As filed with the Securities and Exchange Commission on June 8, 2000
Registration No. 333-22693
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
Post-Effective Amendment No. 1
to
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ALPHA RESOURCES, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
Delaware 6770 59-3422883
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(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
901 Chestnut Street, Suite A, Clearwater, FL 33756,(727) 447-3620
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(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 33756, (727) 447-3620
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(Name, address, including zip
code, and telephone number, including
area code, of agent for service)
Copies to:
Richard A. Friedman, Esq.
Sichenzia, Ross & Friedman LLP
135 West 50th Street, 20th Floor
New York, New York 10020
Tel: (212) 664-1200
Fax: (212) 664-7329
---------------
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
<TABLE>
<CAPTION>
------------------------------------------- ---------------- --------------- ----------------- ----------------
Amount to Proposed Proposed Maximum Amount of
------------------------------------------- ---------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Units (2) 20,000 Units $6.00 $120,000 $41.38
------------------------------------------- ---------------- --------------- ----------------- ----------------
Common Stock, $.001 par value (2) 1,200,000 N/A N/A N/A
------------------------------------------- ---------------- --------------- ----------------- ----------------
Total $41.38 *
===============================================================================================================
</TABLE>
* Previously paid.
(1) Estimated solely for the purpose of determining the registration fee.
(2) Includes an aggregate of 1,200,000 shares of Common Stock to be offered to
the public in 20,000 Units. Each Unit consists of 60 shares of Common
Stock.
--------------
<PAGE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
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
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<TABLE>
<S> <C>
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, Promoters, MANAGEMENT
and Control Persons
11. Security Ownership of Certain Beneficial PRINCIPAL SHAREHOLDERS
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
<PAGE>
17. Management's Discussion and Analysis NOT APPLICABLE
or Plan of Operations
18. Description of Property BUSINESS
19. Certain Relationships and Related Transactions CERTAIN 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
</TABLE>
<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.
PROSPECTUS
ALPHA RESOURCES, INC.
A Minimum of 10,000 Units
and
A Maximum of 20,000 Units
Offering Price: $6.00 Per Unit
A minimum of 10,000 Units and a maximum of 20,000 Units at a price of
$6.00 per Unit are being offered by Alpha Resources, Inc. (the "Company"). Each
Unit consists of 60 shares of common stock, par value $0.001 per share (the
"Common Stock"), of the Company. The offering price of the Units has been
arbitrarily determined by the Company, and bears no relationship to the assets
or book value of the Company or any other recognized criteria of value. (See
"DESCRIPTION OF SECURITIES" and "PLAN OF DISTRIBUTION"). This offering (the
"Offering") shall be completed and shall terminate no later than ninety (90)
days from the date of this Prospectus (or up to a total of one hundred eighty
(180) days from the date of this Prospectus, at the option of the Company). If
the Company does not sell at least 10,000 Units prior to termination of this
offering within such time period, all proceeds received will be promptly
refunded to subscribers, in full, without interest or 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 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 Deposited Securities may
not be traded or transferred. Except for an amount up to 10% of the Deposited
Funds (estimated at $12,000, if the entire Offering is sold, or at $6,000, 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 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 Funds (without 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 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. (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.
<TABLE>
<CAPTION>
----------------------------- ----------------------------- ---------------------------- ----------------------------
Underwriting
Offering Price Discounts and Proceeds
to public Commissions (1) to Company(2)
----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Per Unit Total (3) $ 6.00 -- 6.00
----------------------------- ----------------------------- ---------------------------- ----------------------------
Minimum $60,000 -- 60,000
----------------------------- ----------------------------- ---------------------------- ----------------------------
Maximum $120,000 -- 120,000
----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
The date of this Prospectus is June __, 2000
ALPHA RESOURCES, INC.
<PAGE>
(1) No underwriting discount or commission will be paid to any person in
connection with this Offering. Upon completion of this Offering, the
entire proceeds of this Offering will be received by the Company.
(2) Before deducting expenses of the Offering payable by the Company
estimated at $27,000.
(3) The Offering is being conducted by the Company on a best efforts
"10,000 Unit minimum, 20,000 Unit maximum" basis. In the event that a
minimum of 10,000 Units having a gross subscription price of $60,000 is
not sold within 90 days following the effective date of this Prospectus
(unless extended by the Company for an additional period not to exceed
an additional 90 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 Continental Stock Transfer & Trust
Company 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 deposited in escrow unless and until the minimum Offering period
expires. In the event the minimum number of Units is sold within the
Offering period, the Offering will continue until (i) three months
following the date of this Prospectus, (ii) all 20,000 Units are sold,
or (iii) the Offering is terminated by the Company, whichever occurs
first. (See "PLAN OF DISTRIBUTION"). Assuming 10,000 Units are 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. Such release 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.
