U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
DIVERSIFIED HOLDINGS INTERNATIONAL, INC.
-----------------------------
(Name of Small Business Issuer)
Delaware 52-2051281
______________________ _____________________
(State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization) Identification Number
1201 4th Avenue South, Suite 312, Seattle, Washington 98134
------------------------------------------------------------
(Address of Principal Executive Offices including Zip Code)
206/521-3383
_____________
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act: Common Stock,
$.0001 Par Value
(Title of Class)
PART I
ITEM 1. BUSINESS.
Diversified Holdings International, Inc. (the "Company"), was
incorporated on August 8, 1997 under the laws of the State of Delaware to
engage in any lawful corporate undertaking, including, but not limited to,
selected mergers and acquisitions. The Company has been in the
developmental stage since inception and has no operations to date. Other
than issuing shares to its original shareholders, the Company has not
commenced any operational activities.
The Company will attempt to locate and negotiate with a business
entity for the merger of that target company into the Company. In certain
instances, a target company may wish to become a subsidiary of the
Company or may wish to contribute assets to the Company rather than
merge. No assurances can be given that the Company will be successful
in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company
whose securities are qualified for trading in the United States secondary
market. The Company has voluntarily filed with the Securities and
Exchange Commission a registration statement on Form F-10 to register
the common stock of the Company.
There are certain perceived benefits to being a reporting company with
a class of publicly-traded securities. These are commonly thought to
include the following:
* the ability to use registered securities to make acquisition of
assets or businesses;
* increased visibility;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for whom a primary purpose of becoming public is the
use of its securities for the acquisition of assets or businesses;
* a company which is unable to find an underwriter of its securities
or is unable to find an underwriter of securities on terms
acceptable to it;
* a company which wishes to become public with less dilution of its
common stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment
capital on more favorable terms after it has become public;
* a foreign company which may wish an initial entry into the United
States securities market;
* a special situation company, such as a company seeking a public
market to satisfy redemption requirements under a qualified
Employee Stock Option Plan;
* a company seeking one or more of the other perceived benefits of
becoming a public company.
A business combination with a target company will normally involve
the transfer to the target company of the majority of the issued and
outstanding common stock of the Company, and the substitution by the
target business of its own management and board of directors.
No assurances can be given that the Company will be able to enter
into a business combination, as to the terms of a business combination, or
as to the nature of the target company.
The proposed business activities described herein classify the
Company as a "blank check" company. See "GLOSSARY". The
Securities and Exchange Commission and many states have enacted
statutes, rules and regulations limiting the sale of securities of blank check
companies. Management does not intend to undertake any efforts to
cause a market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan described
herein. Accordingly, each shareholder of the Company has executed and
delivered a "lock-up" letter agreement affirming that such shareholders
will not sell or otherwise transfer their shares of the Company's common
stock except in connection with or following completion of a merger or
acquisition and the Company is no longer classified as a blank check
company. Each shareholder has deposited such shareholder's respective
stock certificate with the Company's management, who will not release
these respective certificates except in connection with or following the
completion of a merger or acquisition.
The Company's business is subject to numerous risk factors, including
the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL
ASSETS. The Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until the consummation
of a business combination. This may result in the Company incurring a
net operating loss which will increase continuously until the Company can
consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and
consummate such a business combination.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED
OPERATIONS. The success of the Company's proposed plan of operation
will depend to a great extent on the operations, financial condition and
management of the identified target company. While management intends
to seek business combinations with entities having established operating
histories, there can be no assurance that the Company will be successful in
locating candidates meeting such criteria. In the event the Company
completes a business combination, of which there can be no assurance, the
success of the Company's operations may be dependent upon management
of the target company and numerous other factors beyond the Company's
control.
SCARCITY OF AND COMPETITION FOR BUSINESS
OPPORTUNITIES AND COMBINATIONS. The Company is and will
continue to be an insignificant participant in the business of seeking
mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be merger or
acquisition target candidates for the Company. Nearly all such entities
have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the Company
will be at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business combination.
Moreover, the Company will also compete with numerous other small
public companies in seeking merger or acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER
TRANSACTION--NO STANDARDS FOR BUSINESS COMBINATION.
The Company has no arrangement, agreement or understanding with
respect to engaging in a merger with or acquisition of a business entity.
There can be no assurance the Company will be successful in identifying
and evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or
specific business within an industry for evaluation by the Company.
There is no assurance the Company will be able to negotiate a business
combination on terms favorable to the Company. The Company has not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which it will require a target
business opportunity to have achieved, or without which the Company
would not consider a business combination with such business entity.
Accordingly, the Company may enter into a business combination with a
business entity having no significant operating history, losses, limited or
no potential for earnings, limited assets, negative net worth or other
negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME
AVAILABILITY. While seeking a business combination, management
anticipates devoting a limited amount of time to the business of the
Company. The Company's sole officer has not entered into a written
employment agreement with the Company and he is not expected to do so
in the foreseeable future. The Company has not obtained key man life
insurance on any of its officers or directors. Notwithstanding the combined
limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of
the Company's business and its likelihood of continuing operations. See
"MANAGEMENT."
