As filed with the Securities and Exchange Commission on July ___,
1997
Registration No. 333-22693
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 1
to
FORM SB-2
REGISTRATION STATEMENT
AMENDMENT NO.1
UNDER THE SECURITIES ACT OF 1933
ALPHA RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 6770 59-3422883
(State or other (Primary standard (I.R.S. Employer
jurisdiction of industrial Identification No.)
incorporation or classification code
organization) number)
901 Chestnut Street, Suite A, Clearwater, FL 34616, (813) 447-3620
(Address, including zip code, and telephone number, including area code,
of small business issuer's principal executive offices)
Gerald L. Couture, 901 Chestnut Street, Suite A, Clearwater, FL 34616, (813)
447-3620
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Michael T. Cronin, Esquire,
901 Chestnut Street, Suite A, Clearwater, Florida 34616,
(813) 447-3620
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective and concluding
120 days thereafter.
If this Form is a post-effective amendment filed pursuant to Rule 429(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [ ]
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CALCULATION OF REGISTRATION FEES
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Amount to Proposed Proposed Amount of
Title of Each Class of be Maximum Maximum Registration
Securities to be Registered Registered Offering Aggregate Fee
Price Per Offering
Security(1) Price(1)
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Units (2) 10,000 $6.00 $60,000 $20.69
Units
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Common Stock, $.0001 par 600,000 N/A N/A N/A
value (2) Shares
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Underwriter's Warrants (3) $.01 $.01 $ .01
1,000
Warrants
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Common Stock, $.0001 par $0.12 $ 7.20 $ 2.48
value (4) 60,000
Shares
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Total $23.18
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(1) Estimated solely for the purpose of determining the registration fee.
(2) Includes an aggregate of 600,000 shares of Common Stock to be offered
to the public in 10,000 Units. Each Unit consists of 60 shares of
Common Stock.
(3) Underwriter's Warrants to purchase 1,000 Units, consisting of an aggregate
of 60,000 shares of Common Stock.
(4) Represents shares of Common Stock underlying Underwriter's Warrants.
--------------
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.
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Cross Reference Sheet Pursuant to Rule 404(a)
Cross reference between Item of Part I of Form SB-2 and the prospectus
filed by the above Company as of the registration statement.
Registration Statement
Item Number Prospectus Heading
1. Forepart of the Registration Statement FRONT COVER
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover INSIDE FRONT COVER and OUTSIDE
Pages of Prospectus BACK COVER
3. Summary Information and Risk Factors PROSPECTUS SUMMARY and RISK
FACTORS
4. Use of Proceeds USE OF PROCEEDS
5. Determination of Offering Price UNDERWRITING
6. Dilution DILUTION and COMPARATIVE DATA
7. Selling Security Holders NOT APPLICABLE
8. Plan of Distribution UNDERWRITING
9. Legal Proceedings LITIGATION
10. Directors, Executive Officers, MANAGEMENT
Promoters, and Control Persons
11. Security Ownership of Certain PRINCIPAL SHAREHOLDERS
Beneficial Owners and Management
12. Description of Securities DESCRIPTION OF SECURITIES
13. Interest of Names Experts and Counsel EXPERTS and LEGALITY OF SHARES
14. Disclosure of Commission Position on UNDERWRITING
Indemnification for Securities Act
Liabilities
15. Organization Within Five Years PROSPECTUS SUMMARY and BUSINESS
16. Description of Business BUSINESS
17. Management's Discussion and Analysis NOT APPLICABLE
or Plan of Operations
18. Description of Property BUSINESS
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19. Certain Relationships and Related CERTAIN TRANSACTIONS
Transactions
20. Market for Common Equity and Related NOT APPLICABLE
Stockholder Matters
21. Executive Compensation MANAGEMENT
22. Financial Statements FINANCIAL STATEMENTS
23. Changes in and Disagreements with NOT APPLICABLE
Accountants on Accounting and
Financial Disclosure
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ALPHA RESOURCES, INC.
10,000 Units
Offering Price $6.00 Per Unit
Each Unit consists of 60 shares of common stock, par value $0.0001 (the
"Common Stock") of Alpha Resources, Inc. (the "Company"). The offering price of
the Units has been arbitrarily determined by the Company, and bear no
relationship to the assets or book value of the Company or any other recognized
criteria of value. (See "DESCRIPTION OF SECURITIES" and "UNDERWRITING"). This
offering shall be completed and shall terminate no later than one hundred twenty
(120) days from the date of this Prospectus (or up to a total of one hundred
fifty (150) days from the date of this Prospectus, at the option of the Company
and the Underwriter). If the Company does not sell at least 5,000 Units prior to
termination of this offering within such time period, all proceed received will
be promptly refunded to subscribers in full, without interest of deduction
therefrom for commissions or expenses. The existing officers and directors
reserve the right to acquire up to the minimum number of Units in this offering.
This offering will be conducted in accordance with Rule 419 promulgated
under the Securities Act of 1933, as amended ("Securities Act"). The net
offering proceeds, after deduction for underwriting commissions and
Underwriter's non-accountable expense allowance (estimated at $7,800, if the
entire offering is sold, or $3,900, if only the minimum offering is sold), and
the securities to be issued to investors must be deposited in an escrow account
(the "Deposited Funds" and "Deposited Securities," respectively). While held in
the escrow account, the securities may not be traded or transferred. Except for
an amount up to 10% of the Deposited Funds (estimated at $5,220, if the entire
offering is sold, or at $2,610, if only the minimum offering is sold) which is
releasable to the Company under Rule 419, the Deposited Funds and the Deposited
Securities may not be released until an acquisition meeting certain specified
criteria has been made and a sufficient number of investors reaffirm their
investment in accordance with the procedures set forth in Rule 419. Pursuant to
these procedures, a new prospectus, which describes an acquisition candidate and
its business and includes audited financial statements, will be deliver to all
investors. The Company must return the pro rata portion of the Deposited Funds
to any investor who does not elect to remain an investor. Unless a sufficient
number of investors elect to remain investors, all investors will be entitled to
the return of a pro rata portion of the Deposited Proceeds (and any interest
earned thereon (and none of the Deposited Securities will be issued to
investors). If an acquisition meeting all the requirements of Rule 419,
including reconfirmation by investors in this offering, is not consummated
within 18 months of the date of this Registration Statement the Deposited Funds
held in escrow shall be returned to all investors on a pro rata basis within
five business days by first class mail or other equally prompt means. (See
"PROSPECTUS SUMMARY: Investors' Rights to Reconfirm Investment Under Rule 419").
THE SECURITIES OFFERED INVOLVE A VERY HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION, AND SHOULD BE CONSIDERED ONLY BY THOSE PERSONS WHO CAN
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. (See "RISK FACTORS").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Offering Price Proceeds
to Public Commissions(1) to Company(2)
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Per Unit Total (3) $ 6.00 .60 5.40
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Minimum $30,000 3,000 27,000
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Maximum $60,000 6,000 54,000
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The date of this Prospectus is ______________, 1997
CORTLANDT CAPITAL CORPORATION
(1) Underwriting commissions shown do not include the compensation to be
received by Cortlandt Capital Corporation ("Underwriter"), in the form
of: (i) a non-accountable expense allowance of 3% of the gross proceeds of
the offering (ii) warrants ("Underwriter Warrants") to purchase units
("Underwriter Units") equal to 10% of the total Units sold in the offering
at a price of $7.20 per Underwriter Unit. In addition, the Company has
agreed to indemnify the Underwriter against certain civil liabilities,
including liabilities which may arise under the Securities Act (See
"Underwriting").
(2) Before deducting expenses of the offering payable by the Company
(including the Underwriter's non-accountable expense allowance of from
$900 to $1,800) estimated at $14,400 if the minimum offering is sold and
$18,300 if the entire offering is sold.
(3) The offering is being conducted by the Underwriter on a "5,000 Unit
minimum, 10,000 Unit maximum" basis. In the event that the minimum of
5,000 Units having a gross subscription price of $30,000 is not sold
within 120 days following the effective date of this prospectus (unless
extended by the Company and Underwriter for an additional period not to
exceed an additional 50 days), all proceeds raised will be promptly
returned to investors, without paying interest and without deducting any
sales commissions or expenses of the offering. All proceeds from the sale
of Units will be placed in escrow with Chase Manhattan Bank, N.A., no
later than noon of the next business day following receipt. Subscribers
will not have the use of their funds, will not earn interest on funds in
escrow, and will not be able to obtain return of funds placed in escrow
unless and until the minimum offering period expires. In the event the
minimum number of shares is sold within the offering period, the offering
will continue three months following the date of this prospectus, all
offered Units are sold, or terminated by the Company, whichever occurs
first. (See "UNDERWRITING"). Assuming the minimum number of Units is sold
within the offering period, the Deposited Funds and Deposited Securities
will be held in escrow and investors will not have the use of the
Deposited Funds or the right to receive and deal in the Deposited
Securities until released in accordance with the requirements of Rule 419,
which may be as long as 18 months following the date of this prospectus.
(See "PROSPECTUS SUMMARY: Investors' Rights to Reconfirm Investment Under
Rule 419.")
FEDERAL LAW REQUIRES THAT ANY BROKER OR DEALER PARTICIPATING IN THE
ISSUANCE OF CERTAIN SECURITIES, INCLUDING THOSE OFFERED HEREBY, DELIVER A COPY
OF THE PROSPECTUS TO ANY PERSON WHO IS EXPECTED TO RECEIVE A CONFIRMATION OF
SALE AT LEAST 48 HOURS PRIOR TO THE MAILING OF SUCH CONFIRMATION.
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THE UNITS HAVE BEEN REGISTERED ONLY IN THE STATES OF FLORIDA, NEW YORK,
NEW JERSEY AND TEXAS, AND MAY ONLY BE SOLD TO PERSONS WHO ARE RESIDENTS OF SUCH
STATES. ACCORDINGLY, THE WARRANTS, SHOULD THEY BECOME EXERCISABLE, MAY ONLY BE
EXERCISED BY PERSONS WHO RESIDE IN THOSE STATES. IF THE UNITS ARE REGISTERED IN
ANY OTHER STATES, THE COMPANY WILL AMEND THIS PROSPECTUS TO REFLECT SUCH
ADDITIONAL REGISTRATION.
THE STATES OF CONNECTICUT, IDAHO, AND SOUTH DAKOTA HAVE ADOPTED
REGULATIONS THAT MAY PROHIBIT PURCHASES OF THE COMPANY'S SECURITIES WITHIN SUCH
STATES IN ANY SUBSEQUENT TRADING MARKET WHICH MAY DEVELOP. ACCORDINGLY, A LEGEND
WILL BE PLACE ON ALL CERTIFICATES REPRESENTING THE UNITS PROHIBITING SALE OF THE
UNITS IN THE STATES OF CONNECTICUT, IDAHO, AND SOUTH DAKOTA.
The Units are offered by the Underwriter, as agent for the Company,
subject to prior sale and withdrawal or cancellation of the offering, without
notice, by the Company or the Underwriter. Offers to purchase and sales by the
Company and the Underwriter are subject to: (a) acceptance by the Company and
the Underwriter; (b) the sale of the minimum number of Units specified herein;
(c) the release and delivery to the Company of the proceeds of this offering and
delivery of the securities in accordance with Rule 419; and (e) the right of the
Company and Underwriter to reject any and all offers to purchase.
