UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FIRST SUNRISE INC.
(Name of small business issuer in its charter)
Delaware 6770
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
200 East 89th Street, New York, NY 10028 (212)876-8578
(Address and telephone number of principal executive offices)
200 East 89th Street, New York, NY 11242 (212)876-8578
(Address of Principal place of business or intended
principal place of business)
Schonfeld&Weinstein, LLP, 63 Wall Street, Suite 1810, New York, NY 10005
(212) 344-1600
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public as soon as practicable after
the effective date of this Registration Statement and Prospectus.
Schonfeld & Weinstein, L.L.P.
63 Wall Street, Suite 1801
New York, NY 10005
(212) 344-1600
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>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount Proposed Proposed Amount of
Securities Being (1) Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Share (2) Price(2)
Shares of Common Stock 100,000 $.50 $50,000 $100.00
TOTAL 100,000 $50,000 $100.00
(1) Excludes 600,000 shares sold at $.045 per share to eight (8) persons
between April 28, 1997 and August 15, 1997.
(2) Estimated for purposes of computing the registration fee pursuant to
Rule 457.
<PAGE>
Cross Reference Sheet
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
Part I. Information Required in Prospectus
Item
No. Required Item Location or Caption
1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and
outside
Prospectus front cover of
Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus of Prospectus and Outside
Front cover Page of
Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors High Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Prospectus Summary -
Price Determination of
Offering Price; High Risk
Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management of Common Stock
<PAGE>
(continued)
Part I Information Required in Prospectus Caption in Prospectus
12. Description of Securities Description of Securities
13. Interest of Named Experts and Legal Opinions; Experts
Counsel
14. Disclosure of Commission Position Statement as to
on Indemnification for Securities Indemnification
Act Liabilities
15. Organization Within Last Management, Certain
Five Years Transactions
16. Description of Business Proposed Business,
Remuneration
17. Management's Discussion and Proposed Business -
and Analysis or Plan of Plan of Operation
Operation
18. Description of Property Proposed Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Prospectus Summary,
Related Stockholder Matters Market for Registrant's
Common Stock and Related
Stockholders Matters;
Shares Eligible for Future
Sale.
21. Executive Compensation Remuneration
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
PROSPECTUS
FIRST SUNRISE INC.
(A Delaware Corporation)
100,000 Shares of Common Stock Offered at $.50 per Share
First Sunrise Inc. (the "Company") hereby offers for sale 100,000 shares
of common stock, $.001 par value per share (the "Shares) (Common Stock") at a
purchase price of $.50 per Share (the "Offering"). The Shares shall be sold
exclusively by the Company on a "best-efforts, all or none basis" for a
period
of ninety (90) days (which may be extended an additional ninety (90) days).
This offering shall be conducted directly by the Company without the use of a
professional underwriter or securities dealer. The Company's offering is
being made in compliance with Rule 419 of Regulation C, pursuant to which the
offering proceeds and the securities to be issued to purchasers will be
placed
in an escrow account (the "Escrow Account") until the offering has been
reconfirmed by the Company's shareholders and a Business Combination (as
hereinafter defined) consummated in accordance with the provisions of such
Rule. Pursuant to Rule 3a51-1(d) under the Securities Exchange Act, the
securities being offered hereto constitute "penny stock," and as such,
certain
sales restrictions apply to these securities. (See "Risk Factors"). This
offering is being made on a best efforts, all or none basis on behalf of the
Company by the Company. (See "Description of Securities"). Up to 20% of
the
Offering may be purchased by officers, directors, current shareholders of the
Company, and any of their affiliates or associates. Officers and directors
of the Company are Eng-Chye Low, Steven Wainick and Rene Kunz. Current
shareholders are Saul Gelernter, Steven Wainick, Sanford Lurie, Rene Kunz,
Gary L. Heller, Victor Weinstein, Schonfeld & Weinstein, L.L.P., and Eng Chye
Low. (See "Principal Shareholders.")
Price to Proceeds to
the Public the Company(2)
Per Share $ .50 $ .50
TOTAL (1) $50,000.00 $50,000.00
(1) These Shares are offered by the Company on a "best-efforts, all or none
basis".
Pursuant to the terms of an escrow agreement (the "Escrow Agreement"),
upon receipt by the Company, investors' funds will immediately be deposited
in
the Escrow Account which will be maintained by Atlantic Liberty Savings, 186
Montague Street, Brooklyn, New York, 11201 (the "Escrow Agent"). All
investors' checks or money orders must be made payable to "First Sunrise
Inc.,
and Atlantic Liberty Savings, as Escrow Agent." Unless all 100,000 Shares
have been sold, and $50,000 in payment therefor has been received in the
Escrow Account within 90 days from the date hereof (the "Offering Period"),
or
within an additional 90 days if the Offering Period is extended by the
Company
(the "Extended Offering Period"), all funds held in the Escrow Account will be
promptly returned to investors in full, without interest thereon or
deduction therefrom.
Upon the sale of all 100,000 Shares within the Offering Period (or the
Extended Offering Period), other terms of the Escrow Agreement which have
been
included therein to comply with Rule 419 (the "Rule 419 Escrow Provisions")
will
govern the treatment of the Shares purchased by investors and the investors'
funds tendered in payment thereof. Pursuant to the Rule 419 Escrow
Provisions, the Common Stock certificates evidencing the Shares are to be
issued in the respective names of the investors and promptly deposited into
the Escrow Account upon issuance. The investors' funds will remain as
deposited in the Escrow Account except for up to 10% of the amount on deposit
after such payments which may be released to the Company under Rule 419 (the
"Deposited Funds.")
Rule 419 permits 10% of the proceeds to be disbursed to the Company from
the Rule 419 Escrow Account prior to the consummation of a Business
Combination.
The Company is entitled to 10% of the Deposited Funds of this offering, and
the
Company's current management intends to request release of these funds from
the
Escrow Account. The Company will receive the remainder of the Deposited
Funds in the event a Business Combination is consummated pursuant to the
provisions of Rule 419.
(2) Before deducting offering expenses which include: Blue Sky fees, legal
fees, accounting fees, printing fees, filing fees, estimated at $22,000.
THE COMPANY IS CONDUCTING A BLANK CHECK OFFERING SUBJECT TO THE
COMMISSION'S RULE 419 OF REGULATION C. THE OFFERING PROCEEDS, WHICH WILL BE
$50,000.00, AND THE SECURITIES PURCHASED BY INVESTORS MUST BE DEPOSITED INTO
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, $5,000, OTHERWISE RELEASABLE UNDER THE RULE, THE DEPOSITED FUNDS AND
THE DEPOSITED SECURITIES MAY NOT BE RELEASED UNTIL AN ACQUISITION IS MADE
WHICH MEETS THE CRITERIA SPECIFIED IN RULE 419, AND A SUFFICIENT NUMBER OF
INVESTORS RECONFIRM THEIR INVESTMENT IN ACCORDANCE WITH RULE 419's
PROCEDURES. 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
SO, ALL INVESTORS WILL BE ENTITLED TO THE RETURN OF THEIR PRO RATA PORTION OF
THE DEPOSITED FUNDS AND NONE OF THE DEPOSITED SECURITIES WILL BE ISSUED TO
INVESTORS. IN THE EVENT AN ACQUISITION IS NOT CONSUMMATED WITHIN 18 MONTHS
OF
THE EFFECTIVE DATE, THE DEPOSITED FUNDS WILL BE RETURNED ON A PRO RATA BASIS
TO ALL INVESTORS. (SEE "INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTIONS UNDER
RULE 419.")
FIRST SUNRISE INC.
200 East 89th STREET,
NEW YORK, NEW YORK 10128
The date of this Prospectus is .
<PAGE>
THESE SECURITIES ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK,
AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. SEE "HIGH RISK FACTORS" FOR SPECIAL RISKS CONCERNING THE COMPANY
AND "DILUTION" FOR INFORMATION CONCERNING DILUTION OF THE BOOK VALUE OF THE
INVESTORS' SHARES FROM THE PUBLIC OFFERING PRICE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL
OFFENSE.
THE SHARES HAVE BEEN REGISTERED ONLY IN THE STATE OF NEW YORK, AND MAY
ONLY BE TRADED IN SUCH STATE AND THE DISTRICT OF COLUMBIA. PURCHASERS OF
SUCH
SECURITIES EITHER IN THIS OFFERING OR IN ANY SUBSEQUENT TRADING MARKET WHICH
MAY DEVELOP MUST BE RESIDENTS OF NEW YORK OR THE DISTRICT OF COLUMBIA. THE
COMPANY WILL AMEND THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL
STATES, IF ANY, IN WHICH THE COMPANY'S SECURITIES ARE REGISTERED. (SEE "HIGH
RISK FACTORS - STATE LAW VIOLATIONS.")
PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON
STOCK OF THE COMPANY. THERE IS NO ASSURANCE THAT ANY TRADING MARKET IN THESE
SECURITIES WILL EVER DEVELOP.
Price to Proceeds to
the Public the Company(2)
Per Share $ .50 $ .50
TOTAL (1) $50,000.00 $50,000.00
(1) These Shares are offered by the Company on a "best-efforts, all or none
basis".
Pursuant to the terms of an escrow agreement (the "Escrow Agreement"),
upon receipt by the Company, investors' funds will immediately be deposited
in
the Escrow Account which will be maintained by Atlantic Liberty Savings, 186
Montague Street, Brooklyn, New York, 11201 (the "Escrow Agent"). All
investors' checks or money orders must be made payable to "First Sunrise
Inc.,
and Atlantic Liberty Savings, as Escrow Agent." Unless all 100,000 Shares
have been sold, and $50,000 in payment therefor has been received in the
Escrow Account within 90 days from the date hereof (the "Offering Period"),
or
within an additional 90 days if the Offering Period is extended by the
Company
(the "Extended Offering Period"), all funds held in the Escrow Account will
be
returned to investors in full, without interest thereon or deduction
therefrom.
Upon the sale of all 100,000 Shares within the Offering Period (or the
Extended Offering Period), other terms of the Escrow Agreement which have
been
included therein to comply with Rule 419 (the "Rule 419 Escrow Provisions")
will govern the treatment of the Shares purchased by investors and the
investors' funds tendered in payment thereof. Pursuant to the Rule 419
Escrow
Provisions, the Common Stock certificates evidencing the Shares are to be
issued in the respective names of the investors and promptly deposited into
the Escrow Account upon issuance. The investors' funds will remain as
deposited in the Escrow Account except for up to 10% of the amount on deposit
after such payments which may be released to the Company under Rule 419 (the
"Deposited Funds.")
Rule 419 permits 10% of the proceeds to be disbursed to the Company from
the Rule 419 Escrow Account prior to the consummation of a Business
Combination. The Company is entitled to 10% of the Deposited Funds of this
offering, and the Company's current management intends to request release of
these funds from the Escrow Account. The Company will receive the remainder
of the Deposited Funds in the event a Business Combination is consummated
pursuant to the provisions of Rule 419.
(2) Before deducting offering expenses which include: Blue Sky fees, legal
fees, accounting fees, printing fees, filing fees, estimated at $22,000.
$18,000 of these offering expenses have been paid from the Company's
treasury,
with approximately $4,000 still remaining to be paid from funds in the
Company's treasury. Offering expenses will not be paid from the 10% ($5,000)
which may be released to the Company from the Rule 419 Escrow Account prior
to
the consummation of a Business Combination.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
SB-2 under the Securities Act of 1933 with respect to the Shares offered
hereby. This prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. The Company will be
subject
to the reporting requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), but is currently not a reporting company. The Company will
file periodic reports voluntarily in the event that its obligation to file
such reports is suspended under Section 15(d) of the Exchange Act. The
reports and other information filed by the Company may be inspected and
copied
at the public reference facilities of the Commission in Washington, D.C.
Copies of such material can be obtained from the Public Reference Section of
the Commission, Washington, D.C., 20549, at prescribed rates. Descriptions
contained in this prospectus as to the contents of any contract or other
document filed as an exhibit to the Registration Statement are not
necessarily
complete and each such description is qualified by reference to such contract
or document.
The Company intends to furnish to its stockholders, after the close of
each fiscal year, an annual report relating to the operations of the Company
and containing audited financial statements examined and reported upon by an
independent certified public accountants. In addition, the Company may
furnish to stockholders such other reports as may be authorized, from time to
time, by the Board of Directors. The Company's year end is December 31.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND 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 ANY OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF; HOWEVER, ANY CHANGES THAT MAY HAVE
OCCURRED
ARE NOT MATERIAL TO AN INVESTMENT DECISION. IN THE EVENT THERE HAS BEEN ANY
MATERIAL CHANGES IN THE AFFAIRS OF THE COMPANY, A POST-EFFECTIVE AMENDMENT
WILL BE FILED. THE COMPANY RESERVES THE RIGHT TO REJECT ANY ORDER, IN WHOLE
OR IN PART, FOR THE PURCHASE OF ANY OF THE SHARES OFFERED HEREBY.
