty (20) days, only cash will be
accepted in payment for the company's stock and the price will be ten
dollars ($10) per share. It is hoped that, due to the small size of the
offering, that it will be sold out in the initial twenty day selling
period.
In the event that the Offering is not sold out in the first twenty
days, the Corporation reserves the right to directly sell shares which
are part of this Offering either for cash or non-cash assets and at such
price or prices as the management of the Company deems beneficial to the
Company. The Company also reserves the right to continue the Offering
for extended periods of time if necessary.
Legal Proceedings
The Company is not a party to any legal proceedings and, to the
best of its information, knowledge and belief, none is contemplated or
has been threatened.
Legal Matters
The validity of the securities being offered hereby will be passed
upon for the Company by Mary Silva, attorney at law. Mary Silva's
address is 712 Strathmore Drive, Orlando, Florida 32803.
Directors, Executive Officers, Promoters and Control Persons
Charles J. Champion, Jr., age 30, is the only member of the Board
of Directors. He has held that office continuously since the inception
of the Corporation on June 3, 1996. Mr. Champion is also the Company's
Registered Agent.
Charles Champion's recent business experience includes:
Chief Financial Officer of C. J. Champion Company, an insurance
agency which provides sophisticated insurance related services in the
estate planning market.
President of Sunshine Securities Corporation which is a securities
firm and a member of NASD and SIPC. Previously, Mr. Champion served as
Registered Representative, Vice President - Entrepreneurial Finance, and
Chairman of the Board of Sunshine Securities Corporation.
President of Tradenet Transaction Systems, Inc., a barter company.
President of Sylvanus Corporation from June 3, 1996 (inception)
until December 9, 1997.
Karl H. Williamson, age 46, is the President, Treasurer and
Secretary of Sylvanus Corporation. He has held those offices since
December 9, 1997. Mr. Williamson is the Chief Executive Officer (CEO)
of the Company.
13<PAGE>
Mr. Williamson has, over the past twenty years, acquired experience in
management, sales and as an entrepreneur and founder of small
businesses. He has worked for numerous small companies and a few larger
ones. Some of the small companies he worked with were successful, some
were not successful.
Mr. Williamson's more notable experience and business activities are as
follows:
Mr. Williamson currently manages an Elder Care Home in Longwood,
Florida, which he and his wife, Glenda Williamson, own.
During 1989-1992 Mr. Williamson was National Sales Director for 3D
Dealer Service, Inc., an embroidery and silk screening business based in
Denver, North Carolina, where he was partly responsible for sales growth
from zero to $4 million annually.
From November of 1988 to September of 1989, Mr. Williamson was employed
by Carroll Leather Goods as their Southeastern Sales Manager. Carroll
Leather Goods is a leather goods manufacturer based in Boone, North
Carolina.
Mr. Williamson had previously (1977-1979) served as sales manager for
Leather Wear, Inc. (a leather goods manufacturer then based in Orlando,
Florida) for more than two years, a period during which sales grew from
less than $50,000 annually to more than $1 million annually. The
company later grew to more than $2 million in annual sales before being
acquired by Carroll Leather Goods. (circa 1987)
Mr. Williamson has, at various times from 1979 to 1988, operated a
successful sole proprietorship entertainment business under the name of
"Gator Williamson."
This wide variety of experience should prove valuable in Mr.
Williamson's efforts to take Sylvanus Corporation from its status as a
"startup" or development stage company, to an operational business. In
particular, the fact that Mr. Williamson has operated businesses which
were liquidated (Williamson Landscaping in 1981, Radford Record Exchange
in 1983) gives him an understanding of the motivations, mindset and
needs of entrepreneurs who find it necessary to give up on a business
venture and liquidate their inventory and other assets. As a company
specializing in liquidations, Sylvanus Corporation plans to become
involved in such situations as a buyer of surplus inventory and other
liquidation assets.
In addition to acquiring assets, Sylvanus Corporation will need to sell
the assets it acquires. Mr. Williamson's experience building sales for
very small companies is notable. Mr. Williamson's entrepreneurial
experience operating sole proprietorship businesses is similar to the
kind of role he is to play as the President of Sylvanus Corporation.
Janet C. Mouquin, age 25, is the Vice President of Finance and
Chief Financial Officer (CFO) of Sylvanus Corporation. She has held
that office since December 9, 1997.
She is an accountant employed by Thomas, Beck, Zurcher & White, P.A. in
Winter Park, Florida. She is a Certified Public Accountant Candidate
with Florida Southern College. She holds a Master of Business
Administration in Aviation degree and a Bachelor of Science in Aviation
Business Administration from Embry -Riddle Aeronautical University.
Her previous business experience includes accounting and real estate
property management responsibilities.
14<PAGE>
Security Ownership of Certain Beneficial Owners and Management.
(1) (2) (3) (4)
Name and Amount and
Address of Nature of
Beneficial Beneficial
Title of Class Owner Owner Percent of
Class
Common Stock Charles J. Champion, Jr.* 1 share 100%
Lock Drawer 2706 owned outright
Winter Park, Florida 32790
*Note that Charles J. Champion, Jr., currently the owner of the only
share of stock issued by the Company prior to this Offering, is also the
only member of the board of directors of the Company.
Description of Securities
The shares offered in this Offering are common stock with ordinary
right to participate in any dividends declared by the Board of Directors
in their sole discretion. No other class of stock has a prior claim on
dividends. There are no other classes of stock in the Corporation,
either common or preferred. There are no preemptive rights. The shares
have voting rights.
Interest of Named Experts and Counsel
Karl H. Williamson is named as an expert in the Exhibits section
as President of the Company. Mr. Williamson is not a stockholder in the
Company. Counsel has agreed to accept payment of her fees in the form
of stock in the company at the same price per share ($10) which the
stock will be offered to the public. Legal fees connected with the
offering are expected to be no more than $2,000.
Description of Business
Organized as a corporation on June 3, 1996 under the laws of the
State of Florida. The Corporation has two officers, Karl H. Williamson
and Janet C. Mouquin, and no employees. The Corporation has carried out
no business and all its activities since inception have been related to
organizational matters and efforts to raise capital. The Corporation
now has a plan to begin substantive business operations. See "Plan of
Operation" below.
Plan of Operation
The Corporation seeks to become a Liquidator. It will specialize
in buying surplus inventory or other items of value in situations where
a good price can be obtained due to circumstances where the seller is
highly motivated to get rid of the inventory. Examples of some possible
sources of inventory are "going out of business" sales, discontinued
lines of merchandise, slow selling excess inventory, used equipment,
obsolete equipment, and recyclable waste products. Other examples are
"perishable" commodities including unsold media advertising, unsold
airplane tickets, unsold hotel rooms, unsold apartment leases or unsold
telephone long distance minutes.