None of the Company's officers, directors, and promoters, and no other
affiliate of the Company, has had any preliminary contact or discussions with
any representative of any other company regarding the possibility of an
acquisition or merger between the Company and such other company (see "BUSINESS:
General"). None of the Company's officers, directors, and promoters, and no
other affiliate of the Company, knows of any person or group of persons who are
likely to purchase, beneficially own, or control any portion of the Units
offered. There are no plans, proposals, arrangements, or understandings with any
person with regard to the development of a trading market in any of the
Company's securities following an acquisition meeting the requirements of Rule
419.
The Company proposed to provide to shareholders within 180 days following
the end of each fiscal year an annual report containing a general description of
its business operations and financial statements which have been examined and
reported on, with an opinion expressed by an independent certified public
accountant. The Company's fiscal year end is December 31.
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PROSPECTUS SUMMARY
The Company
Alpha Resources, Inc. (the "Company"), was organized as a Delaware
corporation on January 13, 1997. Since inception, the Company's activities have
been limited to the sale of initial shares in connection with its organization
and the preparation of this offering. A total of 120,000 shares of Common Stock
have been issued to officers and directors for an aggregate of $600 in cash.
Additional funds have been loaned to the Company by its officers, directors and
principal shareholders, to cover Company expenses. See "CERTAIN TRANSACTIONS.")
The Company proposed to evaluate one or more businesses and ultimately acquire
an interest or otherwise participate in a business. As of the date of this
prospectus, no specific businesses have been investigated by the Company, and it
does not propose to engage in the evaluation of any such businesses unless and
until the successful completion of the offering. Consequently, the Company has
only generally allocated the net proceeds of this offering to the search for and
participation in a business.
The Company's offices are located at 901 Chestnut Street, Suite A,
Clearwater, FL 34616, where its telephone number is (813) 447-3620.
Investors' Rights to Reconfirm Investment Under Rule 419
General
The SEC has adopted Rule 419 relating to "blank check" issuers (a
development stage company that has no specific business plan or has indicated
that its plan is to engage in a merger or acquisition with an unidentified
company). This rule provides that upon consummation of the offering there be
deposited into an escrow or special account all proceeds received, less
underwriting commissions and expenses, and all securities issued. The set
offering proceeds (less 10% which may be withdrawn for expenses) must remain in
escrow until the earlier of an acquisition meeting certain criteria and
affirmation of the offering, or 18 months from the date hereof. During such
escrow period no trading in the "blank check" issuer's securities may take
place. Inasmuch as the Company is a development stage company planning to engage
in a merger or acquisition with an unidentified company, the Company will be
subject to Rule 419.
Deposit of Offering Proceeds and Securities
Rule 419 requires that the net offering proceeds, after deduction for
underwriting compensation and offering expenses and all securities to be issued
be deposited into an escrow or trust account (the "Deposited Funds" and
"Deposited Securities," respectively) governed by an agreement which contains
certain terms and provisions specified by the rule. Under Rule 419, the
Deposited Funds (less 10% otherwise releasable under the rule) and the Deposited
Securities will be released to the Company and to investors, respectively, only
after the Company has met the following three conditions. First, the Company
must execute an agreement for an acquisition(s) meeting certain prescribed
criteria. Second, the Company must successfully complete a reconfirmation
offering which includes certain prescribed terms and condition. Third, the
acquisition(s) meeting the prescribed criteria must be consummated (see
"Prescribed Acquisition Criteria" and "Reconfirmation Offering" within this
section). Accordingly, the Company has entered into an escrow agreement with
Continental Stock Transfer Trust Company, New York, New York ("Unit Escrow
Agent") and with Chase Manhattan Bank, N.A. New York, New York, a banking
corporation (the "Funds Escrow Agent") which provides that:
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(1) The net proceeds will be deposited into an escrow account maintained
by the Funds Escrow Agent promptly after the successful completion
of the offering. Except for the 10% of the Deposited Funds, which
may be released to the Company, the Deposited Funds and interest or
dividends thereon, if any, will be held for the sole benefit of the
investors and can be invested only in a bank savings account, a
money market fund, or federal government securities or securities
guaranteed as to principal and interest by the federal government.
(2) All securities issued in connection with the offering and any other
securities issued with respect to such securities, including
securities issued with respect to stock splits, stock dividends, or
similar rights, will be deposited directly into escrow with the Unit
escrow Agent promptly upon issuance. Certificates for the Deposited
Securities will be issued in the names of the investors.
Accordingly, the Deposited Securities are deemed to be issued and
outstanding, and are held by the Unit Escrow Agent for the sole
benefit of the investors who retain all voting rights, if any, with
respect to the Deposited Securities. The Deposited Securities held
in escrow may not be transferred, disposed of, nor any interested
created therein, other than by will or the laws of descent and
distribution, or, pursuant to a qualified domestic relations order
as defined by the Internal Revenue Code of 1986 or the Employee
Retirement Income Security Act.
(3) Warrants, convertible securities, or other derivative securities
relating to securities held in escrow may be exercised or converted
in accordance with their terms; provided, however, that the
securities received upon exercise or conversion together with any
cash or other consideration paid in connection with the exercise or
conversion, are to be promptly deposited into escrow.
Prescribed Acquisition Criteria
Rule 419 requires that before the Deposited Funds and the Deposited
Securities can be released the Company must first execute one or more agreements
to acquire one or more acquisition candidates meeting certain specified
criteria. The agreement must provide for the acquisition of a business or assets
for which the fair market value of the business represents at least 80% of the
offering proceeds, but excluding underwriting commissions, underwriting
expenses, and dealer allowances payable to non-affiliates. For purpose of the
offering, the estimated fair value of the business or assets to be acquired must
be at least $51,900 ($60,000 maximum offering proceeds less underwriter's
commissions and non-accountable expenses of $8,100, if the entire offering is
sold, or $25,950 ($30,000 minimum offering proceeds less underwriter's
commissions and non-accountable expenses of $4,050, if only the minimum offering
is sold. Once an acquisition agreement meeting the above criteria has been
executed, the Company must successfully complete the mandated reconfirmation
offering and consummate the acquisition. Any agreement pertaining to an
acquisition will include a condition precedent to the effect that investors
representing 80% of the offering proceeds must elect to reconfirm their
investment in the Units, all as provided in Rule 419.
It is possible that the Company may propose to acquire a business in the
development stage. A business is in the development stage if it is devoting
substantially all of its efforts to establishing a new business, and either
planned principal operations have commenced or planned principal operations have
commenced but there has been no significant revenue therefrom. As noted above,
under Rule 419 the Company must acquire a business or assets for which the fair
value of the business represents at least 80% of the offering proceeds,
including funds received or to be received from the exercise of Warrants, less
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certain underwriting expenses. Accordingly, the Company's ability to acquire a
business in the development stage may be limited to the extent it cannot locate
such businesses with a fair value high enough to satisfy the requirements of
Rule 419.
Post Effective Amendment
Once the agreement governing the acquisition of a business meeting the
above criteria has been executed, Rule 419 requires the Company to update the
registration statement with a post-effective amendment ("Amendment"). The
Amendment must contain information about: the proposed acquisition candidate (or
candidates, if more than one) and its business, including audited financial
statements,; the results of this offering; and, the use of the funds disbursed
from escrow. The Amendment must also include the terms of the reconfirmation
offer mandated by Rule 419. The reconfirmation offer will include certain
prescribed conditions which must be satisfied before the Deposited Funds and
Deposited Securities can be released from escrow.
Reconfirmation Offering
The reconfirmation offer must commence within five business days after the
effective date of the Amendment. Pursuant to Rule 419, the terms of the
reconfirmation offer must include the following conditions:
(1) The prospectus contained in the Amendment will be sent to each
investor whose securities are held in escrow within five business
days after the effective date of the Amendment;
(2) Each investor will have not less than 20, nor more than 45, business
days from the effective date of the Amendment to notify the Company
in writing, that the investor elects to remain an investor;
(3) If the Company does not receive written notification from investors
representing 80% of the offering proceeds (estimated at $51,900 if
the entire offering is sold, or $25,950, if only the minimum
offering is sold), within 45 business days following the effective
date of their election to reconfirm their investments in the Units,
the Deposited Funds (and any related interest or dividends) held in
escrow for all investors' will be returned to them on a pro rata
basis within five business days by first class mail or other equally
prompt means;
(4) If an acquisition is consummated, any investor who does not
reconfirm his investment in the Units to the Company in writing
within 45 days following the effective date of the Amendment will
receive his pro rata portion of the Deposited Funds (and any related
interest or dividends) held in escrow for all investors' within five
business days by first class mail or other equally prompt means;
(5) If an acquisition is not consummated within 18 months of the date of
this Prospectus, the Deposited Funds held in escrow shall be
returned to all investors on a pro rata basis within five business
days by first class mail or other equally prompt means.
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Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released to the
Company and the investors, respectively, after the Unit Escrow Agent and Funds
Escrow Agent have received a signed representation from the Company and any
other evidence acceptable to them that: the Company has executed one or more
agreements for the acquisition of one or more business for which the fair market
value of the business represents at least 80% of the offering proceeds and has
filed the required Amendment; the Amendment has been declared effective, the
mandated reconfirmation offer containing the conditions prescribed by Rule 419
has been completed, and the Company has satisfied all of the prescribed
conditions of the reconfirmation offer; and, the acquisition of the business
with the fair value of at least 80% of the offering proceeds is consummated.
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RISK FACTORS
The purchase of the securities offered hereby involves a high degree of
risk. Each prospective investor should consider, in addition to the negative
implications of all material set forth herein, the following specific risks,
particularly in relation to your own financial circumstances and ability to
suffer the loss of your entire investment.
Risk Factors Relating to the Company's Business
No Operating History
The Company was organized under the laws of the State of Delaware on
January 13, 1997, and has no revenues from operations or meaningful assets. The
Company has not as yet identified any business or product for possible
acquisition. The Company faces all of the risks inherent in a new business and
those risks specifically inherent in the type of business in which the Company
proposes to engage, namely, the investigation and acquisition of an interest in
a business. The purchase of the securities offered hereby must be regarded as
the placing of funds at a high risk in a new or "start-up" venture with all of
the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject. (See "USE OF PROCEEDS" and "BUSINESS.")
Potential Profit to be Received by Management
The officers and directors of the Company currently own 100% of the Common
Stock presently issued and outstanding. The officers and directors paid an
aggregate price of $600 for these shares (See "CERTAIN TRANSACTIONS: Purchase of
Stock at Organization"). The officers and directors of the Company may actively
negotiate or otherwise consent to the purchase of any portion of their common
stock as a condition to or in connection with a proposed merger or acquisition
transaction. The proceeds of this offering will not be used to purchase, either
directly or indirectly, any securities held by officers and directors. A premium
may be paid on this stock in connection with any such stock purchase
transactions and public investors will not receive any portion of the premium
that may be paid. Furthermore, the Company's shareholders may not be afforded an
opportunity to approve or consent to any particular stock buy-out transaction.
