U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
HARBOR TOWN HOLDING GROUP I, INC.
(Name of Small Business Issuer in its charter)
Florida 65-0755340
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
324 Datura Street, Suite 303 West Palm Beach, Florida 33401
(Address of principal executive offices)(Zip Code)
Issuer's telephone number, (561)
659-1196
With Copy To:
David M. Bovi, Esquire
319 Clematis Street, Suite 804
West Palm Beach, Florida 33401
(561) 655-0665
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
DESCRIPTION OF BUSINESS.
Harbor Town Holding Group I, Inc. (the "Company"), was incorporated under
the laws of the State of Florida on May 6, 1997 as a wholly owned subsidiary
of Net Lnnx, Inc., a publicly traded Pennsylvania shell corporation traded on
the over-the-counter trading market ("Net Lnnx"). Net Lnnx is a shell company
conducting virtually no business operation, other than its efforts to seek
merger partners or acquisition candidates. The Company was originally created
to act as the receiver of a certain Net Lnnx asset (the "Transferred Asset")
which consisted of a $475,000 note receivable made to Net Lnnx. Net Lnnx was
required to dispose of the Transferred Asset pursuant to the terms of a letter
of intent entered into between Net Lnnx and another unrelated company in
connection with an anticipated merger between Net Lnnx and such other
unrelated company. The parties intended to consummate a reverse merger
transaction between Net Lnnx and the unrelated company whereby Net Lnnx would
issues shares of Net Lnnx stock to the shareholders of the unrelated company.
Since Net Lnnx and the unrelated company could not determine and agree upon an
actual value of the Transferred Asset due to its practically unsecured
nature, and the unrelated company did not wish to purchase the Transferred
Asset with the possibility of never collecting on it due to its practically
unsecured nature, Net Lnnx transferred the Transferred Asset to the Company in
exchange for 2,058,209 shares of the Company's common stock, no par value (the
"Common Stock"). On May 21, 1997, Net Lnnx distributed all 2,058,209 shares
of the Company which it owned to Net Lnnx shareholders as a stock dividend on
a share for share basis intending to register the Common Stock pursuant to
Form 10-SB promulgated under the Securities Exchange Act of 1934 ("the
"Exchange Act") and to utilize the Company along with such Transferred Asset
to enter into a certain fragmented industry and acquire local business
entities in exchange for shares of the Company's Common Stock. This plan was
subsequently aborted as a result of the following: (i) the aforementioned Net
Lnnx reverse merger was called off; (ii) the Transferred Asset became the
subject of litigation; and (iii) the Company determined it was not feasible to
enter into that certain industry at that time. Further, the Company did not
have sufficient funds to pursue the litigation in connection with the
Transferred Asset; therefore, on June 6, 1997 the Company and Net Lnnx agreed
to suspend the transfer of the Transferred Asset until such time that the
litigation concerning the Transferred Asset terminated. Several months
thereafter, the Company and its litigation counsel determined that the
resolution of the litigation concerning the Transferred Asset would not occur
in the foreseeable future; therefore, on November 6, 1997 the Company agreed
to cancel the transfer of the Transferred Asset in exchange for substitute
consideration for the shares of Common Stock it issued to Net Lnnx so that the
Company could pursue other opportunities -- such as registering the Common
Stock hereunder to create a reporting "shell" company. On November 6, 1997
the Company and Net Lnnx canceled the instrument which transferred the
Transferred Asset and the Company and Net Lnnx agreed that in exchange for Net
Lnnx canceling a promissory note dated June 2, 1997 made by the Company to Net
Lnnx in the amount of $12,600, such release from liability
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would constitute substitute consideration for the 2,058,209 shares the Company
previously issued to Net Lnnx. Presently, the Company is a "shell" company
with a shareholder base of approximately 2,000 shareholders and 20,000,000
shares of Common Stock outstanding, all of which are restricted pursuant to
Rule 144 of the Securities Act of 1933, as amended (the "Securities Act").
See "Description of Securities." Presently, the Company does not engage in any
substantive commercial business or other business operations.
After the Company aborted its original purposes, the Company decided to
create a corporate vehicle to seek to effect a merger, exchange of capital
stock, asset acquisition or other similar business combination (a "Business
Combination") with an operating or development stage business (the "Target
Business") which desires to employ the Company's shareholder base to obtain
the perceived advantages of being a publicly held reporting corporation. On
November 6, 1997, the Company issued 17,631,250 shares of Common Stock to
Wheeler Group II, Inc., a Florida corporation ("Wheeler"), and 300,000 shares
to David M. Bovi, president and controlling shareholder of Wheeler in exchange
for (i) $6,000 cash; and (ii) Wheeler purchasing $25,000 in pre-paid legal
services on behalf of the Company to effectuate the legal aspects of this
registration statement on Form 10-SB on a voluntary basis. See "Security
Ownership of Certain Beneficial Owners and Management" and "Certain
Relationships and Related Transactions." This transaction resulted in a
change in the voting control of the Company whereby Wheeler could completely
control the Company's board of directors. See "Directors, Executive Officers,
Promoters and Control Persons." The Company's management effectuated the
above transaction between the Company and Wheeler because in management's
opinion, a shell company voluntarily reporting to the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 is significantly
more valuable than a shell company which does not engage in such reporting.
The Company has approximately 2,000 shareholders of record and 20,000,000
shares of Common Stock outstanding. See "Description of Securities."
Presently, all the Company's outstanding securities, which includes all shares
of its Common Stock, are restricted pursuant to Rule 144 of the Securities
Act. So long as all of the conditions of Rule 144 are met, on May 6, 1998,
2,058,209 shares of Common Stock will be eligible for sale under Rule 144, as
currently in effect. See "Description of Securities." Upon the effectiveness
of this registration statement, the Company intends to seek potential business
opportunities and effectuate a Business Combination with a Target Business
with significant growth potential which, in the opinion of management, could
provide a profit to the Company and its shareholders. The Company's efforts
in identifying a prospective Target Business are expected to emphasize
businesses primarily located in the United States; however, the Company
reserves the right to acquire a Target Business located primarily elsewhere.
While the Company may, under certain circumstances, seek to effect Business
Combinations with more than one Target Business, as a result of its limited
resources the Company will, in all likelihood, have the ability to effect only
a single Business Combination. The Company may effect a Business Combination
with a Target Business which may be financially unstable or in its early
stages of development or growth. The Company will not restrict its search to
any specific business, industry or geographical location, and the Company may
participate in a business venture of virtually any kind or nature. Presently,
the Company has no plan, proposal, agreement,
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understanding or arrangement to acquire or merge with any specific business or
company, and the Company has not identified any specific business or company
for investigation and evaluation. Present management of the Company may
become involved in management of the Target Business and/or may hire qualified
but as yet unidentified individuals to manage such Target Business. The
discussion of the proposed business under this caption and throughout this
registration statement is purposefully general and is not meant to be
restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
"SHELL" CORPORATION
Background.
Since the Company conducts virtually no business operations, other than
its efforts to effectuate a Business Combination, the Company can be
characterized as a "shell" corporation. The Company is dependent upon its
officers and directors and their efforts to effectuate a Business Combination.
Accordingly, the Company's shareholders will not have an opportunity to
evaluate the specific merits or risks of any one or more Business Combinations
and will have no control over the decision making relating to such. In the
event the Company loses the services of any of these officers or directors,
the Company could be adversely affected.
