U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A#5
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 200 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
324 Datura Street, Suite 200
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)
<PAGE>
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 would constitute substitute
consideration for the 2,058,209 shares the Company previously issued to Net
Lnnx. Net Lnnx made the $12,600 loan the Company to assist the Company with
its expenses, which substantially consisted of officer's salaries, which are
no longer in effect, and payments to then outside consultants for certain
industry review and analysis. The final effect of the November 6, 1997
transaction was that the Company issued the 2,058,209 shares of the Company
to Net Lnnx in exchange for $12,600. The Company determined that since it did
<PAGE>
not have the financial resources to finance the cost of litigation with
respect to the Transferred Asset, which was practically unsecured, the Maker
of the transferred Asset would elect to stop making payments on the
Transferred Asset, which would render such asset valueless. Previously, the
Maker threatened to stop payment on the Transferred Asset, which, in essence,
prompted Net Lnnx to sue the Maker in connection with the Transferred Asset.
The Company determined that if the Company elected to hold the Transferred
Asset, since it could not afford to litigate against the Maker, the
Transferred Asset would in all likelihood be valueless. The Company
determined that the likelihood of creating shareholder value for the Company's
shareholder's would be greater if the Company registered the Company's common
stock with the SEC to create a reporting "shell" company, instead of holding
a valueless asset. Therefore, the Company elected to cancel the transfer of
the Transferred Asset and file this registration statement, instead.
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. However,
pursuant to a resolution of the Company's board of directors, no type of
trading market may be developed in the Company's securities prior to (i) the
effectuation of a Business Combination, and (ii) the requisite audited
financial staements required pursuant to Form 8-K (or its equivalent are filed
with the SEC. 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.
<PAGE>
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, 2,058,209 shares
of Common Stock are eligible for sale under Rule 144, as currently in effect.
No assurances are made; however, that Rule 144 will be available at any time
for any shareholder's shares. 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
<PAGE>
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, 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. No trading marekt in the Company's
securities presently exists, and pursuant to a resolution of the Company's
board of directors, no type of trading market may be developed in the
Company's securities prior to (i) the effectuation of a Business Combination,
and (ii) the requisite audited financial statements required pursuant to
Form 8-K (or its equivalent) are filed with the SEC. 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
products, educational services, environmental services, consumer-related
<PAGE>
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
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,
<PAGE>
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:
- 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
<PAGE>
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.
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
<PAGE>
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
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
<PAGE>
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.
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. 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. 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. Section. 607.0902 of the Florida Business
Corporation Act denies corporate control to an acquiror of control shares by
extinguishing the voting rights of shares of an "issuing public corporation",
as defined therein, acquired in a "control share acquisition", as defined
therein. Voting rights may be reinstated to the extent provided in a
shareholders' resolution approved by (1) each class or series entitled to vote
separately on the proposal by a majority of all votes entitled to be cast by
such class or series and (2) each class or series entitled to vote separately
on the proposal by a majority of all votes entitled to be cast by such class
or series, excluding all "interested shares" (ie., generally speaking, those
shares that may be voted by or at the direction of a person who made a
control-share acquisition or an officer or employee/director of the subject
"issuing public corporation"). The acquisition of shares is not directly
affected, only the voting rights attendant to control shares. Other shares
of the same corporation that are owned or acquired by the same person are
not affected. The stated purpose of the control share acquisitions statute
is to protect Florida shareholders by affording them an opportunity to
decide whether a change in corporate control is desirable. Shares of an
"issuing public corporation" acquired pursuant to an acquisition approved
by the corporation's board of directors are not deemed to be "control-share
acquisitions", which, effectively allows the board to approve the
acquisition and avoid a shareholder vote by taking the transaction
out of the purview of the "control-share acquisition" statute. Thus,
non-management/affiliate shareholders will not be afforded an opportunity to
approve or consent to an acquiror's purchase of such management or affiliate's
stock pursuant to a Business Combination. See "Description of Business
<PAGE>
- -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 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
<PAGE>
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 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.