(See "BUSINESS: Acquisition of Business"). Due to the fact that such officers
and directors may negotiate to receive such a premium means that there is a
potential for members of management to consider their own personal pecuniary
benefit rather than the best interests of the Company's other stockholders. Such
conduct may present management with conflicts of interest and, as a result of
such conflicts, may possibly compromise management's state law fiduciary duties
to the Company's shareholders. The Company has not adopted any policy for
resolving such conflicts.
No finder's fees may be paid, directly or indirectly, by the Company (out
of revenues or other funds, or by the issuance of debt or equity securities), to
officers, directors, or promoters of the Company, or their affiliates and
associates. Furthermore, the Company will not pay consulting fees or salaries to
officers, directors, or promoters of the Company, or their affiliates and
associates. The Company will reimburse clerical and office expenses, such as
telephone charges, copy charges, overnight courier service, travel expenses, and
similar costs incurred by officers, directors, and promoters, and their
affiliates and associates, on Company matters, which is estimated will not
exceed, an average $1,000 per month. (See "USE OF PROCEEDS"). Except for such
reimbursement and the potential sale of stock discussed in the preceding
paragraph, there are no arrangements or methods of payment by which the
officers, directors, and promoters, and their affiliates and associates, will
receive funds, securities, or other assets from the Company or in connection
with any acquisition by the Company.
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The Company will not participate in a business combination with any entity
controlled by an officer, director, or promoter of the Company, or their
affiliates and associates.
Lack of Diversification
The extremely limited size of the Company, even after the offering is
completed, makes it unlikely that the Company will be able to commit its funds
to the acquisition of more than one specific business, so the Company's
activities will not be diversified. Therefore, the success or failure of any
business acquired by the Company will have a substantial impact on the Company.
(See "BUSINESS"). Furthermore, the Company will not engage in the creations of
subsidiary entities with a view to distributing their securities to the
shareholders of the Company.
No Current Negotiations Regarding an Acquisition or Merger
None of the Company's officers, directors, or promoters, or their
affiliates and associates, have had any preliminary contact or discussion, and
there are no present plans, proposals, arrangements or understanding, with any
representatives of the owners of any business or company regarding the
possibility of an acquisition or merger transaction contemplated in the
prospectus. (See "BUSINESS: General").
Failure of Sufficient Number of Investors to Reconfirm Investment
A business combination with a target business cannot be consummated
unless, in connection with the reconfirmation offering required by Rule 419, the
Company can successfully convince a sufficient number of investors representing
80% of the maximum offering proceeds to elect to reconfirm their investment, the
proposed business acquisition will not be consummated. In such event, none of
the Deposited Securities hell in escrow will be issued and the Deposited Funds
will be returned to investors on a pro rata basis. Since 13% of the gross
offering proceeds is to be paid to the Underwriter to cover underwriting
commissions and expenses and approximately 9% of the gross proceeds may be used
for other expenses of the Company, investors will be returned only approximately
78% of their invested funds plus any interest that accrues on the Deposited
Funds held in escrow.
Use of Business Acquisition Consultants or Finders
While it is not presently anticipated that the Company will engage
unaffiliated professional firms specializing in business acquisitions on
reorganizations, such firms may be retained if management deems it in the best
interest of the Company. Compensation to a finder or business acquisition firm
may take various forms, including one-time cash payments, payments based on a
percentage of revenues or product sales volume, payments involving issuance of
equity securities (including those of the Company), or any combination of these
or other compensation arrangements. The Company estimates that any fees for such
services will not exceed 10% of the amount of the securities issued or cash paid
by the Company to acquire a business. The Company will not have funds to pay a
retainer in connection with any consulting arrangement, and no fee will be paid
unless and until an acquisition is completed in accordance with Rule 419. (See
"USE OF PROCEEDS," and "BUSINESS").
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No Assurance of Profitability
There can be no assurance that the Company will be able to acquire a
favorable business. In addition, even if the Company becomes engaged in a new
business, there can be no assurance that it will be able to generate revenues or
profits therefrom.
No Assurance of Conventional Financing for Business Acquired or Merged
Although there are no specific business combinations or other transactions
contemplated by management, it may be expected that any such target business
will present such a level of risk that conventional private or public offerings
of securities or conventional bank financing would not be available to the
Company once it acquires said business.
Time to Be Devoted by Management
The officers and directors of the Company currently are employed or
engaged full time in other positions or activities and will devote only that
amount of time to the affairs of the Company which they deem appropriate. The
amount of time devoted by management to the affairs of the Company will depend
on the number and type of businesses under consideration at any given time. In
the fact of competing demands for their time, it should be anticipated that the
officers and directors will grant priority to their full-time positions rather
than the business affairs of the Company. The Company estimates that each
officer will contribute an average of 10 hours per month to Company matters (See
"MANAGEMENT").
Conflicts of Interest
Certain conflicts of interest may exist between the Company and its
officers and directors, due to the fact that they are employed full time in
other endeavors. Failure by management to conduct the Company's business in
its best interest may subject management to claims by the Company and/or its
shareholders of breach of fiduciary duty. (See "MANAGEMENT: Conflicts of
Interest.")
Dependent on Outside Advisors
In connection with its investigation of a possible business and in order
to supplement the business experience of management, the Company may employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by management without
any input from controlling shareholders. Furthermore, it is anticipated that
such persons may be engaged by the Company on an independent basis without a
continuing fiduciary or other obligation to the Company. The Company has no
arrangement or understanding to employ any of its officers or directors as
outside advisors. (See "BUSINESS").
Inability to Evaluate Investments
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exclusive investigation
and analysis of a business. Therefore, management decisions will likely be made
without detailed feasibility studies, independent analysis, market surveys, and
the like which, if the Company had more funds available, would be desirable. The
Company will be particularly dependent in making decisions on information
provided by the promoter, owner, sponsor, or others associated with the
businesses seeking the Company's participation, and which will have a direct
economic interest in completing a transaction with the Company. (See
"BUSINESS").
14
<PAGE>
Possible Consequences of Business Reorganization
It is likely that the Company will issue additional shares of Common Stock
or preferred stock in connection with its potential merger, consolidation, or
other business reorganization, and that the proceeds of the offering will be
used in the business of the acquisition or merger candidate (the Company will
not make loans of the net proceeds of the offering). The consequences may be a
change of control of the Company; significant dilution to the public
shareholders' investment; and, a material decrease in the public shareholders'
equity interest in the Company. Since the Company has not made any determination
with respect to the acquisition of any specific business, it cannot speculate on
the form of any potential business reorganization or the amount of securities
which the Company may issue in connection therewith. The board of directors may
issue additional securities of the Company on terms and conditions which the
board of directors, in its sole discretion, determines to be in the best
interest of the Company and without seeking shareholder approval. (See
"BUSINESS").
Limited Rights of Shareholders in an Acquisition
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by Rule 419, the Company's
shareholders may not be afforded an opportunity specifically to approve or
disapprove any particular business reorganization or acquisition. Except under
certain circumstances, the directors of the Company will be able to consummate
an acquisition by or of the Company without the approval of the shareholders of
the company. Under applicable corporate law, only in the event of a merger,
consolidation, or sale of all or substantially all of the assets of the Company
(but not a target company), will a shareholder of this Company have the right to
object to the merger, consolidation, or sale and assert his or her dissenter's
right to appraisal of his or her shares. If an acquisition is consummated in the
form of an exchange of securities, no shareholder of the Company will have the
right to object thereto and claim dissenter's rights.
Limitation on Acquisitions
The Company is subject to Rule 419 and certain reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will
be required to furnish certain information about significant acquisitions,
including audited financial statements for the company(s) acquired for one, two,
or three years, depending on the relative size of the acquisition. Consequently,
the acquisition prospects available to the Company would be limited to those
that can provide the required audited financial statements. (See "BUSINESS:
Selection of a Business").
Leverage
A business acquired through a leveraged buy-out, i.e., financing the
acquisition of the business by borrowing on the assets of the business to be
acquired, will be profitable only if it generates enough revenues to cover the
related debt and expenses. This practice could increase the Company's exposure
to larger losses. There can be no assurance that any business acquired through a
leveraged buy-out will generate sufficient revenues to cover the related debt
and expenses. The use of leverage to consummate a business combination may
reduce the ability of the Company to incur additional debt, make other
acquisitions, or declare dividends, and may subject the Company's operations to
strict financial controls and significant interest expense. It may be expected
that the Company will have few, if any, opportunities to utilize leverage in an
acquisition. Even if the Company is able to identify a business where leverage
15
<PAGE>
may be used, there is no assurance that financing will be available, or if
available, on terms acceptable to the Company. (See "BUSINESS: Leverage")
Competition
The search for potentially profitable businesses is intensely competitive.
The Company expects to be at a disadvantage in competing with firms which have
substantially greater financial and management resources than the Company. It is
expected this competitive condition will exist in any industry in which the
Company may become engaged. (See "BUSINESS").
Issuance of Preferred Stock
The Company currently has authorized 5,000,000 shares of preferred stock,
par value $0.001 per share. No shares of preferred stock are issued and
outstanding. Although the Company's board of directors has no present intention
to do so, it has the authority, without action by the Company's shareholders, to
issue the authorized and unissued preferred stock in one or more series and
determine the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of any such series. Such shares may, if and
when issued, have rights superior to those of the Common Stock. (See
"DESCRIPTION OF SECURITIES").
Governmental Regulation
The use of assets and/or conduct of business which the Company may acquire
could be subject to governmental regulations, including environmental and
taxation matters, which regulations would have a materially adverse affect on
the use of such assets and/or conduct of such businesses. (See "BUSINESS").
General Risks Relating to Investment
No Access to Investors' Funds While Held in Escrow
The Units are offered on a "best efforts" basis, and no individual, firm,
or corporation, including the Underwriter, has agreed to purchase or take down
any of the offered Units. Consequently, there is no assurance that the required
minimum number of Units (5,000), will be sold during the minimum offering
period, which may last as long as six months, or if the 5,000 Units are sold
within the minimum offering period, that all 10,000 Units will be sold during
the offering period. Provisions have been made to deposit in escrow the funds
received from the purchase of Units, and in the event $30,000 is not received
within three months following the effective date of this Prospectus (unless
extended by the Company and Underwriter for an additional period not to exceed
three months), proceeds so collected will be promptly refunded to investors
without paying interest and without deducting sales commissions or expenses.
During this initial offering period of up to six months, subscribers cannot earn
interest on their funds and have no right to the return or use of their funds
(See "UNDERWRITING.")
Following sale of at least the minimum number of Units within the
prescribed period, investors' funds (reduced to reflect payments for
underwriting compensation and expense amounts, if any, otherwise released as
permitted by Rule 419) will remain in escrow as Deposited Funds. While interest
will accrue on the Deposited Funds after successful completion of the offering,
investors will have no right to the return of or the use of their funds for a
period of up to 18 months from the date of this prospectus. Prior to the
expiration of the 18-month period following the date of this prospectus,
investors will be offered return of their pro rata portion of the Deposited
Funds held in escrow (and interest), only in connection with the reconfirmation
16
<PAGE>
offering required to be conducted upon execution of an agreement to acquire a
target business which represents 80% of the maximum offering proceeds. If the
Company is unable to locate a target businesses meeting the above acquisition
criteria, investors will have to wait the full 18-month period following the
date of this prospectus before a pro rata portion of their funds (and interest)
is returned.