CONFLICTS OF INTEREST-GENERAL. The Company's officers
and directors participate in other business ventures which compete directly
with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity
in which any member of management serves as officers, directors or
partners, or in which they or their family members own or hold any
ownership interest. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS
OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE
ACQUISITION. Section 13 of the Securities Exchange Act of 1934 (the
"Exchange Act") requires companies subject thereto to provide certain
information about significant acquisitions including certified financial
statements for the company acquired covering one or two years, depending
on the relative size of the acquisition. The time and additional costs that
may be incurred by some target companies to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not
have or are unable to obtain the required audited statements may not be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING
ORGANIZATION. The Company has neither conducted, nor have others
made available to it, results of market research indicating that market
demand exists for the transactions contemplated by the Company.
Moreover, the Company does not have, and does not plan to establish, a
marketing organization. Even in the event demand is identified for a
merger or acquisition contemplated by the Company, there is no assurance
the Company will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed
operations, even if successful, will in all likelihood result in the Company
engaging in a business combination with only one business opportunity.
Consequently, the Company's activities will be limited to those engaged in
by the business opportunity which the Company merges with or acquires.
The Company's inability to diversify its activities into a number of areas
may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
REGULATION. Although the Company will be subject to regulation
under the Exchange Act, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940, insofar
as the Company will not be engaged in the business of investing or trading
in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be
required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange
Commission as to the status of the Company under the Investment
Company Act of 1940 and, consequently, any violation of such Act could
subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A
business combination involving the issuance of the Company's common
stock will, in all likelihood, result in shareholders of a target company
obtaining a controlling interest in the Company. Any such business
combination may require management of the Company to sell or transfer
all or a portion of the Company's common stock held by it, and to resign
as members of the Board of Directors and officers of the Company. The
resulting change in control of the Company will likely result in removal of
the present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of the
Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP
FOLLOWING BUSINESS COMBINATION. The Company's primary
plan of operation is based upon a business combination with a business
entity which, in all likelihood, will result in the Company issuing
securities to shareholders of such business entity. The issuance of
previously authorized and unissued common stock of the Company would
result in reduction in percentage of shares owned by present shareholders
of the Company and would most likely result in a change in control or
management of the Company.
ASPECTS OF BLANK CHECK OFFERING. The Company may
enter into a business combination with a business entity that desires to
establish a public trading market for its shares. A target company may
attempt to avoid what it deems to be adverse consequences of undertaking
its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time
delays of the registration process, significant expenses to be incurred in
such an offering, loss of voting control to public shareholders or the
inability to obtain an underwriter or to obtain an underwriter on terms
satisfactory to the target company.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the
Company may undertake. Currently, such transactions may be structured
so as to result in tax-free treatment to both companies, pursuant to various
federal and state tax provisions. The Company intends to structure any
business combination so as to minimize the federal and state tax
consequences to both the Company and the target company; however,
there can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to
the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS.
Management of the Company will request that any potential business
opportunity provide audited financial statements. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company rather than incur the expenses associated
with preparing audited financial statements.
In certain cases, audited financial statements may not be available at
the time of the business combination. If that occurs, the Company intends
to obtain certain assurances as to the target company's assets, liabilities,
revenues and expenses prior to consummating a business combination,
with further assurances that an audited financial statement would be
provided after closing of such a transaction. Closing documents relative
thereto will include representations that the audited financial statements
will not materially differ from the representations included in such closing
documents.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations regarding
such an acquisition. None of the Company's officers, directors, or
affiliates have engaged in any negotiations with any representative of any
company regarding the possibility of an acquisition or merger between the
Company and such other company.
The Company anticipates seeking out a target business through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting
firms, investment bankers, financial advisors and similar persons, the use
of one or more World Wide Web sites and similar methods. No estimate
can be made as to the number of persons who will be contacted or
solicited. Such persons will have no relationship to management.
The Company has no full time employees. The Company's president
has agreed to allocate a portion of his time to the activities of the
Company, without compensation. The president anticipates that the
business plan of the Company can be implemented by his devoting
approximately 10 hours per month to the business affairs of the Company
and, consequently, conflicts of interest may arise with respect to the
limited time commitment by such officer. See "ITEM 5. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS."
The Certificate of Incorporation of the Company provides that the
Company may indemnify officers and/or directors of the Company for
liabilities, which can include liabilities arising under the securities laws.
Therefore, assets of the Company could be used or attached to satisfy any
liabilities subject to such indemnification.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in a business entity presented to
it by persons or firms who or which desire to seek the perceived
advantages of a corporation which has a class of securities registered
under the Exchange Act. The Company will not restrict its search to any
specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter into
potential business opportunities. Management anticipates that it will be
able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See
"FINANCIAL STATEMENTS." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it
will not permit the Company to offset potential losses from one venture
against gains from another.