The Corporation is a "start-up" business meaning that it has no
business activities or capital at the present time. The proceeds of
this Offering will be used to pay overhead expenses and acquire
inventory (see "Use of Proceeds"). The company will attempt to
liquidate the inventory and use the proceeds to acquire additional
inventory. The Company will attempt to make a profit by buying its
inventory from motivated sellers at favorable prices and then reselling
the products at higher prices. The Company will also seek to acquire
equipment or other assets which might be leased or operated to generate
revenue.
Management anticipates that the proceeds of this Offering, if it
is sold out, would probably be sufficient to permit the Corporation to
carry out its intended operations for the next twelve months. If less
than the full Offering is sold in the first twelve months or if cash
flow from sales does not keep pace with expenses, then it is almost
certain that the Corporation will not be able to carry out all of its
operations the way it would if such funds
15<PAGE>
were available. In the event of any shortfall, management is likely to
seek additional financing to make up the difference between the total
amount of this Offering and the amount actually sold. Management may
additionally seek to raise funds above and beyond the amount of this
Offering and that is anticipated within the next twelve months.
Inadequate funding could result in dire consequences. See "Risk
Factors" above.
Management does anticipate hiring one or more employees or
independent contractors or entering into an employee lease agreement.
Management anticipates that a staff of only one or two people will be
sufficient to carry out the Corporation's business for the next twelve
months.
Management does intend to keep funds available for acquisition of
any other assets which may become available and present opportunities
which management feels the need to act on promptly. However, there are
no specific assets targeted for acquisition at this time.
Management has absolutely no experience whatsoever in the
liquidation business, which is intended to be the Company's primary, if
not sole, activity. Since qualified and experienced management is one
of the key factors in the success of any business, this weakness alone
is sufficient to make the Company's stock exceedingly risky (see "RISK
FACTORS").
The company has no business plan other than the brief plan
outlined above. Management does not have any experience in the field in
which the company plans to do business. The company has not yet engaged
in any business activity at all. The only steps management has taken on
behalf of the company are actions related to incorporation and this
public offering of the company's securities. Due to the capital
intensive nature of the company's business, management intends to wait
until some capital has been raised before beginning operations of the
company. Management's intentions for finding inventories or other
assets for potential acquisition are nothing more than simply contacting
people known personally to management or calling companies from the
phone book such as airlines, media, hotels and retailers which
management thinks might have unsold inventory. Management's plans for
sales of acquired inventory are simply to contact people known
personally to management, companies which management thinks might be
interested in buying such inventory. If management is unsuccessful in
locating buyers for its inventory, if any, management may liquidate
inventories by selling to other liquidation companies, or using
auctioneers or barter companies. Management has no plans for any
extensive marketing of the Company's services.
Management has not identified any particular sources of inventory
or potentially income producing assets which might be targeted for
acquisition and does not have any plans on how such inventories or
assets might be located. Management does not have any plans on how
inventories of other assets, if acquired, might be sold at any price and
has not identified any market of potential buyers. Management does not
have any plans on how potentially income producing equipment or other
assets, if acquired, could be operated, what market might be served
thereby or how or to whom to market leasable assets, if any are
acquired.
Management has done virtually none of the detailed planning
normally involved in starting a business and essentially plans to "wing
it". Management has not even completed a basic cash flow analysis or
any financial projections whatsoever. This approach is unheard of in a
public offering and is generally considered foolish, incompetent and
unwise in any business endeavor. There are no facts or circumstances
which justify management's self-confidence in cavalierly embarking on a
start-up business in an unfamiliar industry with no capital, no
experience, no existing business activity, and no real plan of how to
run such a business. Nonetheless, that is what management intends to
do.
Description of Property
Investment Policies
The Company is not primarily engaged in the business of investing
money and is not intended to be an investment company of any kind. Any
investments which the Company may make are purely ancillary to the
company's main business which is intended to be liquidations. Any
investments the Company may make are expected to be mostly or wholly of
an interim nature. In order to avoid classification of the Company as
an Investment Company under the Investment Company Act of 1940,
management intends to ensure that investment assets never constitute 40%
or more of the total assets of the Company. Management plans to ensure
that the
16<PAGE>
Company does not do anything which could cause the Company to be
classified as an Investment Company under the Investment Company Act of
1940.
Management does not feel it necessary to observe any limitations
on the percentage of assets which may be invested in any one investment,
or any type or types of investment except for the above mentioned limits
necessary to avoid classification of the Company as an Investment
Company under the Investment Company Act of 1940. In fact, due to the
likelihood that the Company may need to acquire inventory in wholesale
quantities or single assets of large value while the Company is
undercapitalized, it is quite possible that at any one time 100% of the
Corporation's capital may be invested in a single asset or type of
asset. This is a risky investment policy. Any investment policies of
the Corporation may be changed at any time without a vote of the
shareholders or the Board of Directors and without notice to the
shareholders or Board of Directors. The Company's investment policies
regarding capital gain vs. income do not favor either one more than the
other. If the Company acquires any investments, these may be acquired
in anticipation of capital gains, income or both. However, the
liquidation operations of the Company, as distinct from investments, are
likely to consist largely of buying inventory and reselling it for a
gain (or loss).
(1) Investments in real estate or interests in real estate
The Corporation does not plan to acquire any real estate, but may
do so. The Corporation may invest in any type of real estate.
Properties are intended to be acquired with a minimum of cash unless the
application of larger amounts of cash allows the Corporation to acquire
such properties at significantly lower prices than otherwise would be
the case. Properties may be acquired for cash at auction. Properties
may be acquired for cash, stock, purchase money mortgages, other debt
instruments, exchange of other property, on a joint venture basis, by
other means or by any combination of the foregoing methods.
(2) Investment in real estate mortgages
The Corporation does not plan to acquire any mortgages, but may do
so, particularly money mortgages on properties which it sells, if the
Corporation acquires any such properties. The Corporation may invest
in, or accept upon sale or real estate, any type of mortgage, first,
second or otherwise, upon any type of property and expects to hold
mortgages with unusual terms in order to secure sales. Such terms may
include but not be limited to unusually long amortization schedules,
below market interest rates, infrequent payment schedules, interest only
payments, reverse amortization payments, no payments, stepped interest
rates, blanket security of multiple properties, security of only part of
the property sold, unlimited assumption provisions, release provisions,
subordination provisions, or any combination of the above.