<PAGE>
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 - Selection of a Target Business and Structuring
of a Business Combination".
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.
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.
<PAGE>
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 200, 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 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. These expenses substantially comprised of
officer's salaries, which are no longer in effect, and payments to then
outside consultants for certain industry review and analysis. 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
<PAGE>
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 200, 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 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%
324 Datura Street, Suite 200
West Palm Beach, Fl 33401
_______________________________
</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
of Beneficial Owner of Beneficial Ownership
<S> <C> <C>
Ronald W. Hayes, Jr. 318,669 1.6%
324 Datura Street, Suite 200
West Palm Beach, FL 33401
William R. Colucci 10,541 *
324 Datura Street, Suite 200
West Palm Beach, FL 33401
David M. Bovi (1) 17,931,250 89.7%
324 Datura Street, Suite 200
West Palm Beach, Fl 33401
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.
<PAGE>
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 31 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 International, Inc., a publicly traded company listed on
the Nasdaq. From 1991 to 1995, he was employed as a stockbroker and office
manager with P rudential 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 Johnson Lipman School in 1991.
<PAGE>
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 traded in the
Over-the-counter trading market. 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 traded, billion dollar a
year, chemical and paint manufacturing division of United Technologies, Inc.,
which is traded on the New York Stock Exchange, 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 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
<PAGE>
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.
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
<PAGE>
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 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 200, 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.
<PAGE>
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.
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
<PAGE>
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".
TRANSFER AGENT
The Company's transfer agent is Florida Atlantic Stock Transfer,
Inc.,7130 Nob Hill Road, Tamarac, Florida 33321.
<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. Pursuant to a resolution of the Company's board of directors, no type
of trading market may be developed in the Company's securities prior to
(i) the effectuation of a Business Combination, and (ii) the requisite
audited financial statements required pursuant to Form 8-K (or its equivalent)
are filed with the SEC. Once a Business Combination is effectuated and the
requisite audited financial statements required pursuant to Form 8-K (or
its equivalent are filed with the SEC, 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 such
conditions. 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. As of May 6, 1998, 2,058,209 shares are eligible
for sale under Rule 144, as currently in effect, so long as all other
conditions of Rule 144 are met. No assurances are made; however, that Rule
144 will be available at any time for any shareholder's shares. 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 Rule 144 will be available at any 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.
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
<PAGE>
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.
The Company is of the opinion that this stock dividend transaction did
not constitute a sale of securities under Section 5 of the Securities Act,
since neither Net Lnnx, nor the Company, disposed of such shares for value.
Net Lnnx shareholders paid no consideration for the shares of the Company'
which they received. Therefore, the Company is of the position that it was
not required to utilize an exemption from Section 5 of the Securities Act
for such disposition. The Company has obtained an opinion of counsel from
independent securities counsel to support this position. This opinion is
attached as an exhibit to this registration statement.
Due to the business nature of the Company, the SEC staff members
reviewing this registration statement have declined to provide a "no
action" position on the issue as to whether the stock dividend transaction
did not constitute a sale of securities under Section 5 of the Securities Act,
and they do not consider the stock dividend transaction to fall within the
"safe harbor" postulated by the SEC staff regarding such transactions.
Pursuant to this view, the SEC staff members reviewing this registration
statement are of the opinion that since the Company did not register under
Section 5 of the Securities Act the 2,058,209 shares which it distributed to
the Net Lnnx shareholders, and the Company is not presently claiming reliance
on any exemption from such section available to it, the Company may have
violated Section 5 of the Securities Act.
Certain rights are available to persons receiving securities which are
issued in violation of Section 5 of the Securities Act. Pursuant to Section
12(1) of the Securities Act, any person who sells a security in violation of
Section 5 of the Securities Act is liable to the purchaser to refund the full
purchase price paid by such purchaser. To recover under Section 12(1), the
purchaser need only establish that the person sold the security to such
purchaser and that it was not registered. The burden then shifts to the
seller to establish the availability of an exemption. Similarly, traditional
state securities laws generally provide that any sale made in violation of
the registration provisions of a state's securities laws are voidable, and
that the purchaser is entitled to rescind the transaction and recover his
purchase price.