Until 90 days after the date when the Deposited Funds and Deposited
Securities
are released from the Escrow Account, all dealers effecting transactions in
the Common Stock, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as underwriters with respect to
their unsold allotments or subscriptions.
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY.................................................. 8
The Company....................................................... 8
The Offering...................................................... 8
Offering in Compliance with Rule 419.............................. 9
High Risk Factors................................................. 9
Determination of Offering Price................................... 9
Use of Proceeds................................................... 10
SUMMARY FINANCIAL INFORMATION....................................... 11
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION
UNDER RULE 419...................................................... 12
Deposit of Offering Proceeds and Securities....................... 12
Prescribed Acquisition Criteria................................... 13
Post-Effective Amendment.......................................... 13
Reconfirmation Offering........................................... 14
Release of Deposited Securities and Deposited Funds............... 14
HIGH RISK FACTORS................................................... 16
DILUTION............................................................ 25
USE OF PROCEEDS..................................................... 27
CAPITALIZATION...................................................... 28
PROPOSED BUSINESS................................................... 30
History and Organization.......................................... 30
Plan of Operation................................................. 30
Evaluation of Business Combination................................ 32
Business Combination.............................................. 33
Regulation ....................................................... 35
Employees......................................................... 35
Facilities........................................................ 35
MANAGEMENT..........................................................
Biography.........................................................
Other Blank Check Companies.......................................
Conflicts of Interest.............................................
Remuneration......................................................
Management Involvement............................................
Management Control................................................
STATEMENT AS TO INDEMNIFICATION.....................................
MARKET FOR THE COMPANY'S COMMON STOCK...............................
CERTAIN TRANSACTIONS................................................
PRINCIPAL STOCKHOLDERS..............................................
DESCRIPTION OF SECURITIES...........................................
Common Stock.....................................................
Future Financing.................................................
Reports to Stockholders..........................................
Dividends........................................................
Transfer Agent...................................................
PLAN OF DISTRIBUTION................................................
EXPIRATION DATE.....................................................
LITIGATION..........................................................
LEGAL OPINIONS......................................................
EXPERTS.............................................................
FURTHER INFORMATION.................................................
FINANCIAL STATEMENTS................................................
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere in the
prospectus and in the Registration Statement. Investors should carefully
consider the information set forth in this prospectus under the heading "High
Risk Factors".
The Company
FIRST SUNRISE INC. (the "Company"), was organized under the laws of the
State of Delaware on April 28, 1997. The Company was organized as a vehicle
to acquire or merge with a business or company, (the "Target Business") (a
"Business Combination"). Management believes that the Company's
characteristics as an enterprise with liquid assets, nominal liabilities, and
flexibility in structuring will make the Company an attractive combination
candidate. None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or discussions and
there are no present plans, proposals, arrangements or understandings with
any
representative of the owners of any business regarding the possibility of an
acquisition or merger transaction. The Company does not intend to engage in
the business of investing, reinvesting or trading in securities as its
primary
business or pursue any business which would render the Company an "investment
company" pursuant to the Investment Company Act of 1940.
Since organization of the Company, its activities have been limited to
the sale of initial shares in connection with its organization and its
preparation in producing a registration statement and prospectus for its
initial public offering. The Company will not engage in any substantive
commercial business following the offering. (See "Proposed Business.")
The Company maintains its office at 200 East 89th Street, New York, New
York 10128. The Company's phone number is 212-876-8578.
The Offering
Securities offered..............................100,000 Shares of Common
Stock,
$.001 par value, being
offered
at $.50 per Share. (See
"Description Securities".)
Common Stock outstanding
prior to the offering............................ 600,000 shares.
Common Stock to be
outstanding after the offering................... 700,000 shares.
Offering Conducted in Compliance with Rule 419
The Company is a blank check company and consequently this offering is
being conducted in compliance with the Commission's Rule 419. Investors have
certain rights and will receive the substantive protection provided by the
rule. To that end, the securities purchased by investors and the funds
received in the offering will be deposited and held in the Escrow Account
until an acquisition meeting specific criteria is completed (hereinafter the
"Deposited Funds" and "Deposited Securities".) Before the acquisition can be
completed and before the Deposited Funds and Deposited Securities can be
released to the Company and the investors, respectively, the Company is
required to update the Registration Statement with a post-effective
amendment,
and within the five days after the effective date thereof, the Company is
required to furnish investors with the prospectus produced thereby containing
the terms of a reconfirmation offer and information regarding the proposed
acquisition candidate and its business, including audited financial
statements. According to Rule 419, investors must have no fewer than 20 and
no more than 45 business days from the effective date of the post-effective
amendment to decide to reconfirm their investment and remain an investor or
alternately, require the return of their investment, minus certain
deductions. Any investor not making any decision within said 45 day period
will automatically have his investment funds returned. The rule further
provides that if the Company does not complete an acquisition meeting the
specified criteria within 18 months of the Effective Date, all of the
Deposited Funds in the Escrow Account must be returned to investors. If the
offering period is extended to its limit (6 months), the Company will have
only 12 months in which to consummate a merger or acquisition. (See
"Investors' Rights and Substantive Protection Under Rule 419 - Reconfirmation
Offering.")
High Risk Factors
Investments in the securities of the Company are highly speculative,
involve a high degree of risk, and should be purchased only by persons who
can
afford to lose their entire investment. See "High Risk Factors" for special
risks concerning the Company and "Dilution" for information concerning
dilution of the book value of the investors shares from the public offering.
(See "High Risk Factors" and "Dilution.")
Determination of Offering Price
The offering price of $.50 per Share for the Shares offered hereby has
been arbitrarily determined by the Company. This price bears no relation to
the Company's assets, book value, or any other customary investment criteria,
including the Company's prior operating history. Among factors considered by
the Company in determining the offering price were estimates of the Company's
business potential, the limited financial resources of the Company, the
amount
of equity and control desired to be retained by the present shareholders, the
amount of dilution to public investors and the general condition of the
securities markets. (See "Determination of Offering Price" and "High Risk
Factors.")
Use of Proceeds
Of the $50,000 offering proceeds deposited into the Escrow Account (the
"Deposited Funds"), 10% ($5,000) may be released to the Company prior to a
reconfirmation offering whereby investors reconfirm their investment in
accordance with procedures proscribed by Rule 419. (See "Investors' Rights
and Substantive Protection Under Rule 419 - Reconfirmation Offering.") The
Company is entitled to such funds, and the Company's current management
intends to request release of these funds from the Escrow Account. The
Company will receive the remainder of the Deposited Funds in the event a
Business Combination is consummated pursuant to the provisions of Rule 419.
The Deposited Funds will remain in the non-interest-bearing Escrow Account
maintained by Atlantic Liberty Savings, which bank is to act as Escrow Agent
pursuant to Rule 419 of Regulation C. No portion of the Deposited Funds will
be expended to acquire a Target Business. The Deposited Funds will be
transferred to the Target Company when a Business Combination is effected.
To
the extent that the Common Stock is used as consideration to effect a
Business
Combination, the balance of the Deposited Funds expended will be used to
finance the operation of the Target Business. The Company has not incurred
and does not intend to incur in the future, any debt in connection with its
organizational activities. Management is not aware of any circumstances
under
which this policy, through their own initiative, may be changed.
Accordingly,
no portion of the proceeds are being used to repay debt. Based on an oral
agreement amongst members of management, management may not accrue
compensation prior to the consummation of a Business Combination. Management
is not aware of any circumstances under which such policy through their own
initiative may be changed. Since the role of present management after a
Business Combination is uncertain, the Company has no ability to determine
what remuneration, if any, will be paid to such persons after such Business
Combination. (See "Use of Proceeds.")
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following is a summary of the Company's consolidated financial
information
and is qualified in its entirety by the audited financial statements
appearing
herein.
8 Months
Ended December 31, 1997
(unaudited)
Statement of Income Data:
Net Sales ............... $ 0
Net Income............... $ <1,750>
Net Income Per Share..... $ 0
Shares Outstanding....... 600,000
As of After
December 31, 1997 Offering (1)
Balance Sheet Data.........
Working Capital.......... $ 3,250 $ 53,250
Total Assets............. $ 29,500 $ 57,500
Long Term Debt........... $ - 0 - $ - 0 -
Total Liabilities........ $ 4,250 $ 4,250
Shareholders' Equity..... $ 25,250 $ 53,250
(1) $45,000 of this amount will be restricted pursuant to Rule 419. Upon the
sale of all the Shares in this offering, the Company will receive Deposited
Funds of approximately $50,000, all of which must be deposited in the Escrow
Account. $5,000 may be used by the Company as capital in order to seek a
Business Combination. The Company's management intends to request release of
these funds from escrow.
<PAGE>
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposit of Offering Proceeds and Securities
Rule 419 requires that offering proceeds after deduction for
underwriting
commissions, underwriting expenses and dealer allowances, if any, and the
securities purchased by investors in this offering, be deposited into an
escrow or trust account (the "Deposited Funds" and "Deposited Securities,"
respectively) governed by an agreement which contains certain terms and
provisions specified by the Rule. Under Rule 419, the Deposited Funds and
Deposited Securities will be released to the Company and to the investors,
respectively, only after the Company has met the following three basic
conditions. First, the Company must execute an agreement(s) for an
acquisition(s) meeting certain prescribed criteria. Second, the Company must
file a post-effective amendment to the Registration Statement which includes
the terms of a reconfirmation offer that must contain conditions prescribed
by
the rules. The post-effective amendment must also contain information
regarding the acquisition candidate(s) and its business(es), including
audited
financial statements. Third, the Company must conduct the reconfirmation
offer and satisfy all of the prescribed conditions, including the condition
that a certain minimum number of investors must elect to remain investors.
After the Company submits a signed representation to the escrow agent that
the
requirements of Rule 419 have been met and after the acquisition(s) is
consummated, the escrow agent can release the Deposited Funds and Deposited
Securities.
Accordingly, the Company has entered into an escrow agreement with
Atlantic Liberty Savings, 186 Montague Street, Brooklyn, New York, 11201 (the
"Escrow Agent") which provides that:
(1) The proceeds are to be deposited into the Escrow Account maintained
by the Escrow Agent promptly upon receipt. Rule 419 permits 10% of the
Deposited Funds to be released to the Company prior to the reconfirmation
offering. The Deposited Funds and any dividends or interest thereon, if any,
are to be held for the sole benefit of the investors and can only be invested
in bank deposits, in money market mutual funds or federal government
securities or securities for which the principal or interest is guaranteed 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 are to be
deposited directly into the Escrow Account promptly upon issuance. The
identity of the investors are to be included on the stock certificates or
other documents evidencing the Deposited Securities. The Deposited
Securities
held in the Escrow Account are to remain as issued, and are to be held for
the
sole benefit of the investors who retain the voting rights, if any, with
respect to the Deposited Securities held in their names. The Deposited
Securities held in the Escrow Account 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 Table 1 of the Employee Retirement
Income Security Act.
(3) Warrants, convertible securities or other derivative securities
relating to Deposited Securities held in the Escrow Account may be exercised
or converted in accordance with their terms; provided that, however, 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 the Escrow Account.
Prescribed Acquisition Criteria
Rule 419 requires that before the Deposited Funds and the Deposited
Securities can be released, the Company must first execute an agreement to
acquire an acquisition candidate(s) meeting certain specified criteria. The
agreement(s) must provide for the acquisition(s) of a business(es) or assets
for which the fair value of the business represents at least 80% of the
maximum offering proceeds. The Agreement(s) must include, as a condition
precedent to their consummation, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm
their investment. For purposes of the offering, the fair value of the
business(es) or assets to be acquired must be at least $40,000 (80% of
$50,000).
Post-Effective Amendment
Once the agreement(s) governing the acquisition(s) of a business(es)
meeting the above criteria has been executed, Rule 419 requires the Company
to
update the registration statement with a post-effective amendment. The
post-effective amendment must contain information about the proposed
acquisition candidate(s) and its business(es), including audited financial
statements, the results of this offering and the use of the funds disbursed
from the Escrow Account. The post-effective amendment must also include the
terms of the reconfirmation offer mandated by Rule 419. The reconfirmation
offer must include certain prescribed conditions which must be satisfied
before the Deposited Funds and Deposited Securities can be released from
escrow.
<PAGE>
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Pursuant to Rule 419, the terms of the
reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be
sent
to each investor whose securities are held in the Escrow Account within 5
business days after the effective date of the post-effective amendment.
(2) Each investor will have no fewer than 20 and no more than 45
business
days from the effective date of the post-effective 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 any
investor within 45 business days following the Effective Date, the pro rata
portion of the Deposited Funds (and any related interest or dividends) held
in
the Escrow Account on such investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt means.
(4) The acquisition(s) will be consummated only if investors
representing 80% of the maximum offering proceeds equaling $40,000 elect to
reconfirm their investment.
(5) If a consummated acquisition (s) has not occurred
by (18 months from the date of this prospectus),
the Deposited Funds held in the Escrow Account shall be returned to all
investors on a pro rata basis within 5 business days by first class mail or
other equally prompt means.
Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released to the
Company and the investors, respectively, after:
(1) The Escrow Agent has received a signed representation from the
Company and any other evidence acceptable by the Escrow Agent that:
(a) The Company has executed an agreement for the acquisition(s)
of
a Target Business(es) for which the fair market value of the business
represents at least 80% of the maximum offering proceeds and has filed the
required post-effective amendment;
(b) The post-effective amendment has been declared effective, that
the mandated reconfirmation offer having the conditions prescribed by Rule
419
has been completed and that the Company has satisfied all of the prescribed
conditions of the reconfirmation offer.
(2) The acquisition(s) of the business(es) with the fair value of at
least 80% of the maximum proceeds.
<PAGE>
HIGH RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE AN
EXTREMELY HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "DILUTION" FOR INFORMATION
CONCERNING DILUTION OF THE BOOK VALUE OF THE INVESTORS' SHARES FROM THE
PUBLIC
OFFERING.
1. Anticipated Change in Control and Management. If the initial public
offering is completely sold, management and current shareholders, including
counsel for the Company, will own approximately 83.3% of the Common Stock of
the Company. Therefore, management and current shareholders would continue
to
control the Company and be able to elect all the directors to the board.
Upon
the successful completion of a Business Combination, the Company anticipates
that it will have to issue to the Target Company authorized but unissued
Common Stock in the Company which when issued will comprise a majority of the
then issued and outstanding shares of Common Stock of the Company.
Therefore,
the Company anticipates that upon the consummation of a Business Combination
there will be a change of control in the Company which will most likely
result
in the resignation or removal of the Company's present officers and
directors. If there is a change in management, no assurance can be given as
to the experience or qualification of such persons either in the operation of
the Company's activities or in the operation of the business, assets or
property being acquired. (See "Proposed Business.")
2. New Business Development Stage. The Company was incorporated in
the
State of Delaware on April 28, 1997, and has had no operations to date. The
Company was formed to serve as a vehicle to effect a Business Combination.
There is no assurance the Company's intended acquisition or merger activities
will be successful or result in revenue or profit to the Company. Since the
Company has not yet attempted to seek a Business Combination, and due to the
Company's lack of experience, there is only a limited basis upon which to
evaluate the Company's prospectus for achieving its intended business
objectives. The Company faces all risks which are associated with any new
business. Any investment in this Company should be considered an extremely
high risk investment. As of the date of this prospectus, the Company has not
entered into or negotiated any arrangements for a Business Combination with a
Target Business. (See "Proposed Business.")
3. Use of Proceeds. 90% of the net proceeds of this offering,
pursuant
to Rule 419, must be held in escrow pending the consummation of a Business
Combination which transaction must occur within eighteen (18) months of the
Effective Date herein. The funds from this offering may not be sufficient in
order for the Company to find a Business Combination. Rule 419 permits 10%
of
the net proceeds to be disbursed to the Company from the Rule 419 Escrow
Account prior to the consummation of a Business Combination. The Company
intends to request release of this money. If the Company does not request
release of these funds, the Company will receive these funds in the event a
business combination is consummated in accordance with Rule 419. (See "Use
of
Proceeds", "Business" and "Investors' Rights and Substantive Protection under
Rule 419.")
4. No Access to Investors' Funds While Held In Escrow . The Company is
offering for sale 100,000 Shares, at $.50 per Share. The maximum offering
period is six months.
There is no commitment by any other person to purchase all or any portion
of the Shares offered hereby, and consequently there is no assurance that all
100,000 Shares will be sold during the Offering Period. Investors have no
right to the return or the use of their funds and cannot earn interest
thereon
until conclusion of the offering which may continue for a period of up to six
months after the Effective Date. Even upon the sale of the 100,000 Shares,
the investors funds (reduced to reflect payments for expense amounts, if any,
otherwise released as permitted by Rule 419) may remain in the Escrow
Account,
which is non-interest bearing, and the investors will have no right to the
return of or the use of their funds for a period of 18 months from the
Effective Date.
Investors will be offered return of their pro rata portion of the funds
held in escrow 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 Business meeting the above acquisition criteria, investors
will have to wait 18 months from the Effective Date before a pro rata portion
of their funds is returned without interest thereon.
5. 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 investments. If,
after completion of the reconfirmation offering, a sufficient number of
investors do not reconfirm their investment, the business combination will
not
be consummated. In such event, none of the Deposited Securities held in
escrow will be issued and the Deposited Funds will be returned to investors
on
a pro rata basis.
Up to 20% of the Shares may be purchased by officers, directors, current
shareholders of the Company and any of their affiliates or associates.
Shares
purchased by such insiders will be included in determining whether investors
representing 80% of the maximum offering proceeds elect to reconfirm their
investment. The substantive benefit of an objective 80% reconfirmation by
investors may be reduced, as it is likely that such insiders will elect to
reconfirm a proposed Business Combination.
6. Extremely Limited Capitalization. As of December 31, 1997 ,
the Company had assets of $29,500 and $4,250 of
liabilities. There was $7,500 available in the Company's treasury as
of June , 1997. Upon the sale of all the Shares in this offering, the
Company will receive net proceeds of approximately $50,000, all of which must
be deposited in the Escrow Account. $5,000 may be used by the Company as
capital in order to seek a Business Combination. The Company's management
intends to request release of these funds from escrow. If the Company does
not request release of these funds, the Company will receive the funds in the
event a Business Combination is consummated in accordance with Rule 419. The
costs of conducting the Company's business activities will be paid by the
money in the Company's treasury. Assuming suitable prospects are identified,
if ever, the Company may be unable to complete an acquisition or merger due to
a lack of sufficient funds. Therefore, the Company may require additional
financing in the future in order to consummate a Business Combination. Such
financing may consist of the issuance of debt or equity securities. The
Company can not give any assurances that such funds will be available, if
needed, or whether they will be available on terms acceptable to the Company.
It is unlikely that the Company will need additional funds, but it may occur
if a Target Company insists the Company obtain additional capital. Such
financing will not occur without shareholder approval. The Company will not
borrow funds from its officers, directors or current shareholders. If the
Company does not
consummate an acquisition or purchase within 18 months of the Effective Date,
the Company must return all the funds, minus certain deductions, back to the
investors. (See "Use of Proceeds," "Proposed Business," and "Investors'
Rights and Substantive Protection Under Rule 419.")
7. No Transfer of Escrowed Securities. No transfer or other
disposition
of the Deposited Securities shall be permitted 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 as amended, or Title 7
of the Employee Retirement Income Security Act, or the rules thereunder.
Pursuant to Rule 15g-8, it is unlawful for any person to sell or offer to
sell
the securities (or any interest in or related to the securities) held in the
Rule 419 Escrow Account other than pursuant to a qualified domestic relations
order (i.e., divorce proceedings). Therefore, any and all 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 securities are prohibited. It is further
prohibited to sell any interest in the Deposited Securities (or any
derivative
securities) whether or not physical delivery is required. (See "Investors'
Rights and Substantive Protection Under Rule 419.")
8. No Assurances of a Public Market. Pursuant to Rule 419, all
securities purchased in an offering by a blank check company, as well as
securities issued in connection with an offering to underwriters, promoters
or
others as compensation or otherwise, must be placed in the Rule 419 Escrow
Account. These securities will not be released from escrow until the
consummation of a merger or acquisition as provided for in Rule 419. There
is
no present market for the Common Stock of the Company and there is no
likelihood of any active and liquid public trading market developing
following
the release of securities from the Rule 419 account. Thus, shareholders may
find it difficult to sell their shares. To date, neither the Company nor
anyone acting on its behalf has taken any affirmative steps to request or
encourage any broker dealer to act as a market maker for the Company's Common
Stock. Further, there have been no discussions or understandings,
preliminary
or otherwise, between the Company or anyone acting on its behalf and any
market maker regarding the participation of any such market maker in the
future trading market, if any, for the Company's Common Stock. Present
management of the Company has no intention of seeking a market maker for the
Company's Common Stock at any time prior to the reconfirmation offer to be
conducted prior to the consummation of a Business Combination. The officers
of the Company after the consummation of a Business Combination may employ
consultants or advisors to obtain such market makers. Management expects
that
discussions in this area will ultimately be initiated by the management of
the
Company in control of the entity after a Business Combination is reconfirmed
by the stockholders. There is no likelihood of any active and liquid trading
market for the Company's Common Stock developing. (See "Market for the
Company's Common Stock" and "Investors' Rights and Substantive Protection
Under Rule 419.")
9. Unspecified Industry and Acquired Business; Unascertained Risks. To
date, the Company has not selected any particular industry in which to
concentrate its Business Combination efforts. In relation to its
competitors,
the Company is and will continue to be an insignificant participant in the
business of seeking Business Combinations. A large number of established and
well-financed entities, including venture capital firms, have recently
increased their merger and acquisition activities. 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 suitable merger or
acquisition
candidates and successfully consummating a proposed merger or acquisition.
Also, the Company will be competing with a large number of other small, blank
check companies. (See "Conflicts of Interest - Management's Fiduciary Duty"
and "Business.")
10. Conflict of Interest - Management's Fiduciary Duties. A conflict
of interest may arise between management's personal pecuniary benefits and
management's fiduciary duty to the shareholders of the Company. Investors
should note that the present shareholders of the Company, which include
counsels' interest, will own approximately 83.3% of the Company after the
offering is completed and would therefore have continuing control of the
Company. Schonfeld & Weinstein, L.L.P., counsel to the Company, each own
50,000 shares of the Company's common stock. Schonfeld & Weinstein,
L.L.P.'s, shares comprise 8.3% of the outstanding shares before the
offering,
and 7.1% after the offering, respectively. In addition, Eng Chye Low,
President of the Company, owns 50,000 shares comprising 8.33% of the
outstanding shares before the offering and 7.14% after the offering. Steven
Wainick, Secretary of the Company, and Rene Kunz, Director each own 100,000
shares, each comprising 16.7% of the shares before the Offering and 19.3%
after the Offering. Thus, Management of the Company beneficially owns
250,000
shares, which comprise 41.7% of the Company before the offering and 35.7%
after the offering. Further, management's interest in their own pecuniary
benefits may at some point compromise their fiduciary duty to the Company's
shareholders. No proceeds from this offering will be used to purchase
directly or indirectly any shares of the Common Stock owned by management or
any present shareholder, director or promoter. (See "Management.")
11. Conflicts of Interest. The Company's directors and officers are or
may become, in their individual capacities, officers, directors, controlling
shareholders and/or partners of other entities engaged in a variety of
businesses. Each officer and director of the Company is engaged in business
activities outside of the Company, and the amount of time they will devote to
the Company's business will only be about five (5) to twenty (20) hours each
per month. There exists potential conflicts of interest including, among
other things, time, effort and Business Combinations with such other business
entities. Conflicts with other blank check companies with which members of
Management may become affiliated in the future may arise in the pursuit of
Business Combinations. To aid the resolution of such conflicts, the Company
will adopt a procedure whereby a special meeting of the Company's
shareholders
will be called to vote upon a Business Combination with an affiliated entity,
and shareholders who also hold securities of such affiliated entity will be
required to vote their shares of the Company's stock in the same proportion
as
the Company's publicly held shares are voted. Such procedure shall be in the
form of an oral agreement between Management and the Company.
The Company's officers and directors are not currently involved in other
blank
check companies. The Company's officers and directors may be involved as
officers and directors of other blank check companies in the future. A
potential conflict of interest may result if and when any officer of the
Company becomes an officer or director of another Company, especially another
blank check company. There is presently no requirement contained in the
Company's Articles of Incorporation, Bylaws or minutes which requires that
officers and directors of the Company disclose to the Company Target
Businesses which come to their attention. The officers and directors do,
however, have a fiduciary duty of loyalty to the Company to disclose to the
Company any Target Businesses which come to their attention in their capacity
as an officer and/or director of the Company or otherwise. Included in this
duty would be Target Businesses which the person learns about through his
involvement as an officer and director of another Company. The Company will
not purchase the assets of any Company which is beneficially owned by any
officer, director, promoter or affiliate or associate of this Company.
Management plans on examining a Target Business's financial statements
(including balance sheets, statements of cash flow, stockholders' equity,
etc.) its assets and liabilities and its projections for future growth. This
information will also be considered by the shareholders who, based on this
information, will determine, as part of the Rule 419 reconfirmation offering,
whether a merger with such a Target Business is "beneficial" to the Company.
(See "Management.")
12. Potential Related Party Business Combination. The Company may
acquire a business in which the Company's promoters, management or their
affiliates own a beneficial interest. In such event, such transaction may be
considered a related party transaction not at arms-length. No related party
transaction is presently contemplated. If in the event a related party
transaction is contemplated sometime in the future, the Company intends to
seek shareholder approval through a vote of shareholders. However,
shareholders objecting to any such related party transaction will be able
only
to request the return of the pro-rata portion of their invested funds held in
escrow in connection with the reconfirmation offering to be conducted in
accordance with Rule 419 upon execution of the acquisition agreement.