Due to the limited capital available to the Company, consummation of a
Business Combination will likely involve the acquisition of, or merger or
consolidation with, a company that does not need substantial additional
capital but which desires to establish a public trading market for its shares,
while avoiding what it might deem to be the adverse consequences of
undertaking a public offering itself, such as the time delays and significant
expenses incurred to comply with the various federal and state securities laws
that regulate initial public offerings.
The Company cannot estimate the time that it will take to effectuate a
Business Combination. It could be time consuming. Additionally, no assurance
can be made that the Company will be able to effectuate a Business Combination
on terms favorable to the Company. The Company might identify and effectuate a
Business Combination with a Target Business which proves to be unsuccessful
for any number of reasons, many of which are due to the fact that the Target
Business is not identified at this time. If this occurs, the Company and its
shareholders might not realize any type of profit.
Unspecified Industry and Target Business.
The Company will seek to acquire a Target Business without limiting
itself to a particular industry. Most likely, the Target Business will be
primarily located in the United States, although
the Company reserves the right to acquire a Target Business primarily located
outside the United States. In seeking a Target Business, the Company will
consider, without limitation, businesses
which (i) offer or provide services or develop, manufacture or distribute
goods in the United States or abroad, including, without limitation, in the
following areas: health care and health
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products, educational services, environmental services, consumer-related
products and services (including amusement, entertainment and/or recreational
services), personal care services, voice and data information processing and
transmission and related technology development or (ii) is engaged in
wholesale or retail distribution. To date, the Company has not selected any
particular industry or any Target Business in which to concentrate its
Business Combination efforts. Accordingly, there is presently no current basis
for the Company to evaluate the possible merits or risks of the Target
Business or the particular industry in which the Company may ultimately
operate. Any Target Business that is selected will be required to have audited
financial statements or be audited in connection with the transaction. To the
extent the Company effects a Business Combination with 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 subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies.
In addition, to the extent that the Company effects a Business Combination
with a Target Business in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes certain
industries which experience rapid growth. Although management will endeavor to
evaluate the risks inherent in a particular industry or Target Business, there
can be no assurances that the Company will properly ascertain or assess all
significant risk factors.
Probable Lack of Business Diversification.
As a result of the limited resources of the Company, the Company, in all
likelihood, will have the ability to effect only a single Business
Combination. Accordingly, the prospects for the Company's success will be
entirely dependent upon the future performance of a single business. Unlike
certain entities that have the resources to consummate several Business
Combinations or entities operating in multiple industries or multiple segments
of a single industry, it is highly likely that the Company will not have the
resources to diversify its operations or benefit from the possible spreading
of risks or offsetting of losses. The Company's probable lack of
diversification could subject the Company to numerous economic, competitive
and regulatory developments, any or all of which may have a material adverse
impact upon the particular industry in which the Company may operate
subsequent to consummation of a Business Combination. The prospects for the
Company's success may become dependent upon the development or market
acceptance of a single or limited number of products, processes or services.
Accordingly, notwithstanding the possibility of management assistance to the
Target Business by the Company, there can be no assurance that the Target
Business will prove to be commercially viable.
Limited Ability to Evaluate Target Business' Management.
While the Company's ability to successfully effect a Business Combination
will be dependent upon certain key personnel, the future role of such
personnel in the Target Business cannot presently be stated with any
certainty. It is unlikely that any of the Company's key personnel will remain
associated in any operational capacity with the Company following a
Business
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Combination. Moreover, there can be no assurances that such personnel will
have any experience or knowledge relating to the operations of the particular
Target Business. Furthermore, although the Company intends to closely
scrutinize the management of a prospective Target Business in connection with
evaluating the desirability of effecting a Business Combination, there can be
no assurances that the Company's assessment of such management will prove to
be correct, especially in light of the limited experience of current key
personnel of the Company in evaluating businesses. Accordingly, the Company
will be dependant, in some significant respects, on the ability of the
management of the Target Business who are unidentifiable as of the date
hereof. In addition, there can be no assurances that such future management
will have the necessary skills, qualifications or abilities to manage a public
company. The Company may also seek to recruit additional managers to
supplement the incumbent management of the Target Business. There can be no
assurances that the Company will have the ability to recruit such additional
managers, or that such additional managers will have the requisite skill,
knowledge or experience necessary or desirable to enhance the incumbent
management.
Opportunity for Shareholder Evaluation or Approval of Business Combinations.
The non-affiliate shareholders of the Company will, in all likelihood,
neither receive nor otherwise have the opportunity to evaluate any financial
or other information which will be made available to the Company in connection
with selecting a potential Business Combination until after the Company has
entered into an agreement to effectuate a Business Combination. Such agreement
to effectuate a Business Combination, however, will be subject to shareholder
approval pursuant to applicable law. As a result, non-affiliate shareholders
of the Company will be almost entirely dependent on the judgment of management
in connection with the selection and ultimate consummation of a Business
Combination. In addition, under Florida law, the form of Business Combination
could impact upon the availability of dissenters' rights (i.e., the right to
receive fair payment with respect to the Company's Common Stock) to
shareholders disapproving the proposed Business Combination.
Selection of a Target Business and Structuring of a Business Combination.
The Company's management anticipates that the selection of a Target
Business will be complex and risky because of competition for such business
opportunities among all segments of the financial community. The nature of the
Company's search for the acquisition of a Target Business requires maximum
flexibility inasmuch as the Company will be required to consider various
factors and circumstances which may preclude meaningful direct comparison
among the various business enterprises, products or services investigated.
Investors should recognize that the possible lack of diversification among the
Company's acquisitions may not permit the Company to offset potential losses
from one venture against profits from another. Management of the Company will
have virtually unrestricted flexibility in identifying and selecting a
prospective Target Business. In addition, in evaluating a prospective Target
Business, management will consider, among other factors, the following factors
which are not listed in any particular order:
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- financial condition and results of operation of the Target
Business;
- growth potential and projected financial performance of the
Target Business and the industry in which it operates;
- experience and skill of management and availability of
additional personnel of the Target Business;
- capital requirements of the Target Business;
- the availability of a transaction exemption from
registration pursuant to the Securities Act for the
Business Combination;
- the location of the Target Business;
- competitive position of the Target Business;
- stage of development of the product, process or service of
the Target Business;
- degree of current or potential market acceptance of the
product, process or service of the Target Business;
- possible proprietary features and possible other
protection of the product, process or service of the
Target Business;
- regulatory environment of the industry in which the
Target Business operates;
- costs associated with effecting the Business Combination; and
- equity interest in and possible management participation
in the Target Business.
The foregoing criteria are not intended to be exhaustive; any evaluation
relating to the merits of a particular Business Combination will be based, to
the extent relevant, on the above factors as well as other considerations
deemed relevant by management of the Company in connection with effecting a
Business Combination consistent with the Company's business objective. In
connection with its evaluation of a prospective Target Business, management
anticipates that it will conduct a due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of
facilities, as well as review of financial or other information which will be
made available to the Company.
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The time and costs required to select and evaluate a Target Business
(including conducting a due diligence review) and to structure and consummate
the Business Combination (including negotiating relevant agreements and
preparing requisite documents for filing pursuant to applicable securities
laws and state "blue sky" and corporation laws) cannot presently be
ascertained with any degree of certainty. The Company's management intends to
devote only a small portion of their time, approximately 10%, to the affairs
of the Company and, accordingly, consummation of a Business Combination may
require a greater period of time than if the Company's management devoted
their full time to the Company's affairs. However, each officer and director
of the Company will devote such time as they deem reasonably necessary, up to
100%, to carry out the business and affairs of the Company, including the
evaluation of potential Target Businesses and the negotiation of a
Business Combination and, as a result, the amount of time devoted to the
business and affairs of the Company may vary significantly depending upon,
among other things, whether the Company has identified a Target Business or is
engaged in active negotiation of a Business Combination. Any costs incurred in
connection with the identification and evaluation of a prospective Target
Business with which a Business Combination is not ultimately consummated will
result in a loss to the Company and reduce the amount of capital available to
otherwise complete a Business Combination or for the resulting entity to
utilize. In the event the Company depletes its present cash reserves, the
Company might be forced to cease operations and a Business Combination might
not occur.