(3) Securities of or interests in persons primarily engaged in
real estate activities
The Corporation does not plan to acquire any securities or any
other investments, but may do so. The Corporation may invest in any
type of security or investment including but not limited to stock,
bonds, partnership interests and real estate investment trusts. There
are no particular securities, trusts, partnerships or businesses in
which the Corporation has any specific plans to invest at this time.
The Corporation currently owns no real estate, mortgages, securities or
investments of any kind and has no plans to acquire any.
Certain Relationships and Related Transactions
Mr. Williamson is currently the President, Chief Executive Officer
(CEO), Treasurer and Secretary of the corporation. Mr. Williamson is
also a sales representative for the company pursuant to a compensation
agreement between Mr. Williamson and the Company. (see "Executive
Compensation") The compensation agreement was negotiated in an arms-
length transaction between Mr. Williamson and the Company at a time when
Mr. Williamson had no relationship with the Company and was not an
officer, director or stockholder of the company.
17<PAGE>
Market for Common Equity and Related Stockholder Matters
There is no public market where the Corporation's common equity is
traded. There is no public market for any securities issued by the
Corporation. There is only one share of stock currently outstanding
which could be sold pursuant to Rule 144. There is one stock holder of
common stock in the Company. There have never been any dividends paid
by the Company to its stockholder. The nature of the Company's business
makes it unlikely that it will pay any dividends in the near future, if
ever. (see RISK FACTORS)
Executive Compensation
The Corporation currently has no employees. Karl H. Williamson
serves as the Company's President, Treasurer and Secretary. As
President, Mr. Williamson is the Chief Executive Officer (CEO) of the
Company. It is understood that Mr. Williamson will work for the Company
on a part-time basis. Mr. Williamson will not be obligated to work any
specific number of hours at this job. The amount of time and effort
which Mr. Williamson shall expend on behalf of the Company shall be
entirely at his discretion. Mr. Williamson does not expect to be
compensated for his services as an officer of the Company. However,
pursuant to a compensation agreement, Mr. Williamson will also serve as
the company's sales representative, for which he shall be entitled to
compensation of twenty percent (20%) of the gross profit received by the
Company during the first twelve months following the beginning of this
offering from operations of the company including the sale or lease of
inventory assets. Such compensation may be paid in the form of stock in
the Company at book value or at market value if there is a market for
the Company's stock and the market value is higher than book value. At
the discretion of the Board of Directors, some or all of Mr.
Williamson's compensation may be paid in cash instead of stock.
The Vice President of Finance and Chief Financial Officer (CFO) of the
Company is Janet C. Mouquin. It is understood that Ms. Mouquin will
work for the Company on a part-time basis. Ms. Mouquin will not be
obligated to work any specific number of hours at this job. The amount
of time and effort which Ms. Mouquin shall expend on behalf of the
Company shall be entirely at her discretion. The Company currently has
no arrangements to pay any compensation to Ms. Mouquin as her activities
on behalf of the Company are initially expected to be minimal. At such
time as the Company may need a greater effort from Ms. Mouquin, the
Company may negotiate some form of compensation arrangements with her.
Charles J. Champion, Jr. currently serves as the only member of the
board of directors of the Company and the registered agent of the
Company. There are no arrangements to provide any compensation to Mr.
Champion for these services or for his previous service as an officer of
the Company. Mr. Champion does not expect any compensation in the near
future for these services.
18<PAGE>
(Letterhead of Kuhn, Chatham & Seland P.A., Certified Public
Accountants)
Independent Auditors' Report
To The Board of Directors
Sylvanus Corporation
We have audited the accompanying balance sheet of Sylvanus Corporation
(a development stage enterprise) as of December 31, 1996, and the
related statements of operations, stockholders equity and cash flows for
the period from June 3, 1996 (inception) to December 31, 1996. 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. 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 referred to above present
fairly, in all material respects, the financial position of Sylvanus
Corporation ( a development stage enterprise) as of December 31, 1996,
and the results of its operations and its cash flows for the period from
June 3, 1996 (inception) to December 31, 1996 in conformity with
generally accepted accounting principles.
s/ Kuhn, Chatham & Seland P.A.
February 14, 1997
19<PAGE>
SYLVANUS CORPORATION
(a development stage company)
BALANCE SHEET
December 31, 1996
ASSETS
Cash and cash equivalents $ 10
Other Assets 0
TOTAL ASSETS $ 10
LIABILITIES & STOCKHOLDERS EQUITY
Accounts Payable $ 0
TOTAL LIABILITIES 0
STOCKHOLDERS EQUITY
Common stock ($0.01 par value,
100,000,000 shares authorized, (1) one
share issued and outstanding) 0
Additional paid-in capital 10
TOTAL STOCKHOLDERS EQUITY 10
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 10
See accompanying notes which are an integral part of these financial
statements
20<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 3, 1996(Inception) TO DECEMBER 31, 1996
REVENUES
Sales $ 0
OPERATING EXPENSES
Salaries 0
Occupancy expense 0
Selling expense 0
Other operating expenses 0
Total operating expenses 0
NET INCOME $ 0
NET INCOME PER COMMON SHARE $ 0
See accompanying notes which are an integral part of these financial
statements
21<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM JUNE 3, 1996 (Inception) TO DECEMBER 31, 1996
Common Stock Accumulated
$0.01 Par Earnings
Total
Additional
Shares Amount Paid-in Capital
Balance at Inception $ -0- $ -0- $-0-
$-0-
Stock Issued
September 26, 1996 1 0.01 9.99 -0-
10
Balance at December 31, 1996 1 $0.01 $9.99 $-0-
$ 10
See accompanying notes which are an integral part of these financial
statements
22<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 3, 1996(Inception) TO DECEMBER 31, 1996
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued $ 10
Net cash provided by financing activities 10
Net increase in cash 10
CASH AND CASH EQUIVALENTS AT INCEPTION -0-
CASH AND CASH EQUIVALENTS AT December 31, 1996 $ 10
Supplemental Disclosures
Income taxes paid to federal and state governments $ -0-
Interest paid $ -0-
See accompanying notes which are an integral part of these financial
statements
23<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
The summary of significant accounting policies of Sylvanus Corporation
(the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, who is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles.
The Company was formed under the laws of the State of Florida on June 3,
1996 with its principal place of business in Winter Park, Florida where
it will share facilities with affiliated companies.
The Company is 100% owned by Charles J. Champion, Jr. and is affiliated
by common ownership with Tradenet Transaction Systems, Inc. and Sunshine
Securities Corporation. Certain minor organizational costs of less than
$500 have been paid for by the shareholder. These costs are not
expected to be reimbursed.
