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: July 15, 1997.
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 49
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 14
Description of Securities 14
Interest of Experts and Named Counsel 14
Description of Business 14
Plan of Operation 14
Description of Property 16
Certain Relationships and Related Transactions 17
Market for Common Equity and Related Stockholder Matters 17
Executive Compensation 17
Financial Statements (audited annual statements for FY 1996) 18
Financial Statements (unaudited interim statements 1st Qtr 1997) 25
Indemnification of Officers and Directors 32
Other Expenses of Issuance and Distribution 32
Recent Sales of Unregistered Securities 32
Index of Exhibits 32
Exhibit (1) Underwriting Agreement 33
Exhibit (3)(i) Articles of Incorporation 37
Exhibit (3)(ii) By Laws 39
Exhibit (5) Legal Opinion 43
Exhibit (23) Consent of Counsel 43
Exhibit (23) Consent of Experts 45
Exhibit (27) Financial Data Schedule 47
Exhibit (99) Affidavit of President of Corporation 48
Undertakings 49
Signatures 49
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 underwritten by Sunshine Securities Corporation.
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 $1.00 $9.00
Total minimum 0.00 $1.00 $0.00
Total maximum $290,000.00 $29,000 $261,000.00
(See accompanying notes 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 July 15, 1997.
The date of this Prospectus is , 1997.
3<PAGE>
Notes to Table of Proceeds
Note 1: In addition to a commission of 10% of the capital raised in the
Offering, the Underwriter is entitled to options to buy stock equal to five
percent (5%) of the Securities sold in the Offering at the Offering price of
$10 per share.
Note 2: 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 , 1997.
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 11
Interest of Experts and Named Counsel 11
Description of Securities 11
Description of Business 11
Plan of Operation 11
Description of Property 13
Certain Relationships and Related Transactions 14
Market for Common Equity and Related Stockholder Matters 14
Executive Compensation 14
Financial Statements (audited annual statements for FY 1996) 15
Financial Statements (unaudited interim statements 1st Qtr 1997) 22
Table of Contents 23
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 ________ ____, 1997 (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.
Lack of Management
If the proceeds of the Offering are insufficient to meet the $40,000
allocation toward management compensation, (see "Use of Proceeds", "Directors,
Executive Officers, Promoters and Control Persons") and "Executive
Compensation") the Company may not be able to obtain anyone to manage the
Company or may hire someone even less qualified to do so than Mr. Champion.
Alternately, the Company may hire Mr. Champion or someone else on a part-time
basis. 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
9<PAGE>
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.
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 compensation to
management for which management has allocated up to $40,000 of the proceeds of
this offering.
10<PAGE>
Priority 2
The second 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 $30,000 of
the proceeds of this offering.
Priority 3
The third priority of any funds raised will be to pay for acquisition of
inventory for which management has allocated up to $200,000 of the proceeds of
this offering.
Priority 4
The fourth 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.
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, 2 and 4 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 3. 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 hire a
management team, 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.
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.
11<PAGE>
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 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.
12<PAGE>
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 underwritten by Sunshine Securities Corporation
on a "best-efforts" basis with no minimum. Pursuant to Regulation 15c2-4(a),
there will be no escrow account and proceeds of sales of the Securities will
be immediately forwarded to the Company. This is the first public offering of
any kind underwritten by Sunshine Securities Corporation.
The Underwriter and the Company are under common control. Charles J.
Champion, Jr. owns 100% of the stock in the Company and serves as its
President, Secretary, Treasurer, Registered Agent and sole Director. Charles
J. Champion, Jr. also owns over 90% of the stock of Sunshine Securities
Corporation and serves as its Secretary, Treasurer, Vice-President and
Chairman of the Board of Directors. The underwriting of this offering is,
therefore, a related party transaction.
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. Any sale of Securities registered as part of this Offering will
be commissionable to the Underwriter regardless of whether such sale is made
by the Company or by the Underwriter and regardless of whether such sale is
for cash or other consideration and regardless of whether such sale is made
within the first twenty days of the Offering.
There are no provisions in the underwriting agreement giving the
Underwriter any right to have representation on the Corporation's Board of
Directors. However, Charles J. Champion, Jr., is already a member of the
Board of Directors of the Company as well as the Company's President. Mr.
Champion is also the Chairman of the Board of Directors of Sunshine Securities
Corporation and an officer of Sunshine Securities Corporation.
There are no provisions in the underwriting agreement or any other
arrangement providing for any indemnification of the Underwriter by the
Company or of the Company by the Underwriter.