The Company anticipates that it will locate and make contact with
business prospects primarily through the reputation and efforts of its
management, who will meet personally with existing management and key
personnel, visit and inspect material facilities, assets, products and
services belonging to such prospects, and undertake such further reasonable
investigation as management deems appropriate. The Company's management has
a network of contacts in the States of Florida and Pennsylvania, and will
most likely concentrate its search efforts for a Target Business in those
areas. Management does not intend to actively solicit or contact prospective
Targets directly. Rather, management believes that prospective Target
Business will be referred to the Company through management's network of
contacts. The officers and directors of the Company intend to telephonically
contact approximately 20 previous non-affiliate business contacts each, which
management considers to have the potential to refer Prospective Target
Businesses to the Company. Further, the officers and directors of the
Company's primary businesses include business and management consulting,
investment banking, and a securities law practice. See "Directors, Executive
Officers, Promoters and Control Persons". As a result of the field of their
primary present occupations and reputations therein, management believes that
the Company will be made aware of numerous unsolicited potential Target
Businesses, since, this already occurs on an almost daily or weekly basis.
Existing and potential clientele of the officers and directors of the Company
may be considered potential Target Businesses. The Company also expects that
many prospective Target Businesses will be brought to its attention from
various other non-affiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, and other members of the
financial community. The Company has neither the present intention, nor does
the present potential exist for the Company, to consummate a Business
Combination with a Target Business in which the Company's management,
promoters, or their affiliates or associates directly or indirectly have a
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pecuniary interest, although no existing corporate policies of the Company
would prevent this from occurring. The Company will not advertise or promote
itself in any financial or trade publications, or any other type of written
publications or other type of media, to seek potential business acquisitions.
While the Company does not presently anticipate engaging the services of
professional firms that specialize in finding business acquisitions on any
formal basis, the Company may engage such firms in the future, in which event
the Company may pay a finder's fee or other compensation. Any finder's fee
paid in connection with a Business Combination will be in the form of up to
150,000 shares of Common Stock of the Company, which will be payable upon the
closing date of the Business Combination. In no event, however, will the
Company pay a finder's fee or commission to officers or directors of the
Company or any entity with which they are affiliated for such service.
Moreover, in no event shall the Company issue any of its securities to any
officer, director or promoter of the Company, or any of their respective
affiliates or associates, in connection with activities designed to locate a
Target Business.
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure a Business Combination so as to
achieve the most favorable tax treatment to the Company, the Target Business
and their respective stockholders. There can be no assurance that the Internal
Revenue Service or relevant state tax authorities will ultimately assent to
the Company's tax treatment of a particular consummated Business Combination.
To the extent the Internal Revenue Service or any relevant state tax
authorities ultimately prevail in recharacterizing the tax treatment of a
Business Combination, there may be adverse tax consequences to the Company,
the Target Business and their respective stockholders. Tax considerations as
well as other relevant factors will be evaluated in determining the precise
structure of a particular Business Combination, which could be effected
through various forms of a merger, consolidation or stock or asset
acquisition.
Although the Company has no commitments as of the date of this
registration statement to issue any shares of Common Stock or options or
warrants, other than as described in this registration
statement, the Company will, in all likelihood, issue a substantial number of
additional shares in connection with the consummation of a Business
Combination. To the extent that such additional shares are issued, dilution to
the interests of the Company's stockholders will occur. Additionally, if a
substantial number of shares of Common Stock are issued in connection with the
consummation of a Business Combination, a change in control of the Company is
likely to occur which will likely affect, among other things, the Company's
ability to utilize net operating loss carry forwards, if any. Any such change
in control may also 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. Management considers it likely
that in order to consummate a Business Combination, a change in control will
occur; therefore, management anticipates offering a controlling interest in
the Company to a Target Business in order to effectuate a Business
Combination.
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The officers and directors of the Company may, and intend to, actively
negotiate for or otherwise consent to the disposition of any portion of their
or their affiliate's Common Stock as a condition to or in connection with a
Business Combination. Therefore, it is likely that the terms of any Business
Combination will provide for the sale of some shares of Common Stock held by
management or affiliates of management. In the event this occurs, the
Company's directors intend to approve of the Business combination pursuant to
Section. 607.0902(2)(d)7 of the Florida Business Corporation Act which will
have the effect of removing the transaction from the purview of the
control-share acquisition statute promulgated under Section. 607.0902 of the
Florida Business Corporation Act. Thus, it is likely that no other shareholder
of the Company will be afforded the right to sell their shares of Common Stock
in connection with a Business Combination pursuant to the same terms that such
selling officers, directors or affiliates will be provided. Also, such
shareholders will not be afforded an opportunity to approve or consent to
such management or affiliate's stock purchase. See "Description of Business
- -Shell Corporation - Conflicts of Interest".
There are currently no limitations relating to the Company's ability to
borrow funds to increase the amount of capital available to the Company to
effect a Business Combination or otherwise finance the operations of the
Target Business. However, the Company's limited resources and lack of
operating history could make it difficult for the Company to borrow additional
funds from other sources. The amount and nature of any borrowings by the
Company will depend on numerous considerations, including the Company's
capital requirements, potential lenders' evaluation of the Company's ability
to meet debt service on borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. The Company does
not have any arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that such arrangements if
required or otherwise sought, would be available on terms commercially
acceptable or otherwise in the best interests of the Company. The inability of
the Company to borrow funds required to effect or facilitate a Business
Combination, or to provide funds for an additional infusion of capital into a
Target Business, may have a material adverse effect on the Company's financial
condition and future prospects, including the ability to effect a Business
Combination. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks
traditionally associated with indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Target Business may have already incurred debt
financing and, therefore, all the risks inherent thereto.
If securities of the Company are issued as part of an acquisition, such
securities are required to be issued either in reliance upon exemptions from
registration under applicable federal or state securities laws or registered
for public distribution. The Company intends to primarily target only those
companies where an exemption from registration would be available; however,
since the structure of the Business Combination has yet to be determined, no
assurances can be made that the Company will be able to rely on such
exemptions. Registration of securities typically requires significant costs
and time delays are typically encountered. In addition, the issuance of
additional securities and their potential sale in any trading market which
might develop in the Company's Common Stock, of which there is presently no
trading market and no assurances can be given that one will develop, could
depress the
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price of the Company's Common Stock in any market which may develop in the
Company's Common Stock. Further, such issuance of additional securities of the
Company would result in a decrease in the percentage ownership of the
Company's present shareholders.
Due to the Company's small size and limited amount of capital,
considerable business constraints could be imposed on the Company with respect
to its ability to raise additional capital if and when needed. Until such time
as any enterprise, product or service which the Company acquires generates
revenues sufficient to cover operating costs, it is conceivable that the
Company could find itself in a situation where it needs additional funds in
order to continue its operations. This need could arise at a time when the
Company is unable to borrow funds and when market acceptance for the sale of
additional shares of the Company's Common Stock does not exist.
Conflicts of Interest.