The Company may seek a business opportunity with entities which
have recently commenced operations, or which wish to utilize the public
marketplace in order to raise additional capital in order to expand into new
products or markets, to develop a new product or service, or for other
corporate purposes. The Company may acquire assets and establish
wholly- owned subsidiaries in various businesses or acquire existing
businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that
there are numerous firms seeking the perceived benefits of a publicly
registered corporation. Such perceived benefits may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity for incentive stock options or similar benefits to key
employees, providing liquidity for shareholders and other factors.
Business opportunities may be available in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any cash or other assets.
However, management believes the Company will be able to offer owners
of acquisition candidates the opportunity to acquire a controlling
ownership interest in a publicly registered company without incurring the
cost and time required to conduct an initial public offering. The officers
and directors of the Company have not conducted market research and are
not aware of statistical data to support the perceived benefits of a merger
or acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none
of whom is a professional business analyst. In analyzing prospective
business opportunities, management will consider such matters as the
available technical, financial and managerial resources; working capital
and other financial requirements; history of operations, if any; prospects
for the future; 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; specific risk factors not now foreseeable but which then may
be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. Management expects to meet
personally with management and key personnel of the business opportunity
as part of their investigation. To the extent possible, the Company intends
to utilize written reports and personal investigation to evaluate the above
factors. The Exchange Act requires that any merger or acquisition
candidate comply with all certain reporting requirements, which include
providing audited financial statements to be included in the reporting
filings made under the Exchange Act. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained at or within a reasonable period of time after closing of the
proposed transaction.
Management of the Company, which in all likelihood will not be
experienced in matters relating to the business of a target company, will
rely upon its own efforts in accomplishing the business purposes of the
Company. It is anticipated that outside consultants or advisors may be
utilized by the Company to assist in the search for qualified target
companies. If the Company does retain such an outside consultant or
advisor, any cash fee earned by such party will need to be paid by the
prospective merger/acquisition candidate, as the Company has limited cash
assets with which to pay such obligation.
The Company will not restrict its search for any specific kind of
firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially any
stage of its corporate life. It is impossible to predict at this time the
status of any business in which the Company may become engaged, in that such
business may need to seek additional capital, may desire to have its shares
publicly traded, or may seek other perceived advantages which the
Company may offer. However, the Company does not intend to obtain
funds to finance the operation of any acquired business opportunity until
such time as the Company has successfully consummated such a merger or
acquisition.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization,
joint venture, or licensing agreement with another corporation or entity. It
may also acquire stock or assets of an existing business. On the
consummation of a transaction, it is probable that the present management
and shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the terms
of the acquisition transaction, resign and be replaced by new directors
without a vote of the Company's shareholders or may sell their stock in
the Company.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under
applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of its transaction, the Company may
agree to register all or a part of such securities immediately after the
transaction is consummated or at specified times thereafter. If such
registration occurs, of which there can be no assurance, it will be
undertaken by the surviving entity after the Company has entered into an
agreement for a business combination or has consummated a business
combination and the Company is no longer considered a blank check
company. Until such time as this occurs, the Company will not attempt to
register any additional securities. 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 the
market value of the Company's securities in the future if such a market
develops, of which there is no assurance.
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 avoid the creation of a taxable
event and thereby structure the acquisition in a "tax-free" reorganization
under Sections 351 or 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the
Company which target company shareholders would acquire in exchange
for all of their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage of
shares held by the Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will
require certain representations and warranties of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by the parties prior to and after such
closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, and will include
miscellaneous other terms.
The Company will not acquire or merge with any entity which cannot
provide audited financial statements at or within a reasonable period of
time after closing of the proposed transaction. The Company is subject to
all of the reporting requirements included in the Exchange Act. Included
in these requirements is the duty of the Company to file audited financial
statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as
well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of
the Exchange Act, or if the audited financial statements provided do not
conform to the representations made by the target company, the closing
documents may provide that the proposed transaction will be voidable at
the discretion of the present management of the Company.
The Company's principal shareholder has agreed that it will advance
to the Company any additional funds which the Company needs for
operating capital and for costs in connection with searching for or
completing an acquisition or merger. Such advances will be made without
expectation of repayment unless the owners of the business which the
Company acquires or merges with agree to repay all or a portion of such
advances. There is no minimum or maximum amount such shareholder
will advance to the Company. The Company will not borrow any funds
for the purpose of repaying advances made by such shareholder, and the
Company will not borrow any funds to make any payments to the
Company's promoters, management or their affiliates or associates.
The Board of Directors has passed a resolution which contains a
policy that the Company will not seek an acquisition or merger with any
entity in which any of the Company's officers, directors, shareholders or
their affiliates or associates serve as an officer or director or hold any
ownership interest.
USE OF CONSULTANTS
The Company has no agreements or arrangements with any consultants
for the selection of any possible business transaction. Furthermore, no
officer or director of the Company has used any consultants in the past nor
has any arrangement or agreement for the use of any such consultant in
the selection of a target company. However, the Company may use the
services of a consultant to identify a target company. The Company
would determine to use such a consultant based on the type of target
company being sought or reviewed, the form and amount of compensation
such a consultant would require, the years such consultant had been in
business and the rate of success in matching target companies with
acquiring companies. Management would expect that any such consultant
would provide the Company with a selection of target companies, would
assist in the study of any such target, would assist in negotiating the terms
of any transaction, and would serve to facilitate the negotiation process.