In addition to a commission of 10% of the capital raised in the
Offering, the Underwriter is entitled to options to buy stock equal to five
percent (5%) of the Securities sold in the Offering at the Offering price of
$10 per share.
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 Chairman of the Board of
Directors, President, Vice President, Secretary, and Treasurer. He has held
those offices continuously since the inception of the Corporation on June 3,
1996. Mr. Champion is currently the Registered Agent. There are currently no
other officers, directors or employees of the Corporation and there are no
plans to hire any other officers or employees or any persons nominated to
become directors, officers or employees.
13<PAGE>
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.
Registered Representative, Vice President - Entrepreneurial Finance, and
Chairman of the Board of Sunshine Securities Corporation which is a securities
firm and a member of NASD and SIPC.
President of Tradenet Transaction Systems, Inc., a barter company.
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 Champion, currently the owner of the only share of stock
issued by the Company prior to this Offering is also the President, Vice
President, Secretary, Treasurer and Chairman of the Board 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
Charles J. Champion, Jr. is named as an expert in the Exhibits section
as President of the Company. Mr. Champion of course, owns 100% of the stock
in the Company, over 90% of the stock in the Underwriter and is an officer of
both the Company and the Underwriter. (see "PLAN OF DISTRIBUTION" and
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS") 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 only has one officer, Charles J. Champion, Jr.,
and no employees. The Corporation has carried out no business, nor entered
into any contracts with anyone since its inception. 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.
14<PAGE>
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 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
15<PAGE>
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 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.
16<PAGE>
Certain Relationships and Related Transactions
There have been two related party transactions engaged in by the
Company. These are (1) the sale of one share of the Company's stock for $10
to Charles J. Champion, Jr. and (2) the underwriting of this offering by
Sunshine Securities Corporation.
The Underwriter and the Company are under common control. Charles J.
Champion, Jr. owns 100% of the stock in the Company and serves as its
President, Secretary, Treasurer, Registered Agent and sole Director. Charles
J. Champion, Jr. also owns over 90% of the stock of Sunshine Securities
Corporation and serves as its Secretary, Treasurer, Vice-President and
Chairman of the Board of Directors. The underwriting of this offering is,
therefore, a related party transaction. (see PLAN OF DISTRIBUTION)
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. 14,500 shares of stock in the Company are subject to options
which may become payable as a result of the underwriting agreement for this
offering. Such options would be exercisable at a price of $10 per share.
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. All the corporate offices
and the sole directorship are held by one person, Charles J. Champion, Jr.
Mr. Champion has not received nor is the Corporation under any obligation to
provide any compensation to Mr. Champion for any services he has provided or
is providing to the Corporation.
A portion of the proceeds of this Offering in the amount of $40,000 has
been allocated toward cash compensation of management. If the Offering is
sold out within the first twenty (20) days, the Corporation will hire Mr.
Champion at an annual salary, including the cost to the Corporation of any
fringe benefits, of $20,000 per year. The remaining $20,000 budgeted toward
management compensation will be held in reserve to provide the Corporation the
ability to hire additional staff if needed or to pay Mr. Champion's salary
beyond the first twelve months if additional staff personnel are not needed.
It is understood that Mr. Champion will be hired on a part-time basis. Mr.
Champion will not be obligated to work any specific number of hours at this
job. The amount of time and effort which Mr. Champion shall expend on behalf
of the Company shall be entirely at his discretion. It is expected that he
will be able to identify acquisition and sales opportunities in the course of
his other business activities unrelated to the Company. During the first
twelve months after this Offering, the Company will not enter into any long
term employment contract with Mr. Champion so that the stockholders and the
board of directors will be at liberty to terminate his employment if they are
not satisfied with his performance.
If the Offering is not sold out within the first twenty (20) days, the
Company will hire Mr. Champion at the same $20,000 per year compensation
except that only 20% of the funds raised shall be paid to him immediately and
the balance shall be a debt obligation of the Company payable on January 1,
2001 with 9% interest accruing on the balance.
17<PAGE>
(Letterhead of Kuhn, Raker, 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, Raker, Chatham & Seland P.A.
February 14, 1997
18<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
19<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
20<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
21<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
22<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.
23<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.
24<PAGE>
Sylvanus Corporation Letterhead
June 9, 1997
President's Report of Financial Condition as of 3/31/97
and First 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 March 31, 1997, and the related statements
of operations, stockholders equity and cash flows for the period from
January 1, 1997 to March 31, 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 March 31, 1997, and the results of its
operations and its cash flows for the period from January 1, 1997 to March 31,
1997.
Sincerely,
s/Charles J. Champion, Jr.
Charles J. Champion, Jr.