None of the Company's officers and directors are required to commit their
full time to the affairs of the Company and, accordingly, such persons may
have conflicts of interest in allocating management time among various
business activities. The officers and directors of the Company may engage in
other business activities similar and dissimilar to those engaged in by the
Company. To the extent that such persons engage in such other activities,
they will have possible conflicts of interest in diverting opportunities to
other companies, entities or persons with which they are or may be associated
or have an interest, rather than diverting such opportunities to the Company.
Presently, Mr. Hayes is the chairman of the board, president and a director of
Net Lnnx, a publicly traded "shell corporation" and is the director and
president of two privately held "shell corporations". Mr. Colucci is also
executive vice president and a director of Net Lnnx. Mr. Bovi is the
President of David M. Bovi, P.A., a private practice securities law firm.
Certain activities which may be performed by such individuals in connection
with their other business affiliations may be deemed competitive with the
business of the Company. See "Directors, Executive Officers, Promoters and
Control Persons". Also, certain officers and directors of the Company may in
the future become affiliated with additional other entities, including
registered "blank check" companies, which may engage in business activities
similar to those intended to be conducted by the Company. Such potential
conflicts of interest include, among other things, time, effort and corporate
opportunity involved in their participation in other business transactions.
As no policy has been established for the resolution of such a conflict, the
Company could be adversely affected should such officers or directors choose
to place their other business interests before those of the Company. No
assurance can be given that such potential conflicts of interest will not
cause the Company to lose potential opportunities.
In the course of their other business activities, including private
investment activities, the Company's officers and directors may become aware
of investment and business opportunities which may be appropriate for
presentation to the Company as well as the other entities with which they are
affiliated. Such persons may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. In
general, officers and directors of corporations are required to present
certain business opportunities to such corporations. Accordingly, as a
result of
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multiple business affiliations, the Company's officers and directors may have
similar legal obligations relating to presenting certain business
opportunities to multiple entities. In addition, conflicts of interest may
arise in connection with evaluations of a particular business opportunity by
the board of directors with respect to the foregoing criteria. There can be
no assurances that any of the foregoing conflicts will be resolved in favor
of the Company. In order to minimize potential conflicts of interest which
may arise from multiple corporate affiliations, the Company
shall not consider Business Combinations with entities owned or controlled by
officers, directors, greater than 10% shareholders of the Company or any
person who directly or indirectly controls, is controlled by or is under
common control with the Company. The Company may consider Business
Combinations with entities owned or controlled by persons other than those
persons described above. There can be no assurances that any of the foregoing
conflicts will be resolved in favor of the Company.
The officers and directors of the Company may, and intend to, actively
negotiate for or otherwise consent to the disposition of any portion of their
or their affiliate's Common Stock as a condition to or in connection with a
Business Combination. Therefore, it is likely that the terms of any Business
Combination will provide for the sale of some shares of Common Stock held by
management or affiliates of management. In the event this occurs, the
Company's directors intend to approve of the Business combination pursuant to
Section. 607.0902(2)(d)7 of the Florida Business Corporation Act which will
have the effect of removing the transaction from the purview of the
control-share acquisition statute promulgated under Section. 607.0902 of the
Florida Business Corporation Act. Thus, it is likely that no other shareholder
of the Company will be afforded the right to sell their shares of Common Stock
in connection with a Business Combination pursuant to the same terms that
such selling officers, directors or affiliates will be provided. Also, such
shareholders will not be afforded an opportunity to approve or consent to
such management or affiliate's stock purchase. See "Description of Business
- -Shell Corporation - Conflicts of Interest".
Penny Stock Regulations - Restrictions on Marketability.
The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define "penny stock" to be any equity security
that has a market price (as defined) less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. The
Company's securities may be covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse). For transactions covered by
the rule, the broker-dealers must make a special suitability determination for
the purchase and receive the purchaser's written agreement of the transaction
prior to the sale. Consequently, the rule may affect the ability of
broker-dealers sell the Company's securities and also may affect the ability
of shareholders of the Company to sell their shares of in the secondary
market.
Page -12-
<PAGE>
COMPETITION
The Company expects to encounter intense competition from other entities
having a business objective similar to that of the Company. Many of these
entities are well-established and have extensive experience in connection with
identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater financial, marketing,
technical, personnel and other resources than the Company and there can be no
assurances that the Company will have the ability to compete successfully. The
Company's financial resources will be limited in comparison to those of many
of its competitors. This inherent competitive limitation could compel the
Company to select certain less attractive Business Combination prospects.
There can be no assurances that such prospects will permit the Company to
meet its stated business objective. Management believes, however, that the
Company's status as a reporting public entity could give the Company a
competitive advantage over privately held entities having a similar business
objective to that of the Company in acquiring a Target Business with
significant growth potential on favorable terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business
Combination, the Company will, in all likelihood, become subject to intense
competition from competitors of the Target Business. In particular, certain
industries which experience rapid growth frequently attract an increasingly
larger number of competitors, including competitors with increasingly greater
financial, marketing, technical and other resources than the initial
competitors in the industry. The degree of competition characterizing the
industry of any prospective Target Business cannot presently be ascertained.
There can be no assurances that, subsequent to a Business Combination, the
Company will have the resources to compete effectively, especially to the
extent that the Target Business is in a high-growth industry.
FEDERAL SECURITIES LAWS COMPLIANCE
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the relative size of
the acquisition. Consequently, the Company will only be able to effect a
Business Combination with a prospective Target Business that has available
audited financial statements or has financial statements which can be
audited. See "Description of Securities--Securities Exchange Act of 1934."
FACILITIES
The executive and business office of the Company consist of office space
located at 324 Datura Street, Suite 303, West Palm Beach, FL 33401. Pursuant
to an oral agreement, until the effectuation of a Business Combination, the
Company utilizes free of charge the offices of Harbor Town Management
Group, Inc., a
Page -13-
<PAGE>
corporation controlled by Ronald W. Hayes, Jr., a stockholder of the Company
and the Company's Chief Executive Officer and Director. The Company believes
this office space is adequate to serve its needs until such time as a Business
Combination occurs. The Company expects to be able to utilize these offices,
pursuant to the terms described above, until such time as a Business
Combination occurs. See "Description of Property."
EMPLOYEES
As of the date of this Prospectus, the Company has no full time
employees.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Plan of Operation
The Company is presently a development stage company conducting virtually
no business operation, other than its efforts to effect a Business Combination
with a Target Business which the Company considers to have significant growth
potential. To date, the Company has neither engaged in any operations nor
generated any revenue. It receives no cash flow. In November, 1997 the
Company received the following from Wheeler Group II, Inc. ("Wheeler"):
(i) a capital infusion of $6,000; and (ii) $25,000 in pre-paid legal services
purchased by Wheeler on behalf of the Company to effectuate the legal aspects
of this registration statement. See "Certain Relationships and Related
Transactions." The Company anticipates no other additional capital infusions
prior to effectuating a Business Combination. Until such time as the Company
effectuates a Business Combination, with the exception of certain other
professional fees and costs for such a transaction, the Company expects that
it will incur minimal operating costs throughout 1998. Since inception, all of
the Company's expenses, which approximated $12,600, were paid pursuant to a
$12,600 capital infusion made to the Company by Net Lnnx (former parent
company of the Company) in exchange for a promissory note in the same amount
made to Net Lnnx by the Company. As per that November 6, 1997 agreement with
Net Lnnx which canceled the $12,600 promissory note, the Company is not
indebted to Net Lnnx for any such expenses. See "Description of Business".