THE UNITS HAVE BEEN REGISTERED ONLY IN THE STATE OF NEW YORK AND MAY
ONLY BE SOLD TO PERSONS WHO ARE RESIDENTS OF SUCH STATE. 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 COMMON STOCK UNDERLYING THE
UNITS PROHIBITING SALE OF THE UNITS AND/OR COMMON STOCK IN THE STATES OF
CONNECTICUT, IDAHO, AND SOUTH DAKOTA.
The Units are offered by the Company, subject to prior sale and
withdrawal or cancellation of the Offering, without notice, by the Company.
Offers to purchase and sales by the Company are subject to: (a) acceptance by
the Company; (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 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 or directors will participate in the
making of this Offering other than by the delivery of this Prospectus or by
responding to inquiries by prospective purchasers. Such responses shall be
limited to the information contained in the Registration Statement of which this
Prospectus is a part. 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 proposes 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.
<PAGE>
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 240,000 shares of Common Stock
have been issued, of which 120,000 shares have been issued to officers and
directors of the Company, for an aggregate of $1,200 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 proposes 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 33756, where its telephone number is (727) 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 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 conditions. 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 (the "Escrow
Agent") which provides that:
2
<PAGE>
(1) The net proceeds will be deposited into an escrow account
maintained by the 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 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 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 interest 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 the
purpose of the Offering, the estimated fair value of the business or assets to
be acquired must be at least $74,400 if the entire Offering is sold, or $26,400
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 development
stage business. A business is in a 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 have 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
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.
3
<PAGE>
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 (an "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 $74,400 if the entire Offering is sold, or $26,400, 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, 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
(without any interest thereon) within five business days by
first class mail or other equally prompt means.
4
<PAGE>
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 Escrow Agent has received a
signed representation from the Company and any other evidence acceptable to it
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; 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.
5
<PAGE>
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 50% 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.
6
<PAGE>
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 creation 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 understandings, 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. 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
approximately 9% of the gross proceeds may be used for expenses of the Company,
investors will be returned only approximately 91% 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").
7
<PAGE>
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 the 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
light of the 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 and engagement of any such advisors will
be made by management without the approval from the Company's 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 its 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").
8
<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
may be used, there is no assurance that financing will be available, or if
available, on terms acceptable to the Company. (See "BUSINESS: Leverage")
9
<PAGE>
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 has agreed to purchase or take down any of the offered
Units. Consequently, there is no assurance that the required minimum number of
Units (10,000), will be sold during the minimum Offering period, which may last
as long as six months, or if the 10,000 Units are sold within the minimum
Offering period, that all 20,000 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 $60,000 is not received within three months
following the effective date of this Prospectus (unless extended by the Company
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 "PLAN OF DISTRIBUTION.")
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
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.
10
<PAGE>
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 Exchange Act, 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. 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 Common Stock underlying the Units will contain a legend
prohibiting resale of the Units and/or Common Stock the states of Connecticut,
Idaho, and South Dakota.
Dependence on Successful Completion of the 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
Upon the 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 $1,200 or approximately 1% of the then invested capital of the
Company, and the persons purchasing shares in this Offering would then own
approximately 83% of the then outstanding shares, for which they will have paid
$120,000 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
$60,000 or approximately 98% of the total capital invested. Consequently,
purchasers in this Offering will bear a disproportionately greater risk
investing in the Company than its present shareholders. (See "COMPARATIVE
DATA.")
11
<PAGE>
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 $.046 per share so
that persons purchasing Units in the Offering would suffer an immediate dilution
of $.158 per share or 54% 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 $.007 per share or similar dilution to the
public investors of $.119 per share or 93% 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 "PLAN OF DISTRIBUTION.")
Possible sale of Common Stock Pursuant to Rule 144
All of the Company's 240,000 shares of Common Stock presently
outstanding are "restricted securities" and, in the event a public market for
the Common Stock develops in the future, 120,000 of such shares were eligible
for sale in 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.")
12
<PAGE>
DILUTION
As of March 31, 2000, the Company had an unaudited net tangible book
value deficit (total tangible assets less total liabilities) of $26,901, or a
net tangible book value deficit per share of Common Stock of approximately
$(0.112). 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, 2000, except the sale of the minimum and
maximum number of Units offered at the public Offering price and receipt of the
net proceeds therefrom.