Additionally, a particular target may be presented to the Company
only on the condition that the services of a consultant be continued if the
transaction is concluded. Such consultants or advisors may include
attorneys or accountants who have an agreement with the target company
for continuation of their services after any transaction. Such preexisting
agreements for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the Company's selection of a
target company.
If a consultant is used, compensation may take various forms,
including fixed cash payments, payments based on a percentage of
revenues or product sales volume, payments involving issuance of
securities or any combination of these or other compensation
arrangements. The Board of Directors has not accepted any policies
regarding the use of consultants or their identities or possible
compensation except that no consultant fees will be paid to Management or
any affiliate of Management.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited
financial resources and limited management availability, the Company will
continue to be at a significant competitive disadvantage compared to the
Company's competitors.
The Company subject to the informational requirements of the
Exchange Act and in accordance therewith will file reports and other
information with the Commission. Reports, proxy statements and other
information filed by the Company can be inspected and copied on the
Commission's home page on the World Wide Web at http://www.sec.gov
or at the public reference facilities of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at its
regional offices. The Company intends to file such periodic reports with
the Commission until it effects a merger or acquisition, even in the event
it no longer is obligated to do so. After a merger or acquisition, the filing
of such periodic reports will be the responsibility of new management of
the Company, but the Company anticipates that such reports will be filed
since the continuing public status of the Company will be a principal
factor in effecting the merger or acquisition.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to
acquire any properties. The Company currently uses the offices of Alan
Kwong, one of the Company's directors, at no cost to the Company. Mr.
Kwong has agreed to continue this arrangement until the Company
completes an acquisition or merger.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
The following table sets forth, as of August 1, 1997, each person known by
the Company to be the beneficial owner of five percent or more of the Company's
Common Stock, all directors individually and all directors and officers of the
Company as a group. Except as noted, each person has sole voting and investment
power with respect to the shares shown.
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount of Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------------ ----------------- --------
<S> <C> <C>
William Wing Keung Tang 2,175,000 43%
Trinity House, #605
165 Wanchai Road
Hong Kong
Alan Kwong (1) 957,000 19%
6839 Southeast Cougar Mountain Hgwy
Bellevue, Washington 98006
First Agate Capital Corporation (2) 250,000 5%
1504 R Street, N.W.
Washington, D.C. 20009
All Executive Officers and 3,132,000 62%
Directors as a Group (2 Persons)
</TABLE>
(1) Mr. Kwong is the president, director and 10% shareholder of Global Pacific
International Inc. and therefore may be considered to have voting control
of the shares of common stock owned by it.
(2) First Agate Capital Corporation is a Delaware corporation formed to
provide assistance to companies going public. Mr. James M. Cassidy is
the sole shareholder and director of First Agate Capital Corporation.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The Directors and Officers of the Company are as follows:
Name Age Positions and Offices Held
- -------------------- --- -------------------------
Alan Kwong 37 President, Director
William Wing Keung Tang 39 Vice President, Secretary,
Director
There are no agreements or understandings for any officer of director to
resign at the request of another person and none of the above-named officers or
directors are acting on behalf of or will act at the direction of any other
person.
Set forth below are the names of all directors and executive officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the business
experience of such persons during at least the last five years:
Alan Kwong, 37, serves as President and a director of the Company. Mr.
Kwong received his elementary and high school education in Hong Kong and
obtained his Bachelor of Arts degree from the State University of New York in
1985 and his Masters of Arts degree in computer graphics from the New York
Institute of Technology in 1987. From 1987 to 1994, Mr. Kwong was the
President of Pacific Star International Inc., a Seattle, Washington company
engaged in project research and development in China. While President of
Pacific Star, the company handled contract negotiations for various projects in
China including the "Royal Plaza" aggregating US$125,000,000, a motorcycle
factory in Shanghai, an automobile factory in Shenzhen, and various import and
export transactions. From 1995 to the present, Mr. Kwong has been President
of Global Pacific International, Inc., a Vancouver, British Columbia corporation
engaged in real estate development in the Far East and elsewhere.
William Wing Keung Tang, 39, serves as Vice President, Secretary and a
director of the Company. Mr. Tang was born in and is a resident of Hong
Kong. In 1982, Mr. Tang graduated in Business Studies from the Hong Kong
Business School. From 1991 to 1993, Mr. Tang served as General Manager for
Winning Group, a watch manufacturer in Mainland China. Mr. Tang developed
and monitored a chain of more than 120 outlets of Winning Group in throughout
China. From 1993 to 1995, Mr. Tang served as manager for licensing and
merchandising of Warner Bros. (F.E.) Licensing Inc., Hong Kong. From 1996
to present, Mr. Tang served as the Managing Director of Asian Finance and
Investment Ltd. In 1991, Mr. Tang founded and has been the General Manager
since 1991 of Bilities International, Hong Kong. Mr. Tang is experienced in
international trading, business and manufacturing in China, the Far East and
elsewhere.