Business Activity - The Company intends to become a liquidator.
It will specialize in buying surplus inventory or other items of value
in situations where a good price can be obtained due to circumstances
where the seller is highly motivated to get rid of the inventory.
Examples of some possible sources of inventory are "going out of
business" sales, discontinued lines of merchandise, slow selling excess
inventory, used equipment, obsolete equipment, and recyclable waste
products. Other examples are "perishable" commodities including unsold
media advertising, unsold airplane tickets, unsold hotel rooms, unsold
apartment leases or unsold telephone long distance minutes.
The company will attempt to liquidate the inventory and use the
proceeds to acquire additional inventory. The Company does not expect
to make any cash distributions to shareholders in the near term future.
The Company is in the development stage and its efforts through
December 31, 1996 have been principally devoted to organizational
activities. The company has not entered into any revenue generating
activities and management anticipates that it will incur losses until
it begins to generate revenues.
Cash equivalents - All highly liquid debt instruments purchased
with a maturity of three months or less and investments in money market
funds are considered to be cash equivalents.
24<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(continued)
Management estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value. Fair value estimates are made at a specific
point in time for the Company's financial instruments; they are
subjective in nature and involve uncertainties, matters of significant
judgment and, therefore, cannot be determined with precision.
CASH AND CASH EQUIVALENTS - For those cash equivalents, which consist
primarily of short-term money market instruments, the carrying amount is
a reasonable estimate of fair value.
The estimated fair values of the Company's financial instruments at
December 31, 1996 were as follows:
1996
Carrying Fair
Amount Value
Financial Assets:
Cash and cash equivalents $10 $10
Financial Liabilities:
None $ 0 $ 0
NOTE 3 - CONCENTRATION OF CREDIT RISK
The Company maintains cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company believes it is not exposed
to any significant credit risk on cash and cash equivalents.
25<PAGE>
Sylvanus Corporation
Karl H. Williamson
President
December 9, 1997
President's Report of Financial Condition as of 9/30/97 and Third
Quarter Results
< UNAUDITED >
To The Board of Directors
Sylvanus Corporation
I have reviewed the accompanying balance sheet of Sylvanus Corporation
(a development stage enterprise) as of September 30, 1997, and the
related statements of operations, stockholders equity and cash flows for
the period from July 1, 1997 to September 30, 1997. These financial
statements are the responsibility of the Company's management and have
not been reviewed by our accountants at all. This review did not
constitute an internal audit.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Sylvanus
Corporation ( a development stage enterprise) as of September 30, 1997,
and the results of its operations and its cash flows for the period from
July 1, 1997 to September 30, 1997.
Sincerely,
s/Karl H. Williamson
Karl H. Williamson
President
26<PAGE>
SYLVANUS CORPORATION
(a development stage company)
BALANCE SHEET
September 30, 1997
ASSETS
Cash and cash equivalents $ 10
Other Assets 0
TOTAL ASSETS $ 10
LIABILITIES & STOCKHOLDERS EQUITY
Accounts Payable $ 0
TOTAL LIABILITIES 0
STOCKHOLDERS EQUITY
Common stock ($0.01 par value,
100,000,000 shares authorized, (1) one
share issued and outstanding) 0
Additional paid-in capital 10
TOTAL STOCKHOLDERS EQUITY 10
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 10
See accompanying notes which are an integral part of these financial
statements
27<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 1, 1997 TO SEPTEMBER 30, 1997
REVENUES
Sales $ 0
OPERATING EXPENSES
Salaries 0
Occupancy expense 0
Selling expense 0
Other operating expenses 0
Total operating expenses 0
NET INCOME $ 0
NET INCOME PER COMMON SHARE $ 0
See accompanying notes which are an integral part of these financial
statements
28<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 1, 1997 TO SEPTEMBER 30, 1997
Common Stock Accumulated
$0.01 Par Earnings
Total
Additional
Shares Amount Paid-in Capital
Balance at Inception 1 $0.01 $9.99 $-0-
$ 10
Stock Issued 0 -0- -0- -0-
- -0-
Balance at September 30, 1997 1 $0.01 $9.99 $-0-
$ 10
See accompanying notes which are an integral part of these financial
statements
29<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 1, 1997 TO SEPTEMBER 30, 1997
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued $ 0
Net cash provided by financing activities 0
Net increase in cash 0
CASH AND CASH EQUIVALENTS AT JULY 1, 1997 10
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1997 $ 10
Supplemental Disclosures
Income taxes paid to federal and state governments $ -0-
Interest paid $ -0-
See accompanying notes which are an integral part of these financial
statements
30<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
The summary of significant accounting policies of Sylvanus Corporation
(the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, who is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles.
The Company was formed under the laws of the State of Florida on June 3,
1996 with its principal place of business in Winter Park, Florida where
it will share facilities with affiliated companies.
The Company is 100% owned by Charles J. Champion, Jr. and is affiliated
by common ownership with Tradenet Transaction Systems, Inc. and Sunshine
Securities Corporation. Certain minor organizational costs of less than
$500 have been paid for by the shareholder. These costs are not
expected to be reimbursed.
Business Activity - The Company intends to become a liquidator.
It will specialize in buying surplus inventory or other items of value
in situations where a good price can be obtained due to circumstances
where the seller is highly motivated to get rid of the inventory.
Examples of some possible sources of inventory are "going out of
business" sales, discontinued lines of merchandise, slow selling excess
inventory, used equipment, obsolete equipment, and recyclable waste
products. Other examples are "perishable" commodities including unsold
media advertising, unsold airplane tickets, unsold hotel rooms, unsold
apartment leases or unsold telephone long distance minutes.
The company will attempt to liquidate the inventory and use the
proceeds to acquire additional inventory. The Company does not expect
to make any cash distributions to shareholders in the near term future.
The Company is in the development stage and its efforts through
September 30, 1997 have been principally devoted to organizational
activities. The company has not entered into any revenue generating
activities and management anticipates that it will incur losses until
it begins to generate revenues.
Cash equivalents - All highly liquid debt instruments purchased
with a maturity of three months or less and investments in money market
funds are considered to be cash equivalents.
31<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(continued)
Management estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value. Fair value estimates are made at a specific
point in time for the Company's financial instruments; they are
subjective in nature and involve uncertainties, matters of significant
judgment and, therefore, cannot be determined with precision.
CASH AND CASH EQUIVALENTS - For those cash equivalents, which consist
primarily of short-term money market instruments, the carrying amount is
a reasonable estimate of fair value.