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 theonly offerees
<PAGE>
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.
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,
<PAGE>
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>
PART F/S
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Harbor Town Holding Group I, Inc.
West Palm Beach, FL 33401
We have audited the accompanying balance sheet of Harbor Town
Holding Group I, Inc., (a development stage company) as of
September 30, 1997 and the related statements of operations and
changes in cash flows from May 6, 1997 (inception) to September
30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based upon 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 from 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 statement referred to above,
presents fairly, in all material respects, the financial position
of Harbor Town Holding Group I, Inc., (a development stage
company) as of September 30, 1997, and for the period from May 6,
1997 (inception) to September 30, 1997, in conformity with
generally accepted accounting principles.
The Company is in the development stage and to date has had no
significant operations. The continuation of the Company's
business is dependent upon its ability to obtain adequate
financing arrangements and ultimately, future profitable
operations.
Boynton Beach, FL
November 19, 1997
Except Note 2 which is as of July 28, 1998
F/S -1-
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1997
Assets
Current assets:
Cash $ 44
$ 44
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accrued liabilities $ 765
Total current liabilities 765
Stockholders' equity (deficit):
Common stock; no par value;
50,000,000 shares authorized,
2,058,209 shares issued and outstanding (13,321)
Deficit accumulated during the development stage (13,321)
(13,321)
$ 44
The accompanying notes are an integral part of these financial statements.
F/S -2-
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period May 6, 1997 (Date of Inception) to September 30, 1997
General and administrative expenses $ 13,321
Net Loss ($ 13,321)
Net loss per share ($ 0.01)
Weighted average shares outstanding 2,058,209
The accompanying notes are an integral part of these financial statements.
F/S -3-
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period May 6, 1997 (Date of Inception) to September 30, 1997
Cash flows from operating activities:
Net loss ($ 13,321)
Changes in assets and liabilities:
Increase in accrued liabilities 765
Cash flows used by operating activities ( 12,556)
Cash flows from financing activities:
Proceeds from advances converted to common stock 12,600
Change in cash 44
Cash at beginning of period 0
Cash at end of period $ 44
Supplemental Disclosures:
No cash payments for interest or income taxes.
The accompanying notes are an integral part of these financial statements.
F/S -4-
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENT
September 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Harbor Town Holding Group I, Inc. (the "Company")
was incorporated in the State of Florida on May 6, 1997 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. Net Lnnx, Inc. is a shell that has
no operations other than seeking possible merger partners.
Securities and Exchange Commissions' guidelines state stock
issued in a spin-off of a shell corporation to another shell
corporation is subject to possible recision and, therefore, does
not constitute the issuance of common stock. Accordingly, the
stock issued is shown on the balance sheet as a category other
than equity.
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 significant changes in
stockholder ownership of the Company occur.
F/S -5-
<PAGE>
HARBOR TOWN HOLDING GROUP I, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENT
4. SUBSEQUENT EVENTS
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.
F/S -6-
<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
Exhibit No. Description of Exhibit Sequential 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.**
(5) Opinion re: Legality
5.1 Opinion of Hackney, Miller & Robbins, P.A.**
(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>
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: July 29, 1998
By:/s/Ronald W. Hayes
Ronald W. Hayes, President
(Signature)
By:/s/Ronald W. Hayes
Ronald W. Hayes, President,
Secretary
<PAGE>
INDEX TO EXHIBITS.
Exhibit No. Description of Exhibit Sequential 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.**
(5) Opinion re: Legality
5.1 Opinion of Hackney, Miller & Robbins, P.A.**
(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.
HACKNEY, MILLER & ROBBINS, P.A.