13. Possible Disadvantages of Blank Check Offering. The Company's
business may involve the acquisition of or merger with a company which does
not need substantial additional capital but which desires to establish a
public trading market for its shares. A company which seeks the Company's
participation in attempting to consolidate its operations through a merger,
reorganization, asset acquisition, or some other form of combination may
desire to do so to avoid what they may deem to be adverse consequences of
themselves undertaking a public offering. Factors considered may include
time
delays, significant expense, loss of voting control and the inability or
unwillingness to comply with various federal and state laws enacted for the
protection of investors. In making an investment in the Company, investors
should recognize that they may be doing so under terms which may ultimately
be
less favorable than making an investment directly in a company with a
specific
business. Investors herein may not be afforded an opportunity to
specifically
approve or consent to any particular stock buy-out transaction. (See
"Proposed Business.")
14. Lack of Market Research or Identification of Acquisition or Merger
Candidate. The Company has neither conducted nor have others made available
to it results of market research concerning the feasibility of a Business
Combination with a Target Business. Therefore, management has no assurances
that market demand exists for an acquisition or merger as contemplated by the
Company. 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 form a Business Combination with a
Target Business on terms favorable to the Company. (See "Proposed Business.")
15. Success Dependent on Management. The Company's officers and
director have only limited experience in the business activities in which the
Company intends to engage. Eng Chye Low, President of the Company, was
president and a director of Jackson Holding Corp., a blank check company,
which merged with China Energy Resources Corporation, a British Virgin Islands
corporation, in July 1996. Management believes it has sufficient
experience to implement the Company's plan, although there is no assurance
that additional managerial assistance will not be required. Success of the
Company depends on the active participation of its officers. These officers
have not entered into employment agreements with the Company and they are 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. (See "Proposed
Business," "Management", "Use Of Proceeds," and "Prior Blank
Check Offerings" ).
16. No Current Contemplated Business Combinations. As of the date of
this prospectus, none of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or discussions and
there are no present plans, proposals, arrangements or understandings with
any
representatives of the owners of any business (Target Business) regarding the
possibility of a Business Combination.
17. Lack of Diversification. In the event the Company is successful in
identifying and evaluating a suitable Business Combination, the Company will
in all likelihood, be required to issue its Common Stock in an acquisition or
merger transaction. Inasmuch as the Company's capitalization is limited and
the issuance of additional Common Stock will result in a dilution of interest
for present and prospective shareholders, it is unlikely the Company will be
capable of negotiating more than one acquisition or merger. Consequently,
the
Company's lack of diversification may subject the Company to economic
fluctuatio
n within a particular industry in which a Target Company conducts business.
(See "Proposed Business.")
18. Regulation. 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. The regulatory scope of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), was enacted
principally for the purpose of regulatory vehicles for pooled investments in
securities, extends generally to Companies primarily in the business of
investing, reinvesting, owning, holding or trading securities. The
Investment
Company Act may, however, also be deemed to be applicable to a Company which
does not intend to be characterized as an Investment Company but which,
nevertheless, engages in activities which may be deemed to be within the
definition of the scope of certain provisions of the Investment Company Act.
The Company believes that its principle activities will not subject it to
regulation under the Investment Company Act. Nevertheless, there can be no
assurances that the Company will not be deemed to be an Investment Company.
The funds may be invested primarily in certificates of deposit, interest
bearing savings accounts or government securities. In the event the Company
is deemed to be an Investment Company, the Company may be subject to certain
restrictions relating to the Company's activities, including restrictions on
the nature of its investments and the issuance of securities. 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.
19. Taxation. In the course of any acquisition or merger the Company
may undertake, a substantial amount of attention will be focused upon federal
and state tax consequences to both the Company and the "target" company.
Presently, under the provisions of federal and various state tax laws, a
qualified reorganization between business entities will generally result in
tax-free treatment to the parties to the reorganization. While the Company
expects to undertake any merger or acquisition so as to minimize federal and
state tax consequences to both the Company and the "target" company, there is
no assurance that such Business Combination will meet the statutory
requirements of a 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 a substantial adverse effect on the Company. (See
"Business-Regulation and Taxation.")
20. No Dividends. The Company was only recently organized, has no
earnings, and has paid no dividends to date. Since the Company was formed as
a blank check company with its only intended business being the search for an
appropriate Business Combination, the Company does not anticipate having any
earnings until such time that a Business Combination is effected. However,
there are no assurances that upon the consummation of a Business Combination,
the Company will have earnings or issue dividends. Therefore, it is not
expected that cash dividends will be paid, if at all, to stockholders until
after a Business Combination is effected. (See "Dividends.")
21. Restricted Resale of the Securities. The 600,000 shares of the
Company's Common Stock presently issued and outstanding as of the date hereof
are "restricted securities" as that term is defined under the Securities Act
of 1933 (the "Securities Act"), as amended, and in the future may be sold in
compliance with Rule 144 of the Securities Act, or pursuant to a Registration
Statement filed under the Securities Act. Rule 144 provides, in essence,
that
a person holding restricted securities for a period of one (1) year may sell
those securities in unsolicited brokerage transactions or in transactions
with
a market maker, in an amount equal to one (1%) percent of the Company's
outstanding Common Stock every three (3) months. Sales of unrestricted
shares
by affiliates of the Company are also subject to the same limitation upon the
number of shares that may be sold in any three (3) month period. If all the
Shares offered herein are sold, the holders of the restricted shares may each
sell 6,000 shares during any three (3) month period after April 28, 1998.
Additionally, Rule 144 requires that an issuer of securities make available
adequate current public information with respect to the issuer. Such
information is deemed available if the issuer satisfies the reporting
requirements of sections 13 or 15(d) of the Securities and Exchange Act of
1934 and of Rule 15c2-11 thereunder. Rule 144(k) also permits the
termination
of certain restrictions on sales of restricted securities by persons who were
not affiliates of the Company at the time of the sale and have not been
affiliates in the preceding three (3) months. Such persons must satisfy a
two
(2) year holding period. There is no limitation on such sales and there is
no
requirement regarding adequate current public information. Investors should
be aware that sales under Rule 144 or 144(k), or pursuant to a Registration
Statement filed under the Act, may have a depressive effect on the market
price of the Company's securities in any market which may develop for such
shares.
22. Arbitrary Determination of Offering Price. The initial offering
price of $.50 per Share has been arbitrarily determined by the Company, and
bears no relationship whatsoever to the Company's assets, earnings, book
value
or any other objective standard of value. Among the factors considered by
the
Company were the lack of operating history of the Company, the proceeds to be
raised by the offering, the amount of capital to be contributed by the public
in proportion to the amount of stock to be retained by present stockholders,
the relative requirements of the Company, and the current market conditions
in
the over-the-counter market.
23. Control by Present Management and Shareholders. Investors should
note that the present shareholders of the Company, will own approximately
83.3% of the Company after the offering is completed and would therefore have
continuing control of the Company. In addition, Eng Chye Low, President of
the Company, owns 50,000 shares, comprising 8.3% before the offering and 7.1%
after the offering and Steven Wainick, Secretary of the Company, and Rene
Kunz, Director each own 100,000 shares, comprising 16.7% of the shares before
the Offering and 14.3% after the Offering. Thus, Management of the Company
beneficially owns 250,000 shares, which comprise 41.7% of the Company before
the offering and 35.7% after the offering.
Assuming the sale of all the Shares offered, the Shares of Common Stock
purchased by the public will represent approximately 16.7% of the Company's
outstanding Common Stock after the completion of this offering. Therefore,
the present stockholders for the Company and its management, will own an
83.3%
interest in the corporation and will continue to be able to elect all of the
Company's directors, appoint its officers, and control the Company's affairs
and operations. The Company's Articles of Incorporation do not provide for
cumulative voting. There are no arrangements, agreements or understandings
between non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs or to exercise their voting rights to
continue to elect the current directors. Non-management shareholders will
exercise their voting rights to continue to elect the current directors to
the
Company's board. (See "Principal Stockholders", "Dilution" and "Description
of Securities").
24. Immediate Substantial Dilution. As of December 31, 1997 ,
the net tangible book value of the Company's Common Stock was approximately
$.01 per share, substantially less than the $.50 per share to be paid by the
public investors. In the event all the Shares are sold, public investors
will
sustain an immediate dilution of approximately $ .42 per share in the book
value of public investors' holdings. (See "Dilution.")
25. Purchase of Shares. The Company's officers, directors, current
shareholders and any of their affiliates or associates may purchase a portion
of the Shares offered in this offering. The aggregate number of Shares which
may be purchased by such persons shall not exceed 20% of the number of Shares
sold in this offering. Such purchases may be made in order to close the "all
or nothing" offering. Shares purchased by the Company's officers, directors
and principal shareholders will be acquired for investment purposes and not
with a view towards distribution.
26. State Law Violations. The Company will use its best efforts to
ensure that sales of Shares will only occur in those states in which such
sales would not be a violation of any of said states laws. The Company will
notify the Transfer Agent to aid in such compliance. The Company's
securities
may be sold in New York State and the District of Columbia only, and may be
resold by investors in New York and the District of Columbia only.
27. Business Combination Through A Leveraged Transaction. The Company
is not prohibited from consummating a Business Combination through a
leveraged
transaction. However, investors should be aware that such a transaction
could
result in the Company's assets being mortgaged and possibly foreclosed. 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. Such leverage may also subject the Company's operations to strict
financial controls and significant interest expense.
28. Penny Stock Regulation. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally
are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information
about
penny stocks and the nature and level of risks in the penny stock market.
The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In
addition,
the penny stock rules require that prior to a transaction in a penny stock
not
otherwise exempt from such rules the broker-dealer must make a special
written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the
penny
stock rules. If the Company's Common Stock becomes subject to the Penny
Stock
rules, investors in this offering may find it more difficult to sell their
shares.
<PAGE>
DILUTION
The net tangible book value of the Company as of December 31, 1997
was $ .01. Net tangible book value is the net tangible assets of the Company
(total assets less total liabilities and intangible assets) (See "Financial
Statements.") The public offering price per share is $.50. The net tangible
book value per share after the offering will be $.05. The shares purchased
by
investors in this offering will be diluted $.42 or 84%. As of December
31, 1997 there were 600,000 shares of the Company's Common Stock
outstanding (See "Certain Transactions").
Dilution represents the difference between the public offering price and the
net tangible book value per share immediately after the completion of the
public offering. The following table illustrates this dilution to be
experienced by investors in the offering:
Public offering price per share.............................. $ .50
Net tangible book value per share before offering............ $ .01
Net tangible book value per share after offering............. $ .08
Increase per share attributable to shares offered hereby..... $ .07
Dilution to public investors................................. $ .42
Money Net tangible
received for book value per
# shares shares before share before
before offering offering offering
600,000 $ 27,000 $ .01
- - -------------------------------------------------------------------------
Total Net tangible
Total Amount of Book Value
# of Shares Money Received Per Share
After Offering For Shares After Offering
700,000 $ 77,000 $ .08
- - --------------------------------------------------------------------------
Increase
Net Tangible Net tangible Per Share
Book Value Per Book Value Attributed
Share After Shares Before To Shares
Offering Offering Offered Hereby
$ .08 $ .01 $ .07
- - --------------------------------------------------------------------------
Net tangible
Book Value Per
Public Offering Share After Dilution to
Price Per Share Offering Public Investors
$ .50 $ .08 $ .42
As of the date of this prospectus, the following table sets forth the
percentage of equity to be purchased by public investors in this offering
compared to the percentage of equity to be owned by the present stockholders,
and the comparative amounts paid for the shares by the public investors as
compared to the total consideration paid by the present stockholders of the
Company. (See "Certain Transactions" and footnotes to "Financial
Statements.")
Approx.
Percent Approx.
Total Percent
Public Shares Shares Total Total
Stockholders Purchased Outstanding(1) Consideration Consideration
New Investors 100,000 14.29% $ 50,000 64.94%
Existing(1)
Shareholders 600,000 85.71% $ 27,000 35.06%
(1) 600,000 Shares of Common Stock were sold prior to this offering at $.045
per Share. These Shares are not being registered. (See "Certain
Transactions")
<PAGE>
USE OF PROCEEDS
The gross proceeds of this offering will be $50,000. Pursuant to Rule
15c2-4 under the Securities Exchange Act of 1934 (the "Exchange Act"), all of
these proceeds must be held in escrow until all of the Shares are sold.
Pursuant to Rule 419 under the Securities Act, after all of the Shares are
sold, 10% of the Deposited Funds ($5,000) may be released from escrow to the
Company. The Company intends to request release of this 10%. In the event
that the Company does not request release of these funds, the Company will
receive these funds in the event a Business Combination is consummated in
accordance with Rule 419. Upon the consummation of a Business Combination
and
the reconfirmation thereof, which reconfirmation offering must precede such
consummation, pursuant to Rule 419, $50,000 (plus any dividends received, but
less any portion disbursed to the Company pursuant to Rule 419(b)(2)(C)(vi)
and any amount returned to investors who did not reconfirm their investment
pursuant to Rule 419) will be released the Company.