The estimated fair values of the Company's financial instruments at
September 30, 1997 were as follows:
1997
Carrying Fair
Amount Value
Financial Assets:
Cash and cash equivalents $10 $10
Financial Liabilities:
None $ 0 $ 0
NOTE 3 - CONCENTRATION OF CREDIT RISK
The Company maintains cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company believes it is not exposed
to any significant credit risk on cash and cash equivalents.
32<PAGE>
Indemnification of Directors and Officers
Directors and officers of the Corporation are not indemnified by
the Corporation against any liability arising under the Securities Act
nor for any other liabilities.
Other Expenses of Issuance and Distribution
Registration fees $100
State taxes and fees $1,000
Printing expenses $1,000
Accounting fees $1,000
Legal fees $2,000
Recent Sales of Unregistered Securities
There have been no sales of any securities of the Company prior to
this Offering except for one share of common stock sold to Charles
Champion for $10 on September 26, 1996. Other than that one share,
there have not ever been any shares of the Company's stock of any class
outstanding prior to this Offering. No shares of stock in the Company
have ever been offered to anyone other than Charles Champion prior to
this Offering. The sale and issuance of the one outstanding share was a
transaction exempt from the registration requirements of the Securities
Act of 1933. In issuing the one outstanding share, the Company relied
upon the exemption contained in U.S. 15 sec. 77d(2) for "transactions by
an issuer not involving any public offering." The Company separately
relied upon the exemption inherent in U.S. 15 sec 77e because no means
or instrumentalities of interstate commerce were used to make the sale.
Index of Exhibits
The following exhibits are attached, but none of these exhibits are
incorporated herein by reference.
(3)(i) Articles of Incorporation Page 34
(3)(ii) By laws Page 36
(5) Legal Opinion Page 40
(10) Compensation Agreement Page 42
(23) Consent of Counsel (included in Exhibit 5) Page 40
(23) Consent of Experts Page 43
(27) Financial Data Schedule Page 45
(99) Affidavit of President of Corporation Page 46
33<PAGE>
ARTICLES OF INCORPORATION
OF
SYLVANUS CORPORATION
The Undersigned subscriber to these Articles of Incorporation is a
natural person competent to contract and hereby forms a corporation for
profit under the laws of the State of Florida.
ARTICLE 1 - NAME
The name of this Corporation is Sylvanus Corporation,
(hereinafter, "Corporation").
ARTICLE 2 - PURPOSE
The purpose of the Corporation is to carry out any and all
activities deemed by the shareholders to be potentially profitable or
otherwise desirable.
ARTICLE 3 - PRINCIPAL OFFICE
The initial street address of the principal office of this
corporation in the State of Florida is 2180 Park Avenue North, Suite
100, Winter Park, Florida, 32789. The Board of Directors may from time
to time move the principal office to any other location.
ARTICLE 4 - INCORPORATOR
The name and address of the incorporator of this Corporation is
Charles J. Champion, Jr. 2180 Park Avenue North, Suite 100, Winter Park,
Florida, 32789
ARTICLE 5 - REGISTERED OFFICE AND REGISTERED AGENT
The initial address of the registered office of this Corporation
shall be the same as the principal office of the Corporation. The
initial registered agent shall be Charles J. Champion, Jr.
ARTICLE 6 - CAPITAL STOCK
The authorized capital of this corporation and the maximum number
of shares that this corporation is authorized to have outstanding at any
one time is one hundred million (100,000,000) shares of common stock
having a nominal or par value of $.01 per share.
Stockholders do not and shall not have any preemptive rights;
except as may be expressly created by the Board of Directors or
otherwise provided for in the By-Laws of the Corporation.
The Board of Directors of the Corporation may authorize the
issuance of shares of its stock of any class, whether now or hereafter
authorized, or securities convertible into shares of its stock of any
class, whether now or hereafter authorized, for such consideration as
the Board of Directors may deem beneficial to the Corporation, subject
to any limitations imposed by the By-Laws of the Corporation.
The Stockholders of the Corporation may, by Restated Articles of
Incorporation, classify or reclassify any unissued stock from time to
time by setting or changing the preferences, conversions or other
rights, voting powers, restrictions, limitations regarding dividends,
qualifications, or term or conditions of redemption of the stock.
ARTICLE 7 - REGISTERED OWNERS
The Corporation is entitled to treat the person in whose name any
share or right is registered on the books of the Corporations as the
owner thereto, for all purposes, and except as may be agreed in writing
by the Corporation, the Corporation shall not be bound to recognize any
equitable or other claim to, or interest in, such share or right on the
part of any other person, whether or not the Corporation shall have
notice thereof.
34<PAGE>
ARTICLE 8 - EFFECTIVE DATE
These Articles of Incorporation shall be effective immediately
upon approval of the Secretary of State of the State of Florida.
ARTICLE 9 - TERM OF EXISTENCE
This Corporation shall have perpetual existence.
ARTICLE 10 - POWERS
The Corporation shall have the same powers as an individual
natural person to do all things necessary or convenient to carry out its
business and affairs, subject to any limitations imposed by these
Articles of Incorporation or the By-Laws of the Corporation.
ARTICLE 11 - BY-LAWS
The Stockholders of this corporation shall have the sole power to
adopt, amend or repeal the By-Laws of the Corporation, and the number,
term of office, procedure for election, procedure for removal and duties
of the Directors and Officers of this Corporation shall be prescribed by
such By-Laws.
ARTICLE 12 - AMENDMENT
These Articles of Incorporation may be amended by a majority of
the shares of stock entitled to vote thereon. All rights granted
hereunder to stockholders are subject to subsequent amendments to the
Articles of Incorporation.
35<PAGE>
BY-LAWS
OF
SYLVANUS CORPORATION
ARTICLE I --- OFFICES
Section 1 --- Offices: The principal office of this corporation
shall be located initially at the address specified in the Articles of
Incorporation but may be subsequently changed by decision of the Board
of Directors or the President of the Corporation. The corporation may
also maintain an office or offices at such place or places within or
without the State of Florida, as the Board of Directors or the President
of the Corporation may from time to time designate, as the business of
the corporation requires.
Section 2--- Registered Agent for Service of Process: The Board of
Directors of this corporation shall designate a Registered Agent for
Service of Process, who may be an individual or a corporation. The
Registered Agent thus designated shall serve until a successor is
elected by the Board of Directors. The registered office of the
Corporation and address of the corporation for the service of process
shall be the address of the Registered Agent.
ARTICLE II --- STOCKHOLDERS MEETINGS
Section 1 --- Annual Meetings: The annual meeting of
the stockholders of this corporation shall be held each year at the
principal office of the corporation on the first Monday following the
anniversary of the initial filing of the Articles of Incorporation with
the Secretary of State of the State of Florida or at such other place
and on such other day each year as may be determined by the Board of
Directors.