<TABLE>
<CAPTION>
Assuming Minimum Units Sold Assuming Maximum Units Sold
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Public Offering price
per share(1) $0.10 $0.10
-----------------------------------------------------------------------------------------------
Net tangible book value
before Offering(2) ($0.112) ($0.112)
-----------------------------------------------------------------------------------------------
Increase attributable to purchase of
Shares by new investors $0.119 $0.158
-----------------------------------------------------------------------------------------------
Pro forma net tangible book value
after Offering(3) $0.007 $0.046
-----------------------------------------------------------------------------------------------
Dilution per share to new investors $0.093 $0.044
-----------------------------------------------------------------------------------------------
Percent Dilution 93% 54%
-----------------------------------------------------------------------------------------------
</TABLE>
----------------------------
(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 estimated at $27,000.
13
<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.
<TABLE>
<CAPTION>
Total Shares Purchased Total Consideration Average Price Per Share
---------------------- ------------------- -----------------------
Number % Amount %
------ ----- ------ -----
Minimum Offering
----------------
<S> <C> <C> <C> <C> <C>
Present Shareholders 240,000 28.6% $ 1,200 2.0% $0.005
New Investors 600,000 71.4% $ 60,000 98.0% $0.10
Maximum Offering
----------------
Present Shareholders 240,000 16.7% $ 1,200 1.0% $0.005
New Investors 1,200,000 83.3% $120,000 99.0% $0.10
</TABLE>
14
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of all
20,000 Units is estimated at approximately $93,000, after deducting expenses. If
only the minimum Offering is sold, the Company will receive net proceeds of
approximately $33,000. 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,
($12,000, if the entire Offering is sold, or $6,000, 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 Units Sold Assuming Maximum Units Sold
----- --------------------------- ---------------------------
1. Company Offering
Expenses(1) $27,000 $27,000
--------------------------------------------------------------------------------
2. Funds available for
investigation and
evaluation of
prospective business (2) $33,000 $93,000
--------------------------------------------------------------------------------
TOTAL $60,000 $120,000
-----------------------------------
(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 33756, 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")
Presently, 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.
15
<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.
16
<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.
17
<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 or maintain any control other than through ownership
interests 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, 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,
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.
18
<PAGE>
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.
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.")
19
<PAGE>
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.
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.
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<PAGE>
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 an 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
be profitable if it generates sufficient revenues to cover the related debt and
other costs of the financing.
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<PAGE>
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 33756, 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.
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock immediately prior to this
Offering, and as adjusted to reflect the sale of the shares of Common Stock
offered by the Company by (i) each person known by the Company to beneficially
own more than five percent of the Common Stock, (ii) each officer and director
of the Company, and (iii) all directors and executive officers of the Company as
a group. See "Management."
<TABLE>
<CAPTION>
Percent
----------------------------------------------
Numberof SharesOwned(1) Before Offering After Offering
----------------------- --------------- -----------------------------
Name and Address(2) Minimum Maximum
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald Couture
901 Chestnut Street,
Suite A
Clearwater, FL 33756 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
Michael T. Cronin
911 Chestnut Street
Clearwater, FL 33756 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
Lawrence Steinberg
2 Lincoln Centre
5420 LBJ Freeway,
Suite 540,LB 56
Dallas, TX 75240 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
Renee Morris
14 Verdmont Valley View
Smith's FL02, Bermuda 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
Khiatana Gibbons
15 Limehouse Lane
Hamilton Parish CR03, Bermuda 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
Peter Leighton
6 Cedarhurst Place
Southampton SB 04, Bermuda 40,000 16.66% 4.76% 2.78%
-----------------------------------------------------------------------------------------------
All Officers and Directors
As a Group (3 persons) 120,000 50% 14.28% 8.34%
-----------------------------------------------------------------------------------------------
</TABLE>
(1) All shares are held beneficially and of record, and each record
shareholder has sole voting, investment and dispositive power.
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<PAGE>
(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.
<TABLE>
<CAPTION>
--------------------------------------- -------------------------------------- --------------------------------------
Name Age Position and Office Held
--------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Gerald Couture 54 Chief Executive Officer, Chief
--------------------------------------- -------------------------------------- --------------------------------------
Michael T. Cronin 44 Secretary, Director
--------------------------------------- -------------------------------------- --------------------------------------
Lawrence Steinberg 64 Vice President, Director
--------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
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
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.
From April 1994 to January 1998, he was "Of Counsel" with Jenkens & Gilchrist,
P.C., Dallas, Texas. Thereafter, he has remained affiliated with Jenkens &
Gilchrist, P.C. on an informal basis. Prior to his association with Jenkens &
Gilchrist, P.C., for over 20 years, he was either a shareholder or partner with
Johnson & Steinberg, P.C. and its predecessor partnership. Also, Mr. Steinberg
24
<PAGE>
has been an active investor in real estate and venture capital investments. He
currently is Chairman and Chief Operating Officer of Eagle Equity, Inc. which
manages real estate and other investments for various entities, most of which
are majority owned by Mr. Steinberg. 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.