CONFLICTS OF INTEREST IN GENERAL
Management may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target business to the Company where that
reference results in a business combination. The amount of any finder's will be
subject to negotiation, and cannot be estimated at this time. No finder's fee
of any kind will be paid to the management or promoters of the Company or to
their associates or affiliates. No loans of any type have, or will be, made to
management or promoters of the Company or to any of their associates or
affiliates.
None of the Company's officers, directors, promoters, or their affiliates
or associates have had any negotiations with and there are no present
arrangements or understandings with any representatives of the owners of any
business or company regarding the possibility of a business combination.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management or promoters of the
Company or any affiliates or associates have any interest, direct or indirect.
Management has adopted certain policies involving possible conflicts of
interest, including prohibiting any of the following transactions involving
management or promoters or their affiliates or associates:
(i) Any lending by the Company to such persons;
(ii) The issuance of any additional securities to such persons prior
to a business combination;
(iii) The entering into any business combination or acquisition of
assets in which such persons have any interest, direct or
indirect; or
(iv) The payment of any finder's fees to such persons.
These policies have been adopted by the Board of Directors of the Company,
and any changes in these provisions would require the approval of the Board of
Directors. Management does not intend to propose any such action and does not
anticipate that any such action will occur.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest
in favor of the Company could result in liability of management to the Company.
However, any attempt by shareholders to enforce a liability of management to
the Company would most likely be prohibitively expensive and time consuming.
SPECIFIC CONFLICTS OF INTEREST
Mr. Kwong is president of a company involved in real estate development in
the Far East. This company primarily acts as a finder for real estate
transactions. Mr. Kwong may act as a finder for a project or projects suitable
for development by the Company or other business entities which entities may
present more favorable terms for acting as a finder. Mr. Kwong is the
president, a director and shareholder of Global Pacific Enterprises, Inc. which,
through its trustee corporation Central Ocean International, Ltd., has entered
into an initial joint venture agreement with a Chinese government-owned
development company to develop "Royal Plaza", a commercial/residential/hotel
complex site in the City of Chengdu, China. Global Pacific Enterprises, Inc.
is required to contribute approximately $6,000,000 to the joint venture
project by mid-1998 in order to continue as a joint venturer in the project.
Global Pacific Enterprises, Inc. has filed a registration statement with the
United States Securities and Exchange Commission for the sale of its securities.
If Global Pacific Enterprises, Inc. is unable to raise sufficient funds it may
determine to seek alternate joint venture projects. Such projects may conflict
with projects being sought by the Company.
Mr. Kwong is the vice president of Century Investments International, Inc.,
a development-stage Delaware corporation, formed to develop, manage and
acquire commercial real estate properties in the Far East, particularly China.
Century Investments International, Inc. has filed a registration statement with
the Securities and Exchange Commission for the offer and sale of its
securities. Century Investments International, Inc. is a development stage
company with no operations or revenues.
In general, officers and directors of a corporation incorporated under the
laws of the State of Delaware are required to present certain business
opportunities to such corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's directors and its executive officers may
have similar legal obligations to present certain business opportunities to
other entities. In addition, the Company may enter into one or more joint
ventures with third parties or with entities associated with officers or
directors of the Company. These joint ventures may be in conflict with the
Company in obtaining the rights to acquire or develop certain project
opportunities, or in the use of available funds or other resources for such
development. There can be no assurance that any of the foregoing conflicts,
if such conflicts arise, will be resolved in favor of the Company.
Management of the Company has not been involved in any previous blank
offerings. Global Pacific Enterprises, Inc. has been formed to develop and
locate funding for a specific property located in China. Century Investments
International has been formed to specifically develop and manage real estate
projects in the Far East and China. The Company has been formed to locate and
merge with a target business without limitation as to the type of business in
which it is engaged. Management has determined to wait to review the results of
the Company before deciding whether to file additional blank check companies.
USE OF MARKET MAKERS
The Company does not anticipate that a trading market will develop its in
stock until, if at all, a merger or acquisition with a target company has been
effected. At such time that a merger or acquisition has occurred, the Company
may seek a market maker for the Company's securities. However, a target
company may already have arrangements with a broker-dealer to act as that
company's market maker. The Company has not had any preliminary
discussions nor has entered into any agreements or arrangements with any market
maker regarding participation of such market maker in any future trading market,
if any, of the Company's securities. First Agate Capital Corporation, a
shareholder in the Company, may recommend one or more market makers to the
Company after a merger or acquisition if so requested by new management.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act
of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940. Any violation
of such Act would subject the Company to material adverse consequences.
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered to the Company, nor have they received
such compensation in the past. As of the date of this registration statement,
the Company has no funds available to pay officers or directors. Further,
none of the officers or directors are accruing any compensation pursuant to
any agreement with the Company.
No member of management of the Company will receive any finders fee,
either directly or indirectly, as a result of their respective efforts to
implement the Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In 1997, the Company issued a total of 5,000,000 shares of Common Stock
to the following persons for a total of $500 in cash. If any of these sales
were made within the United States or to United States citizens or residents,
such sales were made in reliance upon the exemption from registration provided
by Section 4(2) of the Securities Act of 1933.