ATTORNEYS & COUNSELORS AT LAW
ADMIRALTY OFFICE TOWER TWO
4400 PGA BOULEVARD, SUITE 505
PALM BEACH GARDENS, FLORIDA 33410
Telephone (561) 627-0677
Facsimile (561) 625-4685
June 24, 1998
To the Board of Directors of Harbor Town Holding Group I, Inc.:
We have acted as counsel for Harbor Town Holding Group I, Inc. a
Florida corporation (the "Company"), in connection with a review of
the "spin-off" and the applicability of Section 5 of the Securities
Act of 1933, as amended, to the transaction.
In connection with the foregoing, we have examined the Registration
Statement on Form 10-SB, Division of Corporation Finance,
Securities and Exchange Commission Staff Legal Bulletin No. 4 dated
September 16, 1997, SEC Comment Letter dated February 6, 1998, SEC
Comment Letter dated March 19, 1998, SEC Comment Letter dated June
16, 1998, SEC Release No. 33-4982 dated July 2, 1969, the Articles
of Incorporation and Bylaws of the Company, the form of the
certificates evidencing the Shares, the records of proceedings of
the directors and shareholders of the Company, certificates of
officers of the Company and public officials and such other
documentation as we deemed necessary or advisable in order to
render the opinions expressed herein.
In such examination, we have assumed the genuineness of all
signatures on original documents and the conformity to original
documents of all copies submitted to us. We have assumed that
there has ben no violation of any applicable state or federal anti-
fraud or disclose law or rule in connection with the spin-off
transaction.
We have investigated such questions of law for the purposes of
rendering this opinion as we have deemed necessary. We are opining
herein only as to United States Federal law and the laws of the
State of Florida and we are not opining on and assume no
responsibility as to the applicability of, the laws of any other
jurisdiction.
<PAGE>
On the basis of the foregoing, and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has
all requisite corporate power and authority to own its properties
and to conduct its businesses as now conducted and as proposed to
be conducted as described in the Form 10-SB Registration Statement
filed on behalf of the Company.
2. All of the issued and outstanding shares of Common Stock have
been duly authorized and are validly issued, fully paid and
nonassessable, and there is a reasonable basis to conclude that all
such shares have been offered, issued, sold and delivered by the
Company in compliance with the registration and qualification
requirements of all applicable federal and state securities laws.
3. The "spin-off" did not violate Section 5 of the Securities Act
of 1933, as amended, for a number of reasons, including but not
limited to the fact that due to its structure, the spin-off cannot
result in an active trading market for the spun-off shares without
there being adequate public information about the issuer. In
addition, the parent shareholders did not provide consideration for
the spun-off shares, the spin-off is pro-rata to the parent
shareholders, the parent had a valid business purpose for the spin-
off and adequate information about the spin-off will be provided to
the trading markets prior to any public market being developed for
the shares. Counsel recognizes that while Staff Legal Bulletin No.
4 was issued to provide guidance in this area, it is not a rule,
regulation or statement of the Securities and Exchange Commission.
In keeping with the position of the Commission that the focus of a
transaction should be substance over form, the substance of the
"spin-off" transaction in this instance cannot result in an active
trading market for the Company's securities without there being
adequate public information about the issuer. Consequently, the
"form" of the staff's position in Legal Bulletin No. 4 is
irrelevant, since it does not relate to the facts of this case.
Even if Legal Bulletin No. 4 carried the legal authority of a rule
or regulation of the Commission, due to the unique facts of this
case, it would be inapplicable.
Very truly yours
/s/Robert C. Hackney for
Hackney, Miller & Robbins, P.A.
Board of Directors
Harbor Town Holding Group I, Inc.
324 Datura Street, Suite 200
West Palm Beach, FL 33401
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our first original audit report dated November
19, 1997 (and all references to our firm) included in Harbor Town Holding
Group I, Inc.'s Form 10-SB report for the period ended September 30, 1997,
which is incorporated by reference in Harbor Town Holding Group I, Inc.'s Form
10-SB report for the period ended September 30, 1997.
Sweeney, Gates & Co.
Boynton Beach, FL
July 29, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44
<CURRENT-LIABILITIES> 765
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (721)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 13,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,321)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,321)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,321)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