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.
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"
25
<PAGE>
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.
26
<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.
In addition, in March 1999, three additional persons paid an aggregate
of $600 in cash to purchase a total of 120,000 shares of Common Stock, which
transactions also took place at a sales price of $0.005 per share.
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 one year from the date on which they are purchased,
and then only under limited circumstances.
(See "DESCRIPTION OF SECURITIES.")
Affiliate Advances
The Company has received an aggregate of $30,000 of loans from its
shareholders, including an aggregate of $15,000 from its officers and directors.
These loans are due on demand and bear interest at 8% per annum and are
unsecured.
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 un-issued 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.
27
<PAGE>
DESCRIPTION OF SECURITIES
Units
The Units offered hereby consist of 60 shares of Common Stock. 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 $0.001 per share, of which 240,000
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,
28
<PAGE>
redemption, and other matters superior to over the Common Stock which would
result in dilution of the income per share 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 240,000 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 one year 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, as of the date of this Prospectus, 120,000 shares of Common
Stock currently issued and outstanding have been held for one year 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
that 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.
PLAN OF DISTRIBUTION
General
The Company is offering to sell a minimum of 10,000 Units and a maximum
of 20,000 Units at a price of $6.00 per Unit. Each Unit consists of sixty shares
of its Common Stock, $.001 par value. The Company has not entered into any
underwriting agreement for the sale of the Units being offered. The Units will
be offered to the public on a "best-efforts, all-or-none" basis as to the
minimum number of Units and on a "best efforts" basis as to the remaining Units.
There is no commitment on the part of any person to purchase and pay for any
Units. The existing officers and directors reserve the right to acquire up to
the minimum number of Units in this Offering.
This Offering is intended to be made solely by the delivery of this
Prospectus and the accompanying Subscription Application to prospective
investors. None of the Company's officers or directors will participate in the
making of this Offering other than by the delivery of this Prospectus or by
responding to inquiries by prospective purchasers. Such responses shall be
limited to the information contained in the Registration Statement of which this
Prospectus is a part.
No commission will be paid with respect to the sale of Units. The
Company will pay its own legal and accounting fees and other expenses incurred
in connection with the Offering.
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<PAGE>
Prior to this Offering, there has been no public market for the Common
Stock underlying the Units. The Offering price of $6.00 per Unit was arbitrarily
determined by the Company and bears no relationship to any recognized criteria
of value, nor is it indicative of the market price for the Common Stock after
this Offering. The Company makes no representations as to any objectively
determinable value of the Units.
After the Registration Statement has been declared effective, the
Company will provide to each prospective investor a copy of the Final Prospectus
relating to this Offering which includes an agreement to purchase shares of the
Units. In order to purchase the Units, the subscription application in the form
attached to the Prospectus and a check made payable to "Continental Stock
Transfer & Trust Co. as Escrow Agent for Alpha Resources, Inc." should be
completed and forwarded to Alpha Resources, Inc. Receipt by the Company of a
Subscription Agreement and/or deposit with the Escrow Agent of payment for the
subscribed shares shall not constitute acceptance of a subscription. The Company
reserves the right to withdraw, cancel or modify the Offering hereby and to
reject subscriptions in whole or in part, for any reason.
The proceeds received under this Offering will be deposited in a
non-interest bearing escrow account with Continental Stock Transfer & Trust Co.
In the event that less than the minimum gross proceeds from the sale of at least
10,000 Units being offered are received within 90 days from the date hereof
(with an allowable additional 90-day extension), the Company will cancel this
Offering and all proceeds received will be promptly refunded to purchasers
without any interest thereon.
Stock certificates will not be issued until such time as good funds
related to the purchase of the Units by such subscribers are released from the
escrow account to the Company by the Escrow Agent. Until such time as stock
certificates are issued to the subscribers, the subscribers will not be
considered shareholders of the Company.
Subscribers will have no right to a return of their subscription
payments held in the escrow account until the Company decides not to accept such
subscription payment.
Termination of the Offering
The Offering will commence on the date of this Prospectus and will
continue for a period of 90 days from the date hereof, with an allowable
additional 90-day extension. The Company has the right to terminate the Offering
for any reason at any time until at least 10,000 Units offered hereby have been
sold. If the Company terminates the Offering before the subscription proceeds
for the minimum of 10,000 Units have been received by the Escrow Agent, all
subscription proceeds will be promptly returned to the subscribers without
interest or deduction.