President
25<PAGE>
SYLVANUS CORPORATION
(a development stage company)
BALANCE SHEET
March 31, 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
26<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1997 TO MARCH 31, 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
27<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 1997 TO MARCH 31, 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 March 31, 1997 1 $0.01 $9.99 $-0- $ 10
See accompanying notes which are an integral part of these financial
statements
28<PAGE>
SYLVANUS CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1997 TO MARCH 31, 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 JANUARY 1, 1997 10
CASH AND CASH EQUIVALENTS AT MARCH 31, 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
29<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 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 March
31, 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.
30<PAGE>
SYLVANUS CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 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 March 31,
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.
31<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.
(1) Underwriting Agreement Page 33
(3)(i) Articles of Incorporation Page 37
(3)(ii) By laws Page 39
(5) Legal Opinion Page 43
(23) Consent of Counsel (included in Exhibit 5) Page 43
(23) Consent of Experts Page 45
(27) Financial Data Schedule Page 47
(99) Affidavit of President of Corporation Page 48
32<PAGE>
INVESTMENT BANKING AGENCY AGREEMENT
1. INTRODUCTION: This Agreement appoints Sunshine Securities Corporation
("SUNSECO") as the exclusive Investment Banking agent for the following seller
of securities ("the Client"):
Sylvanus Corporation
2. SECURITIES: The following equity securities (hereinafter referred to as
"the Securities") will be distributed by SUNSECO on a "Best Efforts", basis
pursuant to a registration under the Securities Act of 1933, as amended:
29,000 shares of common stock in Sylvanus Corporation
3. REPRESENTATIONS/WARRANTIES OF THE CLIENT: The Client hereby represents and
warrants that:
(a) Sufficient copies of an effective prospectus filed under the
Securities Act of 1933 covering all the securities involved in the
offering ("Prospectus") will be provided for SUNSECO to present to
investors/lenders, said Prospectus being, to the best of the Client's
knowledge and belief, fully in compliance with all federal and state
securities laws. While the Client may retain consultants (including
SUNSECO) to help prepare these booklets, the Client will review such
material in detail and assume sole responsibility for, and warrant the
completeness and accuracy of, its contents. Upon request, SUNSECO will
be supplied with all documents or information to which the Client has
access (hereinafter referred to as "Documents") which affect or relate
to the transaction described in the Prospectus, and all such Documents
shall be true, accurate, and complete.
(b) From the effective date of the Offering under the Prospectus to its
termination, the Prospectus and all Documents (as amended and/or
supplemented) will (i) be kept updated by the Client in a form
satisfactory to SUNSECO's counsel so as to assure compliance with all
applicable securities laws and not be misleading to an investor, (ii)
not include any untrue or misleading statement of a material fact, and
(iii) not omit any material fact required by law, or facts which would
clarify statements made therein to keep them from being misleading.
(c) The issuer of the Securities (hereinafter "the Company") is a
corporation or other legal entity duly formed pursuant to the statutes
of the State of Florida with all authority necessary to engage in the
business that the Company conducts and as is described in the
Prospectus; the Client does hold unencumbered title to the Securities
and has full and unrestricted right to sell the Securities. The
Articles of Incorporation and Bylaws of the Company allow such
subscribers to become shareholders and/or lienholders of the Company
entitled to all the benefits thereunto appertaining.
(d) To the best of Client's knowledge, there is no litigation or
governmental proceeding pending or threatened against, or involving the
Company or its officers or directors except as referenced in the
Prospectus.
(e) Any material changes in the condition of the Company, financial or
otherwise, during the Offering, shall be fully disclosed by amendment to
the Prospectus.
(f) The consummation of transactions contemplated as part of this
Agreement will not conflict with, nor result in a breach of any of the
terms, provisions or conditions of any other agreement or instrument to
which the Client, the Company or its officers or directors are a party.
(g) The shares and/or debt obligations offered by the Client will
conform to the description(s) to be contained in the Prospectus.
33<PAGE>
(h) This Agreement is hereby duly and validly authorized, executed, and
delivered by or on behalf of the Client, and it constitutes the valid,
binding, and enforceable agreement of the Client.
(i) All stock certificates and/or debt instruments will be duly and
validly authorized, executed, and delivered by or on behalf of the
Client.
(j) No officer, director, consultant, or other affiliate of the Company
has received, nor are they entitled to receive either directly or
indirectly any type of advisor's, management, consulting, financing, or
finder's fee except as described in the Prospectus.