Restriction on Sale of Units Held in Rule 419 Escrow Account
Under Rule 419, the Company must deposit in a special account securities
issued and funds received in its initial offering. According to Rule 15g-8
adopted under the Securities Exchange Act of 1934, it is unlawful for any person
to sell or offer to sell the Units (or any interest in or related to the Units)
held in the Rule 419 account other than pursuant to a qualified domestic
relations order. As a result, contracts for sale to be satisfied by delivery of
the Deposited Securities (e.g. contracts for sale on a when, as, and if issued
basis), and sales of derivative securities to be settled by delivery of the
Deposited Securities (e.g. physically-settled option on the securities), are
prohibited. Rule 15g-8 also prohibits sales of other interests based on the
Units, whether or not physical delivery is required. Accordingly, investors will
not be able to liquidate their investment in the Units unless and until the
Deposited Securities are released from escrow as provided in Rule 419.
Securities are released from escrow as provided in Rule 419. Therefore, there
will be no trading market for the Units following completion of the offering.
even if the Deposited Securities are released from escrow following a business
acquisition pursuant to Rule 419, there can be no assurance that a public market
for the Company's securities will develop. As a result, purchasers of the Units
offered may not be able to liquidate their investment readily, if at all.
Resale Prohibited in Certain States
The states of Connecticut, Idaho, and South Dakota have adopted
regulations that may prohibit sale of the Company's Units in those states
following release of the Units from escrow under Rule 419. All certificates
representing the Units will contain a legend prohibiting resale of the Units in
the states of Connecticut, Idaho, and South Dakota.
Dependence on Successful Completion of Offering
The company is dependent on successful completion of this offering to
implement its proposed business plan. Furthermore, if the offering is
unsuccessful, it is likely that present shareholders of the Company will lose
their entire investment since the Company will have no working capital after
paying certain expenses associated with this offering. (See "BUSINESS.")
Disproportionate Risks
On sale of all Units offered hereby (assuming allocation of the public
offering price solely to the Common Stock) present shareholders would own
approximately 17% of the then outstanding shares of the Company, for which they
would have paid $600 or approximately 1% of the then invested capital of the
Company, and the persons purchasing shares in this offering would then own 83%
of the then outstanding shares, for which they will have paid $60,000 or
approximately 99% of the then invested capital. If only the minimum number of
Units is sold, existing shareholders would own approximately 29% of the stock
outstanding for which they would have paid approximately 2% of the total capital
invested, as compared to public shareholders who would own approximately 71% of
the stock outstanding for which they would have paid $30,000 or approximately
98% of the total capital invested. Consequently, purchasers in this offering
17
<PAGE>
will bear a disproportionately greater risk investing in the Company than its
present shareholders. (See "COMPARATIVE DATA.")
Substantial and Immediate Dilution to Public
Persons purchasing Units in this offering will suffer a substantial and
immediate dilution to the net tangible book value of their shares below the
public offering price. Giving effect to the sale of all offered Units, the
Company would have a net tangible book value of approximately $.059 per share so
that persons purchasing Units in the offering would suffer an immediate dilution
of $.041 per share or 41% from the offering price of $6.00 per Unit. Giving
effect to the sale of the minimum number of Units, the net tangible book value
of the Company would be approximately $.039 per share or similar dilution to the
public investors of $.061 per share or 61% of the public offering price. (See
"DILUTION.")
Lack of Revenue and Dividends
The company has had no earnings and cannot predict when, if ever, it will
realize any material revenue or realize a profit from any operations it may
subsequently undertake. The Company has paid no dividends and does not propose
to do so in the foreseeable future.
Arbitrary Offering Price
The offering price of the Units does not bear any relationship to the
assets, book value, or net worth of the Company or any other generally accepted
criteria of value, and should not be considered to be an indication of the
actual value of the Company. The offering price was arbitrarily determined by
the Company. (See "UNDERWRITING.")
Possible sale of Common Stock Pursuant to Rule 144
All of the Company's 120,000 shares of Common Stock presently outstanding
are "restricted securities" and, in the event a public market for the Common
Stock develops in the future, such shares may be sold as early as December 1998,
in reliance on Rule 144 adopted under the Securities Act, if certain
requirements are met. Investors should be aware that sales under Rule 144 may
have a depressive effect on the price of the Company's stock in any market which
may develop. (See "DESCRIPTION OF SECURITIES.")
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<PAGE>
DILUTION
As of March 31, 1997, the Company had an unaudited net tangible book value
(total tangible assets less total liabilities) of $600.00, or a net tangible
book value per share of approximately $0.005. The table below sets forth the
dilution to persons purchasing Units in this offering without taking into
account any changes in the net tangible book value of the Company after March
31, 1997, except the sale of the minimum and maximum number of Units offered at
the public offering price and receipt of the net proceeds therefrom, and without
taking into consideration the Underwriter's Warrants.
- --------------------------------------------------------------------------------
Assuming Minimum Assuming Maximum
Units Sold Units Sold
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Public offering price
per share(1) $0.100 $0.100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net tangible book value
before offering(2) $0.005 $0.005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Increase attributable to
purchase of $0.034 $0.054
shares by new investors
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pro forma net tangible book
value $0.039 $0.059
after offering(3)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dilution per share to new
investors $0.061 $0.041
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percent Dilution 61% 41%
- --------------------------------------------------------------------------------
- -----------------------------
(1) Offering Price per share of Common Stock included in the Units and before
deduction of offering expenses and commissions.
(2) Determined by dividing the number of shares of Common Stock outstanding
into the net tangible book value of the Company.
(3) After deduction of offering expenses and commissions estimated at $18,300
if the entire offering is sold and $14,400 is only the minimum offering is
sold.
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<PAGE>
COMPARATIVE DATA
The following chart illustrates percentage ownership in the Company held
by the present shareholders and by the public investors in this offering and
sets forth a comparison of the amounts paid by the present shareholders and by
the public investors.
- --------------------------------------------------------------------------------
Total Total Average Price
Shares Purchased Consideration Per Share
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Number % Amount %
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Minimum Offering
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Present 120,000 28.6% $ 600 2.0% $0.005
Shareholders
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New Investors 300,000 71.4% $30,000 98.0% $0.100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Maximum Offering
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Present 120,000 16.7% $ 600 1.0% $0.005
Shareholders
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New Investors 600,000 83.3% $60,000 99.0% $0.100
- --------------------------------------------------------------------------------
20
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of all 10,000
Units is estimated at approximately $41,700, after deducting underwriting
commissions and expenses. If only the minimum offering is sold, the Company will
receive net proceeds of approximately $15,600. All of the net proceeds must be
deposited in Escrow pursuant to Rule 419. Except for an amount up to 10% of the
Deposited Funds, ($6,000.00, if the entire offering is sold, or $3,000.00, if
only the minimum offering is sold), which is otherwise releasable under the
rule, the Deposited Funds may not be released until an acquisition meeting
certain specified criteria has been made and a sufficient number of investors
reconfirm their investment in accordance with the procedures set forth in Rule
419. Accordingly, the net proceeds of the offering may be applied as follows:
- --------------------------------------------------------------------------------
Items Assuming Minimum Assuming Maximum
Units Sold Units Sold
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Company Offering Expenses(1) $14,400 $18,300
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Funds available for
investigation and $15,600 $41,700
evaluation of prospective
business (2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL $30,000 $60,000
- --------------------------------------------------------------------------------
- ---------------------------
(1) These expenses represent legal, accounting, printing, and other costs
incurred by the Company in connection with the offering. A portion of
these expenses have been paid by the Company with advances from the
current officers and directors.
(2) The Company utilizes office space at 901 Chestnut Street, Clearwater, FL
34616, provided by a private company owned by Gerald Couture, an officer,
director and principal shareholder of the Company. The Company will not
pay rent for this office space. The Company will reimburse clerical and
office expenses, such as telephone charges, copy charges, overnight
courier service, travel expenses, and similar cost incurred by Mr. Couture
on Company matters, which is estimated will not exceed, an average, $1,000
per month. These funds may also be used to cover the expense of legal and
accounting services related to investigation and evaluation of businesses.
A portion or all of the funds required to pay these expenses may not be
released until after the acquisition of a business is completed in
accordance with Rule 419. A portion of the funds available for a business
may be used to pay a fee or other compensation to a person or entity,
other than an officer of director of the Company, which submits a business
acquired by the Company. (See "BUSINESS")
There are no plans, proposals, arrangements, or understandings with
respect to the sale or issuance of additional securities of the Company prior to
the location of an acquisition or merger candidate.
After the Company reaches an agreement for acquisition of a business, it
is required by Rule 419 to prepare and disseminate the Amendment to all
investors, which will describe the business to be acquired and provide more
specific information on the use of the net proceeds of the offering in such
business. The Amendment will also provide information on the proposed use of any
proceeds obtained from the exercise of Warrants in the business acquired by the
Company.
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<PAGE>
Except for reimbursement of offering costs and expenses incurred by
officers and directors on Company matters described above, no portion of the net
proceeds of the offering may be paid to officers, directors, promoters, or their
affiliates or associates, directly or indirectly, as consultant fees, officer
salaries, director fees, purchase of their shares, or other payments. The board
of directors has adopted a policy to the foregoing effect, which may be
rescinded or amended only by majority vote of the Company's stockholders who do
not hold any common stock presently outstanding (whether now held or hereafter
acquired) and will expire by its terms on the date an acquisition of business
venture is consummated. While the board of directors may seek a change in this
policy prior to an acquisition, no change may be made except by the vote
specified. No portion of the net proceeds will be used to make loans to any
person. The Company will not borrow funds and use the proceeds therefrom to make
payments to the Company's officers, directors, or promoters, or their affiliates
or associates.
The Company has no agreement or understanding with any consultant or
advisor to provide services in connection with any future business acquisition.
The Company does not anticipate that it will engage consultants or advisors
specializing in business acquisitions or reorganizations, although the
possibility exists that management may find it to be beneficial to the Company
to retain the services of such a consultant. In no circumstances will the
Company retain the services of any consultant who is also an officer, director,
or promoter, of the Company, or their affiliates and associates. Compensation to
a consultant may take various forms, including one time cash payments, payments
based on a percentage of revenues or product sales volume, payments involving
issuance of securities (including those of the Company) or any combination of
these or other compensation arrangements. The Company estimates that any fees
for such services paid in cash will not exceed 10% of the amount of the
securities issued by the Company to acquire a business. The Company will not
have funds to pay a retainer in connection with any consulting arrangement, and
no fee will be paid unless and until an acquisition is completed in accordance
with Rule 419. None of the Company's officers, directors, or promoters have, in
the past, used any particular consultant or advisor on a regular basis.
22
<PAGE>
BUSINESS
General
The Company was organized for the purpose of seeking, investigating, and
ultimately acquiring an interest in business with long-term growth potential.
Persons should not purchase Units in the offering if they expect short-term
earnings or appreciation in the value of the Company. The Company currently has
no commitment or arrangement to participate in a business and cannot now predict
what type of business it may enter into or acquire. It is emphasized that the
business objectives discussed herein are extremely general and are not intended
to be restrictive on the discretion of the Company's management.