NAME NUMBER OF
TOTAL SHARES
---------------- ---------------
Mark Alan Mannhalt 50,000
Donald Tom Prechitt 30,000
Fred Umayam 100,000
Huang Waxu 80,000
Pollysol Investments Ltd. 100,000
He Rong Hui 20,000
Lee Shick Por 20,000
C.L. Ng 652,500
Kam Ping Lui 130,500
Brenda Kayikong 435,000
William Wing Keung Tang 2,175,000
Alan Kwong 957,000
First Agate Capital Corporation 250,000
The Board of Directors has passed a resolution which contains a policy that
the Company will not seek an acquisition or merger with any entity in which any
of the Company's officers, directors, principal shareholders or their
affiliates or associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under which this policy
through their own initiative may be changed. The proposed business activities
described herein classify the Company as a "blank check" company. See
"GLOSSARY". The Securities and Exchange Commission and many states have enacted
statutes, rules and regulations limiting the sale of securities of blank check
companies. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as the Company
has successfully implemented its business plan described herein. Accordingly,
each shareholder of the Company has executed and delivered a "lock-up" letter
agreement, affirming that such shareholder shall not sell such shareholder's
respective shares of the Company's common stock until such time as the
Company has successfully consummated a merger or acquisition and the
Company is no longer classified as a blank check company. Each shareholder
has placed the respective stock certificate with the Company which will not
release the certificates until such time as a merger or acquisition has been
successfully consummated.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.0001 per share, and 20,000,000 shares of
Preferred Stock, par value $.0001 per share. The following statements relating
to the capital stock are summaries and do not purport to be complete. Reference
is made to the more detailed provisions of, and such statements are qualified in
their entirety by reference to, the Certificate of Incorporation and the By-
laws, copies of which are filed as exhibits to this registration statement.
The Company does not anticipate issuing additional securities to any
officer, director, promoter, associate, advisor or other person currently
associated or connected to the Company. The Company does not anticipate
issuing any additional securities until it has located a target company.
The shares of common stock authorized but unissued may be used by the Company
in the acquisition or merger of a target company and/or by the Company for
future acquisitions for stock thereafter if it desires to do so.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by
the Board of Directors in its discretion from funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities. All of the outstanding shares of
common stock are, and the shares of common stock offered by the Company
pursuant to this offering will be, when issued and delivered, fully paid and
non-assessable.
Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion or redemption rights or
sinking fund provisions with respect to the common stock.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of preferred stock, $.0001 par value per share, of which no
shares have been issued. The Board of Directors is authorized to provide for
the issuance of shares of preferred stock in series and, by filing a
certificate pursuant to the applicable law of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix
the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof without any
further vote or action by the shareholders. Any shares of preferred stock so
issued would have priority over the common stock with respect to dividend or
liquidation rights. Any future issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of the Company
without further action by the shareholders and may adversely affect the voting
and other rights of the holders of common stock. At present, the Company has
no plans to issue any preferred stock nor adopt any series, preferences or
other classification of preferred stock.
The issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might
impede a business combination by including class voting rights that would enable
the holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
Preferred Stock could adversely affect the voting power of the holders of the
Common Stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best
interests of the stockholders of the Company, the Board of Directors could act
in a manner that would discourage an acquisition attempt or other transaction
that some, or a majority, of the stockholders might believe to be in their
best interests or in which stockholders might receive a premium for their
stock over the then market price of such stock. The Board of Directors does
not at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or stock exchange
rules. The Company has no present plans to issue any Preferred Stock.
DIVIDENDS
The Company does not expect to pay dividends. Dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will
be within the discretion of the Company's Board of Directors. The Company
presently intends to retain all earnings, if any, for use in its business
operations and accordingly, the Board of Directors does not anticipate
declaring any dividends in the foreseeable future.
GLOSSARY
"Blank Check" Company As defined in Section 7(b)(3) of the Securities Act, a
"blank check" company is a development stage
company that has no specific business plan or purpose
or has indicated that its business plan is to engage
in a merger or acquisition with an unidentified
company or companies and is issuing "penny stock"
securities as defined in Rule 3a51-1 of the Exchange
Act.
The Company Diversified Holdings International, Inc. the company
whose common stock is the subject of this registration
statement.
Exchange Act The Securities Exchange Act of 1934, as amended.
"Penny Stock"
Security. As defined in Rule 3a51-1 of the Exchange Act, a
"penny stock" security is any equity security other
than a security (i) that is a reported security (ii)
that is issued by an investment company (iii) that is
a put or call issued by the Option Clearing
Corporation; (iv) that has a price of $5.00 or more
(except for purposes of Rule 419 of the Securities
Act); (v) that is registered on a national securities
exchange; (vi) that is authorized for quotation on
the Nasdaq Stock Market, unless other provisions of
Rule 3a51-1 are not satisfied; or (vii) that
is issued by an issuer with (a) net tangible assets in
excess of $2,000,000, if in continuous operation for
more than three years or $5,000,000 if in operation
for less than three years or (b) average revenue of
at least $6,000,000 for the last three years.