Section 2 --- Special Meetings: Special meetings of the
stockholders may be called by the President of the Corporation or the
Board of Directors. Special meetings of the stockholders shall be held
at the principal office of the Corporation, or at such other place as
may be designated in the Notice of Meeting issued at the direction of
the Board of Directors or the President of the Corporation. At any time
that a written request for a special meeting of the stockholders is
presented to any of the Directors or the President of the Corporation
and such request has been signed by stockholders owning at least fifty
percent (50%) of the outstanding stock of the corporation entitled to
vote at such a meeting, the Director or President receiving such request
is authorized and required to call a special meeting of the stockholders
within thirty days, setting the time of the meeting no later than thirty
days after the Notice of Meeting is sent.
Section 3 --- Notice of Meetings: The Notice of Meeting of
the stockholders shall state the purpose of the meeting and the time and
place of the meeting. The Notice of Meeting shall be in writing and a
copy thereof shall be served personally or by mail not less than ten
(10) nor more than sixty (60) days before the date set for such meeting.
When mailed, such notices shall be directed to each stockholder at his
address as it appears in the records of the Corporation.
Notice of any meeting of stockholders shall not be required to be
given to any stockholder who shall attend such meeting in person or by
proxy, or who shall in person or by attorney, waive such notice in
writing either before, at, or after such meeting.
No business other than that specified in the call and Notice of
Meeting, or waiver of such notice described in the preceding paragraph,
shall be transacted at any meeting of the stockholders. If any
stockholder shall transfer any of his stock after notice, it shall not
be necessary to notify the transferee.
Section 4--- Quorum: The holders of a majority of the stock
entitled to vote, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise
provided by law, the Articles of Incorporation or these By-Laws of the
corporation. If, however, such majority shall not be present or
represented at any meeting of the stockholders, the stockholders present
in person and by proxy shall have the power to adjourn from time to time
and place to place. At any adjourned meeting at which a quorum shall be
present, any business may be transacted which
36<PAGE>
might have been transacted at the original meeting. Adjourning a
meeting to a new time and place shall not create any new requirements
for issuance of any Notice of Meeting.
Section 5 --- Proxies: Any stockholder entitled to vote may be
represented at any regular or special meeting of stockholders by a duly
executed proxy. Proxies shall be in writing and properly signed, but
shall require no other attestation. No proxy shall be recognized unless
executed within six (6) months of the date of the meeting at which it is
presented.
Section 6 --- Voting, Books of Record: Except as
otherwise provided by the Articles of Incorporation or these By-Laws,
every stockholder shall be entitled at each meeting and upon each
proposal presented at such meeting to one vote for each share of voting
stock recorded in his name on the books of the corporation on the record
date fixed, or if no record date was fixed, on the date of meeting. An
affirmative vote of the holders of a majority of the outstanding stock
shall be required for approval by the stockholders of any proposal,
unless specifically provided otherwise by the Articles of Incorporation
or the By-Laws of the corporation. The books of record of stockholders
shall be produced by the Secretary of the corporation at any
stockholders' meeting upon the request of any stockholder.
Section 7 --- Record Date: The Directors may fix a date
not more than forty (40) days prior to the date set for a stockholders
meeting as the record date as of which the stockholders of record who
have the right to and are entitled to notice of and to vote at such
meeting and any adjournment thereof shall be determined, but in such
case notice that such day has been fixed shall be stated in the Notice
of Meeting.
Section 8 --- Organization: Meetings of the stockholders
shall be presided over by the President, or if he is not present, by a
Vice President, if a Vice President has been elected, or if neither the
President nor a Vice President is present, by a Chairman to be chosen by
a majority of the stockholders entitled to vote who are present in
person or by proxy at the meeting. The secretary of the meeting for
recording its decisions and proceedings shall be the Secretary of the
corporation, or in his absence, the stockholders entitled to vote who
are present in person or by proxy shall choose any person present to act
as Secretary of the meeting.
ARTICLE III --- DIRECTORS
Section 1 --- Powers, Number, Qualification, Term: All
property, affairs and business of the corporation shall be managed by
its Board of Directors, consisting of not less than one (1) nor more
than seven (7) members. All Directors shall be elected at the annual
meeting of the stockholders, or at a Special Stockholders Meeting.
Section 2 --- Quorum: The members of the Board of Directors
acting at a meeting duly assembled, when a majority of the Board shall
be in attendance, shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be
less than a quorum present, a majority of those present may adjourn the
meeting, without further notice, from time to time and place to place
until a quorum shall have been obtained. The act of a majority of
Directors present at a meeting where a quorum is present shall be the
act of the Board of Directors.
Section 3 --- Vacancies: Any vacancies which may occur
in the Board of Directors may be filled by majority vote of the
remaining members of the Board of Directors.
Section 4 --- Meetings: Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed
by resolution of the Board of Directors, and special meetings may be
held at any time upon the call of the President or any Vice President
or the Secretary or of any two (2) Directors. Notice of Meeting shall
be served in person or mailed to each Director not less than ten (10)
days before each meeting. A meeting of the Board of Directors may be
held without notice immediately after the annual meeting of
stockholders. Notice need not be given of regular meetings of the Board
of Directors held at regular times fixed by resolution of the Board of
Directors. Meetings may be held at any time without notice if all the
Directors are present or if, at any time before or after the meeting,
those Directors not present waive the Notice of Meeting in writing. Any
action of the Board of Directors may be taken without a meeting if
written consent to the action signed by all of the members of the Board
is filed in the Minutes Book of the corporation prior to the taking of
such action.
37<PAGE>
Section 5 --- Organization: The Board of Directors may
elect its own Chairman and Secretary.
Section 6 --- Executive Committee: The Board of directors may, by
resolution, designate two or more members of the Board to constitute an
Executive Committee, which, to the extent provided in such resolution,
shall have and may exercise the powers of the Board of Directors. The
Executive Committee shall act and shall govern itself by such rules,
written or otherwise, as the members of the Committee shall determine.
The Board of Directors shall have power at any time to fill vacancies
in, to change the membership of, or to disband the Executive Committee.
ARTICLE IV --- OFFICERS
Section 1 --- Number: The Board of Directors shall elect a
President, a Secretary and a Treasurer and from time to time may elect
one or more Vice Presidents of the corporation or other officers. Two
or more offices may be held by the same person.
Section 2 --- Term and Removal: The Officers shall be
elected at the first meeting of the Board held following each annual
meeting of the stockholders. The term of office of all Officers shall
continue until their respective successors are elected and qualified,
but any Officer may be removed from office, either with or without
cause, at any time by the Board of Directors. A vacancy in any office
arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors.