Approximate
Approximate Percentage
Amount Total
Escrowed funds pending
Business Combination (1)(2)
$45,000 90%
(1) Does not include the estimated $19,000 of offering expenses. The
expenses of the offering will be paid by money in the Company's treasury.
(2) The Company expects to request release of 10% of the Deposited Funds
($5,000) pursuant to Rule 419.
While the Company presently anticipates that it will be able to locate
and consummate a Business Combination, which adheres to the criteria
discussed
under "Investors' Rights and Substantive Protection Under Rule 419", if the
Company determines that a Business Combination requires additional funds, it
may seek such additional financing through loans, issuance of additional
securities or through other financing arrangements. No such financial
arrangements presently exist, and no assurances can be given that such
additional financing will be available or, if available, whether such
additional financing will be on terms acceptable to the Company. Persons
purchasing Shares in this offering will not, unless required by law,
participate in the determination of whether to obtain additional financing or
as to the terms of such financing. Because of the Company's limited
resources, it is likely that the Company will become involved in only one
Business Combination.
The Company does not intend to advertise or promote the Company.
Instead, the Company's management will actively search for potential Target
Businesses. In the event management decides to advertise (in the form of an
ad in a legal publication) to attract a Target Business, the cost of such
advertising will be assumed by management.
Upon the consummation of a Business Combination, the Company anticipates
that there will be a change in the Company's management, which management may
decide to change the policies as to the use of proceeds as stated herein.
The
Company's present management anticipates that the Deposited Funds will be
used
by the post-merger management at its sole discretion. No compensation will be
paid or due or owing to any officer or director until after a Business
Combination is consummated. Such policy is based upon a written agreement
among management. Management is unaware of any circumstances under which
such
policy through their own initiative may be changed. The Company is not
presently considering any outside individual for a consulting position;
however, the Company cannot rule out the need for outside consultants in the
future. No decisions have been made as to payment of these consultants.
Present management of the Company will not make any loans of the $5,000
available from the Deposited Funds of this offering, nor will present
management borrow funds and use either the Company's working capital or
Deposited Funds as security for such. This policy is based upon an oral
agreement among management. Management is unaware of any circumstances under
which such policy through their own initiative may be changed. Once the
Deposited Funds are released from escrow the then existing management may
loan
the proceeds or borrow funds and use the proceeds as security for such loan,
on terms it deems appropriate.
The proceeds received in this offering will be put into the Escrow
Account pending consummation of a Business Combination and reconfirmation by
investors. Such Deposited Funds will be in an insured depository institution
account in either a certificate of deposit, interest bearing savings account
or in short term government securities as placed by Atlantic Liberty Savings.
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1997 , and as adjusted to give effect to the sale of 100,000
Shares offered by the Company.
December 31, 1997
____________________________
Actual As Adjusted
_________ ___________
Long-term debt $ 0 $ 0
Stockholders' equity:
Common stock, $.001 par value;
authorized 20,000,000 shares,
issued and outstanding
600,000 shares and 700,000
shares, as adjusted $ 600 $ 700
Additional paid-in capital $ 26,400 $ 54,300
Deficit accumulated during
the development period $ <1,750> $ <1,750>
__________ __________
Total stockholders' equity $ 25,250 $ 53,250
Total capitalization $ 25,250 $ 53,250
<PAGE>
PROPOSED BUSINESS
History and Organization
The Company was organized under the laws of the State of Delaware on
April 28, 1997. Since inception, the primary activity of the Company has
been
directed to organizational efforts and obtaining initial financing. The
Company was formed as a vehicle to pursue a Business Combination. The
Company
has not engaged in any preliminary efforts intended to identify possible
Business Combination and has neither conducted negotiations concerning, nor
entered into a letter of intent concerning any such Target Business.
The Company's initial public offering will comprise 100,000 Shares of
Common Stock at a purchase price of $.50 per Share.
The Company is filing this registration statement in order to effect a
public offering for its securities. (See "Description of Securities.")
Plan of Operation
The Company was organized for the purposes of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, engaging in
Business Combinations presented to it by persons or firms who or which desire
to employ the Company's funds in their business or to seek the perceived
advantages of publicly-held corporation. The Company's principal business
objective will be to seek long-term growth potential in a Business
Combination
venture rather than to seek immediate, short-term earnings. The Company will
not restrict its search to any specific business, industry or geographical
location, and the Company may engage in a Business Combination.
The Company does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and
analyzing
Business Combinations will be paid with money in the Company's treasury.
Persons purchasing shares in this offering and other shareholders will most
likely not have the opportunity to participate in any of these decisions.
The
Company's proposed business is sometimes referred to as a "blank check"
company because investors will entrust their investment monies to the
Company's management before they have a chance to analyze any ultimate use to
which their money may be put. Although substantially all of the Deposited
Funds of this offering are intended to be utilized generally to effect a
Business Combination, such proceeds are not otherwise being designated for
any
specific purposes. Pursuant to Rule 419, prospective investors who invest in
the Company will have an opportunity to evaluate the specific merits or risks
of only the Business Combination management decides to enter into. Cost
overruns will be borne equally by all current shareholders of the Company.
Such cost overruns will not be charged to the Company, but will be funded
through current shareholders' voluntary contribution of capital. This is
based on an oral agreement between current shareholders and the Company.
The Company may seek a Business Combination in the form of firms which
have recently commenced operations, are developing companies in need of
additional funds for expansion into new products or markets, are seeking to
develop a new product or service, or are established businesses which may be
experiencing financial or operating difficulties and are in need of
additional
capital. A Business Combination may involve the acquisition of, or merger
with, a Company which does not need substantial additional capital but which
desires to establish a public trading market for its shares, while avoiding
what it may deem to be adverse consequences of undertaking a public offering
itself, such as time delays, significant expense, loss of voting control and
compliance with various Federal and State securities laws.
The Company will not acquire a Target Business unless the fair value of
the Target Business represents 80% of the maximum offering proceeds (the
"Fair
Market Value Test.") To determine the fair market value of a Target Business,
the Company's management will examine the audited financial statements
(including balance sheets and statements of cash flow and stockholders'
equity) of any candidate, focusing attention on a potential Target Business's
assets, liabilities, sales and net worth. In addition, management of the
Company will participate in a personal inspection of any potential Target
Business. If the Company determines that the financial statements of a
proposed Target Business does not clearly indicate that the Fair Market Value
Test has been satisfied, the Company will obtain an opinion from an
investment
banking firm (which is a member of National Association of Securities
Dealers,
Inc., (the "NASD") with respect to the satisfaction of such criteria. (See
"Investors' Rights and Substantive Protection Under Rule 419.")
Based upon management's experience with and knowledge of blank check
companies, the probable desire on the part of the owners of target businesses
to assume voting control over the Company (to avoid tax consequences or to
have complete authority to manage the business) will almost assure that the
Company will combine with just one target business. Management also
anticipates that upon consummation of a Business Combination, there will be a
change in control in the Company which will most likely result in the
resignation or removal of the Company's present officers and directors.
Eng Chye Low, President of the Company, was president and a director
of Jackson Holding Corp., a blank check company which merged with China Energy
Resources Corporation in July 1996. He has no other experience with any blank
check companies. Steven Wainick, Secretary, Treasurer and a director of the
Company, was secretary of Mandi of Essex, Ltd., a blank check company, which
merged with CityScape Financial Services, in 1991. Mr. Wainick has had no
further experience with blank check companies.
None of the Company's officers or directors have had any preliminary
contact or discussions with any representative of any other entity regarding
a
Business Combination. Accordingly, any Target Business that is selected may
be a financially unstable Company or an entity in its early stage of
development or growth (including entities without established records of
sales
or earnings), the Company will become subjected to numerous risks inherent in
the business and operations of financially unstable and early stage or
potential emerging growth companies. In addition, the Company may affect a
Business Combination with an entity in an industry characterized by a high
level of risk, and although management will endeavor to evaluate the risks
inherent in a particular industry or Target Business, there can be no
assurance that the Company will properly ascertain or assess all significant
risks. (See "High Risk Factors.")
Management anticipates that it may be able to effect only one potential
Business Combination, due primarily to the Company's limited financing, and
the dilution of interest for present and prospective shareholders of the
Company, which is likely to occur as a result of Management's plan to offer a
controlling interest in the Company to a Target Business in order to achieve
a
tax free reorganization. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from
another.
The Company anticipates that the selection of a Business Combination
will
be complex and extremely risky. Because of general economic conditions,
rapid
technological advances being made in some industries, and shortages of
available capital, management believes that there are numerous firms seeking
even the limited additional capital which the Company will have and/or the
benefits of a publicly traded corporation. Such perceived benefits of a
publicly traded corporation may include facilitating or improving the terms
on
which additional equity financing may be sought, providing liquidity for the
principals of a business, creating a means for providing incentive stock
options or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for all shareholders, and other
factors.
Potentially available Business Combinations may occur 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
extremely difficult and complex.
Evaluation of Business Combinations
The analysis of Business Combinations will be undertaken by or under the
supervision of the officers and directors of the Company, none of whom is a
professional business analyst. (See "Management.") Management intends to
concentrate on identifying preliminary prospective Business Combinations
which
may be brought to its attention through present associations. In analyzing
prospective Business Combinations, management will consider such matters as
the available technical, financial, and managerial resources; working capital
and other financial requirements; history of operation, 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 or products, services, or trades; name identification; and other
relevant factors. Officers and directors of the Company will meet personally
with management and key personnel of the firm sponsoring 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.
Since the Company will be subject to Section 13 or 15 (d) of the
Securities Exchange Act of 1934, it will 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 upon the relative size of the acquisition. Consequently,
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. In the event the
Company's obligation to file periodic reports is suspended under Section
15(d), the Company intends on voluntarily filing such reports.
It may be anticipated that any Business Combination will present certain
risks. Many of these risks cannot be adequately identified prior to
selection, and investors herein must, therefore, depend on the ability of
management to identify and evaluate such risks. In the case of some of the
potential combinations available to the Company, it may be anticipated that
the promoters thereof have been unable to develop a going concern or that
such
business is in its development stage in that it has not generated significant
revenues from its principal business activity prior to the Company's merger
or
acquisition, and there is a risk, even after the consummation of such
Business
Combinations and the related expenditure of the Company's funds, that the
combined enterprises will still be unable to become a going concern or
advance
beyond the development stage. Many of the Combinations may involve new and
untested products, processes, or market strategies which may not succeed.
Such risks will be assumed by the Company and, therefore, its shareholders.
Business Combinations
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 purchase stock or assets of an existing business.
Investors should note that 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 then-shareholders, including
purchasers in this offering. On the consummation of a Business Combination,
the Target Business will have significantly more assets than the Company;
therefore, management plans to offer a controlling interest in the Company to
the Target Business. 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
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1954, as amended (the "Code"). In order to obtain
tax-free treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting 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, which would be likely to result in
significant
dilution in the equity of such shareholders. Management of the Company may
choose to avail the Company of these provisions. In addition, a majority of
all of the Company's directors and officers may, as part of the terms of the
acquisition transaction, resign as directors and officers. (See "High Risk
Factors" and "Dilution.")
Management will not 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 Business Combination unless such a purchase is
requested by a Target Company as a condition to a merger or acquisition. The
officers and directors of the Company who own Common Stock have agreed to
comply with this provision which is based on a written agreement among
management. Management is unaware of any circumstances under which such
policy through their own initiative may be changed. (See "Management").
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 this 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. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's Common Stock may have a depressive effect on
such
market.
As a part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key
personnel, and take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management expertise.
The manner of the Business Combination will depend on the nature of the
Target Business, the respective needs and desires of the Company and other
parties, the management of the Target Business opportunity, and the relative
negotiating strength of the Company and such other management.
If at any time prior to the completion of this offering the Company
enters negotiations with a possible merger candidate and such a transaction
becomes probable, then this offering will be suspended so that an amendment
can be filed which will include financial statements (including balance
sheets
and statements of cash flow and stockholders' equity) of the proposed
target.
The Company will not purchase the assets of any company which is
beneficially owned by any officer, director, promoter or affiliate or
associate of the Company. Furthermore, the Company intends to adopt a
procedure whereby a special meeting of the Company's shareholders will be
called to vote upon a Business Combination with an affiliated entity, and
shareholders who also hold securities of such affiliated entity will be
required to vote their shares of the Company's stock in the same proportion
as
the Company's publicly held shares are voted. The Company's officers and
directors have not approached and have not been approached by any person or
entity with regard to any proposed business ventures with respect to the
Company. The Company will evaluate all possible Business Combinations
brought
to it. If at any time a Business Combination is brought to the Company by
any
of the Company's promoters, management, or their affiliates or associates,
disclosure as to this fact will be included in the post-effective amendment,
thereby allowing the public investors the opportunity to fully evaluate the
Business Combination.