Indemnification
The Company has agreed to indemnify its officers and directors with
respect to certain liabilities including liabilities which may arise under the
Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to any charter, provision, by-law, contract,
arrangements, statue or otherwise, the Company has been advised that in the
opinion of the SEC, 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 such action, suit or
30
<PAGE>
proceeding) is asserted by such director, officer or controlling person of the
Company 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 and will be governed by the final adjudication on such issue.
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.
LEGAL MATTERS
The validity of the issuance of the shares offered hereby will be
passed upon for Alpha Resources, Inc. by Sichenzia, Ross & Friedman LLP, New
York, New York.
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.
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission a
registration statement, SEC File No. 333-22693, under the Securities Act 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. The registration statement 35y be viewed at the
Securities and Exchange Commission's EDGAR internet web site at
http://www.sec.gov.
31
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Index
Page
----
Independent Auditor's Report...................................... F-1
Balance Sheet -
December 31, 1999...................................... F-2
Operating Statements -
For the years ended December 31, 1999
and December 31, 1998 and the period January 13, 1997
(Date of Inception) to December 31, 1999................ F-3
Statements of Changes in Stockholders' Deficit -
For the Period January 13, 1997 (Date of Inception)
to December 31, 1999..................................... F-4
Statements of Cash Flows -
For the years ended December 31, 1999
and December 31, 1998 and the period January 13, 1997
(Date of Inception) to December 31, 1999................ F-5
Notes to Financial Statements..................................... F-6
Index to Stub Period.............................................. F-7
i
<PAGE>
Independent Auditors' Report
Board of Directors
Alpha Resources, Inc.
(A Development Stage Company)
Clearwater, Florida
We have audited the accompanying balance sheet of Alpha Resources, Inc. (a
development stage company) as of December 31, 1999 and the related statements of
operations, changes in stockholders' deficit, and cash flows for the years ended
December 31, 1999 and 1998 and the period January 13, 1997 (date of inception)
to December 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits 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 audits provide 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. (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998 and
the period January 13, 1997 (date of inception) to December 31, 1999 in
conformity with generally accepted accounting principles.
/s/ Pender Newkirk & Company, CPAs
---------------------------------
Certified Public Accountants
Tampa, Florida
January 28, 2000
F-1
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Balance Sheet
December 31,
1999
-----------------
Assets
Current assets
Cash $ 15,075
-----------------
Total current assets 15,075
-----------------
Other assets
Offering costs 4,206
-----------------
Total assets $ 19,281
=================
Liabilities and Stockholders' Deficit
Current liabilities
Accrued expenses $ 9,191
Loans payable - stockholders 30,000
-----------------
Total current liabilities 39,191
-----------------
Stockholders' deficit
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 - 240,000 240
Additional paid-in capital 960
Deficit accumulated during the development stage (21,110)
-----------------
Total stockholders' (deficit) (19,910)
-----------------
Total liabilities and stockholders' equity $ 19,281
=================
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-2
<PAGE>
<TABLE>
<CAPTION>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Operating Statements
For the Years Cumulative During
Ended December 31, Development Stage
------------------------------- January 13, 1997( Date of
1999 1998 Inception) to December 31, 1999
-------------- -------------- --------------------------------
<S> <C> <C> <C>
Development stage expenses
General & Administrative Expense $ 2,780 $ 3,600 $ 16,709
Interest Expense 2,001 1,200 4,401
-------------- -------------- -----------------------
Net Loss Before Income Taxes (4,781) (4,800) (21,110)
Income Taxes - - -
-------------- -------------- -----------------------
Net Loss $ (4,781) $ (4,800) $ (21,110)
============== ============== =======================
Basic Loss Per Share $ (0.02) $ (0.04) $ (0.14)
============== ============== =======================
Weighted average number of
common shares outstanding 209,096 120,000 150,055
============== ============== =======================
</TABLE>
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-3
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Changes in Stockholders' Deficit
For the Period January 13, 1997 (Date of Inception) to December 31, 1999
<TABLE>
<CAPTION>
Common Stock Deficit
------------------------------ Accumulated
Shares $ 0.001 Additional During the Total
Issued and Par Paid-in Development Stockholders'
Outstandng Value Capital Stage Equity (Deficit)
--------------- ----------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (11,529) (11,529)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1997 120,000 $ 120 $ 480 $ (11,529) $ (10,929)
--------------- ----------- ------------- --------------- ----------------
Net loss for period - - - (4,800) (4,800)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1998 120,000 $ 120 $ 480 $ (16,329) $ (15,729)