Persons purchasing Units in the offering will be entrusting their funds to
the Company's management, subject to the requirements of Rule 419. The net
proceeds of the offering are not specifically allocated to identified purposes
or allocated to the acquisition of any specific type of business venture.
Decisions concerning these matters may be made by management without shareholder
action, except for the right of each investor to recover his pro rata portion of
the Deposited Funds in accordance with Rule 419.
(See "USE OF PROCEEDS.")
Management anticipates that it may be able to participate in only one
potential business venture, due primarily to the Company's limited financing.
This lack of diversification should be considered a substantial risk of
investing in the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will seek businesses from all known sources, but will rely principally
on personal contacts of its officers and directors and their affiliates, as well
as indirect associations between them and other business and professional
people. While it is not presently anticipated that the Company will engage
unaffiliated professional firms specializing in business acquisitions on
reorganizations, such firms may be retained if management deems it in the best
interest of the Company.
Compensation to a finder or business acquisition firm may take various
forms, including one-time cash payments, payments based on a percentage of
revenues or product sales volume, payments involving issuance of securities
(including those of the Company), or any combination of these or other
compensation arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services, but estimates that any fees for
such services paid in cash will not exceed 10% of the gross proceeds of this
offering and/or equity securities (not debt) equal to 10% of the amount of the
securities issued by the Company to acquire a business. If a finder or business
acquisition firm is utilized by the Company, the cost may be paid out of the net
proceeds of this offering. ( See "USE OF PROCEEDS.") The board of directors has
adopted a policy, which may be rescinded or amended only by majority vote of the
Company's stockholders who do not hold any common stock presently outstanding
(whether now held or hereafter acquired) and will expire by its terms on the
date an acquisition of a business venture is consummated, prohibiting the
payment, either directly or indirectly, of any finder's fee or similar
compensation to any person who has served as an officer or director of the
Company prior to the acquisition, or who is a promoter. While the board of
directors may seek a change in this policy prior to an acquisition, no change
may be made except by the vote specified.
23
<PAGE>
The Company will not restrict its search to any particular business,
industry, or geographical location, and management reserves the right to
evaluate and enter into any type of business in any location. The Company may
participate in newly organized business venture or a more established company
entering a new phase of growth or in need of additional capital to overcome
existing financial problems. Participation in a new business venture entails
greater risks since in many instances management of such a venture will not have
proved its ability, the eventual market of such venture's product or services
will likely not be established, and the profitability of the venture will be
unproven and cannot be predicted accurately. If the Company participates in a
more established firm with existing financial problems, it may be subjected to
risk because the financial resources of the Company may not be adequate to
eliminate or reverse the circumstances leading to such financial problems.
In seeking a business venture, the decision of management will not be
controlled by an attempt to take advantage of any anticipated or perceived
appeal of a specific industry, management group, product, or industry, but will
be based on the business objective of seeking long-term capital appreciation in
the real value of the Company. The Company will not acquire or merge with a
business or corporation in which the Company's officers, directors, or
promoters, or their affiliates or associates, have any direct or indirect
ownership interest. The board of directors has adopted a policy, which may be
rescinded or amended only by majority vote of the Company's stockholders who do
not hold any common stock presently outstanding (whether now held or hereafter
acquired) and will expire by its terms on the date and acquisition of a business
venture is consummated, prohibiting the acquisition of any business in which a
promoter or any person who has served as an officer or director of the Company,
or any of their affiliates or associates, held, directly or indirectly, any
ownership interest prior to the acquisition. While the board of directors may
seek a change in this policy prior to an acquisition, no change may be made
except by the vote specified.
The analysis of new businesses will be undertaken by or under the
supervision of the officers and directors (See "MANAGEMENT"). In analyzing
prospective businesses, management will consider, to the extent applicable, the
available technical, financial, and managerial resources, working capital and
other prospects for the future, the nature of present and expected competition;
the quality and experience of management services which may be available and the
depth of that management; the potential for further research, development, or
exploration; the potential for growth and expansion; the potential for profit;
the perceived public recognition or acceptance of products, services, or trade
or service marks; name identification; and other relevant factors.
It is possible that the Company may propose to acquire a business in the
development stage. A business is in the development stage if it is devoting
substantially all of its efforts to establishing a new business, and either
planned principal operations have not commenced or planned principal operations
have commenced but there has been not significant revenue therefrom. Under Rule
419 the Company must acquire a business or assets for which the fair value of
the business represents at least 80% of the offering proceeds, including funds
received or to be received from the exercise of Warrants, less certain
underwriting expenses. Accordingly, the Company's ability to acquire a business
in the development stage may be limited to the extent it cannot locate such
businesses with fair value high enough to satisfy the requirements of Rule 419.
The Company will be subject to requirements of Rule 419 and certain
reporting requirements under the Exchange Act and will, therefore, be required
to furnish certain information about significant acquisitions, including audited
financial statements for the company(s) acquired, covering one, two, or three
years, depending on the relative size of the acquisition. Consequently,
24
<PAGE>
acquisition prospects that do not have or are unable to obtain the required
audited statements which meet the requirements of Rule 419 and the Exchange Act
will not be appropriate for acquisition. The Company anticipates that it will
voluntarily prepare and file periodic reports under the Exchange Act,
notwithstanding the fact that such obligation may be suspended under sections
15(d) of the Exchange Act.
The decision to participate in a specific business may be based on
management's analysis of the quality of the other firm's management and
personnel, the anticipated acceptability of new products or marketing concepts,
the merit of technological changes, and other factors which are difficult, if
not impossible, to analyze through any objective criteria. It is anticipated
that the results of operations of a specific firm may not necessarily be
indicative of the potential for the future because of the requirement to
substantially shift marketing approaches, expand significantly, change product
emphasis, change or substantially augment management, and other factors.
The Company will analyze all available factors and make a determination
based on a composite of available facts, without reliance on any single factor.
The period within which the Company may participate in a business on completion
of this offering cannot be predicted and will depend on circumstances beyond the
Company's control, including the availability of businesses, the time required
for the Company to complete its investigation and analysis of prospective
businesses, the time required to prepare appropriate documents and agreements
providing for the Company's participation, and other circumstances. It is
anticipated that the analysis of specific proposals and the selection of a
business will take several months. Even after the Company has located a
prospective acquisition target, it will still have to comply with the
reconfirmation mandate of Rule 419, which may take months. Persons should not
purchase Units in this offering if they expect a short-term appreciation in the
value of the Company or its securities.
Acquisition of Business
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, or other reorganization
with another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without vote of
the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company would acquire a
higher percentage of equity ownership in the Company. Although the Company's
present shareholders did not acquire their shares of Common Stock with a view
towards any subsequent sale in connection with a business reorganization, it is
not unusual for affiliates of the entity participating in the reorganization to
negotiate to purchase shares held by the present shareholders in order to reduce
the number of "restricted securities" held by persons no longer affiliated with
the Company and thereby reduce the potential adverse impact on the public market
in the Company's Common Stock that could result from substantial sales of such
shares after the restrictions no longer apply. Public investors will not receive
any portion of the premium that may be paid in the foregoing circumstances.
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Furthermore, the Company's shareholders may not be afforded an opportunity to
approve or consent to any particular stock buy-out transaction. (See
"MANAGEMENT:Conflicts of Interest.")
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms of such
registration rights and the number of securities, if any, which may be
registered cannot be predicted, it may be expected that registration of
securities by the Company in these circumstances would entail substantial
expense to the Company. The issuance of substantial additional securities and
their potential sale into any trading market which may develop in the Company's
securities may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to structure the acquisition as a so-called
"tax-free" event under sections 351 or 368(a) of the Internal Revenue Code of
1986, (the "Code"). In order to obtain tax-free treatment under section 351 of
the Code, it would be necessary for the owners of the acquired business to own
80% or more of the stock of the surviving entity. In such event, the
shareholders of the Company, including investors in this offering, would retain
less than 20% of the issued and outstanding shares of the surviving entity.
Section 368(a)(1) of the Code provides for tax-free treatment of certain
business reorganization between corporate entities where on corporation is
merged with or acquires the securities or assets of another corporation.
Generally, the Company will be the acquiring corporation in such a business
reorganization, and the tax-free status of the transaction will not depend on
the issuance of any specific amount of the Company's voting securities. It is
not uncommon, however, that as a negotiated element of a transaction completed
in reliance on section 368, the acquiring corporation issue securities in such
an amount that the shareholders of the acquired corporation will hold 50% or
more of the voting stock of the surviving entity. Consequently, there is a
substantial possibility that the shareholders of the Company immediately prior
to the transaction would retain less than 50% of the issued and outstanding
shares of the surviving entity. Therefore, regardless of the form of the
business acquisition, it may be anticipated that the investors in this offering
will experience a significant reduction in their percentage of ownership in the
Company.
Notwithstanding the fact that the Company is technically the acquiring
entity in the foregoing circumstances, generally accepted accounting principles
will ordinarily require that such transaction be accounted for as if the Company
had been acquired by the other entity owning the business and, therefore, will
not permit a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on
the nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
It is possible that the Company will not have sufficient funds from the
proceeds of this offering to fully undertake such development, marketing, and
manufacturing of products which may be acquired. Accordingly, following the
acquisition of any such product rights, the Company may be required to either
seek additional debt or equity financing or obtain funding from third parties,
in exchange for which the Company would probably be required to give up a
portion of its interest in any acquired product. There is no assurance that the
Company will be able either to obtain additional financing or interest third
parties in providing funding for the further development, marketing, and
manufacturing of any products acquired.
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The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by each of the parties prior to such closing, will
outline the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms. It should
be expected that one of the conditions will be compliance with Rule 419, and
reconfirmation by investors representing at least 80% of the gross proceeds of
the offering, after giving effect to the exercise of all Warrants included in
the Units sold in the offering.
It is anticipated that the investigation of specific businesses and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business, the costs
theretofore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business, the failure to consummate that transaction may result in the loss to
the Company of the related costs incurred which could materially adversely
affect subsequent attempts to locate and participate in additional businesses.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the Business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks to
investors herein, certain of which have been generally summarized in the "RISK
FACTORS" portion of this prospectus. The specific risks of a given business
cannot be predicted at the present time.
Leverage
The Company may be able to participate in a business involving the use of
leverage. Leveraging a transaction involves the acquisition of a business
through incurring indebtedness for a portion of the purchase price of that
business, which is secured by the assets of the business acquired.
One method by which leverage may be used is that the Company would locate
an operating business available for sale and arrange for the financing necessary
to purchase such business. Acquisition of a business in this fashion would
enable the Company to participate in a larger venture that its limited funds
would permit, or use less of its funds to acquire a business and thereby commit
its remaining funds to the operations of the business acquired.
Leveraging a transaction would involve significant risks due to the fact
that the borrowing involved in a leveraged transaction will ordinarily be
secured by the combined assets of the Company and the business to be acquired.
If the combined enterprises are not able to generate sufficient revenues to make
payments on the debt incurred to acquire the business, the lender would be able
to exercise the remedies provided by law or by contract and foreclose on
substantially all of the assets of the Company. Consequently, the Company's
participation in a leveraged transaction may significantly increase the risk of
loss to the Company. During periods when interest rates are relatively high, the
benefits of leveraging are not as great as during periods of lower interest
rates because the investment in the business held on a leveraged basis will only
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be profitable if it generates sufficient revenues to cover the related debt and
other costs of the financing.