The Company has adopted a policy that it will not pay a finder's fee to
any member of management for locating a merger or acquisition candidate. No
member of management intends to or may seek and negotiate for the payment of
finder's fees. In the event there is a finder's fee, it will be paid at the
direction of the successor management after a change in management control
resulting from a Business Combination. The Company's policy regarding
finder's fees is based on an oral agreement among management. Management is
unaware of any circumstances under which such policy through their own
initiative may be changed.
The Company will remain an insignificant player among the firms which
engage in Business Combinations. 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 limited financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to the Company's competitors. Also, the Company will
be
competing with a large number of other small, blank check public companies
located throughout the United States.
The Company does not intend to advertise or promote the Company.
Instead, the Company's management will actively search for potential Target
Businesses. In the event management decides to advertise (in the form of an
ad in a legal publication) to attract a Target Business, the cost of such
advertising will be assumed by management.
Regulation
The Investment Company Act defines an "investment company" as an issuer
which is or holds itself out as being engaged primarily in the business of
investing, reinvesting or trading of securities. While the Company does not
intend to engage in such activities, the Company could become subject to
regulations under the Investment Company Act in the event the Company obtains
or continues to hold a minority interest in a number of enterprises. The
Company could be expected to incur significant registration and compliance
costs if required to register under the Investment Company Act. Accordingly,
management will continue to review the Company's activities from time to time
with a view toward reducing the likelihood the Company could be classified as
an "Investment Company."
Employees
The Company presently has no employees. Each officer and director of
the
Company is engaged in business activities outside of the Company, and the
amount of time they will devote to the Company's business will only be
between
five (5) and twenty (20) hours per person per week. Upon completion of the
public offering, it is anticipated that the President and the other officers
and directors of the Company will devote the time necessary each month to the
affairs of the Company until a successful business opportunity has been
acquired.
Facilities
The Company is presently using the office of Eng Chye Low, 200 East 89th
Street, New York, New York 10128 at no cost as its office. Such arrangement
is
expected to continue after completion of this offering only until a Business
Combination is consummated, although there is currently no such agreement
between the Company and Mr. Low. The Company at present owns no equipment,
and
does not intend to own any upon completion of this offering.
Year 2000 Issues
Since the Company currently has no operations, it does not
anticipate incurring significant expense with regard to Year 2000 issues.
<PAGE>
MANAGEMENT
The officers and directors of the Company, and further information
concerning them are as follows:
Name Age Position
Eng Chye Low(1) 60 President, Director
200 East 89th Street
New York, NY 10128
Steven Wainick(1) 40 Secretary, Director
64 Tamarack Street
Islip, NY 11751
Rene Kunz 37 Director
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
____________________
(1) May be deemed "Promoters" of the Company, as that term is defined under
the Securities Act of 1933.
BIOGRAPHY
Eng Chye Low, President and a director of the Company, has been president of
Seacom, Inc., a New York based real estate management company, since 1980.
Mr. Low is a graduate of the University of Malaya. He has been president and
a director of the Company since May 1997. Mr. Low is the former president
of Jackson Holding Corp., a blank check company which merged with China Energy
Resources Corporation in June 1996. (See "Other Blank Check Companies.")
Steven Wainick, Vice President, Secretary and a director of the Company, was
Vice-President of Metro Tag and Label Company, a manufacturer of tags and
labels, from 1978 to 1994. Since 1994, Mr. Wainick has been President of
Metro Tag and Label Company. He attended Nassau Community College and
University of Miami. He has been secretary and a director of the Company
since May 1997. Mr. Wainick is the former vice president of Mandi of
Essex, Ltd., a blank check company which merged with CityScape Financial Corp.
on April 27, 1994. (See "Other Blank Check Offerings.")
Rene Kunz, director of the Company, has been assistant vice president of
Winterthur Insurance, located in Winterthur, Switzerland, since 1991. He has
been a director of the Company since May 1997.
Other Blank Check Companies
Competing searches for combination candidates among blank check
affiliates may present conflicts of interest. Management intends to present
each Business Combination candidate to the shareholders for their approval.
There are currently no other blank check affiliates seeking combination
candidates. The Company's offering and other contemplated offerings (if any)
by other blank check companies do not constitute a single plan of financing.
The Company may not acquire, be acquired by or merged with any
affiliated
blank check companies or join with such companies in acquiring a business.
Eng Chye Low was President of Jackson Holding Co., a blank check
company, which merged into China Energy Resources Corporation on June 19,
1996. Jackson Holding Corp.'s initial public offering was declared effective
by the Securities and Exchange Commission on December 21, 1994. In its
initial public offering, Jackson Holding Corp. offered for sale 10,000 shares
of common stock at $5.00 per share. All shares offered were sold; $50,000 was
raised. Pursuant to the merger with China Energy Resources Corporation, all of
the issued and outstanding shares of Jackson Holding Corp. common stock were
exchanged for a total of 110,000 shares of China Energy Resources Corporation
common stock. China Energy Resources Corporation is currently an operating
company, with publicly trading shares. Mr. Low resigned from Jackson Holding
Corp. upon the merger, and has had no subsequent involvement with that
company. He is not an officer or director of China Energy Resources
Corporation.
Steven Wainick was Vice President of Mandi of Essex, Ltd., a blank
check company. The initial public offering of Mandi of Essex, Ltd. was
declared effective by the S.E.C. on July 25, 1991. 5,000 units were offered
at $5.00 per unit, each unit consisting of one share of common stock and
twenty (20) class A redeemable common stock purchase warrants. Each class A
warrant could be redeemed for one (1) share of common stock and one class B
redeemable common stock purchase warrant. Each class B warrants entitled the
holder to purchase one (1) share of common stock. $25,000 was raised in the
initial public offering. The purpose of this offering was to raise money for
a potential business combination. On April 27, 1994, Mandi of Essex, Ltd.
acquired CityScape Financial Corp., pursuant to which, all of the outstanding
common stock of CityScape was acquired by Mandi in exchange for 4,140,000
shares of Mandi common stock. CityScape Financial Corp. is currently an
operating company, with publicly trading shares. Mr. Wainick has not been
involved with Mandi of Essex/CityScape Financial Corp. since the acquisition.
Conflicts of Interest
No member of management is currently affiliated or associated with any
blank check company. Management does not currently intend to promote blank
check entities other than the Company. However, management may become
involved with the promotion of other blank check companies in the future. A
potential conflict of interest may occur in the event of such involvement.
(See "HIGH RISK FACTORS - Conflicts of Interest.") Management intends to
present each Business Combination candidate to the shareholders for their
approval.
Remuneration
No officer or director of the Company has received any cash remuneration
since the Company's inception, and none is to receive or accrue any
remuneration or reimbursements of expenses from the Company upon completion
of this offering. No remuneration of any nature has been paid for or on
account of services rendered by a director in such capacity. None of the
officers and directors intends to devote more than 20 hours a month of his
time to the Company's affairs.
The legal fee to be paid to Schonfeld & Weinstein, L.L.P., counsel for
the corporation, is eighteen thousand dollars ($18,000), all of which has
been
paid to Schonfeld & Weinstein, L.L.P. prior to this offering.
Management Involvement
The Company has conducted no business as of yet, and aside from
the search for shareholders associated with the Company's formation,
management has done no work with or for the Company. All of management will
speak to business associates and acquaintances and will search the New York
Times, the Wall Street Journal and other business publications for Target
Businesses. After the closing of this offering, all of management intends to
search for, consider and negotiate with a Target Business. Management has not
divided these duties among its members. No member of management has any
distinct influence over the others in connection with their participation in
the Company's affairs.
Management Control
Management may not divest themselves of ownership and control of the Company
prior to the consummation of an acquisition or merger transaction. This
policy is based on an unwritten agreement among management. Management is
not
aware of any circumstances under which such policy through their own
initiative, may be changed.
STATEMENT AS TO INDEMNIFICATION
Section 145 of the Delaware General Corporation Law provides for
indemnification of the officers, directors, employees and agents of
registrants by the Company. Complete disclosure of this statute is provided
in Part II hereof. This information can be examined as described in "Further
Information", herein.
Under Article XI of the Company's bylaws, the Company will indemnify and
hold harmless to the fullest extent authorized by the Delaware General
Corporation Law, any director, officer, agent or employee of the Company,
against all expense, liability and loss reasonably incurred or suffering by
such person in connection with the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against the public policy as expressed in the Securities
Act and is therefore, unenforceable.
MARKET FOR THE COMPANY'S COMMON STOCK
Prior to the date hereof, there has been no trading market for the
Company's Common Stock. Pursuant to the requirements of Rule 15g-8 of the
Exchange Act, a trading market will not develop prior to or after the
effectiveness of this prospectus or while the Common Stock under this
offering
is maintained in escrow. The Common Stock under this offering will remain in
escrow until the Company's consummation of a Business Combination pursuant to
the requirements of Rule 419. There are currently eight (8) holders of the
Company's outstanding Common Stock. Current shareholders will own
approximately 83.3% of the outstanding shares upon completion of the offering
and, as a result, there is no likelihood of an active public trading market,
as that term is commonly understood, developing for the shares. There can be
no assurance that a trading market will develop upon the consummation of a
Business Combination and the subsequent release of the Common Stock and other
escrowed shares from escrow. To date, neither the Company nor anyone acting
on its behalf has taken any affirmative steps to retain or encourage any
broker dealer to act as a market maker for the Company's Common Stock.
Further, there have been no discussions or understandings, preliminary or
otherwise, between the Company or anyone acting on its behalf and any market
maker regarding the participation of any such market maker in the future
trading market, if any, for the Company's Common Stock. (See "HIGH RISK
FACTORS - No Assurance of a Public Market" and "HIGH RISK FACTORS - Control
by
Present Management and Shareholders.")
Present management does not anticipate that any such negotiations,
discussions or understandings shall take place prior to the execution of an
acquisition agreement. Management expects that discussions in this area will
ultimately be initiated by the party or parties controlling the entity or
assets which the Company may acquire. Such party or parties may employ
consultants or advisors to obtain such market maker but present management of
the Company has no intention of doing so at the present time. None of the
Company's officers, directors or controlling shareholders has in the past used
particular consultants or advisers, and the Company has no set criteria to use
in its possible evaluation of any consultants or advisers.
There are no outstanding options or warrants to purchase, or securities
convertible into, common equity of the Company. The 600,000 shares of the
Company's Common Stock currently outstanding are "restricted securities" as
that term is defined in the Securities Act of 1933. Pursuant to Rule 144 of
the Securities Act, if all the Shares being offered hereto are sold, the
holders of the restricted securities may each sell 6,000 shares during any
three (3) month period after August 15, 1998. The Company is offering
100,000 shares of its Common Stock at $.50 per Share. Dilution to the public
investors after the public offering shall be $.42 per share (see "DILUTION.")
Schonfeld & Weinstein, L.L.P.'s legal fees will total $18,000, all of
which has been paid by the Company for legal services rendered. The $18,000
paid to Schonfeld & Weinstein, L.L.P. from the Company's treasury was part of
the $27,000 in proceeds raised in the sale of common stock in the April 1997
private placement.
CERTAIN TRANSACTIONS
The Company was incorporated in the State of Delaware on April 28, 1997.
Between April 28, 1997 and August 15, 1997 the Company issued 600,000 shares
to eight (8) shareholders at $.045 per share, for a total of $27,000. The
current breakdown of share ownership by shareholder may be found in the
section on Principal Stockholders.
<PAGE> PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the date of this prospectus,
and
as adjusted to reflect the sale of the shares offered hereby, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (ii) each of the Company's officers and
directors; and (iii) all directors and officers of the Company as a group.
Name/Address Shares of Percent of Percent of
Beneficial Common Stock Class Owned Class Owned
Owner Beneficially Owned Before Offering After Offering
Saul Gelernter(5) 100,000 16.67% 14.29%
76-23 168th Street
Flushing, NY 11366
Steven Wainick(1)(4)(5) 100,000 16.67% 14.29%
64 Tamarack Street
Islip, NY 11571
Sanford Lurie (5) 100,000 16.67% 14.29%
201 West 89th Street
New York, NY 10024
Rene Kunz(1)(4)(5) 100,000 16,67% 14.29%
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
Gary L. Heller(5) 50,000 8.33% 7.14%
7641 66th Street
Penellas Park, FL 33781
Victor Weinstein(2)(5) 50,000 8.33% 7.14%
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P. 50,000(3)(5) 50,000 8.33% 7.14%
63 Wall Street
New York, NY 10005
Eng Chye Low(1)(4)(5) 50,000 8.33% 7.14%
200 East 89th Street
New York, NY 10128
Total Officers
and Directors
(3 Persons) 250,000 41.66% 35.71%
Total 600,000 100% 85.71%
__________________________
(1) May be deemed "Promoters" of the Company, as that term is defined
under the Securities Act of 1933.
(2) Mr. Weinstein is the father of Andrea I. Weinstein of Schonfeld &
Weinstein, L.L.P., special counsel to the Company.