--------------- ----------- ------------- --------------- ----------------
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (4,781) (4,781)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1999 240,000 $ 240 $ 960 $ (21,110) $ (19,910)
=============== =========== ============= =============== ================
</TABLE>
Read Independent Auditors' Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-4
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Cumulative During
Ended December 31, Development Stage
--------------------------------- January 13, 1997( Date of
1999 1998 Inception) to December 31, 1999
--------------- --------------- -------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,781) $ (4,800) $ (21,110)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase (Decrease) in accrued expenses (659) 4,279 9,191
--------------- --------------- ------------------
Net cash used by operating activities (5,440) (521) (11,919)
--------------- --------------- ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 600 - 1,200
Proceeds from loans payable - stockholders 15,000 - 30,000
Offering costs - - (4,206)
--------------- --------------- ------------------
Net cash provided by financing activities 15,600 - 26,994
--------------- --------------- ------------------
Net increase (decrease) in cash 10,160 (521) 15,075
Cash beginning 4,915 5,436 -
--------------- --------------- ------------------
Cash ending $ 15,075 $ 4,915 $ 15,075
=============== =============== ==================
</TABLE>
Read Independent Auditors Report
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-5
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended December 31, 1999
Note 1 - 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 has registered its securities with the Securities and Exchange
Commission and plans on offering certain securities in a "blank check" offering
subject to Rule 419 of the Securities Act of 1933. On August 12, 1999, the
Company's Registration Statement on Form SB-2 was declared effective by the U.S.
Securities and Exchange Commission.
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.
Organizational Costs
--------------------
Costs incurred in the organization of the Company were expensed as incurred
under the provision of SOP 98-5, "reporting on the costs of start up
activities."
Income Taxes
------------
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.
Loss Per Share
--------------
Loss per share is computed by dividing income available to common shareholders
by the weighted average number of shares outstanding for the period.
Note 3 - Related Party Transactions
--------------------------
The Company has received $30,000 of loans from the six shareholders of the
Company. These loans are due on demand and bear interest at 8% per annum and are
unsecured. Three of these shareholders are also officers and directors of the
Company. The Company accrued $3,801 of interest on these notes at December 31,
1999.
Read Independent Auditors Report.
F-6
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Index to Stub Period
Page
----
Part I - Financial Information
Item 1. Financial Statements
Balance Sheet -
March 31, 2000................................................... F-8
Statements of Operations -
Three Months ended March 31, 2000 and 1999
and the period January 13, 1997 (Date of Inception)
to March 31, 2000................................................. F-9
Statements of Changes in Stockholders' Deficit -
For the period January 13, 1997 (Date of Inception)
to March 31, 2000................................................. F-10
Statements of Cash Flows -
Three Months ended March 31, 2000 and 1999
and the period January 13, 1997 (Date of Inception)
to March 31, 2000................................................. F-11
Notes to Financial Statements.............................. F-12 - F-13
i
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Balance Sheet
(unaudited)
March 31,
2000
-----------------
Assets
Current assets
Cash $ 14,376
-----------------
Total current assets 14,376
-----------------
Other assets
Offering costs 4,206
-----------------
Total assets $ 18,582
=================
Liabilities and Stockholders' Deficit
Current liabilities
Accrued expenses $ 11,277
Loans payable - stockholders 30,000
-----------------
Total current liabilities 41,277
-----------------
Stockholders' deficit
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 - 240,000 240
Additional paid-in capital 960
Deficit accumulated during the development stage (23,895)
-----------------
Total stockholders' (deficit) (22,695)
-----------------
Total liabilities and stockholders' equity $ 18,582
=================
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-8
<PAGE>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Operating Statements
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Cumulative During
Ended March 31, Development Stage
------------------------------- January 13, 1997( Date of
2000 1999 Inception) to March 31, 2000
-------------- -------------- -------------------------------
<S> <C> <C> <C>
Development stage expenses
General & Administrative Expense $ 2,185 $ 21 $ 18,894
Interest Expense 600 300 5,001
-------------- -------------- -----------------------
Net Loss Before Income Taxes (2,785) (321) (23,895)
Income Taxes - - -
-------------- -------------- -----------------------
Net Loss $ (2,785) $ (321) $ (23,895)
============== ============== =======================
Basic Loss Per Share $ (0.01) $ (0.00) $ (0.15)
============== ============== =======================
Weighted average number of
common shares outstanding 240,000 120,000 157,033
============== ============== =======================
</TABLE>
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-9
<PAGE>
<TABLE>