The likelihood of the Company obtaining a conventional bank loan for a
leveraged transaction would depend largely on the business being acquired and
its perceived ability to generate sufficient revenues to repay the debt.
Generally, businesses suitable for leveraging are limited to those with
income-producing assets that are either in operation or can be placed in
operation relatively quickly. The Company cannot predict whether it will be able
to locate any such business. As a general matter it may be expected that the
Company will have few, if any, opportunities to examine businesses where
leveraging would be appropriate.
Even if the Company is able to locate a business where leveraging
techniques may be used, there is no assurance that financing for the acquisition
will be available or, if available, on terms acceptable to the Company. Lenders
from which the Company may obtain funds for purposes of a leveraged buy-out may
impose restrictions of the future borrowing, dividend, and operating policies of
the Company. It is not possible at this time to predict the restrictions, if any
which lenders may impose or the impact thereof on the Company.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which
the Company may be subject until it has acquired an interest in a business. The
use of assets and/or conduct of businesses which the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their more substantial financial resources and prior experience in business.
There is no assurance that the Company will be successful in obtaining suitable
investments.
Offices
The Company utilizes office space at 901 Chestnut Street, Suite A,
Clearwater, Florida 34616, provided by a private company owned by Gerald L.
Couture, an officer, director, and principal shareholder of the Company. The
Company will not pay rent for this office space. The Company will reimburse
clerical and office expenses, such as telephone charges, copy charges, overnight
courier service, travel expenses, and similar costs incurred by Gerald L.
Couture on Company matters, which is estimated will not exceed, on average,
$1,000 per month.
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Employees
The Company is a development stage company and currently has no employees.
Executive officers, who are not compensated for their time contributed to the
Company, will devote only such time to the affairs of the Company as they deem
appropriate. (See "MANAGEMENT.") Management of the Company expects to use
consultants, attorneys, and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
businesses. The need for employees and their availability will be addressed in
connection with a decision whether or not to acquire or participate in a
specific business industry.
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PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the date of this prospectus, the
aggregate number of shares of Common Stock of the Company owned of record or
beneficially by each person who owned of record, or is known by the Company to
own beneficially, more than 5% of the Company's Common Stock, and the name and
shareholdings of each officer and director and all officers and directors as a
group:
- --------------------------------------------------------------------------------
Percent
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Number
of Shares Before
Owned(1) Offering After Offering
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name and Address(2) Minimum Maximum
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gerald Couture
901 Chestnut Street,
Suite A 40,000 33.3% 9.5% 5.6%
Clearwater, FL 34616
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael T. Cronin
911 Chestnut Street
Clearwater, FL 34616 40,000 33.3% 9.5% 5.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lawrence Steinberg
2 Lincoln Centre
5420 LBJ Freeway,
Suite 540, LB 56
Dallas, TX 75240 40,000 33.3% 9.5% 5.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
All Officers and Directors
As a Group (3 persons) 120,000 100% 28.6% 16.7%
- --------------------------------------------------------------------------------
- ----------------------------
(1) All shares are held beneficially and of record, and each record
shareholder has sole voting, investment and dispositive power.
(2) The persons listed are all of the officers, directors and promoters of
the Company.
Officers and Directors
The following table sets forth the names, age, and position of each
director and executive officer of the Company.
- --------------------------------------------------------------------------------
Name Age Position and Office Held
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gerald Couture 51 Chief Executive Officer,
Chief Financial Officer,
Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael T. Cronin 41 Secretary, Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lawrence Steinberg 60 Vice President, Director
- --------------------------------------------------------------------------------
The above individuals are the persons responsible for founding and
organizing the business of the Company, and each became an officer and director
of the Company in connection with its organization in August 1993. The term of
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office of each officer and director is one year and until his successor is
elected and qualified.
Officers and directors will not be compensated for the time they devote to
the Company's affairs. Each officer and director will devote only such time to
the business affairs of the Company as he or she deems appropriate. (See
"Conflicts of Interest" below.)
Biographical Information
Set forth below is biographical information for each of the Company's
officers and directors. No person other than the Company's officers and
directors will perform any management functions for the Company. Consequently,
investors will be relying on the general business acumen and experience of the
Company's management and should critically assess the information set forth
below.
Gerald Couture is a principal in Couture & Company, Inc., a corporate
financial consulting firm he founded in 1980. Mr. Couture has been director
and/or officer of several corporations over the past ten years. These include
Medical Technology Systems, Inc. from August, 1987 to October 15, 1996; which
completed a Chapter 11 Bankruptcy reorganization proceeding in 1996; Cinema
North Corporation and affiliates from June, 1983 to date; Smith & Wesson Knives,
Inc., from March, 1988 to December, 1992; Prime Container Corp., June, 1985 to
December, 1992; Vermont Manufacturing Corporation from March, 1975 to December,
1992.
Michael T Cronin, has been a practicing attorney with the law firm of
Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., in Clearwater, Florida
since 1983. Mr. Cronin concentrates his practice in securities and corporate
law.
Lawrence Steinberg, has been a practicing attorney for over 35 years.
Since April 1994, he has been "Of Counsel" with Jenkens & Gilchrist, P.C.,
Dallas, Texas. Prior to that time, for over 20 years, he was either a
shareholder or partner with Johnson & Steinberg, P.C. and its predecessor
partnership. Also, Mr. Steinberg has been an active investor in real estate and
venture capital investments. From July 1992 to January 1997, he was Chief
Executive Officer and Principal Shareholder of a corporation, which has owned
and operated a television station in Charleston, South Carolina. In addition, he
is currently the owner of a corporation which owns and operates video stores.
Conflicts of Interest; Prior Participation Blank Check Companies
Each of the officers and directors of the Company has other professional
and business interests to which he devotes his primary attention. Each may
continue to do so notwithstanding the fact that management time should be
devoted to the business of the Company.
The Company has no arrangement, understanding, or intention to enter into
any transaction or participate in any business venture with any officer,
director, or principal shareholder or with any firm or business organization
with which they are affiliated, whether by reason of stock ownership, position
as officer or director, or otherwise. The board of directors has adopted a
policy limiting the circumstances under which the Company may enter into such
transactions. Although it is believed that the policy adopted by the Company
will help to resolve conflicts of interest, there can be no assurance that such
policies will be successfully implemented or that, if implemented, conflicts
will be satisfactorily resolved in the best interests of the Company.
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In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. A conflict of interest is inherent in this situation
since the Company's officers and directors will be negotiating for the
acquisition on behalf of the Company and for sale of their Common Stock for
their own respective accounts. Management has not adopted any policy for
resolving the foregoing potential conflicts, should they arise.
Lawrence Steinberg, an officer and director of the Company, has served as
a founder, officer, and director of other companies formed with the express
purpose of seeking available businesses. Mr. Steinberg is not presently
associated with any "blank check" issuer other than the Company, nor is he
presently seeking acquisition targets but is expected to do so after the
effectiveness of this prospectus. It should be expected that all of the officers
and directors will form and promote other "blank check" companies in the future.
Any such activities by management are not, in the opinion of management, a part
of a single plan of financing, and the board of directors has adopted a policy,
which may be rescinded or amended only by majority vote of the Company's
stockholders who do not hold any common stock presently outstanding (whether now
held or hereafter acquired) and will expire by its terms on the date an
acquisition of a business venture is consummated, prohibiting the Company from
participating in a business acquisition with any other "blank check" company in
which any person who has served as an officer or director of the Company prior
to the acquisition holds directly, or indirectly, any ownership interest. While
the board of directors may seek a change in this policy prior to any
acquisition, no change may be made except by the vote specified. Certain
conflicts of interest are inherent in the participation of the Company's
officers and directors as shareholders in other "blank check" companies, which
may be difficult, if not impossible, to resolve in all cases in the best
interests of the Company. Failure by management to conduct the Company's
business in its best interests may result in liability of management of the
Company to the shareholders. In order to mitigate any potential conflict, each
of the officers, directors, and promoters of the Company has undertaken in
writing not to participate as an officer or director in any "blank check"
company that files a registration statement under the Securities Act of 1933,
prior to the date the Company identifies a business it proposes to acquire which
meets the acquisition criteria of Rule 419, or the date six months following the
date of this prospectus, whichever occurs first.
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<PAGE>
CERTAIN TRANSACTIONS
Purchase of Stock At Organization
In connection with organizing the Company, its officers and directors,
paid an aggregate of $600 in cash to purchase a total of 120,000 shares of
Common Stock at a sales price of $0.005 per share. These transactions were not
the result of arm's length negotiation. All of the shares of Common Stock
presently issued and outstanding are "restricted securities" as that term is
defined under the Securities Act and, as such, may not be sold in the absence of
registration under the Securities Act or the availability of an exemption
therefrom. Under current law, such shares could not be sold for a period of two
years from the date on which they are purchased, and then only under limited
circumstances. (See "DESCRIPTION OF SECURITIES.")
Affiliate Advances
Messrs. Couture, Cronin and Steinberg will make additional advances as
required to cover the Company's expenses through completion of the offering. The
advances do not bear interest, and will be repaid out of the net proceeds of the
offering, if successful. In the event the offering is not successful, it is not
expected that Messrs. Couture, Cronin and Steinberg will be able to recoup their
advances.
Other Arrangements
The Company has no agreement or understanding, express or implied, with
any officer, director, or promoter, or their affiliates or associates, regarding
employment with the Company or compensation for services. The Company has no
plan, agreement, or understanding, express or implied, with any officer,
director, or promoter, or their affiliates or associates, regarding the issuance
to such persons of any shares of the Company's authorized and unissued Common
Stock. The existing officers and directors reserve the right to acquire Units in
this offering. There is no understanding between the Company and any of its
present shareholders regarding the sale of a portion or all of the Common Stock
currently held by them in connection with any future participation by the
Company is a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers, directors, principal shareholders, or
promoters, or any of their affiliates or associates, would receive funds, stock,
or other assets in connection with the Company's participation in a business. No
advances have been made or contemplated by the Company to any of its officers,
directors, principal shareholders, or promoters, or any of their affiliates or
associates.
Upon acquisition of a business, it is possible that current management
will resign and be replaced by persons associated with the business acquired,
particularly if the Company participates in a business by effecting a stock
exchange, merger, or consolidation as discussed under "BUSINESS." In the event
that any member of current management remains after effecting a business
acquisition, that member's time commitment and compensation will likely be
adjusted based on the nature and location of such business and the services
required, which cannot now be foreseen.
33
<PAGE>
DESCRIPTION OF SECURITIES
Units
The Units offered hereby consist of 60 shares of Common. The Common Stock
is immediately detachable on delivery from the escrow required by Rule 419, so
that the Common Stock can be separately transferable on issuance.
(See "COMMON STOCK" and "WARRANTS," below.)
Common Stock
The Company is authorized to issue 15,000,000 shares, consisting of
10,000,000 shares of Common Stock, par value $0.0001 per share, of which 120,000
shares are issued and outstanding, and 5,000,000 shares of preferred stock, par
value $0.001 (the "Preferred Stock"), of which no shares have been issued.