No officer or director of the Company is paid any type of compensation by
the Company and presently, there are no arrangements or anticipated
arrangements to pay any type of compensation to any officer or director in the
near future. The Company expects that it will meet its cash requirements until
such time as a Business Combination occurs. However, in the event the Company
depletes its present cash reserves, the Company may cease operations and a
Business Combination may not occur. There are no agreements or
understandings of any kind with respect to any loans from officers or
directors of the Company on behalf of the Company.
DESCRIPTION OF PROPERTY.
The executive and business office of the Company consist of office space
located at 324 Datura Street, Suite 303, West Palm Beach, FL 33401.
Pursuant to an oral agreement, until the
Page -14-
<PAGE>
effectuation of a Business Combination, the Company utilizes, free of charge,
the offices of Harbor Town Management Group, Inc., a corporation controlled by
Ronald W. Hayes, Jr., a stockholder of the Company and the Company's president
and a director. The Company believes this office space is adequate to serve
its needs until such time as a Business Combination occurs. The Company
expects to be able to utilize these offices, pursuant to the terms described
above, until such time as a Business Combination occurs. See "Certain
Relationships and Related Transactions".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of each person known to the Company to be
the beneficial owner of more than five percent (5%) of Company's Common
Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class(1)
of Beneficial Owner of Beneficial Owner(1)
<S> <C> <C>
Wheeler Group II, Inc. 17,931,250 89.7%
_______________________________
</TABLE>
(1) Includes 300,000 shares held directly by David M. Bovi, a director of
the Company. Mr. Bovi is the president and controlling shareholder of Wheeler
Group II, Inc., a privately held Florida corporation which serves as a
business consulting and holding corporation.
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of the Company's Common Stock of each of the officers and directors
of the Company, and the officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class(1)
of Beneficial Owner of Beneficial Owner(1)
<S> <C> <C>
Ronald W. Hayes, Jr. 318,669 1.6%
324 Datura Street, Suite 303
West Palm Beach, FL 33401
William R. Colucci 10,541 *
324 Datura Street, Suite 303
West Palm Beach, FL 33401
David M. Bovi (1) 17,931,250 89.7%
319 Clematis Street, Suite 804
West Palm Beach, Fl 33401
Page -15-
<PAGE>All Officers and Directors
as a Group (3 persons).(1) 18,260,460 91.3%
_______________________________
</TABLE>
* Less than .01%.
(1) Includes 17,631,250 shares held indirectly by Mr. Bovi, a director of the
Company, through Wheeler Group II, Inc. Mr. Bovi is the president and
controlling shareholder of Wheeler Group II, Inc., a Florida corporation.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The current directors and executive officers of the Company are as
follows:
Name Age Position
Ronald W. Hayes, Jr. 31 Director, CEO, President,
Secretary, Treasurer
William R. Colucci 59 Director
David M. Bovi 30 Director
___________________________
Mr. Hayes has served as a director, chief executive officer,
president, treasurer, and secretary of the Company since the Company's
inception in May, 1997. Mr. Hayes formalized his position with the Company
pursuant to an employment agreement dated June 1, 1997 in order to delineate
his and the Company's rights and obligations. This employment agreement was
subsequently terminated on August 1, 1997, and presently, Mr. Hayes continues
to hold such offices without receiving any type of compensation or benefits.
Mr. Hayes presently also serves as the chairman of the board, president and a
director of Net Lnnx, Inc., a publicly traded Pennsylvania "shell"
corporation. He has held this position since January, 1997 where he has been
in charge of implementing Net Lnnx's acquisition strategy. Mr. Hayes is also
presently the president of a privately held management firm known as Harbor
Town Management Group, Inc., a Florida corporation, which provides investment
banking and business consulting services, and is the president and a director
of both Harbor Town Holding Group III, Inc. and Harbor Town Holding Group IV,
Inc., which are privately held Florida "shell corporations". See "Description
of Business-Shell Corporation - Conflict of Interest". From 1994 to 1997, Mr.
Hayes served as president and chairman of R. H. Financial Services, Inc. an
investment services company which provided investment banking, brokerage and
consulting services. Also, from 1994 to 1995 Mr. Hayes served as a director
of Action Products, Inc., a publicly traded Nasdaq listed company. From 1991
to 1995, he was employed as a stockbroker and office manager with Prudential
Securities and First Montauk Securities, Inc. Mr. Hayes majored in business
finance at Palm Beach Junior College from 1985 to 1987. He received his
Real Estate Sales License and Mortgage Broker License from Gold Coast Real
Estate School in 1987 and 1988, respectively, and received his Series 7 and
63 Licenses from the
Page -16-
<PAGE>
Johnson Lipman School in 1991.
Mr. Colucci has served as a director of the Company since November,
1997. Mr. Colucci is also the executive vice president and a director of Net
Lnnx, Inc., a publicly traded Pennsylvania "shell" corporation. He has held
this position since September, 1997. His duties include assisting Net Lnnx in
implementing its acquisition strategy. Mr. Colucci is also presently a
consultant with a privately held management firm known as Harbor Town
Management Group, Inc., a Florida corporation, which provides investment
banking and business consulting services. See "Description of Business- Shell
Corporation - Conflict of Interest". From June 1996 to May 1997, Mr. Colucci
served as Chief Operating Officer and SEC Compliance officer for Physicians
Laser Services, Inc., a publicly traded Delaware corporation. From April 1991
to May 1996, Mr. Colucci served as a senior partner of Decision Dynamics,
Inc., a private business and real estate consulting firm. Prior to this, Mr.
Colucci has served in senior management positions, including president and CEO
of various companies. These companies included Bandak Corporation, a privately
held jewelry and manufacturing company, Inmont Corporation, a publicly held
division of United Technologies, Inc., a billion dollar a year chemical and
paint manufacturing company and Butcher & Sherrerd a privately held securities
brokerage firm based in Philadelphia, Pennsylvania. Mr Colucci received his
Bachelor of Science Degree in Economics from St. Joseph's University in
Philadelphia in 1964 and has successfully completed advanced courses of study
at Stanford University's Graduate School of Business for executives of
emerging growth companies.
Mr. Bovi has served as a director of the Company since November, 1997.
Mr. Bovi is also presently the sole shareholder, officer and director of
David M. Bovi, P.A., a private practice law firm which concentrates its
practice in representing public and private entities with respect to corporate
and securities law and merger and acquisition transactions. He has held this
position since April, 1996. See "Description of Business- Shell Corporation -
Conflict of Interest". From November 1995 to April 1996 he worked as a
transactional corporate and securities and mergers and acquisitions attorney
at Communications/USA, a privately held cellular paging services firm located
in Palm Beach County, Florida. During 1994 and 1995 he served as an
associate attorney in the corporate securities law department of the law firm
of Robert C. Hackney and Associates, Chartered, of counsel to the
law firm of Desantis Gaskill & Hunston, Palm Beach County, Florida. Also, in
1994, he served as an associate attorney in the corporate securities law
department of the law firm of Cohen Chernay et al., Palm Beach County,
Florida. From September 1993 to December 1993 Mr. Bovi served as a
"contract" attorney to various small privately held entities where he
assisted such entities with raising private capital. Mr. Bovi received his
LL.M. Degree (Masters Degree of Law) in Securities Regulation from Georgetown
University Law School in May, 1993, his Juris Doctor Degree from St. Thomas
University School of Law in May, 1992, and his Bachelor of Arts Degree in
Economics from the State University of New York at Buffalo in May, 1989. He
has been a member in good standing of the Florida Bar since October, 1992.