Section 3 --- Powers and Duties: The Officers of the
corporation shall each have such powers and duties as generally pertain
to their respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors. The Vice
President or Vice Presidents, shall, in the order of their respective
seniorities, in the absence or disability of the President, perform the
duties of the President.
ARTICLE V --- CAPITAL STOCK
Section 1 --- Form and Transfers: The interest of each
stockholder of the corporation may be evidenced by certificates for
shares of stock certifying the kind, class, series, and the number of
shares represented thereby and in such form not inconsistent with the
Articles of Incorporation, as the Board of Directors may from time to
time prescribe.
Transfer of shares of the capital stock of the corporation shall
be made only on the books of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation, or with a
transfer clerk or a transfer agent appointed by the Board of Directors,
upon surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes thereon. The person in
whose name shares of stock stand on the books of the corporation shall
be deemed the owner thereof for all purposes as regards the corporation;
provided that whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact, if known to the
Secretary of the corporation, shall be so expressed in the entry of
transfer. The Board of Directors may, from time to time, make such
additional rules and regulations as it may deem expedient, concerning
the issue, transfer and registration of certificates for shares of the
capital stock of the corporation.
The certificates of Stock shall be signed by the President or a
Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and sealed with the seal of the
corporation. In case any such Officer who has signed such certificate
shall have ceased to be such before such certificate is issued and
delivered, it may be issued and delivered by the corporation with the
same effect as if such Officer had not ceased to be such at the time of
its issue and delivery.
Section 2 --- Treasury Stock: Treasury stock shall be held by the
corporation subject to the disposal of the Board of Directors, and shall
neither vote, participate in dividends, or be counted as outstanding for
the purposes of any stockholders quorum or vote.
Section 3 --- Lien on Capital Stock: The corporation shall
have a first lien on all the shares of its capital stock, and upon all
dividends declared upon the same, for any indebtedness of the respective
holders
38<PAGE>
thereof to the corporation. The corporation hereby reserves the right
to note this lien conspicuously on the certificate or certificates
representing the capital stock subject to the lien.
Section 4 --- Lost, Stolen, Destroyed or Mutilated Certificates:
No certificate for shares of stock in the corporation shall be
issued in place of any certificate alleged to have been lost, destroyed
or stolen, except on production of evidence of such loss, destruction or
theft and on delivery to the corporation, if the Board of Directors
shall so require, of a bond of indemnity in such an amount (not
exceeding twice the value of the shares represented by such
certificate), and upon such terms and secured by such surety as the
Board of Directors may in its discretion require.
Section 5 --- Transfer Agent and Registrar: The Board of
Directors may appoint one or more transfer clerks or one or more
transfer agents and one or more registrars, and may require all
certificates of stock to bear the signature or signatures of any of
them.
Section 6 --- Inspection of Stock Book: This corporation
shall keep at its office, or in the office of its transfer agent, a book
(or books where more than one kind, class or series of stock is
outstanding) to be known as the stock book, containing the names,
alphabetically arranged, with the address of every stockholder, showing
the number of shares of each kind, class, or series of stock held on
record by him, and when the stock book is kept in the office of the
transfer agent, the corporation shall keep copies of the stock lists
prepared from said stock book and sent to it from time to time by said
transfer agent. The stock book or stock lists shall show the current
status; provided, if the transfer agent of the corporation be located
elsewhere, a reasonable time shall be allowed for transit or mail. The
stock book or stock lists shall be open for at least three (3) business
hours each business day for inspection by any person who shall have
been, for at least six (6) months immediately preceding his demand, a
record holder of not less than one percent (1%) of the outstanding stock
of the corporation, or by any officer, director or any committee or
person authorized in writing by the holders of at least five percent
(5%) of all its outstanding shares. Persons so entitled to inspect
stock books or stock lists may make extracts therefrom.
This provision shall not apply to a person who seeks such
information otherwise than to protect his interest in the corporation or
has within two (2) years sold or offered for sale any list of
stockholders of such corporation or any other corporation, or has aided
or abetted any person in procuring any stock list for any such purpose.
ARTICLE VI --- MISCELLANEOUS
Section 1 --- Fiscal Year: The fiscal year of the
corporation shall, by resolution, be determined by the Board of
Directors or otherwise be the calendar year.
Section 2 --- Dividends: Subject always to the
provisions of the Articles of Incorporation, the Board of Directors
shall have full power to determine whether any part of the current or
accumulated earnings of the corporation shall be declared in dividends
and paid to stockholders; provided, however, that such determination
shall also be ratified at a meeting of the stockholders.
Section 3 --- Funds and Obligations of the Corporation: All
monies of this corporation, or under its charge, deposited in any bank
or other place of deposit, shall be deposited in credit of the
corporation in its corporate name. Checks withdrawing funds of the
corporation from bank deposits shall be made by such signature or
signatures as may be provided by resolution of the Board of Directors.
All bonds, notes, and other evidences of indebtedness, mortgages,
deeds and contracts of this corporation shall be signed in its name by
the President; and no such instrument shall be valid without being so
signed, unless otherwise stated by the Board of Directors.
Section 4 --- Amendment of By-Laws: The By-Laws of the
corporation shall be subject to alteration, amendment, or repeal, by the
adoption of new By-Laws not inconsistent with any provision of the
Articles of Incorporation, laws of the State of Florida, or these By-
Laws, either by the stockholders of the corporation or by the Board of
Directors. By-Laws made, altered, or amended by the Board of Directors
shall not conflict with the By-Laws passed by the stockholders and may
be altered , amended, or repealed by the stockholders at any annual or
special meeting thereof.
39<PAGE>
(Letterhead of Mary Silva, Attorney at Law)
February 14, 1997
RE: Sylvanus Corporation
Form SB-2 Registration Statement
Filed March 27, 1997 with the SEC
To Whom It May Concern:
Sylvanus Corporation (Sylvanus) has been duly incorporated and is a
validly existing corporation in good standing under the laws of the
State of Florida, with full corporate power and authority to carry on
its business as set forth in the Registration Statement. This opinion
is limited to Florida and federal laws.
I am familiar with the corporate actions taken and to be taken by
Sylvanus in connection with the authorization, issuance and sale of
29,000 shares of the Company's Common Stock, par value $0.01, (Shares)
to the public, registered on a Form SB-2 Registration Statement to be
filed with the Securities and Exchange Commission.