4. SALE OF SHARES AND/OR DEBT OBLIGATIONS:
(a) Subject to the representations, warranties, terms, and conditions
set forth herein, the Client hereby appoints SUNSECO as its exclusive
Agent to sell the Securities described in 2. above during the Selling
Term of the offering, the latter being defined as that period from the
date of this Agreement to the Selling End Date specified in paragraph
4.(b) below. SUNSECO hereby agrees to use its best efforts as Agent to
sell the Securities contemplated by this Agreement at the prices stated
in the Prospectus.
(b) There shall be no minimum amount of securities to be sold. There
shall be no escrow arrangement. Pursuant to Regulation 15c2-4(a) all
proceeds of the offering shall be paid directly to the Company. The
Company shall be obligated to pay commissions from such proceeds on a
pro-rata basis as they are received. The "Selling End Date" of the
offering shall be twenty (20) days following the latter of the effective
date of the registration of the securities under the Securities Act of
1933 and the effective date of registration of the securities under
state securities laws in the State of Florida. The Selling End Date
shall be automatically extended until the Offering is sold out unless
either party provides five (5) day notice to the other party of
termination of the agreement.
(c) In consideration for SUNSECO's performance as defined herein, the
Client agrees to:
(1) pay or cause to be paid to SUNSECO a commission of ten percent
(10%) of all capital raised. The commission shall be payable on a
pro-rata basis within ten (10) calendar days after the Company
receives the proceeds of any securities sold by SUNSECO.
(2) convey to SUNSECO stock options for five percent (5%) of the
equity securities sold in the Offering. The exercise price of
such options shall be the same price at which the securities in
the offering are to be sold to the public. Such options shall be
payable on a pro-rata basis and shall be delivered to SUNSECO no
later than sixty (60) days after the Company receives the proceeds
of any securities sold by SUNSECO.
5. COVENANTS: The Client covenants that it will:
(a) Notify SUNSECO immediately, and confirm the notice in writing, of
(i) any notification or action by any governmental agency which affects
or relates to the Company or sale of its securities, (ii) any issuance
by any regulatory body of any stop order, or of the initiation or
threatening of any proceeding for that purpose, and/or (iii) any fact
which would make inaccurate any representation or warranty given by the
Company in this Agreement or the Prospectus, or of any change in facts
which would impact SUNSECO's obligation to perform in a timely manner
under this Agreement.
(b) Comply, during the time of this Offering and insofar as the Company
is able, with all requirements imposed by state and federal securities
statutes and regulations as now and hereafter amended. The Company
further agrees to exercise reasonable care to assure that the terms of
the Offering complies with the Securities Act of 1933, the Securities
and Exchange Act of 1934, the regulations promulgated thereunder, as
well as applicable state securities laws and regulations.
34<PAGE>
(c) Apply the net proceeds of the Offering substantially as will be set
forth in the "Use of Proceeds" section of the Prospectus.
6. PAYMENT OF EXPENSES: The Company hereby confirms that SUNSECO shall have
no liability for any Offering-related state, federal, and miscellaneous filing
fees, or documentary stamps which become due.
7. RIGHT OF FIRST-REFUSAL IN FUTURE OFFERINGS: Should SUNSECO be successful in
raising any capital for the Company, the Company agrees to grant SUNSECO first
right to represent the Company with respect to any type of disposition of the
Company, including the sale of any and all future securities offerings, with
the terms of such right to be identical to those allowed or offered to any
other selling agent(s). Such representation shall be at the sole discretion
of SUNSECO, which shall have 30 days from written notification of a proposed
offering to accept or deny the representation; said notification shall include
the terms to be given to the selling agent.
8. TERMINATION OF THIS AGREEMENT:
(a) By Passage of Time: The Effective Term of this Agreement shall be
five (5) years from the date of this Agreement signed below.
(b) By Principals: During the Effective Term of this Agreement as
defined in paragraph 8.(a) just above, the Company shall not be
permitted to terminate this Agreement unless SUNSECO materially breaches
the terms hereof. SUNSECO shall have the right to terminate if:
(1) any representations or warranties in the Offering are, in the
sole opinion of SUNSECO, found to be irreparably incorrect or
misleading,
(2) the Company fails, refuses, or is unable to perform any major
element(s) of its agreements hereunder,
(3) there is such a change in the condition or prospects of the
Company, or in the condition of securities markets in general,
which in SUNSECO's judgment would make it inadvisable to proceed
with the Offering and sale of the Securities.
10. ATTORNEYS' FEES: In the event any litigation or controversy arises out of
or in connection with this Agreement between the parties hereto, the
prevailing party in such litigation or controversy shall be entitled to
recover from the other party or parties all reasonable attorneys fees,
expenses, and suit costs, including those associated with any appellate or
post-judgment collection proceedings.