Securities Act The Securities Act of 1933, as amended.
Small Business Issuer As defined in Rule 12b-2 of the Exchange Act, a
"Small Business Issuer" is an entity (i) which has
revenues of less than $25,000,000 (ii) whose public
float (the outstanding securities not held by
affiliates) has a value of less than $25,000,000
(iii) which is a United States or Canadian issuer
(iv) which is not an Investment Company and (v) if a
majority-owned subsidiary, whose parent corporation
is also a small business issuer.
<PAGE>
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue.
(a) Market Price. The Company's Common Stock is not quoted at the
present time.
The Securities and Exchange Commission has adopted Rule 15g-9 which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior
to any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to
be made about the risks of investing in penny stocks in both public offerings
and in secondary trading, and about commissions payable to both the broker-
dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers the Nasdaq Stock Market, has recently implemented changes in the
criteria for initial and continued eligibility for listing on the Nasdaq Stock
Market. In order to qualify for listing on the Nasdaq SmallCap Market, a
company must have at least (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years of
$750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market capitalization. For continued listing on the
Nasdaq SmallCap Market, a company must have at least (i) net tangible assets
of $2,000,000 or market capitalization of $35,000,000 or net income for two of
the last three years of $500,000; (ii) a public float of 500,000 shares with a
market value of $1,000,000; (iii) a bid price of $1.00; (iv) two market makers;
and (v) 300 shareholders.
There can be no assurances that, upon a successful merger or acquisition,
the Company will qualify its securities for listing on the Nasdaq SmallCap
Market or a national or regional exchange, or be able to maintain the
maintenance criteria necessary to insure continued listing. The failure of
the Company to qualify its securities or to meet the relevant maintenance
criteria after such qualification may result in the discontinuance of the
inclusion of the Company's securities. In such events, trading, if any, in
the Company's securities may then continue in the over-the-counter market.
In such case, a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
(b) Holders. All of the issued and outstanding shares of the Company's
Common Stock were issued in accordance with the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated
thereunder. Each shareholder who is a citizen or resident of the United States
represented to the Company in a subscription therefor that such shareholder was
a sophisticated investor (or an accredited investor), knew that he could have
information about the Company, was able to make inquiries about the Company,
and, in fact, had information about the Company. The Company does not intend
to issue or sell any additional securities until it has effected a merger or
acquisition of a target company.
(c) Dividends. The Company has not paid any dividends to date, and has
no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which were not
registered as follows:
DATE NAME NUMBER OF CONSIDERATION
SHARES
8/15/97 Mark Alan Mannhalt 50,000 $5.00
8/15/97 Donald Tom Prechitt 30,000 3.00
8/15/97 Fred Umayam 100,000 10.00
8/15/97 Huang Waxu 80,000 8.00
8/15/97 Pollysol Investments Ltd. 100,000 10.00
8/15/97 He Rong Hui 20,000 2.00
8/15/97 Lee Shick Por 20,000 2.00
8/15/97 C.L. Ng 652,500 65.25
8/15/97 Kam Ping Lui 130,500 13.05
8/15/97 Brenda Kayikong 435,000 43.50
8/15/97 William Wing Keung Tang 2,175,000 217.50
8/15/97 Alan Kwong 957,000 95.70
8/15/97 First Agate Capital Corporation 250,000 25.00
As listed above, the Company issued shares of its Common Stock par value
$.0001 per share to the individuals or entities for the consideration as listed
in cash. If any of these sales were made within the United States or to United
States citizens or residents, such sales were made in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933.
All the shareholders of the Company have executed and delivered a
"lock-up" letter agreement which provides that each such shareholder shall not
sell the securities except in connection with or following the consummation of a
merger or acquisition. Further, each shareholder has placed its stock
certificates with the Company. Any liquidation by the current shareholders
after the release from the "lock-up" selling limitation period may have a
depressive effect upon the trading price of the Company's securities in any
future market which may develop.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents,
against expenses incurred in any action, suit or proceeding. The Certificate of
Incorporation and the by-laws of the Company provide for indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
(relating to liability for unauthorized acquisitions or redemptions of, or
dividends on, capital stock) of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation
contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED
TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED
IN THE ACT AND IS THEREFORE UNENFORCEABLE.
<PAGE>
PART F/S
Financial Statements.
Attached are audited financial statements for the Company for the period
ended April 29, 1997. The following financial statements are attached to this
report and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Report of Independent Certified Public Accountants
3) Balance Sheet
4) Stockholders' Equity
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION LOCATION
-------- ------------------------------ -------
(2) Articles of Incorporation and By-laws:
2.1 Articles of Incorporation
2.2 By-laws
(3) Instruments Defining Rights of Holders
3.1* Lock Up Agreement
(10)(a) Consents - Experts:
10.1* Consent of Accountants
* filed herewith
<PAGE>
INDEX TO FINANCIAL STATEMENTS
DIVERSIFIED HOLDINGS INTERNATIONAL INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants F-2
Financial Statements:
Assets F-3
Stockholders' Equity F-3
Notes to Financial Statement F-4
<PAGE>
JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 Alameda Drive
Bowie, Maryland 20716
301/249-4900 Fax 301/249-9296
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Diversified Holdings International Inc.