I have made such legal and factual inquiries as I deem necessary for the
purpose of rendering this opinion. Based on the foregoing, the attached
affidavit incorporated herein, and in reliance thereon, and subject to
the effectiveness of the Registration Statement under the Securities Act
of 1933, as amended, I am of the opinion that:
(1) the Shares have been duly authorized; and
(2) the Shares, when issued and sold in accordance
with the terms of the Registration Statement,
will be legally issued, fully paid and nonassessable,
and free and clear of all liens, encumbrances,
equities and claims whatsoever.
The issuance and sale of the stock will not conflict with or result in a
breach of any of the terms, conditions, or provisions of, or constitute
a default under, the Articles of Incorporation, including any amendments
thereto, or By-Laws of Sylvanus as amended.
40<PAGE>
Counsel has no reason to believe that the Registration Statement or any
amendment or supplement contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statement therein not misleading.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to me under the heading
"Legal Matters" contained in the prospectus that forms a part of the
Registration Statement. In giving this consent, I do not admit that I
am within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the General Rules and
Regulations of the Commission.
Sincerely,
s/Mary E. Silva
Mary E. Silva, Esq.
41<PAGE>
Independent Contractor Agreement
This agreement is entered into this 9th day of December, 1997 between
Karl H. Williamson ("Contractor") and Sylvanus Corporation ("Company").
Company hereby hires Contractor on a non-exclusive basis to serve as its
sales representative for products which the Company shall from time to
time ask Contractor to sell.
Proceeds of such sales shall be paid directly to Company.
Prices and terms of such sales must be approved by Company prior to
sale.
Contractor is in no way an employee or agent of the Company and shall
have no authority to bind or obligate the Company.
This agreement may be canceled by either party at any time upon notice
to the other party.
This agreement shall automatically expire on December 8, 1998 if not
canceled sooner.
Contractor shall be entitled to receive 20% of the gross profits
received by the Company as a result of sales made by Contractor. For
purposes of this agreement, sales shall include lease arrangements or
other forms of payments to the Company where such arrangements were made
by Contractor.
Compensation to the Contractor under this agreement may be paid in the
form of stock in the Company at book value or at market value if there
is a market for the Company's stock and the market value is higher than
the book value. At the discretion of the board of directors of the
Company, some or all of contractor's compensation may be paid in cash
instead of stock.
This agreement constitutes the entire understanding between the parties
hereto and may only be amended by further agreement in writing which
must be ratified by the board of directors of the Company in order to be
effective.
Sylvanus Corporation
By: s/Charles J. Champion, Jr. s/Karl H. Williamson
Charles J. Champion, Jr. Karl H. Williamson
President
42<PAGE>
(Letterhead of Kuhn, Raker, Chatham & Seland P.A., Certified Public
Accountants)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use, in this Registration Statement on Form SB-
2, of our report dated February 14, 1997 relating to the financial
statements of Sylvanus Corporation for the period from June 3, 1996
(Date of Inception) to December 31, 1996, and the reference to our firm
under the caption "Experts" in the Prospectus contained in said
Registration Statement.
s/Kuhn, Chatham & Seland, P.A.
Kuhn, Chatham & Seland, P.A.
February 14, 1997
43<PAGE>
Consent to Inclusion in Registration Statement
I hereby consent to the inclusion of the affidavit signed by me on
December 15, 1997 as part of Exhibit (5) of the registration statement.
I hereby consent to the inclusion of the report of financial condition
as of 9/30/97 signed by me on December 9, 1997 as part of financial
statements in the registration statement. In giving this consent, I do
not admit that I am within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the General
Rules and Regulations of the Commission.
s/Karl H. Williamson
Karl H. Williamson
12/15/97
date
44<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] SEP-30-1997
[CASH] 10
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 10
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 10
[CURRENT-LIABILITIES] 0
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 10
[TOTAL-LIABILITY-AND-EQUITY] 10
[SALES] 0
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 0
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
45<PAGE>
AFFIDAVIT OF KARL H. WILLIAMSON
I, Karl H. Williamson, hereby declare under oath the following:
1. I am President of Sylvanus Corporation (Sylvanus).
2. I am familiar with Sylvanus's Articles of Incorporation and
By-Laws and appropriate laws and regulations concerning the issuance and
sale of shares.
3. I am also familiar with the corporate actions taken and to
be taken by Sylvanus in connection with the authorization, issuance, and
sale of 29,000 shares of Sylvanus's Common Stock to the public.
4. All shares have been duly authorized and the shares, when
issued and sold, will be in accordance with the terms of the
Registration Statement and Sylvanus's Articles of Incorporation and By-
Laws.
5. Furthermore, the shares, when issued and sold, will be
legally issued, fully paid and nonassessable.
I declare under the penalty of perjury that the foregoing is true
and correct to the best of my knowledge and belief.
12/15/97 s/Karl H. Williamson
Date Karl H. Williamson
SIGNED AND SWORN TO before me this 15th day of December, 1997.
s/La Shan E. Connelly (seal of Notary Public)
Notary Public La Shan E. Connelly
My Commission # CC465445
Expires: May 18, 1999
Bonded Thru Notary Public
Underwriters
My Commission Expires: May 18, 1999
Whom produced FL drivers license
46<PAGE>
Undertakings
This registration constitutes a Rule 415 Offering because the
Company will continue to offer the securities on a continuous basis
extending beyond thirty days if not sold out prior to that time.
The Company will:
(1) File, during the continuation of this Offering, any post
effective amendments necessary to
(i) Comply with the requirements of section 10(a)(3) of the
Securities Act of 1933.
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a
fundamental change in the information in the registration
statement; and
(iii) Include any additional or changed material information
on the plan of distribution.
(2) Treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities
at that time to be the initial bona fide offering for purposes of
determining liability under the Securities Act of 1933.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the Offering.
This registration does not include any warrants or rights offerings.
This offering does not involve competitive bids.
The issuer will not request an acceleration of the effective date.
The issuer does not rely upon Rule 430A.
Signatures
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, in the City of Winter Park, State of Florida, on December
9, 1997.
Sylvanus Corporation
By: s/Karl H. Williamson
Karl H. Williamson, President
In accordance with the requirement of the Securities Act of 1933,
this registration statement was signed by the following persons in the
capacities and on the dates stated.
December 9, 1997 s/ Karl H. Williamson
Karl H. Williamson, President, Secretary,
Treasurer,
Chief Executive Officer
December 9, 1997 s/ Janet C. Mouquin
Janet C. Mouquin, Vice President of Finance,
Chief Financial Officer, Chief Accounting
Officer
December 9, 1997 s/ Charles J. Champion, Jr.
Charles J. Champion, Jr., Director
47<PAGE>