11. SEVERABILITY: In case any covenant, condition, term or provision contained
in this Agreement shall be held to be invalid, illegal, or unenforceable in
any respect, in whole or in part, by judgment, order, or decree of any court
or other judicial tribunal of competent jurisdiction, from which judgment,
order or decree no further appeal or petition for review is available, the va-
lidity of the remaining covenants, conditions, terms and provisions contained
in this Agreement, and the validity of the remaining part of any term or
provision held to be partially invalid, illegal or unenforceable, shall in no
way be affected, prejudiced, or disturbed thereby.
12. WAIVER OR MODIFICATION: No waiver or modification of this Agreement or of
any covenant, condition or limitation herein contained shall be valid unless
in writing and duly executed by the party to be charged therewith.
Furthermore, no evidence of any waiver or modification shall be offered or
received in evidence in any proceeding, arbitration or litigation between the
parties arising out of or affecting this Agreement, or the rights or
obligations of any party hereunder, unless such waiver or modification is in
writing and duly executed as aforesaid. The provisions of this paragraph may
not be waived except as herein set forth.
35<PAGE>
13. COMPLETE AGREEMENT: This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter of this Agreement and
supersedes any and all previous agreements between the parties, whether
written or oral, with respect to such subject matter.
14. SECTION AND PARAGRAPH HEADINGS: Section and paragraph headings used
throughout this Agreement are for reference and convenience. In no way are
they meant to define, limit or describe the scope or intent of this Agreement
or affect its provisions.
15. MULTIPLE COPIES OR COUNTERPARTS OF AGREEMENT: The original and one or more
copies of this Agreement may be executed by one or more of the parties hereto.
In such event, all such executed copies shall have the same force and effect
as the executed original and all such counterparts taken together shall have
the effect of a fully executed original.
16. APPLICABLE LAW, BINDING EFFECT, AND VENUE. This Agreement shall be con-
strued and regulated under and by the laws of the State of Florida. However,
it is hereby agreed that any irreconcilable disputes between the Company and
SUNSECO shall be resolved by binding arbitration via the Code of Arbitration
Procedure of the National Association of Securities Dealers, with a majority
of such arbitrators being from the securities industry. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
heirs, personal representatives, successors, and assigns. Venue for any
action related to or arising out of this Agreement shall lie in Orange County,
Florida.
17. NOTICES: All communications hereunder, except as herein otherwise
specifically provided, shall be in writing, and if sent to SUNSECO shall be
mailed or delivered to: Sunshine Securities Corporation, 2180 Park Avenue
North, Suite 100, Winter Park, Florida 32789. Notice shall be deemed to be
given by SUNSECO to the Company when it is mailed or delivered to:
Sylvanus Corporation
2180 Park Avenue North, Suite 100
Winter Park, Florida 32789
As the foregoing correctly sets forth the understanding between the Company
and Sunshine Securities Corporation, the following signatures indicate that
this document is intended to constitute a legally binding agreement:
Sylvanus Corporation Sunshine Securities Corporation
by: s/Charles J. Champion, Jr. by: s/John O. McIntosh
Charles J. Champion, Jr. John O. McIntosh
President President
Date: June 12, 1997 Date: June 12, 1997
36<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.
37<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.
38<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
39<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.
40<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
41<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.
42<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.
43<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.
44<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
45<PAGE>
Consent to Inclusion in Registration Statement
I hereby consent to the inclusion of the affidavit signed by me on March 26,
1997 as part of Exhibit (5) 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.
s/Charles J. Champion, Jr.
Charles J. Champion, Jr.
3/26/97
date
46<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] MAR-31-1997
[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>
47<PAGE>
AFFIDAVIT OF CHARLES J. CHAMPION, JR.
I, Charles J. Champion, Jr., 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.
11/8/96 s/Charles J. Champion, Jr.
Date Charles J. Champion, Jr.
SIGNED AND SWORN TO before me this 8th day of November, 1996.
s/Q Kim Le
Q Kim Le
Notary Public
My Commission Expires: September 18, 1998
48<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.
This offering is being conducted by a nonreporting small business issuer
and the Company undertakes to provide to the Underwriter at such times as the
Underwriter shall request, stock certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each purchaser.
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 June 10, 1997.
Sylvanus Corporation
By: s/Charles J. Champion, Jr.
Charles J. Champion, Jr., 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.
June 10, 1997
s/Charles J. Champion, Jr.
Charles J. Champion, Jr., President, Vice President,
Secretary, Treasurer, Chief Executive Officer,
Chief Financial Officer, Comptroller and sole Director
49