There are no agreements or understandings for any officer or director to
resign at the request of another person, and none of the officers and
directors of the Company are acting on behalf of or will act at the discretion
of any other person. The Company is a former wholly owned subsidiary of Net
Lnnx. See "Description of
Page -17-
<PAGE>
Business" and "Certain Transactions". The initial promoters of the Company
were Ronald W. Hayes, Jr., president of Net Lnnx and Net Lnnx, by and through
its board of directors of May 6, 1997. Mr. Hayes is the only present director
of Net Lnnx out of three directors of Net Lnnx who sat on the Net Lnnx board
of directors at that time. Mr. Ronald P. Perella and Mr. Frederick Hall, who
sat on Net Lnnx's board of directors on May 6, 1997, have since resigned as
directors and/or officers and have no other affiliation or business dealings
with Net Lnnx or the Company, other than with respect to any equity securities
which they might own. The Company had no other promoters.
Presently, the only persons who perform material operations on behalf of
the Company are the Company's present officers and directors. Until such time
as a Business Combination occurs, the officers and directors of the Company do
not expect any significant changes in the composition of the Company's
officers or board of directors. 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. For purposes of this
paragraph herein, Wheeler's shares, an affiliate shareholder of the Company
owned and controlled by Mr. Bovi, should be deemed to be Mr. Bovi's shares.
See "Directors, Executive Officers, Promoters and Control Persons".
The Company's cash reserves are minimal; therefore, no officer
or director of the Company is paid any type of compensation by the Company and
presently, there are no arrangements or anticipated arrangements to pay any
type of compensation to any officer or director in the near future. The
Company expects that it will meet its cash requirements until such time as a
Business Combination occurs. However, in the event the Company depletes its
present cash reserves, the Company may cease operations and a Business
Combination may not occur. There are no agreements or understandings of any
kind with respect to any loans from officers or directors of the Company on
behalf of the Company.
EXECUTIVE COMPENSATION.
The Company was formed in May, 1997. The table below sets forth
certain information concerning the compensation earned during fiscal 1997 by
the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
---------------------------------------------------------------------------
FISCAL OTHER ANNUAL
NAME AND PRINCIPAL YEAR SALARY($) BONUS($) COMPENSATION($)
POSITION
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
Ronald W. Hayes, Jr 1997 10,000 -0- -0-
President and Chief
Executive Officer
__________________________________
</TABLE>
(1) No other form of compensation has been paid to the Company's Chief
Executive Officer; therefore, all other columns have been omitted.
Page -18-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As of the date of this registration statement, the Company has issued an
aggregate of 20,000,000 shares of Common Stock as follows:
Harbor Town Holding Group I, Inc. (the "Company"), was incorporated under
the laws of the State of Florida on May 6, 1997 as a wholly owned subsidiary
of Net Lnnx, Inc., a publicly traded Pennsylvania shell corporation traded on
the over-the-counter trading market ("Net Lnnx"). Net Lnnx is a shell company
conducting virtually no business operation, other than its efforts to seek
merger partners or acquisition candidates. The Company was originally created
to act as the receiver of a certain Net Lnnx asset (the "Transferred Asset")
which consisted of a $475,000 note receivable made to Net Lnnx. Net Lnnx was
required to dispose of the Transferred Asset pursuant to the terms of a letter
of intent entered into between Net Lnnx and another unrelated company in
connection with an anticipated merger between Net Lnnx and such other
unrelated company. The parties intended to consummate a reverse merger
transaction between Net Lnnx and the unrelated company whereby Net Lnnx would
issues shares of Net Lnnx stock to the shareholders of the unrelated company.
Since Net Lnnx and the unrelated company could not determine and agree upon an
actual value of the Transferred Asset ( due to its practically unsecured
nature) and the unrelated company did not wish to purchase the Transferred
Asset with the possibility of never collecting on it due to its practically
unsecured nature, Net Lnnx transferred the Transferred Asset to the Company in
exchange for 2,058,209 shares of the Company's common stock, no par value (the
"Common Stock").
On May 21, 1997, Net Lnnx distributed all 2,058,209 shares of the
Company which it owned to Net Lnnx shareholders as a stock dividend on a share
for share basis. Ronald W. Hayes, Jr., an officer and director of the Company,
received 318,669 shares of Common Stock in this transaction as a result of his
ownership of 318,669 shares of Net Lnnx stock on such date. Mr. Hayes is the
president and a director of Net Lnnx. On November 6, 1997 the Company and Net
Lnnx agreed to cancel the instrument which transferred the Transferred Asset
and the Company and Net Lnnx agreed that in exchange for Net Lnnx releasing
the Company from debt in the amount of $12,600 owed to Net Lnnx by the
Company, such release from liability would constitute substitute consideration
for the 2,058,209 shares the Company previously issued to Net Lnnx.
On November 6, 1997, the Company issued 17,631,250 shares of Common Stock
to Wheeler Group II, Inc. ("Wheeler") and 300,000 shares to David M. Bovi,
president and controlling shareholder of Wheeler in exchange for (i) $6,000
cash, and (ii) Wheeler purchasing $25,000 in pre-paid legal services on behalf
of the Company to effectuate the legal aspects of this registration
statement. David M. Bovi is the president and controlling shareholder of
David M. Bovi, P.A., the law firm retained by Wheeler on behalf of the Company
to effectuate the legal aspects of this registration statement.
On November 12, 1997, David M. Bovi and William R. Colucci were elected
directors of the Company. Also, on that date, the Company issued 10,541
shares of Common Stock to William R. Colucci
Page -19-
<PAGE>
in exchange for his services as a director of the Company.
As the owner of approximately 88.2% of the Company's shares of Common
Stock, Wheeler is a "parent" corporation of the Company and is the Company's
controlling shareholder. David M. Bovi, a director of the Company, is the
president and controlling shareholder of Wheeler.
The executive and business office of the Company consist of office space
located at 324 Datura Street, Suite 303, West Palm Beach, FL 33401. Pursuant
to an oral agreement, until the effectuation of a Business Combination, the
Company utilizes, free of charge, the offices of Harbor Town Management Group,
Inc., a corporation controlled by Ronald W. Hayes, Jr., a stockholder of the
Company and the Company's chief executive officer and a director. The Company
believes this office space is adequate to serve its needs until such time as a
Business Combination occurs. The Company expects to be able to utilize these
offices, pursuant to the terms described above, until such time as a Business
Combination occurs.
DESCRIPTION OF SECURITIES.
GENERAL
The Company is authorized to issue 50,000,000 shares of Common Stock, no
par value. As of the date of this registration statement 20,000,000 million
shares of Common Stock are outstanding, held of record by approximately 2,000
shareholders. No other type of securities are authorized by the Company at
this time.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. By virtue of its ownership of more
than 50% of the outstanding Common Stock, Wheeler can elect all of the
directors of the Company. Florida law permits the holders of the minimum
number of shares necessary to take action at a meeting of shareholders
(normally a majority of the outstanding shares) to take action by written
consent without a meeting, provided notice is given within ten days to
all other shareholders. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining available for distribution to them after
payment of liabilities and after provision has been made for
each class of stock, if any, having preference over the Common Stock. Holders
of shares of Common Stock, as such, have no conversion, preemptive, redemption
provisions or other subscription rights. All of the outstanding shares of
Common Stock are fully paid and non-assessable.
Page -20-
<PAGE>
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and
does not presently intend to pay cash dividends prior to the consummation of a
Business Combination. The payment of cash dividends in the future, if any,
will be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then Board of
Directors. It is the present intention of the Board of Directors to retain all
earnings, if any, for use in the Company's business operations and,
accordingly, the Board does not anticipate paying any cash dividends in the
foreseeable future.