<CAPTION>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Changes in Stockholders' Deficit
(unaudited)
For the Period January 13, 1997 (Date of Inception) to March 31, 2000
Common Stock Deficit
------------------------------ Accumulated
Shares $ 0.001 Additional During the Total
Issued and Par Paid-in Development Stockholders'
Outstandng Value Capital Stage Equity (Deficit)
--------------- ----------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (11,529) (11,529)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1997 120,000 $ 120 $ 480 $ (11,529) $ (10,929)
--------------- ----------- ------------- --------------- ----------------
Net loss for period - - - (4,800) (4,800)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1998 120,000 $ 120 $ 480 $ (16,329) $ (15,729)
--------------- ----------- ------------- --------------- ----------------
Issuance of 120,000 shares of
common stock ($.005 per share) 120,000 $ 120 $ 480 $ - $ 600
Net loss for period - - - (4,781) (4,781)
--------------- ----------- ------------- --------------- ----------------
Balance, December 31, 1999 240,000 $ 240 $ 960 $ (21,110) $ (19,910)
--------------- ----------- ------------- --------------- ----------------
Net loss for period - - - (2,785) (2,785)
--------------- ----------- ------------- --------------- ----------------
Balance, March 31, 2000 240,000 $ 240 $ 960 $ (23,895) $ (22,695)
=============== =========== ============= =============== ================
</TABLE>
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-10
<PAGE>
<TABLE>
<CAPTION>
ALPHA RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
(unaudited)
For the Three Months Cumulative During
Ended March 31, Development Stage
---------------------------------- January 13, 1997( Date of
2000 1999 Inception) to March 31, 2000
---------------- --------------- ----------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,785) $ (321) $ (23,895)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase (Decrease) in accrued expenses 2,086 (1,924) 11,277
---------------- --------------- ------------------
Net cash used by operating activities (699) (2,245) (12,618)
---------------- --------------- ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock - 600 1,200
Proceeds from loans payable - stockholders - 15,000 30,000
Offering costs - - (4,206)
---------------- --------------- ------------------
Net cash provided by financing activities - 15,600 26,994
---------------- --------------- ------------------
Net increase (decrease) in cash (699) 13,355 14,376
Cash beginning 15,075 4,915 -
---------------- --------------- ------------------
Cash ending $ 14,376 $ 18,270 $ 14,376
================ =============== ==================
</TABLE>
The Accompanying Notes Are An Integral Part Of The Financial Statements
F-11
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Three Months Ended March 31, 2000
(Unaudited)
Note 1 - 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 its intentions.
The Company has registered its securities with the Securities and Exchange
Commission and plans on offering certain securities in a "blank check" offering
subject to Rule 419 of the Securities Act of 1933. On August 12, 1999, the
Company's Registration Statement on Form SB-2 was declared effective by the U.S.
Securities and Exchange Commission.
The accompanying unaudited financial statements, which are for interim periods,
do not include all disclosures provided in the annual financial statements.
These unaudited financial statements should be read in conjunction with the
financial statements and the footnotes thereto contained in Form 10-KSB for the
fiscal year ended December 31, 1999 of Alpha Resources, Inc. (the "Company"), as
filed with the Securities and Exchange Commission.
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.
In the opinion of management, all adjustments, consisting of adjustments
necessary for a fair presentation of (a) the results of operations for the three
month periods ended March 31, 2000 and 1999, and the period January 13, 1997
(Date of Inception) to March 31, 2000, (b) the financial position at March 31,
2000, (c) cash flows for the three month period ended March 31, 2000 and 1999,
and the period January 13, 1997 (Date of Inception) to March 31, 2000 have been
made.
Organizational Costs
--------------------
Costs incurred in the organization of the Company were expensed as incurred
under the provision of SOP 98-5, "reporting on the costs of start up
activities."
Income Taxes
------------
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.
F-12
<PAGE>
ALPHA RESOURCES, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Three Months Ended March 31, 2000
(Unaudited)
(Continued)
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.
Loss Per Share
--------------
Basic loss per share is computed by dividing net loss available to common
shareholders by the weighted average number of shares outstanding for the
period.
Note 3 - Related Party Transactions
--------------------------
The Company has received $30,000 of loans from the six shareholders of the
Company. These loans are due on demand and bear interest at 8% per annum and are
unsecured. Three of these shareholders are also officers and directors of the
Company. The Company accrued $4,401 of interest on these notes at March 31,
2000.
F-13
<PAGE>
ALPHA RESOURCES, INC.
SUBSCRIPTION AGREEMENT
1. Subscription. The undersigned hereby subscribes to purchase _______ (the
"Units"), of Alpha Resources, Inc. (the "Company") for a purchase price equal to
$6.00 per unit or $________________ total. A cashier's check payable to
"Continental Stock Transfer & Trust Co., as Escrow Agent for Alpha Resources,
Inc." in the amount of the purchase price is enclosed with this Subscription
Agreement.