Holders of Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of shareholders. Shares of Common Stock do
not carry cumulative voting rights and, therefore, holders of a majority of the
outstanding shares of Common Stock will be able to elect the entire board of
directors, and, if they do so, minority shareholders would not be able to elect
any members to the board of directors. The Company's board of directors has
authority, without action by the Company's shareholders, to issue all or any
portion of the authorized but unissued shares of Common Stock, which would
reduce the percentage ownership in the Company of its shareholders and which may
dilute the book value of the Common Stock.
Shareholders of the Company have no pre-emptive rights to acquire
additional shares of Common Stock. The Common Stock is not subject to redemption
and carries no subscription or conversion rights. In the event of liquidation of
the Company, the shares of Common Stock are entitled to share equally in
corporate assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable.
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally available
for the payment of dividends. The Company has not paid dividends on its Common
Stock and does not anticipate that it will pay dividends in the foreseeable
future.
Preferred Stock
The Company's board of directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
Preferred Stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series. The Preferred Stock, if and when issued, may carry rights
superior to those of the Common Stock.
The Company considers it desirable to have a class or classes of Preferred
Stock available to provide increased flexibility in structuring possible future
acquisitions and financings and in meeting corporate needs which may arise. If
opportunities arise that would make it desirable to issue Preferred Stock
through either public offerings or private placements, the provision for these
classes of stock in the Company's certificate of incorporation would avoid the
possible delay and expense of a shareholder's meeting, except as may be required
by law or regulatory authorities. Issuance of the Preferred Stock would result,
however, in a series of securities outstanding that may have certain preferences
with respect to dividends, liquidation, redemption, and other matters superior
to over the Common Stock which would result in dilution of the income per share
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<PAGE>
and net book value of the Common Stock. Issuance of additional Common Stock
pursuant to any conversion right which may be attached to the Preferred Stock
may also result in the dilution of the net income per share and net book value
of the Common Stock. The specific terms of any series of Preferred Stock will
depend primarily on market conditions, terms of a proposed acquisition or
financing, and other factors existing at the time of issuance. Therefore, it is
not possible at this time to determine the respects in which a particular series
of Preferred Stock will be superior to the Company's Common Stock. The board of
directors does not have any specific plan for the issuance of Preferred Stock at
the present time and does not intend to issue any such stock on terms which it
deems are not in the best interests of the Company and its shareholders.
Resale of Outstanding Shares.
All 120,000 shares of the Common Stock presently issued and outstanding
are "restricted securities" as that term is defined in Rule 144 adopted under
the Securities Act of 1933 which provides, in essence, that as long as there is
publicly available current information about the Company, a person holding
restricted securities for a period of at least two years may sell in each 90-day
period, provided he is not part of a group acting in concert, an amount equal to
the greater of the average weekly trading volume of the stock during the four
calendar weeks preceding the sale or 1% of the Company's outstanding Common
Stock. Consequently, beginning in December, 1998, 120,000 shares of Common Stock
currently issued and outstanding will have been held for two years within the
meaning of Rule 144 and may be eligible for resale in accordance with such
volume restrictions. Sales under Rule 144 or otherwise may, in the future, have
a depressive effect on the price of the Company's Common Stock in any market
which may develop.
Transfer Agent
Upon the closing of this offering, he transfer agent for the Company's
securities will be Continental Stock Transfer & Trust Company, New York, New
York.
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<PAGE>
UNDERWRITING
Plan of Distribution
Pursuant to an underwriting agreement (the "Underwriting Agreement"), the
Company has engaged Cortlandt Capital Corporation, the Underwriter, as its
exclusive agent to sell 10,000 Units to the public on a "best efforts" basis.
There can be no assurance that any of the Units will be sold. If the Underwriter
fails to sell at least 5,000 Units within three months from the effective date
of this prospectus (unless extended by the Company and Underwriter for an
additional period not to exceed three months), the offering will be terminated
and subscription payments will be promptly refunded in full to subscribers,
without paying interest or deducting expenses.
All subscriptions payments should be made payable to "Chase Manhattan
Bank, N.A. - Alpha Resources, Inc. Escrow Account." The subscription payments
will be deposited by the Underwriter no later than noon of the next business day
following receipt into an escrow account maintained by Chase Manhattan Bank. The
escrow agent will hold all subscription payments pending the sale of the minimum
number of Units within the specified period. Such subscription payments will
only be withdrawn from the escrow account for the purpose of paying the
underwriting and offering expenses and establishing the escrow for the Deposited
Funds under Rule 419, or for the purpose of refunding subscriptions to investors
(without interest and without deduction for offering expenses) if the minimum
number of Units is not sold.
If the minimum number of Units is sold within the specified period, the
net offering proceeds, after deduction for underwriting commissions and offering
expenses, estimated at $18,300, if the entire offering is sold, and $14,400, if
only the minimum offering is sold, and the securities to be issued to investors
will be deposited in an escrow account. While held in the escrow account, the
securities may not be traded or transferred. Except for an amount up to 10% of
the Deposited Funds (estimated at $5,220, if the entire offering is sold, or at
$2,610, if only the minimum offering is sold), which is otherwise releasable
under the rule, the Deposited Funds and the deposited Securities may not
released until an acquisition meeting certain specified criteria has been made
and sufficient number of investors reconfirm their investment in accordance with
the procedures set forth in Rule 419. Pursuant to these procedures, a new
prospectus, which describes an acquisition candidate and its business and
includes audited financial statements, will be delivered to all investors. The
Company must return the pro rata portion of the Deposited Funds to any investor
who does not elect to remain an investor. Unless a sufficient number of
investors elect to remain investors, all investors will be entitled to the
return of a pro rata portion of the Deposited proceeds (and any interest earned
thereon), and none of the Deposited Securities will be issued to investors. In
the event an acquisition is not consummated within 18 months of the effective
date, the Deposited Funds will be returned in a pro rata basis to all investors.
(See "PROSPECTUS SUMMARY: Investors' Rights to Reconfirm Investment Under Rule
419").
The public offering price of the Units was determined by the Company after
consultation with the Underwriter and is based arbitrarily upon various
considerations, including market conditions and other factors. The public
offering price does not bear any relationship to the assets, book value of the
Company, or other traditionally recognized criteria or indicia of value. The
Company's officers and directors may acquire a substantial amount of the shares
in this offering.
The Underwriter will receive a sales commission of 10% or $0.60 per Unit.
The Company has also agreed to pay the Underwriter a non-accountable expense
allowance equal to 3% of the gross proceeds of the offering $1,800 if the entire
offering is sold and $900 if only the minimum offering is sold. The Underwriter
has advised the Company that it proposes to allow concessions to certain
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<PAGE>
selected dealers who are members of the National Association of Securities
Dealers. The amount of such concessions will be determined through negotiations
between the Underwriter and the selected dealers or between such selected
dealers and other dealers, as the case may be.
The Company has agreed to indemnify the Underwriter, and the Underwriter
has agreed to indemnify the Company against certain liabilities, including
liabilities under the Securities Act. In the opinion of the Securities and
Exchange Commission, such indemnification is against the public policy as
expressed in the Securities Act and is, therefore, unenforceable.
The foregoing is a summary of the principal terms of the Underwriting
Agreement, which summary does not purport to be complete. For all the terms of
the Underwriting Agreement, reference is made to a copy thereof which is on file
as an exhibit to the registration statement of which this prospectus forms a
part.
Underwriter Warrants
On the sale of the minimum number of Units offered hereby, the Company
will sell to the Underwriter, at price of $0.01 each, warrants ("Underwriter
Unit Warrants") to purchase units ("Underwriter Units"), each Underwriter Unit
consisting of sixty shares of Common Stock. The number of Underwriter Unit
Warrants sold to the Underwriter shall equal 10% percent of the total number of
Units sold to the public in the offering, or a maximum 1,000 Underwriter Unit
Warrants. The Underwriter Unit Warrants are exercisable for a period of four
years commencing one year after the date hereof. The exercise price of the
Underwriter Unit Warrants will be $7.20 per unit. The Underwriter Unit Warrants
are non-transferable for one year, except to officers of the Underwriter, or
officers or partners of selling group members. The Underwriter Warrants are
exercisable for a term of four years from the date the Underwriter Unit Warrants
are exercised. The Underwriter Unit Warrants are protected against dilution on
the occurrence of certain events, such as stock dividends, split-ups, and
reclassifications. The holder of the Underwriter Unit Warrants have no voting,
dividend, or other rights as stockholders of the Company with respect to shares
underlying the Underwriter Unit Warrants unless such warrants have been
exercised.
At any time during the period in which the Underwriter Unit Warrants are
exercisable, the Company is obligated to offer the holders the right to register
the Common Stock issuable on exercise thereof in any registration statement
filed by the Company. In addition, the holders are also granted the right to
demand registration on one occasion only. The Company has agreed to pay the
costs, including legal, accounting, and other costs, incurred in connection with
such registration.
During the life of the Underwriter Unit Warrants, the holders thereof are
given, a nominal cost, the opportunity to profit from a rise in the market price
of the Common Stock with a resulting dilution in the interest to the other
holders of Common Stock. The holders of the Underwriter Unit Warrants can be
expected to exercise such warrants at a time when the Company would, in all
likelihood, be able to obtain needed capital from an offering of its unissued
Common Stock on terms more favorable to the Company than those provided for by
the Underwriter Unit Warrants. Such circumstances may adversely affect the terms
on which the Company can obtain additional financing.
37
<PAGE>
LITIGATION
The Company is not a party to any material pending legal proceedings and
no such action by or, to the best of its knowledge, against the Company has been
threatened.
38
<PAGE>
LEGALITY OF SHARES
Michael T. Cronin, Esq., counsel to the Company will render an opinion
that the Common Stock being offered hereby, when issued, will be fully paid and
non-assessable under the corporation law of the State of Delaware.
Michael T. Cronin is a shareholder of the Company.
39
<PAGE>
EXPERTS
The financial statements included in this prospectus, to the extent and
for the periods indicated in its report, have been included herein and in the
registration statement in reliance on the report of Pender, Newkirk and Company,
the Company's independent certified public accounts, given on the authority of
such firm as experts in accounting and auditing.
40
<PAGE>
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission a
registration statement, SEC File No. 333-22693, under the Securities Act of
1933, as amended, with respect to the securities offered by this prospectus.
This prospectus omits certain information contained in the registration
statement. For further information, reference is made to the registration
statement and to the exhibits filed therewith. Statements contained in this
prospectus as to the contents of any contract or other document referred are not
necessarily complete, and where such contract or other document is an exhibit to
the registration statement, such statement is deemed to be qualified and
amplified in all respects by the provisions of the exhibit. The complete
registration statement, including exhibits, is not available to the public at
the Southeast Regional Office, Atlanta District Office, but may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission at 450 Fifth Street, NW, Washington, DC 20549, at its
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, NY 10048,
and at its Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies may be obtained from the public reference
facilities maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
41
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Financial Statements
Contents
Page
------
Independent Auditor's Report on Financial Statements F-2
Financial Statements:
Balance Sheet F-3
2
Statement of Changes in Stockholders' Equity F-4
Operating Statement F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
i
<PAGE>
Independent Auditors' Report
Board of Directors
Alpha Resources, Inc.