SECURITIES EXCHANGE ACT OF 1934
By virtue of filing this registration statement, the Company is making an
application with the Commission to register its Common Stock under the
provisions of Section 12(g) of the Exchange Act. Such registration will
require the Company to comply with periodic reporting, proxy solicitations and
certain other requirements of the Exchange Act. If the Company seeks
shareholder approval of a Business Combination at such time as the Company's
securities are registered pursuant to Section 12(g) of the Exchange Act, the
Company's proxy solicitation materials required to be transmitted to
shareholders may be subject to prior review by the Securities and Exchange
Commission. Under the federal securities laws, public companies must furnish
certain information about significant acquisitions, which information may
require audited financial statements of an acquired company with respect to
one or more fiscal years, depending upon the relative size of the acquisition.
Consequently, if a prospective Target Business did not have available and was
unable to reasonably obtain the requisite audited financial statements, the
Company could, in the event of consummation of a Business Combination with
such company, be precluded from (i) any public financing of its own securities
for a period of as long as three years, as such financial statements would be
required to undertake registration of such securities for sale to the public;
and (ii) registration of its securities under the Exchange Act. Consequently,
it is unlikely that the Company would seek to consummate a Business
Combination with such a Target Business. See "Description of Business--Federal
Securities Laws Compliance".
In the event the Company's obligation to file periodic reports under the
Exchange Act is suspended, the Company presently intends to continue to file
such periodic reports on a voluntary basis.
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
The Company's bylaws provide, among other things, that (i) officers and
directors of the Company will be indemnified to the fullest extent permitted
under Florida law. See "Part II-- Indemnification of Directors and Officers".
Page -21-
<PAGE>
TRANSFER AGENT
The Company's transfer agent is Florida Atlantic Stock Transfer, Inc.,
5701 North Pine Island Road, Suite 310B, Tamarac, Florida 33321.
Page -22-
<PAGE>
PART II
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
MARKET INFORMATION
No public trading market presently exists for the Company's Common
Stock. The likelihood of a trading market developing for the Company's Common
Stock is conditioned upon, among other things, the effectuation of a Business
Combination. Once a Business Combination is effectuated, the Company intends
to begin developing a trading market in the Company's Common Stock. The
Company has no present intention of developing any type of trading market
prior to the effectuation of a Business Combination. Presently, there are no
plans, proposals, arrangements or understandings with any person with regard
to the development of a trading market in any of the Company's securities.
No assurances are made that a trading market for the Company's Common Stock
will ever develop. No shares of Common Stock of the Company are subject to
outstanding options or warrants to purchase, or securities convertible into,
common equity of the Company.
Approximately 2,000 shareholders hold the Company's common stock, no par
value (the "Common Stock"). The Company presently has 20,000,000 shares of
Common Stock outstanding. All such shares are deemed to be "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act, in that such shares were issued in private transactions not
involving a public offering. No such shares will be eligible for sale under
Rule 144, as currently in effect, prior to May 6, 1998, at which time
2,058,209 shares will be eligible for sale under Rule 144, so long as all
other conditions of Rule 144 are met. The Company has not provided to any
shareholder registration rights to register under the Securities Act any
shareholder's shares for sale.
In general, under Rule 144, as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has beneficially
owned restricted shares of Common Stock for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of 1% of the total number of outstanding shares of the same class
or, if the Common Stock is not quoted on NASDAQ, the average weekly trading
volume during the four calendar weeks preceding the sale. A person who has
not been an affiliate of the Company for at least the three months immediately
preceding the sale and who has beneficially owned restricted shares of Common
Stock for at least two years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above. No assurances are
made; however, that all of the other conditions of Rule 144 will be met on
May 6, 1998, or any date subsequent thereto, or that Rule 144 will be
available at that time for any shareholder's shares.
The Company has no present plans, proposals, arrangements, understandings
or intention of selling any additional shares of Common Stock pursuant to any
type of private or public offering prior to the consummation of a Business
Combination.
Page -23-
<PAGE>
The Company has no present plans, proposals, arrangements, understandings
or intention of selling any amount of shares of Common Stock in the public
market subsequent to a Business Combination. Nevertheless, in the event that
substantial amounts of Common Stock are sold in the public market subsequent
to a Business Combination, such sales may adversely affect the price for
the sale of the Company's equity securities in any trading market which may
develop. No prediction can be made as to the effect, if any, that market sales
of restricted shares of Common Stock or the
availability of such shares for sale will have on the market prices prevailing
from time to time.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and
does not presently intend to pay cash dividends prior to the consummation of a
Business Combination. The payment of cash dividends in the future, if any,
will be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then Board of
Directors. It is the present intention of the Board of Directors to retain all
earnings, if any, for use in the Company's business operations and,
accordingly, the Board does not anticipate paying any cash dividends in the
foreseeable future.
LEGAL PROCEEDINGS.
As of the date hereof, the Company is not a party to any material legal
proceedings, nor is it aware of any threatened litigation of a material
nature.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
RECENT SALES OF UNREGISTERED SECURITIES.
As of the date of this registration statement, the Company has issued an
aggregate of 20,000,000 shares of Common Stock as follows:
On May 6, 1997, the Company was created as a wholly owned subsidiary of
Net Lnnx, Inc., ("Net Lnnx") a publicly traded Pennsylvania shell corporation
traded on the over-the-counter trading market. Net Lnnx is a shell company
which conducts virtually no business operation, other than its efforts to seek
merger partners or acquisition candidates. The Company issued 2,058,209 shares
of the Company's capital stock to Net Lnnx in exchange for the Transferred
Asset. The Company relied on Section 4(2) of the Securities Act since such
transaction did not involve any public offering. On May 21, 1997, Net Lnnx
distributed the shares of the Company which it owned to Net Lnnx shareholders
as a stock dividend on a share for share basis. This transaction did not
constitute a sale of securities since Net Lnnx did not dispose of such shares
for value; therefore, the Company was not required to utilize a transactional
exemption for such disposition. On November 6, 1997, the Company and Net
Lnnx agreed to cancel the
Page -24-
<PAGE>
instrument which transferred the Transferred Asset and the Company and Net
Lnnx agreed that in exchange for Net Lnnx releasing the Company from debt in
the amount of $12,600 owed to Net Lnnx by the Company, such release from
liability would constitute substitute consideration for the 2,058,209 shares
the Company previously issued to Net Lnnx.
On November 6, 1997, the Company issued 17,631,250 shares of Common Stock
to Wheeler Group II, Inc., a Florida corporation ("Wheeler"), and 300,000
shares to David M. Bovi, president and controlling shareholder of Wheeler in
exchange for (i) $6,000 cash; and (ii) Wheeler purchasing $25,000 in pre-paid
legal services on behalf of the Company to effectuate the legal aspects of
this registration statement. Wheeler and Mr. Bovi were the only offerees in
connection with this transaction. The Company relied on Section 4(2) of the
Securities Act since such transaction did not involve any public offering.
On November 12, 1997, the Company issued 10,541 shares of Common Stock to
William R. Colucci, a director of the Company, in exchange for his services as
a director of the Company. Mr. Colucci was the only offeree in connection
with this transaction. The Company relied on Section 4(2) of the Securities
Act since such transaction did not involve any public offering.
No underwriters were utilized and no commissions or fees were paid with
respect to any of the above transactions. No other shares of Common Stock
have been issued by the Company in any other transaction.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws contain the broadest form of indemnification for its
officers and directors and former officers and directors permitted under
Florida law. The Company's bylaws generally provide that: The Company shall
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 Company) by reason of the fact that he is or was a
director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees), judgments, fines, amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, including any appeal thereof, if he acted in good
faith in a manner he reasonably believed to be in, or not opposed to the best
interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contenders or its equivalent
shall not create, of itself, a presumption that the person did not act in good
faith or in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Page -25-
<PAGE>
To the extent that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to above, or in any defense of any claim, issue or
matter therein, he shall be indemnified against expenses, including attorneys
fees, actually and reasonably incurred by him in connection therewith.