(3) Mr. Schonfeld and Ms. Weinstein are the principals of Schonfeld &
Weinstein, L.L.P., special counsel to the Company. Ms. Weinstein's father,
Vic Weinstein, is a shareholder of the Company.
(4) Mr. Low is President and a director of the Company. Mr. Wainick is
Treasurer, Secretary and a director of the Company. Mr. Kunz is a director
of
the Company.
(5) Beneficial owner has sole voting power and sole investment power as
to shares owned in the Company.
None of the current shareholders have received or will receive any extra or
special benefits that were not shared equally (pro-rata) by all holders of
shares of the Company's stock.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue twenty million (20,000,000) shares of
Common Stock, $.001 par value per share, of which 600,000 shares were issued
and outstanding as of the date of this prospectus. Each outstanding share of
Common Stock is entitled to one vote, either in person or by proxy, on all
matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends
from funds legally available therefor, when, as and if declared by the Board
of Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company;
(iii) do not have preemptive, subscription or conversion rights, or
redemption
or sinking fund provisions applicable thereto; and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote
at
all meetings of stockholders.
All shares of Common Stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to the ownership thereof. The holders of shares of Common Stock of
the Company do not have cumulative voting rights, which means that the
holders
of more than 50% of such outstanding shares voting for the election of
directors can elect all of the directors of the Company if they so choose
and,
in such event, the holders of the remaining shares will not be able to elect
any of the Company's directors. At the completion of this offering, the
present officers and directors and present shareholders will beneficially own
83.3% of the then outstanding shares. Accordingly, after completion of this
offering, the present shareholders of the Company will be in a position to
control all of the affairs of the Company.
Future Financing
In the event the proceeds of this offering are not sufficient to enable
the Company to successfully find a Business Combination the Company may seek
additional financing. Current shareholders of the Company have agreed
that
cost overruns will be borne equally by all current shareholders of the
Company. Such cost overruns will not be charged to the Company, but will be
funded through current shareholders' voluntary contribution of capital. This
is based on an oral agreement between current shareholders and the Company.
At this time the Company believes that the proceeds of this offering
will be sufficient for such purpose and therefore does not expect to issue any
additional securities before the consummation of a Business Combination.
However, the Company may issue additional securities, incur debt or procure
other types of financing if needed. The Company has not entered into any
agreements, plans or proposals for such financing through the issuance of
additional securities and as of present has no plans to do so. The
Company will not use the Deposited Funds as collateral or security for any
loan or debt incurred. Further, the Deposited Funds will not be used to pay
back any loan or debts incurred by the Company. If the Company does require
additional financing, there is no guarantee that such financing will be
available to it or if available that such financing will be on terms
acceptable to the Company. (See "Use of Proceeds.")
Reports to Stockholders
The Company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year. The Company's fiscal year ends on December 31st.
Dividends
The Company was only recently organized, has no earnings, and has paid
no
dividends to date. Since the Company was formed as a blank check company
with
its only intended business being the search for an appropriate Business
Combination, the Company does not anticipate having any earnings until such
time that a Business Combination is reconfirmed by the stockholders.
However,
there are no assurances that upon the consummation of a Business Combination,
the Company will have earnings or issue dividends. Therefore, it is not
expected that cash dividends will be paid to stockholders until after a
Business Combination is reconfirmed.
Transfer Agent
The Company has appointed Oxford Transfer and Registrar Agency, Inc. as
the Transfer Agent for the Company.
PLAN OF DISTRIBUTION
The Company hereby offers the right to subscribe for 100,000 Shares at $.50
per Share.
The Company proposes to offer the Shares directly on a "best efforts, all or
none basis", and no compensation is to be paid to any person in connection
with the offer and sale of the Shares.
Three of the Company's officers and directors, Eng Chye Low and Steven
Wainick
and Rene Kunz , shall distribute prospectuses related to this Offering. The
Company estimates approximately 100 to 200 prospectuses shall be distributed
in such a manner. Mr. Low, Mr. Wainick and Rene Kunz intend to distribute
prospectus to acquaintances, friends and business associates.
The Offering shall be conducted by Eng Chye Low, Steven Wainick and Rene
Kunz.
Although Mr. Low, Mr. Wainick and Rene Kunz are "associated persons" of the
Company as that term is defined in Rule 3a4-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), they are deemed not to be
brokers for the following reasons: (1) the officers and directors are not
subject to a statutory disqualifications as that terms is defined in Section
3(a)(39) of the Exchange Act at the time of his/her participation in the sale
of the Company's securities; (2) they will not be compensated in connection
with their participation in the sale of the Company's securities by the
payment of commission or other remuneration based either directly or
indirectly on transactions in securities; (3) none of them are an associated
person of a broker or dealers at the time of his/her participation in the
sale
of the Company's securities; and (4) each associated person shall restrict
his/her participation to the following activities:
(a) preparing any written communication or delivering such
communication through the mails or other means that does not involve oral
solicitation by the associated person of a potential purchaser;
(b) responding to inquiries of a potential purchasers in a
communication initiated by the potential purchasers, provided however, that
the content of such responses are limited to information contained in a
registration statement filed under the Securities Act of 1933 or other
offering document; or
(c) performing ministerial and clerical work involved in effecting
any transaction.
As of the date of this Prospectus, no broker has been retained by the Company
in connection with the sale of securities being offered hereby. In the event
a broker who may be deemed an Underwriter is retained by the Company, an
amendment to the Company's Registration Statement will be filed with the
Securities and Exchange Commission.
Neither the Company nor anyone acting on its behalf including the Company's
shareholders, officers, directors, promoters, affiliates or associates will
approach a market maker or take any steps to request or encourage a market in
these securities either prior or subsequent to an acquisition of any business
opportunity. There have been no preliminary discussions or understandings
between the Company (or anyone acting on its behalf) and any market maker
regarding the participation of any such market maker in the future trading
market (if any) for the Company's securities, nor does the Company have any
plans to engage in such discussions. The Company does not intend to use
consultants to obtain market makes. No member of management, promoter or
anyone acting at their direction will recommend, encourage or advise
investors
to open brokerage accounts with any broker-dealer that is obtained to make a
market in the Shares subsequent to the acquisition of any business
opportunity. The Company's investors shall make their own decisions
regarding
whether to hold or sell their Shares. The Company shall not exercise any
influence over investors' decisions.
Method of Subscribing
Persons may subscribe by filling in and signing the subscription agreement
and
delivering it, prior to the expiration date (as defined below), to the
Company. The subscription price of $.50 per Share must be paid in cash or by
check, bank draft or postal express money order payable in United States
dollars to the order of the Company. This offering is being made on a "best
efforts, all or none basis." Thus, unless all 100,000 shares are sold, none
will be sold.
The Company's officers, directors, current shareholders and any of their
affiliates or associates may purchase a portion of the Shares offered in this
offering. The aggregate number of Shares which may be purchased by such
persons shall not exceed 20% of the number of Shares sold in this offering.
Such purchases may be made in order to close the "all or nothing" offering.
Shares purchased by the Company's officers, directors and principal
shareholders will be acquired for investment purposes and not with a view
towards distribution.
EXPIRATION DATE
This offering will expire 90 days from the date of this prospectus (or
180 days from the date of this prospectus if extended by the Company).
LITIGATION
The Company is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company
which
may materially affect the Company.
LEGAL OPINIONS
Schonfeld & Weinstein, L.L.P., 63 Wall Street, Suite 1801, New York, New
York 10005, special counsel to the Company, has rendered an opinion that the
Shares are validly issued.
EXPERTS
The financial statements included in this prospectus have been examined
by Boykoff & Bell, CPA, PC, 2 Skyline Drive, Hawthorn, New York, independent
certified public accountants, as stated in their opinion given upon the
authority of that person as an expert in accounting and auditing.
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form SB-2 with respect to this the
securities offered by this prospectus. This prospectus omits certain
information contained in the Registration Statement as permitted by the Rules
and Regulations of the Commission. Reports and other information filed by
the
Company may be inspected and copied at the public reference facilities of the
Commission in Washington, D.C. and at the Northeast Regional Office of the
Commission at 7 World Trade Center, 13th Floor, New York, New York. Copies
of
such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rate. Statements contained
in this prospectus as to the contents of any contract or other document
referred to are not complete and where such contract or other document is an
exhibit to the Registration Statement, each such statement is deemed
qualified
and amplified in all respects by the provisions of the exhibit.
<PAGE>
FIRST SUNRISE INC.
FINANCIAL STATEMENTS
(A Development Stage Company)
For the Period April 28, 1997 (Date of Inception)
to December 31, 1997
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
CONTENTS
Independent Auditors' Report
Financial Statements:
Balance Sheet
Statement of Operations
Statement of Cash Flows
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
First Sunrise, Inc.
New York, New York
We have audited the accompanying balance sheet of First Sunrise, Inc., a
development stage company, as of December 31, 1997 and the related
statements of operations, stockholders' equity and cash flows for the period
April 28, 1997 (Inception) to December 31, 1997 . These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of
material misstatement. An audit includes examining, on a test basis,
evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Sunrise, Inc., a
development stage company, as of December 31, 1997 , and the results
if its operations and its cash flows for the period April 28, 1997 (Inception)
to December 31, 1997 in conformity with generally accepted
accounting
principles.
The B & B Group, LLP
Certified Public Accountants
Dated: February 14, 1998
Pleasantville , New York
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
BALANCE SHEET
December 31, 1997
ASSETS
CURRENT ASSETS:
Cash $ 7,500
Total current assets 7,500
OTHER ASSETS:
Defferred registration costs 22,000
Total assets $ 29,500
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,250
Total current liabilities 4,250
SHAREHOLDERS' EQUITY:
Common stock, .001 par value, 20,000,000 authorized,
600,000 issued and outstanding (Note 1.) 600
Additional paid in capital (Note 1.) 26,400
Deficit accumulated during development stage <1,750>
Total shareholders' equity 25,250
Total liabilities and shareholders'equity $ 29,500
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ <1,750>
Adjustments to reconcile net loss to
net cash provided by operating activities:
Increase in accounts payable 4,250
Net cash provided by operating activities 2,500
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in deferred registration costs <22,000>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 27,000
Net increase in cash 7,500
Cash, beginning of period 0
Cash, end of period $ 7,500
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
REVENUE $ 0
OPERATING EXPENSES:
Professional fees $ 1,750
Net loss $ <1,750>
EARNINGS PER SHARE:
Net loss per common share $ 0
Weighted average number of shares 600,000
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
SHARES AMOUNT
Initial sale of stock
April 28, 1997 600,000 $27,000
Deficit accumulated
during developmental stage <1,750>
600,000 $25,250
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
1. ORGANIZATION OF THE COMPANY
FIRST SUNRISE INC. (the "COMPANY"), was organized under the State of Delaware
on April 28, 1997. The Company was organized as a vehicle to acquire or
merge
with a business or company, (the "Target Business") (a "Business
Combination"). Management believes that the Company's characteristics as an
enterprise with liquid assets, nominal liabilities, and flexibility in
structuring will make the Company an attractive combination candidate. None
of the Company's officers, directors, promoters, their affiliates or
associates have had any preliminary contact or discussions and there are no
present plans, proposals, arrangements or understandings with any
representative of the owners of any business regarding the possibility of an
acquisition or merger transaction. The Company does not intend to engage in
the business of investing, reinvesting or trading in securities as its
primary
business or pursue any business which would render the Company an "investment
company" pursuant to the Investment Company Act of 1940.
Since organization of the Company, its activities have been limited to the
sale of initial shares in connection with its organization and its
preparation
in producing a registration statement and prospectus for its initial public
offering. The Company will not engage in any substantive commercial business
following the offering.
2. SIGNIFICANT ACCOUNTING POLICIES
Deferred registration costs
Costs incurred in connection with the companies anticipated public offering
are deferred and will be charged against shareholders equity upon successful
compilation of the offering. If the offering is not
consummated, deferred costs will be charged to expense.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Loss per share of common stock
Loss per share of common stock is calculated by dividing net loss by the
weighted average number of shares of common stock and common stock
equivalents, if dilutive, outstanding during each of the periods presented.
In addition, when an initial public offering is contemplated, common stock
and
common stock equivalents issued by the Company at a price less than the
estimated initial public offering price during the twelve months immediately
preceding the anticipated initial filing of the offering are treated as
outstanding for all periods presented, using the treasury stock method.
Recent accounting pronouncements
During February, 1997 the FASB issued SFAS No. 128 "Earnings Per Share" which
replaces the presentation of primary earnings per share ("EPS") with basic
EPS. It also requires dual presentation of basic and diluted EPS. SFAS No.
128 is effective for periods ending after December 15, 1997. The Company
believes the adoption of this pronouncement will not have a material effect
on
the financial statements.
During June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income", which establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures, SFAS 130 requires that all items that
are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
Recent accounting pronouncements (continued)
SFAS 130 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to
be
restated. Because of the recent issuance of this standard, management has
been unable to fully evaluate the impact, if any, the standard may have on
future financial statement disclosures. Results of operations and financial
position, however, will be unaffected by implementation of this standard.