I have audited the accompanying Balance Sheet of Diversified Holdings
International Inc. as of August 19, 1997. This financial statement is the
responsibility of management. My responsibility is to express an opinion on
this financial statement based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statement is 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statement referred to above presents fairly,
in all materials respects, the financial position of Diversified Holdings
International Inc. as of August 19, 1997, in conformity with generally
accepted accounting principles.
/s/ John P. MacLean, CPA, CFP
August 19, 1997
<PAGE>
DIVERSIFIED HOLDINGS INTERNATIONAL INC.
Balance Sheet
August 19, 1997
ASSETS
Cash $500
Total assets $500
Shareholder Equity
Common Stock (5,000,000 shares
$.0001 par value $500
Total Equity $500
See Auditor's Report
<PAGE>
Diversified Holdings International, Inc.
Notes to Financial Statements
Summary of Significant Accounting Policies
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statement follows:
(A) DESCRIPTION OF BUSINESS. The Company was organized August 8, 1997 for
the purpose of engaging in any lawful business. The Company is in the
development stage and operations have not commenced. The Company has selected
the calendar year as its fiscal year.
(B) COMMON STOCK ISSUED. The Company has authorized 100,000,000 shares of
common stock having a par value of $.0001 per share. As of August 19, 1997,
5,000,000 shares of common stock have been issued and were outstanding.
(C) As of August 19, 1997, no shareholders, officers, directors or other
related parties had incurred costs on behalf of the Company.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this amendment to its registration statement to be
signed on its behalf by the undersigned thereunto duly authorized.
DIVERSIFIED HOLDINGS INTERNATIONAL INC.
By: /s/ Alan Kwong
Date: February 15, 1998 Alan Kwong, President
Diversified Holdings International, Inc.
1201 4th Avenue South
Suite 312
Seattle, Washington 98134
August 15, 1997
Re: Lock Up Agreement for Shares of Diversified Holdings
International, Inc. (the "Company")
Dear Shareholder:
1. As part of the sale of the shares of Common Stock of Diversified
Holdings International, Inc. to the undersigned holder (the "Holder"), the
Holder hereby represents, warrants, covenants and agrees, for the benefit of
the Company and the other holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the
Company's Common Stock, $.0001 par value (the "Stock") at the date
hereof and during the pendency of this letter agreement that the Holder will
not transfer, sell, contract to sell, devise, gift, assign, pledge, hypothecate,
distribute or grant any option to purchase or otherwise dispose of, directly
or indirectly, its shares of Stock of the Company owned beneficially or
otherwise by the Holder until such time, if ever, as the Company has
effectively consummated a merger or acquisition with a target company and
the Company is no longer classified as a "blank check" company.
2. Any attempted sale, transfer or other disposition in violation of
this agreement shall be null and void.
3. The Holder further understands and agrees that the Company will
(i) instruct its transfer agent not to transfer such securities without the
prior consent of the Company and (ii) will provide a copy of this agreement to
the Company's transfer agent for the purpose of instructing the Company's
transfer agent to place a legend on the certificate(s) evidencing the securities
subject hereto and disclosing that any transfer, sale, contract for sale,
devise, gift, assignment, pledge or hypothecation of such securities is
subject to the terms of this agreement and (iii) issue stop-transfer
instructions to its transfer agent for the period contemplated by this
agreement for such securities.
4. This agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
5. Any waiver by the Company of any of the terms and conditions
of this agreement in any instance must be in writing and must be duly
executed by the Company and the Holder and shall not be deemed or
construed to be a waiver of such term or condition for the future, or of any
subsequent breach thereof.
6. The Holder agrees that any breach of this agreement will cause
the Company and the third party beneficiaries irreparable damage for which
there is no adequate remedy at law. If there is a breach or threatened
breach of this agreement by the Holder, the Holder hereby agrees that the
Company and the third party beneficiaries shall be entitled to the issuance
of an immediate injunction without notice to restrain the breach or
threatened breach. The Holder also agrees that the Company and all third
party beneficiaries shall be entitled to pursue any other remedies for such a
breach or threatened breach, including a claim for money damages.
This agreement is effective as of the date hereinabove written.
THE HOLDER
By:
Title (if any)
By:
Co-owner (if any)
DIVERSIFIED HOLDINGS INTERNATIONAL, INC.
By:
Name:
Title:
JOHN P. MACLEAN
CERTIFIED PUBLIC ACCOUNTANT
15701 ALAMEDA DRIVE
BOWIE, MARYLAND 20716-1312
301/249-4900
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in the Registration Statement on Form 10-SB
of my report dated August 19, 1997, relating to the audited financial
statements of Diversified Holdings International Inc. and the reference to my
firm under the caption "experts" therein.
/s/ John P. MacLean
January 15, 1997