Any indemnification shall be made only if a determination is made that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct
set forth above. Such determination shall be made either (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) by the shareholders who
were not parties to such action, suit or proceeding. If neither of the above
determinations can occur because the Board of Directors consists of a sole
director or the Company is owned by a sole shareholder, then the sole director
or sole shareholder shall be allowed to make such determination. Expenses
incurred in defending any action, suit or proceeding may be paid in advance
of the final disposition of such action, suit or proceeding as authorized in
the manner provided above upon receipt of any undertaking by or on behalf of
the director, officer, employee or agent to repay such amount, unless it
shall ultimately be determined that he is entitled to be indemnified by the
Company.
The indemnification provided shall be in addition to the indemnification
rights provided pursuant to Chapter 607 of the Florida Statutes, and shall not
be deemed exclusive of any other rights to which any person seeking
indemnification may he entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
such person's 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 of the Company and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Page -26-
<PAGE>
PART F/S
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company
BALANCE SHEET
December 31, 1997
(Unaudited)
ASSETS
Current assets:
Cash $ 4,268
Total current assets 4,268
$ 4,268
LIABILITIES AND STOCKHOLDERSÆ EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,530
Total current liabilities 1,530
Stockholders' equity:
Common stock 18,600
Retained deficit ( 15,862)
Total stockholders' equity 2,738
$ 4,268
See Accompanying Notes
1
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period May 6, 1997 (Date of Inception)
to December 31, 1997
(Unaudited)
Sales, net $ -
Cost of sales -
Gross profit (loss) -
General and administrative expenses 15,862
Net loss ( 15,862)
Retained earnings(deficit), beginning
of period
- -
Retained earnings(deficit), end of period ( 15,862)
Net loss per share $ (.00)
Weighted average shares outstanding 6,262,099
See Accompanying Notes
2
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company
STATEMENT OF CASH FLOW
For the Period May 6, 1997 (Date of Inception)
to December 31, 1997
(Unaudited)
Cash flows from operating activities:
Net loss $ ( 15,862)
Changes in assets and liabilities 1,530
Net cash provided (used) for operations ( 14,332)
Financing activities:
Proceeds from sale of capital stock 18,600
Net increase (decrease) in cash 4,268
Cash, beginning of period -
Cash, end of period $ 4,268
Supplemental disclosure:
Cash paid for interest $ -
Income taxes paid $ -
See Accompanying Notes
3
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Organization - Harbor Town Holding Group I, Inc. (the "Company") was
incorporated in the State of Florida May 6, 1998 as a wholly owned subsidiary
of Net Lnnx, Inc.
The company shares facilities and certain other resources free of charge with
Harbor Town Management Group, Inc.
Development Stage Activities - The Company has been in the development stage
since its inception on May 6, 1997. It has conducted no business other than
to organize as a corporation. It intends to seek and acquire merger partners
that have ongoing operations.
Loss per Common Share - Loss per share is computed using the weighted number
of common shares outstanding during each period. There are no common stock
equivalents or other dilutive securities outstanding.
Recently Issued Accounting Standards - In February 1997, the Financial
Accounting Standards Board issued Financial Accounting Standards 128,
"Earnings Per Share" effective for years ending after December 15, 1997.
Management does not believe this will have an effect on the Company's
computation of earnings per share because of its simple capital structure.
2. CAPITALIZATION
The initial cash came as an advance from Net Lnnx, Inc. As consideration to
cancel the debt resulting from the advance, the Company issued 2,058,209
shares of its stock to Net Lnnx, Inc. On May 21, 1997, Net Lnnx, Inc. spun off
all shares of the Company, which it owned, to its shareholders as a stock
dividend on a share for share basis. On November 6, 1997, a subscription
agreement was signed to sell 17,931,250 shares for $6,000 in cash and $25,000
in pre-paid legal services on behalf of the Company regarding the legal
aspects of a registration statement on Form 10-SB under the Securities Act of
1934. On November 12, 1997, the Company issued 10,541 shares of common stock
to a director of the Company for services to the Company as a director.
3. INCOME TAXES
At September 30, 1997, the Company had a net operating loss carryforward for
tax purposes of approximately $13,300, which expires in 2012. The Company has
fully reserved the tax benefits of the operating loss carryforward because the
likelihood of realization of the benefit cannot be established.
The Internal Revenue Code contains provisions, which may limit the loss
carryforwards available if a significant change in stockholder ownership of
the Company occurs.
4
<PAGE>
PART III
Pursuant to Items 1 and 2 of Part III of Form 10-SB and, with respect to
the Financial Data Schedule, Item 601 of Regulation S-B, the Company includes
the following exhibits:
INDEX TO EXHIBITS.
Sequential
Exhibit No. Description of Exhibit Page No.
(2) Charter and Bylaws.
2.1 Articles of Incorporation and Amendment
to Articles of Incorporation.**
2.2 Bylaws.**
(3) Instruments defining the rights of
security holders.
3.1 Articles of Incorporation and Amendment *
to Articles of Incorporation.**
3.2 Bylaws.**
(6) Material Contracts.
6.1 Ronald W. Hayes, Jr. Employment
Contract.**
6.2 Addendum to Ronald W. Hayes, Jr.
Employment Contract.**
6.3 Wheeler Group II, Inc. Subscription
Agreement.**
(10) Consents.
10.1 Consent of Sweeney, Gates & Co.,
CPA's and Consultants.
(27) Financial Data Schedule.
27.1 Financial Data Schedule.
* Incorporated by reference to Exhibit (2) herein.
** Previously filed.
Page -28-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
(Registrant)
Date: February 18, 1998
By:/s/Ronald W. Hayes
Ronald W. Hayes, President
(Signature)
By:/s/Ronald W. Hayes
Ronald W. Hayes, President,
Secretary
Page -29-
<PAGE>
INDEX TO EXHIBITS.
Sequential
Exhibit No. Description of Exhibit Page No.
(2) Charter and Bylaws.
2.1 Articles of Incorporation and Amendment
to Articles of Incorporation.**
2.2 Bylaws.**
(3) Instruments defining the rights of
security holders.
3.1 Articles of Incorporation and Amendment *
to Articles of Incorporation.**
3.2 Bylaws.**
(6) Material Contracts.
6.1 Ronald W. Hayes, Jr. Employment
Contract.**
6.2 Addendum to Ronald W. Hayes, Jr.
Employment Contract.**
6.3 Wheeler Group II, Inc. Subscription
Agreement.**
(10) Consents.
10.1 Consent of Sweeney, Gates & Co.,
CPA's and Consultants.
(27) Financial Data Schedule.
27.1 Financial Data Schedule.
* Incorporated by reference to Exhibit (2) herein.
** Previously filed.
Page -30-
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
financials for the period ended December 31, 1997 included in the Form 10-SB/A
and incorporated by reference in the registration statement of Harbor Town
Holding Group I, Inc.
Sweeney, Gates & Co.
Lake Worth, FL
November 19, 1997
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,268
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,268
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,268
<CURRENT-LIABILITIES> 1,530
<BONDS> 0
0
0
<COMMON> 18,600
<OTHER-SE> (15,862)
<TOTAL-LIABILITY-AND-EQUITY> 2,738
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (15,862)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,862)
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,862)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
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