3. ADDITIONAL INFORMATION
The Board of Directors passed a resolution authorizing the Management of the
Company to initiate steps to make a public offering of the Company's
securities, in order to raise additional capital of up to $50,000.00.
Management was granted authority to file a Registration statement on form
SB-2
with the Securities and Exchange Commission and to register the securities in
any state jurisdictions that management felt was required and appropriate.
It
was furthermore resolved , that the public offering would consist of 100,000
shares of common stock, $.001 par value per share, to be offered at $.50 per
share. The shares are being offered by the company on a "best effort, all or
none basis".
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Delaware General Corporation Law, as amended, provides for the
indemnification of the Company's officers, directors and corporate employees
and agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. - (a) A corporation may indemnify any person who was or is a
party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent
of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not
act in good faith and in a manner which he reasonably believed to be in or
not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstance of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections
(a) and (b) of this section. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this
section. Such expenses including attorneys' fees incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the
board
of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or
granted
pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation
including absorbed in a consolidation of merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was
a
director, officer, employee or agent of such constituent corporation, or is
or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture,
trust or other enterprise, shall stand in the same position under this
section
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such person.
Article XI of the Company's By-laws provides for the indemnification of the
company's officers, directors, and corporate employees and agents under
certain circumstances as follows:
Article XI provides that the Company will hold harmless and will indemnify
all
officers, directors, employees and agents of the Company against all expense,
liability and loss reasonably incurred or suffered by such person in its
connection as such with the Company. The Company shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by
such person (except against the Company) only if such proceeding was
authorized by the Company's Board of Directors.
If a claim under the above paragraph is not paid in full by the Company
within
30 days after a written claim has been received by the Company, the claimant
may at anytime thereafter bring suit against the Company to recover the
unpaid
amount of the claim. If the claimant is successful, it is entitled to be
paid
the expense of prosecuting such claim, as well.
Notwithstanding any limitations in other sections of the By-laws, the Company
will, to the fullest extend permitted by Section 145 of the General
Corporation Law of Delaware, indemnify any and all persons whom it has the
power to indemnify against any and all of the expense, liabilities and loss,
and this indemnification shall not be deemed exclusive of any other rights to
which the indemnities may be entitled under any By-law, agreement, or
otherwise, both as to action in his/her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to
the benefit of the heirs, executors and administrators of such persons.
The Company may, at its own expense, maintain insurance to protect itself and
any director, officer, employee or agent of the Company against any such
expense, liability or loss, whether or not the Company would have the power
to
indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Item 25. Expenses of Issuance and Distribution
The other expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are estimated as
follows:
Escrow Fee............................................$ - 0 -
Securities and Exchange Commission
Registration Fee..................................... $ 100.00
Legal Fees........................................... $18,000.00
Accounting Fees...................................... $ 2,000.00
Printing and Engraving............................... $ 250.00
Blue Sky Qualification Fees and Expenses............. $ 750.00
Miscellaneous........................................ $ 350.00
Transfer Agent Fee................................... $ 500.00
TOTAL.......................................................... $22,000.00
<PAGE>
Item 26. Recent Sales of Unregistered Securities
The Company issued 600,000 shares on between April 28, 1997 and August 15,
1997 to its initial stockholders for $27,000. The Company relied on an
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended. Each purchaser in this offering was sophisticated and had
access to information about the Company.
Name/Address
Consideration Shares
Beneficial of Common Price
Owner Stock Purchased(2) Paid
Saul Gelernter 100,000 $4,500.00
76-23 168th Street
Flushing, NY 11366
Steven Wainick(1)(3) 100,000 $4,500.00
64 Tamarack Street
Islip, NY 11571
Sandford Lurie 100,000 $4,500.00
201 West 89th Street
New York, NY 10024
Rene Kunz(1)(3) 100,000 $4,500.00
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
Gary Heller 50,000 $2,250.00
7641 66th Street
Penellas, FL
Victor Weinstein(4) 50,000 $2,250.00
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P.(5) 50,000 $2,250.00
63 Wall Street
New York, NY 10005
Eng Chye Low(1) 50,000 $2,250.00
200 East 89th Street
New York, NY 10128
___________
(1) May be deemed "Promoters" of the Company, as that term is defined
under the Securities Act of 1933.
(2) These Shares were sold under the exemption of Section 4(2) of the
Securities Act of 1933.
(3) Mr. Low is President and a director of the Company. Mr. Wainick
is
Treasurer, Secretary and a director of the Company. Mr. Kunz is a director
of
the Company.
(4) Mr. Weinstein is the father of Andrea I. Weinstein of Schonfeld &
Weinstein, L.L.P., special counsel to the Company.
(5) Mr. Schonfeld and Ms. Weinstein are the principals of Schonfeld &
Weinstein, L.L.P., special counsel to the Company. Ms. Weinstein's father,
Vic Weinstein, is a shareholder of the Company.
Neither the Company nor any person acting on its behalf offered or sold the
securities by means of any form of general solicitation or general
advertising.
Each purchaser represented in writing that he/she acquired the securities for
his own account. A legend was placed on the certificates stating that the
securities have not been registered under the Act and setting forth the
restrictions on their transferability and sale. Each purchaser signed a
written agreement that the securities will not be sold without registration
under the Act or exemption therefrom.
<PAGE>
EXHIBITS
Item 27.
3.1 Certificate of Incorporation. *
3.2 By-Laws. *
4.1 Specimen Certificate of Common Stock. *
4.6 Form of Escrow Agreement. *
5.0 Opinion of Counsel.
24.0 Accountant's Consent to Use Opinion.
24.1 Counsel's Consent to Use Opinion.
99.0Written Agreement Between Management and First Sunrise, Inc.
* As filed with originally Registration Statement on Form SB-2.
<PAGE>
Item 28.
UNDERTAKINGS
The registrant undertakes:
(1) To file, during any period in which offers or sales are being made,
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(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 thereof) 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, including
(but not limited to) any addition or deletion of managing underwriter;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering 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.
(4) To deposit into the Escrow Account at the closing, certificates in such
denominations and registered in such names as required by the Company to
permit prompt delivery to each purchaser upon release of such securities from
the Escrow Account in accordance with Rule 419 of Regulation C under the
Securities Act. Pursuant to Rule 419, these certificates shall be deposited
into an escrow account, not to be released until a business combination is
consummated.
Insofar as indemnification for liabilities arising under the Securities Act
of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant 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 registrant 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 indemnification by it is
against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on September 23, 1997
FIRST SUNRISE, INC.
BY: Eng Chye Low
Eng Chye Low, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
Eng Chye Low Dated March 5, 1998
Eng Chye Low
President, Secretary
Steven Wainick Dated March 5, 1998
Steven Wainick
Treasurer, Secretary, Director
Dated
Rene Kunz
Director
<PAGE>
March 4, 1998
Securities and Exchange Commission
Washington, D.C.
Re: First Sunrise Inc.
To Whom It May Concern:
First Sunrise Inc.(the "Company") is a corporation duly incorporated and
validly existing and in good standing under the laws of the state of Nevada.
The Company has full corporate powers to own its property and conduct its
business, as such business is described in the prospectus. The Company is
qualified to do business as a foreign corporation in good standing in every
jurisdiction in which the ownership of property and the conduct of business
requires such qualification.
This opinion is given in connection with the registration with the Securities
and Exchange Commission of one hundred thousand (100,000) Shares of Common
Stock at a price of $.50 per Share, for sale in the Company's proposed public
offering.
We have acted as counsel to the company in connection with the preparation of
the Registration Statement on Form SB-2, pursuant to which such Shares are
being registered and, in so acting, we have examined the originals and copies
of the corporate instruments, certificates and other documents of the Company
and interviewed representatives of the Company to the extent we deemed it
necessary in order to form the basis for the opinion hereafter set forth. In
such examination we have assumed the genuineness of all signatures and
authenticity of all documents submitted to me as certified or photostatic
copies. As to all questions of fact material to this opinion which have not
been independently established, we have relied upon statements or certificates
of officers or representatives of the Company.
All of the 100,000 Shares being registered are now authorized but unissued
shares.
Based upon the foregoing, we are of the opinion that the 100,000 Shares of
Common Stock of the Company being registered for sale by the Company, when
issued and sold pursuant to this Registration Statement will be legally
issued, fully paid and non-assessable and there will be no personal liability
to the owners thereof.
The undersigned hereby consents to the use of this opinion in connection with
such Registration Statement and its inclusion as an exhibit accompanying such
Registration Statement.
Very truly yours,
SCHONFELD & WEINSTEIN, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
JS:ed
<PAGE>
To The Board of Directors of
First Sunrise Inc.
Re: First Sunrise Inc.
The B & B Group, LLP , certified public accountants, do hereby consent
to the use of our opinion dated February 14, 1998 to First Sunrise Inc. to be
used and filed in connection with the SB-2 Registration Statement and
Prospectus, as filed with the Securities and Exchange Commission. We also
consent to the use of our name under the caption "Experts" in the
above-mentioned Registration Statement.
The B & B GROUP, LLP
The B & B GROUP, LLP
Dated: February 14, 1998
<PAGE>
To The Board of Directors of
First Sunrise Inc.
Re: First Sunrise Inc.
SCHONFELD & WEINSTEIN, L.L.P. does hereby consent to the use of our opinion
dated March 4, 1998, to First Sunrise Inc. to be used and filed in
connection with the SB-2 Registration Statement and Prospectus, as filed with
the Securities and Exchange Commission.
Schonfeld & Weinstein, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
Dated: March 4, 1998
<PAGE>
AGREEMENT BETWEEN
FIRST SUNRISE, INC.
AND MANAGEMENT
This agreement made the ____ day of __________, 19___, by and between
First Sunrise, Inc., a Nevada corporation located at 200 East 89th Street,
44th Floor, New York, New York 11242 (the "Company") and Eng-Chye Low,
President of the Company and Steven Wainick, Secretary of the Company, both of
whom together comprise the management of the Company (the "Management") (the
"Agreement"); and
WHEREAS, Eng-Chye Low is the President of the Company; and
WHEREAS, Steven Wainick is the Secretary of the Company; and
WHEREAS, the Company is located at 200 East 89th Street, 44th Floor, New
York, New York; and
WHEREAS, there are no other members of the Company's Management; and
WHEREAS, the Company is a "blank check" company, actively searching for a
merger candidate (a "Target Company") with which to form a business
combination ("Business Combination"); and
WHEREAS, the Company intends to offer 100,000 shares of common stock,
$.001 par value (the "Shares") (the "Offering") at a purchase price of $.50
per Share;
NOW, therefore, subject to the terms and conditions set forth herein and
pursuant to the Offering, Management and the Company agree to the following:
AGREED, that the Company will not pay to any present officer, director,
their affiliate or associate any portion of the proceeds form this offering,
nor will the Company issue any securities as payment of any expenses, labor or
services, commission, solicitation fees or finder's fees, consultants fees or
as payment of any kind (except as noted in its SB-2 Registration Statement for
its initial public offering (the "Registration Statement") in connection with
the finding of a business combination or for the sale of any shares offered in
the Registration Statement. This includes the proceeds available upon their
release from escrow pursuant to Rule 419; and it is further
AGREED, that no compensation will be paid or due or owing to any officer
or director until after a business combination is consummated; and it is
further
AGREED, that present management of the Company will not make any loans of
the $5,000 available from the deposited proceeds of the initial public
offering, nor will management borrow funds and use either the Company's
working capital or deposited funds as such; and it is further
AGREED, that management will not 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 business combination unless such a purchase is
requested by a target company as a condition to a merger or acquisition; and
it is further
AGREED, that the Company will not pay a finder's fee to any member of
management for locating a merger or acquisition candidate, and that no member
of management intends to or may seek and negotiate for the payment of finder's
fees, and that in the event there is a finder's fee, it will be paid at the
direction of the successor management after a change in management control
resulting from a business combination; and it is further
AGREED, that management may not accrue compensation prior to the
consummation of a Business Combination; and it is further
AGREED, that the Company will not pay a finder's fee to any member of
management for locating a merger or acquisition candidate. No member of
management intends to or may seek and negotiate for the payment of finder's
fees. In the event there is a finder's fee, it will be paid at the direction
of the successor management after a change in management control resulting
from a Business Combination; and it is further
AGREED, that the Company will adopt a procedure whereby a special meeting
of the Company's shareholders will be called to vote upon a Business
Combination with an affiliated entity, and shareholders who also hold
securities of such affiliated entity will be required to vote their shares of
the Company's stock in the same proportion as the Company's publicly held
shares are voted.
IN WITNESS WHEREOF, we have set our hands and seals on this _____ day of
___________, 199__.
FIRST SUNRISE, INC.
BY:
Steven Wainick, Secretary
Eng-Chye Low, President
Steven Wainick, Secretary