Clearwater, Florida
We have audited the accompanying balance sheet of Alpha Resources, Inc. as of
January 15, 1997 and the related statements of changes in stockholders' equity,
and cash flows for the period January 13, 1997 (date of inception) to January
15, 1997. These financial statements are the responsibility of the management of
Alpha Resources, Inc. 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.
These 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 Alpha Resources, Inc. as of
January 15, 1997 and the results of its operations and its cash flows for the
period then ended in conformity with generally accepted accounting principles.
Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
July 9, 1997
F-2
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
--------
January 15, 1997 March 31, 1997
---------------- --------------
(unaudited)
Current assets:
Cash $ 15,600 $ 11,139
Organization expense 500 1,112
-------- --------
$ 16,100 $ 12,251
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accrued expenses and interest $ 500 $ 391
Loans payable - stockholders 15,000 15,000
-------- --------
$ 15,500 $ 15,391
Stockholders' equity:
Preferred stock, $.001 par value:
Authorized - 5,000,000
Issued or outstanding - none
Common stock, $.001 par value:
Authorized - 10,000,000
Issued and outstanding - 120,000 120 120
Additional paid-in capital 480 480
Retained earnings (deficit) 0 $(3,740)
-------- --------
Total stockholders' equity (deficit) $ 600 $(3,140)
-------- --------
$ 16,100 $ 12,251
======== ========
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-3
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
For the Period from Inception (January 13, 1997) to March 31, 1997
Total Additional
Stockholders' Common Paid-in Retained
Equity Stock Capital Earnings(deficit)
------ ----- ------- -----------------
Issuance of 120,000 shares of
common stock $ 600 $ 120 $ 480
------ ------ ------
Balance, January 15, 1997 $ 600 $ 120 $ 480
====== ====== ======
Net loss for period ($3,740) $ 0 $ 0 ($3,740)
(unaudited) -------- ------ ------ --------
Balance, March 31, 1997 ($3,140) $ 120 $ 480 ($3,740)
(unaudited) ======== ====== ====== ========
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-4
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Operating Statement
For the Period from Inception (January 13, 1997) to March 31, 1997
(Unaudited)
Quarter Ending
March 31, 1997
--------------
Revenues $ 0
Less: General & Administrative Expense 3,740
--------
Profit (loss) before tax $(3,740)
Taxes $ 0
--------
Net Income (loss) $(3,740)
========
The Accompanying Notes Are An Integral Part Of The Financial
Statements
F-5
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period from Inception (January 13, 1997) to March 31, 1997
(Unaudited)
Cash flows from operating activities:
Net income (loss) $ (3,740)
Adjustment to record net loss to net cash used by operations:
Add: Amortization 59
---------
Increase in accrued expenses $ 391
---------
Net cash used by operating activities (3,290)
---------
Cash flows from financing activities:
Proceeds from issuance of common stock $ 600
Proceeds from loans payable - stockholders 15,000
---------
Net cash used by financing activities 15,600
---------
Cash flows from investing activities:
Organization costs $ 1,171
---------
Net cash used by investing activities 1,171
---------
Cash at March 31, 1997 $ 11,139
=========
The Accompanying Notes Are An Integral Part Of The Financial
Statements
F-6
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements For the Period from
Inception (January 13, 1997) to March 31, 1997
Note I - Background
----------
Alpha Resources, Inc. (the "Company") was incorporated January 13, 1997 in the
State of Delaware, and has been in the development stage since its formation.
The Company intends to effect a merger, exchange of capital stock, asset
acquisition, or other similar business combination or acquisition with a
business entity. The Company has not identified any specific business or company
to fulfill it intentions.
The Company plans to register its securities with the Securities and Exchange
Commission and offer certain securities in a "blank check" offering subject to
Rule 419 of the Securities Act of 1933.
Note 2 - Summary of Significant Accounting Policies
------------------------------------------
Accounting Estimates
--------------------
The preparation of financial statements requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Income Taxes
------------
The Company plans to file its income taxes on a calendar year basis. Deferred
income taxes are provided for when transactions are reflected in income for
financial reporting purposes in a year other than the year of their inclusion in
taxable income. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Concentration of Credit Risk
----------------------------
The Company maintains cash balances at a bank. The account is insured by the
Federal Deposit Insurance Corporation up to $100,000.
Note 3 - Related Party Transactions
--------------------------
The Company has received $15,000 of loans from the three shareholders of the
Company. These loans are due on demand and bear interest at 8% per annum and are
unsecured. These shareholders are also officers and directors of the Company.
One shareholder is also providing office space to the Company at no charge,
pursuant to an oral agreement. The agreement remains in effect until a business
combination is consummated or until any escrow held from the offering is
terminated, upon thirty days prior written notice by either party to the
agreement.
F-7
<PAGE>
No dealer, salesperson, or any other individual has been authorized to give any
information or make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Underwriters. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances, create an implication that there has
not been any change in the facts set forth in this Prospectus or in the affairs
of the Company since the date hereof.
TABLE OF CONTENTS
Page
Available Information.......................... 5
Prospectus Summary............................. 8
The Company.................................... 8
Risk Factors................................... 12
Dilution....................................... 19
Comparative Data............................... 20
Use of Proceeds................................ 21
Business....................................... 23
Principal Shareholders......................... 30
Certain Transactions........................... 33
Description of Securities...................... 34
Underwriting................................... 36
Litigation..................................... 38
Legality of Shares............................. 39
Experts........................................ 40
Further Information............................ 41
Financial Statements........................... F-1
ALPHA RESOURCES, INC.
10,000 Units
600,000 SHARES OF
COMMON STOCK
----------------
PROSPECTUS
----------------
----------------
___1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
-----------------------------------------
The Certificate of Incorporation (the "Certificate") provides that a
Director shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a Director, except, (i) for any
breach of the duty of loyalty; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or knowing violations of laws; (iii) for
liability under Section 174 of the Delaware General Corporation Law (the
"Delaware GCL") (relating to certain unlawful dividends, stock repurchases or
stock redemptions); or (iv) for any transaction from which the Director derived
any improper personal benefit. Article 3 of the Company's Certificate, included
as Exhibit 3 hereto, provides that the Company shall indemnify each Director and
such of the Company's officers, employees and agents as the Board of Directors
shall determine from time to time to the fullest extent provided by the Delaware
GCL.
Article I of the Company's Bylaws, included in Exhibit 3B hereto,
provides, in general, that the Company shall indemnify its directors and
officers under the circumstances specified in the Delaware GCL and gives
authority to the Company to purchase insurance with respect to such
indemnification.
Item 25. Other Expenses of Issuance and Distribution
-------------------------------------------
The estimated expenses in connection with the issuance and distribution of
the securities being registered hereby.
Securities and Exchange Commission registration fee............... $ 25
National Association of Securities Dealers, Inc.examination fee... 500
Accounting fees and expenses...................................... 3,200
Legal fees and expenses........................................... 7,500
Printing and engraving expenses................................... 2,000
Blue Sky fees and expenses(including legal fees).................. 5,000
Transfer Agent and Registrar fees and expenses.................... 2,000
Miscellaneous..................................................... 500
TOTAL................................................... 20,725
* Estimates
The Registrant will bear all expenses listed above.
II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities
---------------------------------------
The Company has issued 120,000 shares of its Common Stock to its three
(3) founders.
For such transactions, the Company relied upon Section 4(2) of the
Securities Act of 1933 as an exemption available from the registration
requirements of Section 5 of the Securities Act of 1933 for transactions by an
issuer not involving a public offering. The securities were issued to a
purchaser who represented, in a manner satisfactory to the Company, that it had
acquired the securities for investment and not with the view of the distribution
thereof. The transaction described or referred to above did not involve an
underwriter, and no discount or commission was paid in connection therewith. No
advertising or general solicitation was employed by the Company in offering the
securities and no commissions were paid in connection with the sales thereof.
The securities of the Company issued to the purchasers have been embossed with
the legend restricting transfer of such securities. A stop transfer order
concerning the transfer of the certificates representing all the common stock
issued and outstanding as indicated above has been noted on the Company's stock
transfer ledger.
II-2
<PAGE>
Item 27. Exhibits and Financial Statement Schedule.
------------------------------------------
10.1 Form of Underwriting Agreement (1)
10.2 Form of Selected Dealers Agreement (1)
10.3 Form of Underwriter's Warrant (1)
10.4 Form of Proceeds Escrow Agreement (1)
10.5 Certificate of Incorporation (1)
10.6 By-Laws (1)
10.7 Opinion re: Legality and Consent of Counsel (2)
10.8 Consent of Pender, Newkirk & Co. , CPA (2)
- -------------------
(1) Previously filed.
(2) Filed herewith.
II-3
<PAGE>
Item 28. Undertakings.
-------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereto) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer, or
controlling person of the Company in the successful defense of any action, suit,
or proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-4
<PAGE>
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements of filing on this Amendment No.1 to Form SB-2 and
authorizes this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Clearwater, State of
Florida on July 9, 1997.
ALPHA RESOURCES, INC.
By: /s/ Gerald Couture
------------------
Gerald Couture, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Amendment No. 1 to Form SB-2 has been signed by the
following persons in the capacities and on the dates stated.
Signature Capacity Date
- --------- -------- ----
/s/Gerald Couture Chairman of the Board, July 9, 1997
- ----------------- Chief Executive Officer,
Gerald Couture Financial Officer, Chief
Accounting Officer, President,
Treasurer
/s/Michael T. Cronin Director, Secretary July 9, 1997
- --------------------
Michael T. Cronin
/s/Lawrence Steinberg Director July 9, 1997
- ---------------------
Lawrence Steinberg
II-6
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE>
- ------------------------------------------------------------------------
MICHAEL T. WILLIAMS, ESQ.
- ------------------------------------------------------------------------
2503 West Gardner Court
Tampa, FL 33611
July 9, 1997
Alpha Resources, Inc.
901 Chestnut Street
Unit A
Clearwater, FL 33416
Re: Registration Statement on Form SB-2, File No. 333-22673
Gentlemen:
I have acted as your counsel in the preparation on a Registration
Statement on Form SB-2 (the "Registration Statement") filed by you with the
Securities and Exchange Commission covering 60,000 units (the "Units"), each
Unit consisting of sixty shares of common stock, $.001 par value per share (the
"Common Stock").
In so acting, I have examined and relied upon such records, documents and
other instruments as in our judgment are necessary or appropriate in order to
express the opinion hereinafter set forth and have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies.
Based on the foregoing, I am of the opinion that:
(i) the Units and the Common Stock, when issued and delivered in the
manner and on the terms described in the Registration Statement
(after it is declared effective), will be duly and validly issued,
fully paid and nonassessable;
I hereby consent to the reference to my name in the Registration Statement
under the caption "Legal Matters" and to the use of this opinion as an exhibit
to the Registration Statement. In giving this consent, I do not hereby admit
that I come within the category of a person whose consent is required under
Section 7 of the Act, or the general rules and regulations thereunder.
Very truly yours,
/s/ Michael T. Williams
-----------------------
Michael T. Williams
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form SB-2, and any amendments, there to, to be filed
by Alpha Resources, Inc. of our Auditors' Opinion dated January 17, 1997,
accompanying the Financial Statements of Alpha Resources, Inc. as of January 15,
1997, and to the use of our name under the caption "Experts" in the Prospectus.
Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
July 9, 1997