2. Subscription Funds. The undersigned understands that the subscription funds
will be held in an escrow account at Continental Stock Transfer & Trust Co. In
the event this Subscription Agreement is rejected in whole by the Company, or if
subscriptions for a minimum of 10,000 Units have not been received and accepted
by the Escrow Agent, the funds will be promptly returned to the undersigned
without interest or deduction, and this Subscription Agreement will be null and
void. In the event this Subscription Agreement is accepted, in whole or in part,
the funds deposited in the escrow account will be paid over to the Company at a
closing and applied as described in the Prospectus (and any amounts which the
undersigned has tendered in excess of the cash subscription price for the Units
allocated to the undersigned will be returned).
3. Acknowledgement. The undersigned acknowledges that, prior to signing this
Subscription Agreement, he or she has received the Prospectus describing the
offering of Units by the Company and has carefully reviewed the risks of and
other considerations relevant to, a purchase of the Common Stock, including
those described under the caption "Risk Factors" in the Prospectus.
4. Subscription Irrevocable. This Subscription Agreement is not transferable or
assignable and is irrevocable, except that the execution and delivery of this
Subscription Agreement will not constitute an agreement between the undersigned
and the Company until this subscription is accepted on behalf of the Company.
This Subscription Agreement shall survive the death or disability of the
undersigned and shall be binding upon the undersigned's heirs and legal
representatives. The undersigned hereby executes this Subscription Agreement as
of the ____ day of _______ 2000, at
-----------------------,----------------------.
(city) (state)
SUBSTITUTE FORM W-9
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER
Under the penalties of perjury, I certify that: (1) the Social Security number
or Taxpayer Identification Number given below is correct; and (2) 1 am not
subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT NUMBER 2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPOM71NG INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
MAIL TO: Signature: ___________________________
Alpha Resources Subscription Account Print Name: _________________________
c/o Continental Stock Transfer & Trust Co. ___________________________________
2 Broadway ___________________________________
Federal Employer Identification Number/
New York, New York 10004 Social Security Number
-----------------------------------
Street Address
-----------------------------------
City, State and Zip Code
-----------------------------------
Telephone Number
<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. 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
Plan of Distribution..................... 36
Litigation............................... 38
Legal Matters............................ 39
Experts.................................. 40
Further Information...................... 41
Financial Statements..................... F-1
Until , 2000 (25 days after the date of the Prospectus), all dealers effecting
transactions in the registered securities, whether or not participating in this
distribution, may be required to deliver a Prospectus.
ALPHA RESOURCES, INC.
20,000 Units
1,200,000 SHARES OF
COMMON STOCK
----------------
PROSPECTUS
----------------
----------------
_________, 2000
<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 following table sets forth the estimated expenses to be incurred by
the Registrant in connection with the issuance and distribution of the
securities being registered hereby:
Securities and Exchange Commission registration fee......$ 42
National Association of Securities Dealers, Inc.
examination fee......................................... 500
Accounting fees and expenses............................. 3,200
Legal fees and expenses.................................. 10,000
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
Escrow Agent fees........................................ 3,800
Miscellaneous............................................ 458
--------
TOTAL........................................... $27,000
=======
Item 26. Recent Sales of Unregistered Securities
---------------------------------------
The Company has issued 120,000 shares of its Common Stock to its three (3)
founders.
In addition, in March 1999, the Company issued an additional 120,000 shares
of its Common Stock to three persons.
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-1
<PAGE>
Item 27. Exhibits and Financial Statement Schedule.
------------------------------------------
10.1 Intentionally Left Blank.
10.2 Intentionally Left Blank.
10.3 Intentionally Left Blank.
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 (1)
10.8 Consent of Pender, Newkirk & Co. CPA (2)
-------------------
(1) Previously filed.
(2) Filed herewith.
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.
II-2
<PAGE>
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.
(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-3
<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 Post Effective 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 June 23, 2000.
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 Post Effective Amendment No. 1 to Form SB-2 has been
signed by the following persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/Gerald Couture Chairman of the Board, June 23, 2000
------------------------------------
Gerald Couture Chief Executive Officer,
Financial Officer, Chief
Accounting Officer, President,
Treasurer
/s/Michael T. Cronin Director, Secretary June 23, 2000
------------------------------------
Michael T. Cronin
/s/Lawrence Steinberg Director June 23, 2000
------------------------------------
Lawrence Steinberg
</TABLE>
